A council-owned roading company in Tararua and Hawke's Bay headed for liquidation, putting more than 200 jobs at risk, will have a huge impact on the region, the Tararua mayor says.
Infracon board directors yesterday recommended the company be put into liquidation, leaving at least 210 employees in Palmerston North, Woodville, Dannevirke, Waipukurau and Hastings with uncertain futures.
Interim Infracon board chairman and Tararua District mayor Roly Ellis said several factors had led to the recommendation.
"Infracon has had losses for the previous three years and the cash flow position has meant that the company cannot continue to trade as it has been . . . the long-term prospects for Infracon remain extremely difficult and forecasts indicate continuing losses for the next two years," Ellis said.
"After receiving a letter from its bank, withdrawing financial support from Infracon, further negotiations by the interim board and the bank had been unable to resolve the situation."
Ellis said the move would have a huge impact on the region.
"Anything like this always has impact on the district, like the meatworks some years ago. Locals were very supportive and we worked our way through it.
"It's never going to be easy," he said.
"We are working as hard as we can to get employment for these people. I don't think people will have to move, with any luck, but obviously every person's situation is different."
The board had put out feelers to businesses in the community to see if anyone could help out and an assistance hub for employees would be held next week, Ellis said.
Tararua District Council chief executive Blair King said the council would be undertaking a review to determine if staff could be employed directly by the council, given that the work still needed to be done.
While staff had concerns over being paid next week, King said that the preferred liquidator, who was yet to be approved by the court, saw no reason why staff shouldn't be paid.
Redundancy for employees would include "first preferential treatment" of just over $20,000, and the rest of redundancy would be treated as ordinary credit, King said.
Ellis said Infracon did not owe any creditors and was "up to date".
The Infracon board had considered selling the company without going into liquidation but "no companies were prepared to pay anywhere near enough to sort the situation out", Ellis said.
"There's been five years of losses and there were more losses forecast in the next two years . . . to restructure there was going to be a capital expenditure of at least $2 million.
"To restructure the staff throughout the whole of Intracon has been worked out to be about $2.5m."
The board had spent several hours trying to determine whether or not to hold on to the company, Ellis said.
"We've spent a lot of long hours but we have called in really good advice in our situation, it hasn't been down to whim. It was a shock when we were sent the bank letter," he said.
"The whole board can agree it's an extremely bad day, we've sat here and given it our all behind the scenes to try to put together some sort of deal, but you have to be extremely prudent and pragmatic," Ellis said.
An assistance hub for employees will be held at Woodville next week from Tuesday to Friday, 10am to 2.30pm, with job registers, CV assistance and appointments with Work and Income would be available.
- Manawatu Standard
If you had a choice, which would you prefer on Christmas day?Related story: Sun takes a Christmas holiday