Kinleith Mill to halt paper production next year, with 230 jobs on the line

Kinleith Mill plans to halt paper processing next year with 230 jobs on the line.

Workers were called to a meeting at the mill in Tokoroa on Wednesday morning.

The pulp and paper mill is owned by Oji Fibre Solutions, which in September announced it was closing its operation at Penrose, Auckland. Up to 75 workers were affected. Oji said that closure was partly due to high power prices.

Oji chief executive Jon Ryder said in a statement the company was proposing to simplify Kinleith Mill's operations by focusing on pulp and discontinuing lossmaking paper production.

"Therefore, we are consulting on a plan to permanently shut the Kinleith PM6 paper machine and move to a paper import model for our packaging operations.

"Manufacturing paper has become unprofitable. Paper production at Kinleith Mill has suffered significant losses for several years and we see no prospect of the situation improving," he said.

"Due to the complexities of operational changes required at the mill for this proposal, the exact number of potential job losses is unknown at this stage. However, we anticipate approximately 230 roles may be affected."

The mill will continue producing pulp.

The company said it would consult with employees and announce a decision by the end of January 2025.

E tū union is calling on the company to pause the consultation process until the new year, so it can bring in experts and put together a proposal to keep paper-making production in New Zealand.

Union negotiator Joe Gallagher, who was at the meeting, told Nine to Noon the union wanted to engage with local authorities and government, and look at accessing regional funding.

"Essentially the mill is the heart of the south Waikato, Tokoroa was born out of the mill being built and so this would be a massive blow for this economy if we can't keep this production going".

Along with the 230 jobs on the line, contractors would also be affected, he said.

He said the company told workers paper production was too expensive in New Zealand because of high power prices, the cost of logs and aging equipment at the plant.

Staff were upset and angry and didn't feel the company had listened to their ideas, Gallagher said.

No plan to counter 'worrying' trend

Later in the day on Checkpoint Gallagher said the announcement was concerning.

"Our domestic economy is having a really tough time, and this is just another announcement of New Zealand workers losing their jobs and there doesn't seem to be any plan in place to support or stop what's a really worrying trend for New Zealand workers."

He said he had been working with Oji over the closure of the Penrose mill and he wasn't surprised the announcement had happened.

"We had notification on Monday of this impending meeting, and it didn't paint a very good picture. Today was pretty tough for their workforce."

All surrounding members of the community would be affected by the job losses, he said.

"You're talking about doctors, nurses, teachers, coffee shops, supermarkets and the like. So really the whole supply chain, these are good, well-paid jobs in a rural community."

The potential flow on effect had already been seen with the closure of the Winston Pulp mills.

"I think we have to start looking much more strategically about particularly what the government does about how we support these rural communities."

"We've got a regional growth fund. I'm not quite sure what it does. I've been saying I think the government needs to come to the party and look at ways that they can support us, to help these workers."

Gallagher said to support the mill, a good business case needs to be put together.

"What I've asked the mill to do today is to suspend the consultation, if they're actually serious about having a genuine consultation, we need to engage some economists."

"Part of the problem, we're right in the middle of forest down there. Yet the logs are $300 a tonne and then we've got thousands of logs sitting on the wharf waiting to be exported."

In a statement, the mill said it could get paper cheaper from offshore to supply its packaging operations.

Gallagher said being down the road from forests and it not being economical to make paper went back to when Oji first bought the mill from Graham Hart and Co.

"They had an ageing plant and the other mistake I think that was made they only bought the mill; they didn't buy the forest. They don't have a supply of logs; they have to buy those logs."

"Three hundred dollars a tonne, that is a problem, and I don't know how we get around it."

There could be a subsidy introduced for the plant operators that could bring the price of logs down, to make it viable to maintain paper making in New Zealand, he said.

"There's plenty of money that floats around this economy to support big industry around climate change and there's plenty of money out there to support farmers and landlords, but there doesn't seem to be any money out there to support middle New Zealanders who are in these rural communities."

"I just don't accept that it is a good thing that we close down a paper plant, people lose their jobs, then we import paper. It's just not good for New Zealand."

Worker and union delegate Ian Farall said it had been an emotional morning.

"Obviously there was a lot of quite angry people today upset about what the company's proposal was, really hoping and wishing (management) could have done better," he told Midday Report.

"We know it's been declining in the ability to produce compared to what it was in 2010, we're down 80,000 tonnes a year."

He said it was a difficult time for the manufacturing industry.

"What's happened to Winstone Pulp, as well as what's happened to the Penrose Mill... They closed them down and the government didn't seem to be wanting to help or assist in that whole process. It seems the dole queue is going to increase."

Worker has seen it happen before

Mario Van Der Putten worked on one of the mill's boilers. He moved to Tokoroa during high school and started at the mill in 1985.

"A few months later it was 1986 and the very first announcements of cuts here... There were about 3000 people on the site back then, down to about 700 at the moment," he recalled.

That retrenchment continued for nearly 40 years. Of the six original paper machines just one is left, the one now proposed to be shut down.

But Van Der Putten said these cuts were not like what had come before.

"All the other cuts actually resulted in increased production and decreased costs," he said.

"This is different because we're eliminating quite a technical process which is paper-making."

Terry Ray, a former mill worker and past club president of the Tokoroa Cosmopolitan Club, worried about the future of younger workers.

"They're talking 230 workers, that's a lot. A lot of young families," he said.

"There is an older group of guys out there, quite a few of my old mates, and a lot of them were looking to retire next year - so I guess that's good timing for them... But not so much for the young families with mortgages and young kids."

Ray said it was possible for workers to find new jobs and reinvent themselves.

"I've managed to find my footing, got my own business as a mobile computer technician... I've managed to survive, so other people can do it."

In September Winstone Pulp International announced it would close its pulp mill at Karioi and its sawmill at Tangiwai with the loss of 230 jobs.

The mill was the main employer in the central North Island region, with most of its workers living in Raetihi, Ohakune and Waiouru. Locals feared Raetihi would turn into a ghost town with the effect from the mill closure on households.

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