Cavalier Corporation is proposing to restructure its manufacturing operations in Napier, Whanganui and Christchurch.
- Consolidation of woollen yarn spinning operations (currently in Napier and Whanganui) to a single hub at the Napier plant
- Down-scaling of the semi-worsted yarn spinning operation in Whanganui
- Relocation of the felted yarn operation from Christchurch to Whanganui
- Closure of the Christchurch plant
It is estimated this will result in approximately 65 net job losses across the Group, however this cannot be confirmed until the staff consultation process is completed.
The consolidation of the Group’s yarn spinning operations will significantly reduce the cost base of all yarns produced allowing the business to be more efficient and competitive. This aligns with the overall strategic plan and will aid in returning the business to acceptable levels of profitability.
The estimated cost impact on the 2015/16 financial year will be in the region of $4 to $4.5 million after tax, mostly in the form of employee termination benefits. It also includes costs to support affected employees and relocate plant and equipment.
The benefits that will flow through in the 2016/17 and 2017/18 years are expected to be significant, with the payback for the restructuring of yarn spinning expected to be slightly over one year.
Chief Executive Officer
For and on behalf of the Board of Directors