Who is to blame for the Heinz Wattie’s closures – and is this another nail in the coffin of NZ manufacturing, asks Catherine McGregor in today’s excerpt from The Bulletin.
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A long time coming
The fallout continues from last week’s announcement that Heinz Wattie’s is set to close manufacturing lines across New Zealand, at the cost of 350 jobs. The company blames high input costs and shoppers trading down to cheaper brands – but as Jonathan Milne writes for Newsroom, the difficulties can also be traced to the supermarket duopoly. A key, largely unreported turning point came in 2021, when Foodstuffs sharply cut Wattie’s frozen ranges in New World, Pak’nSave and Four Square, replacing them with its own Pams and Value house brands. “When the supermarkets remove your products from their chillers,” Milne notes, “it’s hard to maintain consumer awareness and affection for your brand.”
Meanwhile Heinz Wattie’s revenue was essentially flat for nearly a decade as costs continued to rise, report Blayne Slabbert and Dita De Boni in The Press. Managing director Andrew Donegan said the company had no choice but to act. “If we don’t make these changes now, it’s going to be quite challenging to run the business for the future.”
Workers and growers left behind
For many workers in the firing line, the shock is compounded by the length of time they have spent at the company. Christchurch forklift driver and E tū delegate Kathy Perrin told The Press the average length of service for permanent staff was around 30 years; one employee noted her last job interview was in 1979. The union has also raised concerns about seasonal workers, some with more than 20 years of service, facing redundancy without financial compensation. Perrin told RNZ the factory floor was still in shock. “We could see we were a bit top-heavy and we thought there’d be redundancy, not a plant closure. This is just – it’s traumatising.”
The proposed closures will likely end contracts with 220 Canterbury growers who collectively produce around 36,000 tonnes of peas annually. Minister for regulation David Seymour said red tape around vegetable growing was partly to blame. The government says its regulation-cutting drive has already improved profitability in horticulture – and the RMA replacement will go further. “I wish the new law had been in place in time to save these businesses, but this Government is passing it as fast as any government could,” said Seymour.
Another one falls
Heinz Wattie’s is a prominent name in a lengthening list of multinationals closing their NZ operations, from Unilever in Petone in 2014, to Cadbury in Dunedin in 2018, to James Hardie in Penrose in 2020. Speaking to RNZ’s Susan Edmunds, Simplicity’s Shamubeel Eaqub described a cycle of “hollowing out” of the business landscape that accelerates in downturns: “Every time there’s a recession, it feels like we lose another bunch and then it’s smaller again.”
BusinessNZ chief executive Katherine Rich said that while many smaller food companies were thriving, the threat to New Zealand’s large-scale manufacturing sector was acute. “It’s a factor of globalisation and the fact that this is a very high-cost market to try and manufacture in.” E tū’s Finn O’Dwyer-Cunliffe said the government needed to do more to save jobs and protect local manufacturing. “We’re watching iconic New Zealand brands disappear from our production lines. That’s not good for workers, it’s not good for regional economies, and it’s not good for the country.“
What fills the gap?
As Wattie’s steps back from frozen vegetables, questions are being raised about what will take its place on supermarket shelves. RNZ’s Monique Steele reports that Foodstuffs and Woolworths already import canned and frozen vegetables for their house brands from China, South Africa, Thailand and Italy. Process Vegetables’ David Hadfield warned this creates food security risks: supply disruptions – such as the shipping routes affected by the conflict in the Middle East – leave New Zealand more exposed as it increasingly relies on imports.
A further concern was raised by Tearfund’s Claire Gray, who noted that we have no modern slavery legislation, unlike the UK and EU. New Zealand “runs the risk of becoming a dumping ground” for food produced in slavery conditions that is locked out of markets with tighter regulations, she told RNZ.
