Cutting 100 jobs 'could save Contact $9.4m'

Wellington-based Contact Energy's plan to lay off about 100 of its 1100 staff by the middle of the year is casting doubt on many high-paying jobs in the city.

Contact Energy is among the top five payers of big sharemarket-listed companies, paying an average of $93,768 an employee in 2011. Almost 23 per cent of staff made more than $100,000 a year.

Contact's job cuts are part of a plan to chop $40 million in yearly costs. But the $40m included cutting procurement costs for anything from office stationery to power turbines, and rationalising IT systems, as well as job cuts.

Cutting 100 jobs at an average salary would save the company about $9.4m a year.

Contact's head office has 270 staff and its retail operation has 150 people in Wellington. The two sites are being combined, with retail staff moving into the head office building in coming months. The retail staff look after marketing and call centre management.

Contact also employs 100 call centre staff in Levin and 130 in Dunedin. Although the whole business was being looked at, Contact said it did not expect any "material" cuts at the call centres.

"We will be taking great care that any of the reductions don't impact on the reliability and safety of operations or customer service," a spokesman said. Contact was not considering outsourcing the call centres to other countries.

The changes were being made so the company could continue to offer competitive services to customers, but the spokesman would not say if that meant power prices could be cut as a result. Contact has about half a million customers.

Contact employs 160 fulltime staff at its geothermal power station in Taupo, excluding contractors working on the new Te Mihi geothermal power station.

Labour's finance spokesman David Parker said recent job losses, including those at Contact, 200 at Mainzeal and 100 at New Zealand Post offshoot Datamail, were a "shocking indictment". "It's showing the Government's economic programme isn't working," he said.

Prime Minister John Key said a "minor" restructuring at Contact Energy did not mean a lot for the rest of the industry.

Contact made no formal announcement to the stock exchange about the planned job cuts, but made an "internal" announcement on Wednesday, which then leaked out.

It said it was too early to specify how many and where the jobs would be cut.