Editorial: who benefits when jobs disappear?

GEORGE HEARD/Stuff.co.nz

Silver Fern Farms is planning to close its plant in Fairton, near Ashburton - which would make 370 people redundant.

EDITORIAL: When the Overseas Investment Office approved Chinese firm Shanghai Maling's purchase of 50 per cent of iconic New Zealand firm Silver Fern Farms in 2016, it was said by then Minister for Land Information Louise Upston that the office was "satisfied that the investment will be of substantial and identifiable benefit to New Zealand".

Bill English, then Finance Minister, agreed. 

Silver Fern Farms chairman Rob Hewett described it as a great day for the company and for New Zealand. 

The Ashburton job losses have occurred as sheep farming continues to decline in New Zealand.
BRITTANY PICKETT/FAIRFAX NZ

The Ashburton job losses have occurred as sheep farming continues to decline in New Zealand.

Shanghai Maling paid $261 million for half of Silver Fern Farms, in a deal that was approved by 82 per cent of shareholders. Everyone seemed happy, from the Government to the shareholders to the new co-owners, but rumours were already swirling that the Fairton sheep meat processing plant near Ashburton would be closed.

READ MORE: Hundreds of meatworks jobs on the chopping block

It has been reported that Silver Fern Farms told Shanghai Maling that it intended to close Fairton but did not tell its own shareholders nor its workers. Media were also assured that there were no plans to close any of the firm's plants. 

Silver Fern Farms CEO Dean Hamilton.
GEORGE HEARD/FAIRFAX NZ

Silver Fern Farms CEO Dean Hamilton.

Rumour turned into solid fact on Wednesday when 370 staff were called to a meeting and told they would lose their jobs. The meat processing plant will close and only the pelt house will stay in business. 

This decision raises many questions, which will hopefully be answered in time. Some will be inclined to ask how New Zealand benefits from an investment decision that is followed by 370 jobs disappearing. Many will also wonder why Silver Fern Farms management could not have been as open with local workers, shareholders and media as it appeared to have been with an overseas company. 

A 2016 Infometrics​ report on Ashburton District showed that meat processing is the second-biggest employer behind dairy farming, providing 1317 jobs or 6.9 per cent of the total. The closure of Fairton will take roughly a quarter of those jobs from the district. The bigger picture is the steady decline of sheep farming in Canterbury and the rise of dairying. 

Shanghai Maling purchased half of Silver Fern Farms in 2016.

Shanghai Maling purchased half of Silver Fern Farms in 2016.

In a media statement, chief executive Dean Hamilton said that Fairton had gone from processing more than 1 million lambs prior to 2010 to fewer than 500,000 lambs last season. Some processing will continue at Pareora near Timaru, where the company has recently boosted capacity. Work may also be available in Belfast near Christchurch and in Hokitika. 

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It is understandable that in an election year the Fairton closure will be seen by some as symptomatic of global political trends. In the immediate aftermath of the announcement, it was NZ First leader Winston Peters who made the biggest splash. His media release spoke of the "hollow denials" of "cowardly managers" while workers and families spent the past year on tenterhooks, waiting for bad news. 

A populist political dimension is inevitable. The Fairton closure could be made to fit an economic nationalist narrative that has already unfolded in the United States and the United Kingdom. Whether Peters can get as far with that kind of rhetoric remains to be seen, but there is no doubt that many in Ashburton will wonder what benefit this investment brought them. 

 - Stuff

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