2 Jun 2016

$133m AgResearch restructure gets go-ahead

7:45 am on 2 June 2016

The government has given AgResearch the go-ahead for a controversial major restructure that will cost $33 million more than first proposed.

The research company is downsizing its operations in Hamilton's Ruakura site and Otago's Invermay site, and moving almost 200 staff to two new science hubs in Lincoln and Palmerston North.

A ryegrass cultivar at the AgResearch stand at the 2015 Fieldays.

A ryegrass cultivar at the AgResearch stand at the 2015 Fieldays. Photo: Facebook / AgResearch

The original $100m business case from 2012 was changed after consultation and an Auditor-General report last year.

Steven Joyce at bridge run.

Science and Innovation Minister Steven Joyce Photo: RNZ / Alexander Robertson

The government has approved the latest $133m revamp, with Science and Innovation Minister Steven Joyce saying the company had "presented a strong business case for change".

View the latest business case documents (PDF, 4.1MB)

AgResearch chief executive Tom Richardson said it would self-fund the $133m programme through cash reserves, asset sales and debt.

"The costs are up and different because we've got a very different build program than we imagined in 2011/12.

"We've now got a significant new food science centre, and we've got a much more aggressive Lincoln hub plan which will bring us and Lincoln University and DairyNZ into one facility, which is going to be north of $200m between ours and the university's contribution there."

Mr Richardson said the cost also included support packages for staff to relocate over the next few years.

In total, 199 staff would be asked to relocate - a figure touted by the government as 83 fewer than originally proposed.

However, Mr Richardson said that wasn't necessarily the case, with the final number left in each of the four locations remaining relatively unchanged since consultation in 2014.

He said the number was down as some staff had moved early, as roles turned over they were being refilled in the hubs, and some staff had also left after last year's job cuts.

Around 10 staff had already moved, with agreement on move times reached with another 10.

The original business case was met with anger from locals, particularly around the cuts to the Invermay site, which would see staff numbers drop from 91 as of last September to 35 after the relocation.

Mr Richardson said AgResearch changed its plans as a result of that pressure and had kept the Invermay farm, which allowed a number of scientist to remain there.

It would be talking with staff and arranging details six months before they had to relocate, he said.

"For a lot of our staff, it's far enough out and with today's hurdles still to be cleared we haven't had a lot of staff who've felt compelled to make a move/not move decision. There's no doubt though that it won't work for some of our staff.

"We're realistic, we don't expect every single one of our currently 199 roles will be able to relocate but we'll work on the best outcome for those folks as well."

The staff relocation would be done over the next three-and-a-half years as construction of the hubs was completed.

Major construction was expected to start at Lincoln and Palmerston North later this year.

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