28 Jan 2017

US tariffs on Mexico could hurt Fisher & Paykel

7:13 am on 28 January 2017

Punitive tariffs by the United States on Mexico could rebound on a major New Zealand company, according to its managers in Auckland.

Fisher & Paykel Healthcare's Lewis Gradon is stepping into the company's top job after Michael Daniell's 30 years in the role.

Lewis Gradon Photo: SUPPLIED

US President Donald Trump has talked of imposing a 20 percent tariff on Mexican exports to the US as a way of making Mexico pay for a wall being planned for the US-Mexican border.

Since that tariff idea was first unveiled, the White House has back-pedalled slightly, saying it is an option, not a proposal.

But the mere possibility of a tariff has hit the New Zealand firm Fisher & Paykel Healthcare, which manufactures goods for the American market in the Mexican town of Tijuana.

News of a possible tariff caused its shares to fall 3.06 percent yesterday.

The company has indicated it is working on options to deal with the problem.

The company's chief executive, Lewis Gradon, has now said an option would be to use its Mexican plant to supply the rest of the world.

The factory in Auckland would then be used to fill the American market.

Mr Gradon admitted this would raise costs for the company.

"We've got two plants, one in New Zealand and one in Mexico. We have the capacity to supply the United States from New Zealand if that makes more economic sense," he said.

Fisher & Paykel Healthcare produces devices for treating sleep apnoea, which is a breathing disorder connected with snoring and deprives up to 2 percent of the population of a proper night's rest.

It also manufactures hospital humidifiers.

The company's Mexican difficulties follow record profits announced last year.

It began producing in Mexico in 2009, for the US and Canadian markets which provide half its revenues.

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