The Ruapehu district has been dealt a huge blow - as Winstone Pulp International confirms it will close the two mills in the region.
Over 230 workers will lose their jobs, and mayor Weston Kirton is 'gutted' the Government couldn't broker a deal and save the mills.
Infometrics principal economist unpacks the economic impact of this announcement.
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Now we've been talking about the Real A Pair Who District, the fact that it's been dealt a huge blow with today's announcement that Winstone is going to close two mills in the region. Around two hundred and thirty workers are set to lose their jobs and the mayor Western Curtain is gutted. The government wasn't able to broker a deal.
This is a big hit, Heather. I've had ups and downs, as you know, but this is a big hit. I'm really taking a personally to these companies seem to be milking the system and then when it gets to you know, paying it back to the communities or if not, these businesses that they're working hard on our behalf. It just doesn't add.
Up infora metrics principle Econos. Brad Olson is with us.
Now, Hey, Brad good evening Brad.
What proportion of the economy and the re A Pair Who were these two mills?
Look, it was a substantial proportion. Around about three and a half percent of Real pay Who District's entire workforce was employed at the mill, So it is a substantial hit. Now, of course it's not just that three point four four percent of total employment directly, but it's all the other businesses in real pay Who that supported those meals with various you know, supply and similar So there is a much wider challenge coming through I think important as well. When you look through the numbers, we can see that already over the last year, up until June, there was a two point three percent fall according to our analysis sative metrics of fuel jobs and all pay WHO. So those jobs figures were already coming down. It's tougher now because of the mill closures. You've of course had the uncertainty because of Real pay Who, Alpine lifts, what's been happening on both sides of the mountain. So an already very difficult situation has become even more difficult with those closures. So a big hit to the community and I sort of think it's one of those areas where Real pay Who is likely one of the hardest hit parts of regional and rural New Zealand.
At the moment.
Yeah, I mean, you've got this, You've got the Tolareo Chateau, you've got the ski fields. At the moment, how does it feel to you? Does it feel like this is a place that's a bit stuffed.
I wouldn't I wouldn't say that. I mean, there's still a lot going for the area, but it's quite clear that the operating environment is a lot more differ I mean, it's I think also worthwhile bearing in mind that we do see some of these challenges cropping up across different parts of the country. Real pay who's obviously sort of the post child and really in the thick of it at the moment, but it highlights that where you do have some of those sort of bigger anchor employers in particularly provincial New Zealand, you know, the change in fortune for that anchor, provided that anchor employer, can have a big influence on the wider economy. I think the challenge all the difficulty here is that although you've seen electricity wholesale prices that have come back towards sort of much better positions over the last week or two, hydro levels have come up in similar the fundamentals those for the mills just didn't stack up anymore. You've got the potential for those energy costs despite higher but more importantly commodity prices, particularly for forestry and wood based products, just aren't in a sustainable area. At the moment, and so if you've got low prices that you're getting in high costs that you're having to pay out, those numbers just don't start to stack up. From a this point of view, do you.
Think this will be the end of the closures because of energy costs?
Not necessarily. I think there's a lot of businesses, particularly in that sort of forestry based area making sort of wood based products that will still be considering. Yes, you might not have those sort of super high rocketing up prices like you had a couple of weeks back, but equally the risk of that hasn't necessarily gone away. If you have again drier conditions as we move through the rest of this year and the hydro lakes sort of you know, we keep using the water and there's not quite as much that comes and replenishes it. If there's still that sort of gas issue that comes through, I think there's a lot of businesses that are probably going is this just one off? For more realistically how many more times might it come through? And can they last through? I mean there are some big operators as well up in the far North. They already lost energy of course because the pylon fell over so there's a lot I think that are probably going. Actually, the business operations are a lot more risky, a lot more costly, and of course that's got real implications for people, not only if they lose their job, but even just over the last couple of weeks, everyone who's been left in limbo. It's a really tough environment out there for a lot of people to.
Right it is. Hey, Brad, thank you very much, appreciate it. Brad Olson, infa Metrix Principle Economists.
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