NEW ZEALAND - Fisher & Paykel Appliances (FPA) said Wednesday that it will relocate part of its manufacturing operations to Thailand.
The company will move certain washing machine and clothes dryer facilities currently located in New Zealand to a purpose built facility in Thailand.
FPA cited competition for laundry product supply in the Australasian market from low-cost countries like China, Thailand and South Korea as a factor in the relocation.
The relocation is expected to take place over the next 12 months. The company will produce additional inventory to cover the lead times for the transfer and plant re-commissioning.
Plastic injection molding machines and dies, fabrication equipment, assembly equipment and metal pressing facilities will be shifted as part of the relocation. Initial production in Thailand is expected to begin by March 2008.
Once fully operational, the company expects financial benefits of $10-$15 million annually, at a one-off cost of $20-$25 million. The company also expects to see additional cost savings by sourcing raw material and purchased parts from local vendors. Capital expenditure is estimated at $13 million.
“Most of our competitors supplying the Australasian market do so from facilities in low-cost Asian countries which offer generous manufacturing incentives,” said John Bongard, CEO and Managing Director. “Also the environment in New Zealand for our type of manufacturing operation has deteriorated due to a combination of factors, such as high interest rates, persistently high exchange rates and some trade tariff policies. Our laundry margins have suffered considerably over the past 4-5 years. Without this relocation to Thailand our continued future in laundry design and manufacture would be doubtful.”
The company will cut approximately 350 jobs as a result of the relocation. The cuts are expected after December 2007. The company said it will try to relocate those employees affected by the relocation as vacancies arise elsewhere.
“If we don’t continue to innovate, we won’t survive, but in order to do this, we also need competitive manufacturing facilities. This is what this move is addressing.” Bongard added.