By James Wells
AUCKLAND: To further reduce costs within its business, Fisher & Paykel chief executive officer, John Bongard, announced today that the company will open a procurement office in China later this year.
Following significant rises in oil and steel, the New Zealand based whitegoods manufacturer will use the Chinese office to provide further efficiencies for the business.
“We need to accelerate our efforts if we are to expeditiously offset the full negative impact of the raw materials price hikes,” Bongard said at the company’s annual shareholder’s meeting in Auckland this morning.
“These ongoing uncertainties have required us to continually review all procurement options, internally, within New Zealand and off shore. We currently make in-house, many plastic components for the finished products we produce. There is a growing opportunity to purchase some of these components cheaper, from emerging, low cost countries like China.
“We see China as a shopping warehouse, where we can purchase good quality components considerably cheaper than we can either make ourselves, or purchase locally.
“To facilitate this further, we will be opening a procurement office in China later this year. This will enable us to source local components and tooling at a considerable cost saving to the company.”
Bongard sees the move to open the Chinese procurement office as an initial step in securing contacts and knowledge, which will lead to further areas of savings.
“In addition to our normal Cost Out activities, which include switching material sources to low labour countries such as China, we are undertaking a full review of all parts of the business We have already identified further opportunities to make significant savings, through improved design and labour efficiencies. Unfortunately, the inevitable consequence of this is job losses.
“This financial year to date, we have retrenched 41 people in New Zealand at a one-off cost of $1.5 million. This structural review is ongoing.”