Tough months ahead in wool
The next six months will be tough for the domestic wool market with international markets shut due to Covid-19, but there is still optimism in the industry.
New Zealand Woolscouring chief executive Nigel Hales said despite the challenges they were pushing ahead with plans to expand their Timaru operation.
‘‘We see the next six months being quite hard, only because the international markets have been shut down.
‘‘A recovery will happen, its just a matter of when.’’
‘‘Wool-related business around the world is now only getting back to work post the lockdown, many of whom are still at partial production,’’ he said.
‘‘This will cause a speed blimp in the supply chain at some point.’’
Stocks of finished goods in many countries were ‘‘cluttered’’ due to stock being unsold when
businesses were placed in lockdown and that would take some time to work through, Hales said.
‘‘The easiest way to describe this is when China was put into lockdown, it was the first week of the Chinese New Year, traditionally a big week when people go shopping.
‘‘Even with Europe, they were coming out of winter and going into summer at a time when one season’s goods were being sold and another season’s stock was coming on to the market.’’
Hales said the 43 staff employed at the South Canterbury branch of New Zealand Woolscouring had all been retained and were ‘‘safe at this point’’ but he was unable to guarantee that into the future.
‘‘While we may need to seasonally adjust our capacity, just like any seasonal based business would do, our preference is to maintain our staff where we can."
And, the operation was planning to go ahead with an expansion which was planned before Covid-19 hit.
The company was adding 5500 square metres of storage capacity to an existing 20,000sqm in Hayes St, Timaru, Hales said.
The new lease would give them a combined storage and handling capacity of up to 50,000 farm bales in Timaru.
‘‘We are increasing our overall capability and reacting to greater demand for our customers,’’ he said.
‘‘This was a unique opportunity to have all our logistics in one place and in purpose-built wool sheds.’’
‘‘We are working on an expansion now.’’
It was expected the expansion would lead to new jobs, he said.
‘‘Over the coming months, we expect to employ some additional staff to help growth in this area.’’
The business supplied handling services for Wools of New Zealand customers who send their wool directly from the farm to the Hayes St storage facility, Hales said.
‘‘This is a very cost-effective option for the farmers and is well-supported by New Zealand’s wool exporters especially if the wool is destined to go to the Meadows Rd scouring facility.
The Meadows Rd operation was running at 75 per cent capacity, he said.
‘‘When seasonally adjusted, the volume of wool being processed is only slightly lower than at the same time last year.
‘‘Given the impact of Covid-19, we are very pleased to be processing this much wool at this difficult time.’’