Radio New Zealand - Te Reo Irirangi o Aotearoa

Kawerau mill's production to be halved

Updated at 10:32 pm on 10 September 2012

Norske Skog has confirmed it will halve production at its Kawerau pulp mill in eastern Bay of Plenty.

The Norwegian company says demand for newsprint is falling and unfavourable exchange rates are making large-scale export to Asia unprofitable.

The announcement was made to 290 employees at the Tasman Mill on Monday morning and discussions about job losses will begin early in October.

Norske Skog says one of its two newsprint machines at the mill is likely to be closed in early 2013, but the number of jobs lost will not be clear until employees are consulted.

General manager Peter McCarty says the mill will continue to produce newsprint for Australasia and the Pacific Islands.

The Pulp and Paper Workers' Union represents about 150 workers at the mill, while the Engineering, Printing and Manufacturing Union represents about 60.

Tane Phillips, a spokesperson for the Pulp and Paper Workers' Union, told Radio New Zealand's Checkpoint programme on Monday workers are sad and angry at the situation.

Mr Phillips says most are in their 40s, so to get future employment in the area will be very hard and many are already talking about moving to Australia.

The union says 120 jobs were cut the last time a machine was shut down in 2006, while the EPMU expects the number of losses this time round will be substantial.

Kawerau mayor Malcolm Campbell says the closure is a step backwards as far as economic development for the region goes.

Mr Campbell says if 100 people were to lose their jobs, the flow-on effect would be worse and he is not sure what the future holds.

Listen to Checkpoint interview with Tane Phillips

Political reaction

The Maori Party MP for Waiariki, Te Ururoa Flavell, says it is bad news for the town and for workers who now face the prospect of losing their jobs.

National MP for Rotorua Todd McClay acknowledges the move will affect a number of families in the wider area.

However, he says in the long term, he is optimistic there will be employment in Bay of Plenty for those who lose jobs at the Tasman Mill.

Labour Party leader David Shearer says Monday's announcement follows a series of job cuts around the country and is urging the Government to do more to create jobs

Mr Shearer says Norske Skog has complained about the impact of the exchange rate on its business - yet the Government is not prepared to consider any policy changes to help bring down the value of the New Zealand dollar.

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