What the media, and politicians for that matter, have failed to grasp is the flow-on effect the cuts will have. Support industries in Kawerau and the Eastern Bay of Plenty will have to downsize significantly. There are several engineering and construction firms in the region who rely on the health of NS and the other tenants at the Tasman Mill. With this in mind, the job losses will be well in excess of the 120 set to go at NS.
Carter Holt Harvey (CHH), who also operate at the Tasman Mill, supply NS with pulp for the manufacture of newsprint. With the downsizing at NS, demand for pulp from CHH will fall 20%, at the moment NS constitutes 40% of CHH’s demand. As a result, CHH will be forced to downsize as well. This will push job losses higher still.
The Tasman Mill is the second largest industrial power user in New Zealand. The Mill is supplied by an on-site geothermal power station. With a decline in production at NS and CHH there will be reduced demand for power. This may result in job losses at the power station (which is owned and operated by Mighty River Power by the way). Again, this would push job losses higher still.
These job losses will cut a gash in the Eastern Bay of Plenty economy. The Mill is the largest single employer in the region and the source of many of the regions middle-income jobs.
Those affected by the downsizing, and the region as a whole, are crying out for government support. However, as of today, the government has failed to respond with anything substantive other than “everything will sort itself out” and "Biofuels! Biofuels!", despite his government cancelling biofuel requirements. This response fits well with the government’s non-existent strategy for the manufacturing sector and their apathy towards provincial economies. Oh, and I’m sure their response has nothing to do with the Mill workforce been entirely unionised and nothing to do with their 50 year history of union activism.
David Cunliffe spoke to Morning Report on the issue and, in contrast with the government, discussed solutions including easing volatility in the exchange rate, thus making conditions more favourable for export. The contrast between Cunliffe and the government (and Cunliffe and his colleagues) could not be more stark. At least the people of Kawerau and the Eastern Bay of Plenty know where to place their vote in 2014.