Two works down…

May 19, 2008

There are no surprises in today’s announcement that PPCS is closing its Burnside venison plant in Dunedin with the loss of 138 jobs.

 

The age of the plant was one of the factors counting against it and PP chief executive Keith Cooper said it had been losing millions of dollars.

“Tightening New Zealand and European food safety regulations make the continued operation of export meat processing facilities at Burnside increasingly problematic as all areas on site, even those not used for food processing, must be maintained to specified standards,” Mr Cooper said.

“In addition, the modern blast freezers used for venison processing require a large section of now-obsolete conventional cold storage to be frozen down, which incurs significant ongoing electricity costs.”

Mr Cooper said sheep and lamb numbers were expected to drop by two million in the South Island next year and national deer numbers were forecast to drop from 736,000 to around 500,000.

“The forecast seriously impacts on the ongoing viability of the venison and (lamb and deer) skin processing operations at Burnside,” he said.

It’s been a horror month for employment in Dunedin with 430 jobs lost through Fisher and Paykal’s closure of its Mosgiel plant and a further 50 jobs lost with the closure of Tamahine knitwear.  

The announcement will also be making staff at other freezing works nervous. PP announced the closure of its Orinigi works with the loss of 446 jobs last week  and there may be more to come.

Owen Hembry points out that PP with 24 plants, including Orinigi, has as many plants as Alliance with 8,  Affco (10) and ANZCo Foods (7) combined.

In fact Alliance and Affco, which has previously restructured, have both said they have no plans to rationalise.

So the pain is going to fall mainly on PPCS but as the saying goes, no pain no gain – and what comes out the other end will undoubtedly be a leaner, fitter company.

The cost of redundancies at Oringi – which employs 466 people with an opportunity for about 100 to be relocated within the company – will be about $14 million to $15 million with operating cost savings of about $15 million a year.

A fitter PPCS will have another card to play – a good geographic and product spread.

One of the reasons Alliance didn’t want to merge with PP was the overcapacity of PP works. These closures will change that, but PP may also feel that having bitten the bullet it is in the best interests of the company to continue on its own.


When will it be?

May 19, 2008

In the last few days I’ve received a couple of emails asking me to note dates in my diary for November. I’ve replied to both saying yes, subject to the date not being election day.

 

It is the Government’s prerogative to name the date for an election; not surprisingly it chooses a day which suits it best, keeps that to itself as long as possible to maximise its advantage and isn’t concerned that it might interfere with other plans people may have made.

 

There is a possibility that if the polls don’t improve for Labour they could call an early election. But there is a danger that will be seen as desperate opportunism and count against them. Besides winter campaigning isn’t much fun and farmers and retired people often go overseas for a sunshine fix at that time of year, although Labour may consider that advantages them.

The Herald on Sunday suggests October 18

Commentator Bill Ralston said the election would have to be kept away from the Beijing Olympics, between August 8 and August 24.

Claving and lambing are in full swing at that time too.

October has not been a popular month for elections but Ralston said Labour governments usually plumped for warmer election days after midwinter.

should be well into spring, with daylight saving restarting on September 28.

Schools would have finished the first week of term 4 and people would be positive about the Labour Day weekend starting on Saturday, October 25.

The Hive  agrees that October 18 is a possibility but so too are November 1 or November 15.

 

November 14 is Canterbury Anniversary Day which coincides with Christchurch Show and makes it a long weekend so that is unlikely because too many people would be away from home.

 

So when will it be? Labour secretary Mike Smith  said the Party’s moderating committee is due to meet at the end of June to decide when the ranking will take place. That will be as close as possible to election day to ensure MPs and candidates keep working hard for a place and leave as little time as possible for those who miss out on good places to do any damage.


Labour rushing ETS for politics

May 19, 2008

Matthew Hooton pointed out on Nine to Noon Politics  that Labour’s motivation for pushing ahead with the ETS in spite of growing concerns: it’s political not environmental.

 

The Ministry of the Environment has a budget of $14 million to spend promoting Government’s climate change initiatives and it can hardly spend that saying how wonderful they are but they haven’t actually done anything yet.


Key differences in tax cuts & ETS

May 19, 2008

John Key and National have neutralised a lot of the issues which Labour might have used to attack them. To avoid the accusation of being Labour-lite they need some key (no pun intended) policies to clearly differentiate the party and they’ve got two in tax cuts and the Emissions Trading Scheme.

 

Tracy Watkins says National will trump Labour with a tax cut worth at least $50 for the average worker.

 

Accountants report sheep farmers are facing losses of up to $200,000 in the past financial year so they won’t be worrying about paying tax but many dairy and cropping farmers will. And regardless of individual balance sheets, everyone will gain from tax cuts if they take a bit of pressure off wages.

 

Critics of tax cuts always say they’ll have to be matched by spending cuts, but the tax take doesn’t necessarily mirror the tax rate. The tax take can go up when the rate goes down because there is an increase in productivity.

Key’s announcement yesterday that National’s support for the ETS will depend on six conditions has gained support from business although the Government is not being swayed.

The Herald reports on the conditions and Climate Change Minister David Parker’s response to them:

ONE
Key: The ETS must strike a balance between New Zealand’s environmental and economic interests. It should not try to make New Zealand a world leader on climate change; Kiwis can’t afford to pay the price for that particular experiment.
Parker: The ETS is designed to balance environmental and economic interests. The Government’s recent delay of the entry of the fuel sector until 2011, and extension of the phase-out of free allocation until 2018, are examples of balancing economic imperatives with the environment.

TWO
Key: The ETS should be fiscally neutral rather than providing billions of dollars in windfall gains to the government accounts at the expense of businesses and consumers. National does not think it is responsible for the Government to use green initiatives to swell the Crown coffers at the expense of Kiwis’ wallets.
Parker: The ETS would not result in a surplus of credits for the Government in the short term, and any surplus that might result later depends on New Zealand’s target under future international agreements. The five-yearly reviews of the scheme are the way to take account of that.

THREE
Key: The ETS should be as closely aligned as possible with the planned Australian scheme, with common compliance regimes and tradability. In my second speech as National Party leader, I called for close co-operation with our biggest trading partner on this, and I continue to call for it. Given the Australian timetable for developing an ETS, I believe it’s still possible.
Parker: New Zealand officials are in close contact with Australian officials as both sides develop their schemes. They are very likely to be compatible, but New Zealand’s priority is to design a scheme that is best suited to our strengths and weaknesses, not Australia’s.

FOUR
Key: The ETS should encourage the use of technologies that improve efficiency and reduce emissions intensity, rather than encourage an exodus of industries and their skilled staff to other countries.
Parker: The select committee and the Government are already considering intensity-based allocation within a cap.

FIVE
Key: The ETS needs to recognise the importance to New Zealand of small and medium enterprises, and not discriminate against them in allocating emission permits.
Parker: This matter is under consideration by the select committee.

SIX
Key: The ETS should have the flexibility to respond to progress in international negotiations rather than setting a rigid schedule. This way, industry obligations can be kept in line with those of foreign competitors.
Parker: This has already been achieved, by way of a five-yearly review that is proposed on the phase-out of free allocation.

 David Farrar answers Parker on Kiwiblog.

 

He’s right and Labour has got it wrong. There is nothing to be gained by New Zealand being world leaders on this. We’ll only risk losing businesses to other countries with less rigorous requirements which will have a huge economic and social impact here while at best doing nothing for the environment and potentially making emissions worse.


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