Criterion falls victim to high dollar

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Fri, 03 Feb 2012 6:05p.m.

Criterion has gone into receivership

Criterion has gone into receivership

By Josh Heslop

The 40-year-old furniture building business Criterion Manufacturing has gone into receivership and it is unclear if it will be able to continue trading, as the company becomes the latest exporter to fall victim to the rapidly rising Kiwi dollar.

Criterion was so committed to manufacturing in New Zealand that it moved all production back to the country five years ago despite the higher costs. Now due to the high dollar hundreds of jobs are on the line at the company as receivers take over the business.

“If we picked up everything today, in the current environment we operate in here with exchange rates and interest rates, if we were operating offshore today we’d be significantly more profitable than we are,” former chief executive Laurie Margrain said back in 2007.

The decision to manufacture in New Zealand has not paid off however and now 180 staff do not know if they have jobs and their union says there is no redundancy agreement.

It is a tough climate for Kiwi manufacturers but the Employers and Manufacturers Association (EMA) maintains this receivership does not mean every manufacturer is in trouble.

“This is an occurrence that has happened very sadly, but let’s face it, some are succeeding spectacularly well despite the situation and some fail, “says Kim Campbell of the EMA.

The receivers, Kordamenta, say they will contact all the affected parties including customers and suppliers as the receivership progresses, meanwhile Criterion says on its website that it is looking forward to meeting customers’ requirements.

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Comments

10 Feb 2012 07:08p.m.

Bill wrote:

Was it the high dollar? I undurstand that the majority of their exports were to Australia. Very little to the other markets. So was it the Dollar or was it the management?

04 Feb 2012 12:51a.m.

Mike wrote:

NZ doesn't have a high dollar. Our biggest trading partner is still Austalia and since about 2000 we have gone from a peak of aroun 97 cents to the Aus $ to 77 cents roughly now.

ie our dollar has significantly weakened.

How much did Criterion export to the USA as their economy is a mess from their social policies starting back with Clinton financing families into housing they couldn't afford, which lead to the housing market collapsing and the house values dropping so many others have fallen from the pack of cards effect. The EU is a mess with social policy spending exceeding revenue with likes of Greece/Ireland, which has lead to bank bailouts and further troubles.

And still, how much does Criterion export to these troubled places who have had their dollars plunge even more than the NZ $?

The NZ dollar is being blamed yet it doesn't stack up. The world has a recession, NZ has a recession, so less people here in NZ are buying the criterion range. Personally I like the Criterion range, have myself or for business purchased 5 desks of theirs as I like the products. But it is the recession more than the NZ $ which has given the company trouble. Recesion, more competition from imports as companies diversify for another dollar at lower margins.

If they could hold on another 18 months then they could do well from the Christchurch rebuild, but people probably want more than reasonable quality functional equipment like Criterion makes. Eg cabinetry companies who made kitchens in lean times also make other cabinetry at lower margins even forgeting imports.

Our export earners are currently doing well, ie just about anyone who exports.