Price hikes predicted
A merger of Cavalier Wool Holdings and New Zealand Wool Services International’s two wool scouring operations would create a monopoly that would use its market powers to hike prices as much as 25 per cent, says carpet maker Godfrey Hirst. The Commerce Commission on Friday released its second draft determination on the merger, maintaining its view that the public benefits would outweigh the loss of competition. The regulator considered the biggest constraint on prices from a merged business could be scours in Asia, especially China, and cited the experience of Australia, where scouring plants dropped to three in 2009 from 25 in 1995, while volume plunged to 54,000 tonnes of greasy wool, or 14 per cent of total production, from 600,000 tonnes, or 82 per cent, in 1995. “The commission also recognises that the Chinese scouring industry poses a significant long-term competitive threat to the
The Business Herald New Zealand Steel’s blue-collar workforce has agreed to forgo annual bonus payments during unprofitable years to allow the Auckland-based unit of ASX-listed Bluescope Steel a fighting chance as it seeks A$50 million ($55 million) in annual savings.
The two-year deal also sees the workforce take just a 1 per cent pay increase over two years and was “a very good outcome” from a collaborative process, said NZ Steel chief executive Andrew Garey.
“It [the new contract] wasn’t due ‘til next May” and the early resolution reflected a recognition that “the business was facing a pretty dire scenario”.
Bluescope announced in August that earnings before interest and tax from New Zealand operations sank to a loss of A$30.3 million in the year to June 30 from a A$73.6 million profit the previous year, and that the company was seeking “gamechanging” restructuring in both its Australian and New Zealand operations to combat the impact of low global steel prices.
The Engineering, Printing and Manufacturing Union announced last week that it had reached a new employment contract that would “allow the company to focus on becoming sustainable and resilient for the future, protecting jobs and the steel-making industry in New Zealand,” said EPMU organiser for NZ Steel Joe Gallagher.
The two-year deal “gives the company certainty about its costs and ensures good job security for the workers”, he said. “It also helps NZ Steel achieve its goal of A$50 million in sustainable savings.”
The company is still seeking to cut as many as 100 jobs in both its blue and white collar workforces which operate the Glenbrook steel mill, the Pacific Steel operation (bought from Fletcher Building last year) and ironsands exports.
It is also renegotiating with suppliers and improving industrial processes to achieve efficiencies.
The company was targeting between A$20 million and A$25 million in savings from workforce changes, with the new collective agreement delivering around half that and further restructuring expected to deliver the other half, Garey said. — BusinessDesk