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Cavalier ends spinning at Onehunga – 70 jobs lost

BUSINESSDESK: Cavalier Corp is closing a yarn spinning plant in Onehunga, where about 90 people are employed.

The company is hoping to limit job losses to 70 by redeploying staff to other jobs. The plant, which will close on July 26, is part of subsidiary Norman Ellison Carpets.

"This decision is about reducing over-capacity in the yarn spinning operations that support the group’s broadloom carpet manufacturing operations", the company said.

Norman Ellison will continue to make carpet at its Onehunga tufting plant.

The shares last traded at $1.54 and have declined 21% this year.

The carpet maker said in June that market conditions for its carpet businesses remain very soft on both sides of the Tasman, with volumes and margins under pressure.

It said then that underlying earnings for the current year ending June 30 are likely to be in the range of $3 to 5 million after tax.

If it booked all of the one-off costs from a restructuring plan the company would report a loss of $1 million to $3 million after tax.

But the company is signalling a tax-paid profit in the range of $10 million to $12 million in the 2013 year, when it plans to recommence dividend payments.
 

Comments and questions
3

... and Rob Fyfe wasn't even their manager

Always sad to see good product companies hit the skids...I remember their wonderful ads and always bought their carpets...but that's what happens when NZ products just don't have a competitive pricing edge. At my age I've seen it all happen before and they say lunacy is doing the same thing and expecting different results.

High dollar impacting us again. Local companies losing out to cheap imports. Norman Ellison's tufting operation stays - in part due to the fact it is now tufting nylon wool mixes. Another example of NZ's slide down the OECD wealth ladder and ineffective government policy.