New Zealand Power Company axes 100 jobs to save $40M

New Zealand's biggest listed electricity company has just reached the end of a $2 billion spending programme on new power stations

The power plant at Contact Energy’s Otahuhu Power Station Photo/ Greg Bowker

contact energy

 Contact Energy, which is owned by Origin Energy in Australia, says electricity demand remains weak, and shows few prospects of growth. Electricity Authority statistics show that two-year contracts for wholesale power, are down 26 per cent on current prices. CEO, Dennis Barnes is reported to have said that investors expected a better performance and returns in the near and long term.

The Labour Party says Contact Energy’s decision is another reason why the Government should abandon its plan to partially privatise its power companies.

third_Clayton_Cosgrove_(Photo_LABOUR_PARTY)State-owned enterprises spokesperson Clayton Cosgrove said on Wednesday his party had predicted that this would happen some time ago.

 “This was a state-owned asset, started off majority ownership in New Zealand. It didn’t take long – I think it’s now 70 percent or the overwhelming majority is foreign ownership. These people don’t invest for charitable purpose – they want money. In a flat demand situation how do you do that – you restructure. You either hike your price or knock down your cost. That means human beings and jobs.”

 Mr Cosgrove said there is no sense in the Government’s partial privatisation programme when the electricity market is flat.

Debra WattesIs renewable energy going to be the down fall to the countries green initiative? Many New Zealanders of both households and businesses are heading towards renewable energy being either solar or wind. Will there be more job losses, and if it’s going to create unemployment, just how sustainable is it, really? Our earth maybe better off, but is it worth putting families on the street? How many more companies will fall?

A spokesman said the losses would be enforced by the end of the financial year on June 30, and would be across board. There are 65 plans in total which were outlined by chief executive, Dennis Barnes, at a management meeting on Tuesday night. Workers were informed on Wednesday and union representatives heard about it in the media.

“There’s no particular area” the company spokesman said “We are looking at efficiencies across the organisation so we can remain competitive. Safety will remain a priority, and no cuts will jeopardise maintenance or safety,”

Contact’s headquarters are in Wellington, they have four power stations in Central Otago, Taranaki, Taupo and Auckland, and call centres in Levin and Dunedin.

The fall results from softening industrial demand for electricity following the drop of production at the Tiwai Pt aluminium smelter and the closure of part of Norske Skogg’s Kawerau pulp and paper mill. There is also weak residential and commercial demand for power.

There have been other announcements, in New Zealand this month, 192 jobs at Summit Wool Spinners in Oamaru will be lost. Oamaru is a small town that has around a 9000 population. The job losses will constitute a major impact economically for the small town. Further news of about 200 workers at Mainzeal New Zealand, will be laid off in the wake of the construction firm’s receivership. There is chatter that the government may help keep Mainzeal afloat as they’re an important company to keep the New Zealand construction industry competitive.

Contact announces its half-year results next Tuesday.

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