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R&D focus spells end for F&P’s Auckland manufacturing

A research and development focus will spell the end of manufacturing by Fisher & Paykel Appliances in Auckland.

Chinese-owned F&P is spending $5.5 million refitting a building at its East Tamaki site with laboratories and product testing equipment, which will have a capacity of 400 research and development staff – which means another 160 staff might be added.

It will take on 50 more engineers, on top 80 new hires in the last year.

Chief executive Stuart Broadhurst told NBR ONLINE its Auckland facility will close at some point, and F&P is actively reviewing the future of all manufacturing sites, including Auckland.

The Auckland manufacturing facility is 40 years old, he says, and demand is falling for the products it makes – small fridges and chest freezers.

“The platform on which it’s built is beyond maturity, really, and we’re not re-investing in a shrinking part of the market and we’re investing our money in high-end premium, segments like French-door built-in refrigerators, high-end cooking product and laundry, rather than small bar fridges and small refrigerators that we used to make 30 years ago.

“We do not have plans to have a large-scale cutback beyond business as usual in this 12-month period.”

Mr Broadhurst says shareholder Haier, the Chinese whiteware giant, is supportive of F&P’s expansion plans – with ambitions to lift revenue from $1 billion to $4 billion within 15 years – but its investments need to be wise.

“If we aren’t getting the results, we will slow down the investment; if we aren’t growing in markets, we won’t be investing as much in products.”

R&D expansion

In a statement released last night, Mr Broadhurst says its redeveloped facility will house its growing Auckland-based research and development team.

That follows the Dunedin City Council's announcement last week it is spending $2.3 million expanding its central city building because of F&P's anticipated 40% increase in design staff numbers by 2018.

A year ago, the company announced its two-year growth plans included creating 100 new research and development roles in Auckland and Dunedin.

Mr Broadhurst said 80 new engineering roles have already been filled, which will lead to more new products in coming years.

The company launched 70 new products last year.

The redevelopment at East Tamaki should be finished in the middle of this year, the statement says, with dates for Dunedin to be firmed up in the next few months.

Mr Broadhurst says its East Tamaki plan underlines the company's long-term commitment to research and development in New Zealand.

The statement mentioned the word "research" seven times – "manufacturing" was not mentioned once.

Fisher & Paykel was previously listed but was taken over by Haier – previously a 20% shareholder – in late 2012 and de-listed from the NZX.

Comments and questions

Haier and China have now emphatically showed the xenophobic critics like Winston Peters what a bunch of losers they are.

Really? Try telling that to those who will loose their jobs once the manufacturing plant is finally closed down and they are out of a job. Not everyone can be an engineer you know.

Please explain then why nobody else was prepared to rescue F&P?

Well we don't now that, do we? All we know is that Haier were prepared to do it at the price they paid, which may in fact turn out to be far too much. Only time will tell. If the price had in fact been less, others may very have stepped up to the plate. And let's face it, it wouldn't be the first time that the mainland Chinese, who are very new to business, have paid too much for something.

I feel that F&P have lost their edge. A bit like a Nokia. I suspect it is too late to come back from it as well.

F&P lost their edge the day they sold out to China and their product quality went with it. Nowadays they make products that are a shadow of the quality they once were.

That's a ridiculous comment, they only 'sold out' a year or two back and the products haven't had time to be changed. If anything F&P have gone for the high end.

Last year are you kidding??? F&P Management Bankrupted the company with their move from Dunedin at least 4 years ago! They were turning over 1 billion dollars then and owned themselves by the way so ask yourself how well that went. I think if you looked at the transactions that were done you will find some very senior people made a lot of money from that exercise, Plastic parts manufacturing for one. I do believe the products are made to a target level to ensure turnover and to be price competitive. I think reliability isn't an issue but the bar is lower than it was. Product innovation is still there however not enough hard questions are asked of the design team as to the functionality of some appliance concepts.

Agree. Ask anyone with an F&P dishwasher, or dryer, or washing machine that is more than 10-15 years old and chances are it is still working fine while anything newer has bit the dust. If they brought traditional Kiwi manufacturing standards to their products then they might have a more satisfied market.

Time to send in Judith Collins to schmooze things over in China.

Research and development grants worth more than $140 million are being split among 31 high technology companies which operate in New Zealand. ... Grant recipients announced today include some well known public companies such as Fisher & Paykel Appliances, F&P Healthcare, Scott Technology and Rakon, ... - hi tech

travel overseas out of your xenophobic googles

French style fridges and fridge-drawers are very popular with emerging market, read China customers = volume sales at the top end

This is not 1974 when you froze a few dozen hoggets and Jam to last you the winter because supermarkets opened 9-5 Mon to Fri

When any business or department closes down it affects real people, in this case, production staff and masses of labourers. Like it was said earlier not everyone can be an engineer. The highly skilled and trained win this time and the wage earners, family bread winners have lost out yet again in this country.
Jobs have been lost which cannot be a good thing for our economy. A disturbing trend? Or just the way of the world where it is more economical (profitable) to manufacture in Asia..