21 Oct 2013

Future of Rotorua sawmill plant uncertain

10:23 pm on 21 October 2013

About 120 workers at a Rotorua sawmill still don't know if they will have a future at the plant which closed on Friday.

The receivers of the Tachikawa sawmill says they're still trying to assess it's future.

Brendon Gibson from KordaMentha said on Monday they are continuing to get a better understanding of the business so it can be sold and this will take some time.

He says workers will be paid on Tuesday, but there is no certainty after that and, at this stage, there is no more work for them and no resources to keep paying them.

Mr Gibson he met with FIRST union officials on Monday and says he will continue to to talk to them over the next few weeks. He says the business had been running down for a while and has no log supply.

Brendan Gibson says the mill's owner had tried to raise money to save it, but there just wasn't any interest. He says Tachikawa Forest Products owes millions of dollars to banks and suppliers, although he is still unable to put a precise figure on the debt.

Mr Gibson says he wants to sell the entire business which has been struggling for some time.

"It's run out of cash, run out of working capital. The shareholder has been trying to, as we understand it, raise further capital. The aim for that was the end of September. He wasn't able to do that so, ultimately, he had to ask the banks to appoint a receiver."

Brendon Gibson says the mill is still owed some money from products it has sold and he hopes to find a buyer for $3 million to $4 million worth of processed wood.

Rotorua's newly elected mayor Steve Chadwick and local MPs were also to meet with union officials on Monday. Ms Chadwick says her first priority is to support workers who have been on considerably reduced hours in the past three weeks and will need help paying bills.

MP for Waiariki Te Ururoa Flavell says he's not overly optimistic that the sawmill can be saved. He says the main focus is to make sure the workers get the best support possible.

"It's in an industrial area, it's a running mill, there were orders from what we can gather but it's just simply that there wasn't enough working capital to be able to cover the costs that were needed immediately."

Mr Flavell says he started hearing about a year ago that the company was having difficulties.

Industry review

Labour Party leader David Cunliffe says he wants an urgent review into the forestry processing sector following Tachikawa's failure.

However the National MP for Rotorua, Todd McClay, says failure is not representative of the industry and other companies in the region are doing quite well.

Economic Development Minister Steven Joyce says a review is not needed and points out sawn logs and processed products are one of the strong growth areas in New Zealand exports at the moment.

"That doesn't mean in any industry that there won't be a particular company that has difficulties from time to time, and it's very unfortunate what's occurred here."

Mr Joyce says he can understand the concern the workers feel, but it is important everyone give the receivers the opportunity to try to salvage the company as a going concern.