The Whakatāne Mill will close and just over 210 staff will be made redundant, most by the end of June.
Management at Whakatāne Mill Limited (WML) today informed staff at the Whakatane Mill that the company has decided to proceed to close the mill.
In a media statement this afternoon, it said there was no buyer and no viable option was found from the consultation process, and the decision was reached with a heavy heart.
The mill employs just over 210 staff and has, for more than 80 years, produced paper and packaging products, mostly for export.
However, the volumes produced were "modest" by global standards, according to the company's general manager, and their costs-per-unit can no longer compete.
The company will stop production on June 21 and then begin the decommissioning of the plant, with an expected final closure date of June 30.
General manager Juha Verajankorva said it was a "very tough day for all of us".
Verajankorva said all staff at the mill would be made redundant, with most staff completing their roles by the end of June. A small group would be retained to complete shut down and decommissioning work.
"We will work to do the best we can by our people and the community of Whakatāne and the Bay of Plenty as we complete our decommissioning and closure of the plant".
He said they would continue to work with union representatives and other agencies to support staff through the redundancy process.
A number of options are being explored for both the plant and the site, but no decisions had yet been made, he said.
He said the management was grateful to all staff members who had worked hard over many years, and contributed to the consultation process.
"We have explored several options in terms of considering how we might have been able to continue operations, but the economic reality of our position must be faced."
The closure marks the end of a significant production business in Whakatāne and the Bay of Plenty, and a further loss of capacity for New Zealand's paper production and exports.
The decision by parent company SIG Combibloc AG (SIG) to source its Liquid Paper Board from a lower-cost provider has meant the company would lose its major customer, accounting for 80 per cent of its sales, he said.
"This loss of customer, combined with the serious challenges that the operation has faced for some time, means that the operations are no longer viable.
"It's very tough, but SIG's decision is understandable, given the circumstances and the reality that we cannot compete with suppliers elsewhere. We accept that further investment in the business is just not feasible."
The mill had been producing paper and packaging products for more than 80 years while faced with the challenge presented by large-scale, new production sites, processes, and facilities overseas, for a long time, he said.
He said this "eroded" the competitiveness of their products.
E tū spokesman Raymond Wheeler said the announcement of the closure is "devastating" for local industry, including businesses like scaffolding and engineering.
"We've just had the economic impact of the Whakaari (White Island) eruption and Covid-19 on Whakatāne's tourism industry to contend with, and now the region has been dealt this blow.
"It's an enormous hit to the regions and to the eastern Bay of Plenty."
Raymond said job opportunities in the area are limited, and emphasised the urgency around the Government's work on an Industry Transformation Plan (ITP) for the forestry and wood processing sector, if local manufacturing was to survive.
First Union transport, logistics and finance secretary Jared Abbott said they were inviting potential buyers to come forward to make the most of the existing skills and infrastructure.
"There are opportunities in the industry and there is an important role for Government to play in securing the wood supply chain and increasing our manufacturing capacity."