The first Level 4 lockdown hit big manufacturers hard. But when one came up with a plan to allow plants to stay open safely, the Government wouldn’t listen
Last year, after New Zealand came out of our first Covid-19 lockdown, Tony Clifford went to the Government with what he thought was a pretty good idea. An idea which might save manufacturers millions of dollars if we went back into Level 4.
Clifford, managing director of big forestry and wood products company Pan Pac, proposed a Covid certification system.
Government would draw up a set of standards which a manufacturer had to meet to operate under Level 4 lockdown. Companies would be audited independently and if they passed, they could stay open through lockdown. Think of it like a Covid WoF for factories.
“I advocated for it strongly,” Clifford says. “But there was no appetite at all.”
Once New Zealand went back into Level 4 lockdown this week, Pan Pac had to shut down its whole operation.
Clifford says he approached a range of government agencies with his accreditation plan, including the Ministry of Health and the Ministry of Business, Innovation and Employment.
He also got in touch with ministers, including Forestry Minister Stuart Nash, who also has the economic and regional development portfolio.
“Government basically told me there wouldn’t be another Level 4, so we didn’t need to worry.”
– Tony Clifford, Pan Pac
“I said: ‘Why not prepare for the future?’ They basically told me there wouldn’t be another Level 4, so we didn’t need to worry.”
It cost Pan Pac $45 million when it had to shut down operations during the last Level 4 lockdown, Clifford says, although the company recovered about half of that when prices lifted.
But the company also let down local and international customers, many of which are part of essential supply chains. Housing and infrastructure projects, for example.
Now it’s happening again.
“I was always fearful another lockdown would occur and my gripe is we lost a full 12 months where we had the opportunity to put in place a regime to prepare for it.”
Clifford says managing risk isn’t new for wood manufacturers – they deal with factors like high voltages, natural gas and chemicals all the time.
And some of Pan Pac’s plant is highly automated, meaning staff don’t need to be in close contact with each other. Equipment like loaders have only one person in.
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Even if Pan Pac could operate at 60-70 percent, it would be a massive improvement on being closed altogether, Clifford says.
“We could have been certified against any standard, but there was no process in place for businesses to be assessed.
“Government didn’t want to put resources into it, because they said it wouldn’t be needed.”
Just stay home
Level 4 isn’t about which plants can operate safely, says an MBIE spokesman, but about people staying home as much as possible.
“Having non-essential businesses operating during Alert Level 4 unnecessarily increases the odds of transmission with workers moving in an out of their home bubbles, connecting bubbles and therefore increasing the potential chain of infection.
“For this reason, during Alert Level 4 only essential services are allowed to operate, this is to reduce the risk of further transmission in the community.
Making NZ ‘unreliable and expensive’
Catherine Beard, executive director of Manufacturing NZ and Export NZ says there are other companies like Pan Pac, which could gear up to operate safely in Level 4, but don’t get the chance because they aren’t deemed essential by Government.
“It costs them many millions per week to shut down, although often they have a highly controlled health and safety regime in place – registered to deal with chemicals, for example – and would even create a special worker bubble if they needed to,” Beard says.
“The cost of a shut-down for those companies is disproportionately high and they are working in environments they can control very precisely.”
The more often New Zealand companies are forced to shut down, the harder it is to remain credible in the international market, Beard says.
“Manufacturers often have export customers waiting, and particularly in this environment with a lot of shipping interruptions, if you miss a shipment it’s a big deal.
“New Zealand doesn’t want to look like a country that’s unreliable and expensive and give[s] our international customers a reason to drop us.”
A dire housing situation getting worse
Julien Leys, chief executive of the Building Industry Federation, is frustrated at the ramifications for the construction sector from the latest Level 4 plant closures.
Last week, before any thought of a lockdown, Leys went on RNZ’s Nine to Noon show and described the situation for the building industry as “as bad as it gets” in terms of shortages of construction timber and other building supplies.
It meant many of the 40,000 or so consented homes New Zealanders are desperately waiting for won’t get built anytime soon, he told RNZ.
That was before the new Covid outbreak. This week, the latest Covid outbreak has shut down logging operations, sawmills, cement factories and manufacturing operations, perhaps for three days, perhaps for a week, potentially for far longer.
‘As bad as it gets’ for home building just got a bit worse.
There are government exemptions which allow New Zealand Steel’s production facilities, Tiwai Point’s aluminium smelter and the Methanex methanol plant to stay open under Level 4 lockdown, Leys says. Why can’t exemptions be given to other production facilities that can operate safely.
“We need to consider what other materials we need to produce, for example structural timber,” he says.
The new Red Stag cross laminated timber plant in Rotorua, for example, is highly automated, and can operate with a minimum number of workers, he says. Could that not be allowed to keep operating?
“I wish there was something we could do, we are so far behind the eight ball,” Leys says. “The delays are because of a shortage of materials and people, and the Covid shutdowns just mean the delays are extended.”
Clifford says other countries treat the forestry sector as essential.
Steel is fine, cement is not
Meanwhile, Fletcher Building is also left wondering why its Golden Bay Cement works can’t get a Level 4 exemption. The Government says exemptions to steel, aluminium and methanol are because the time and difficulty to turn the plants off and on again makes shutdown uneconomic.
But the same could be said for cement too. It takes three days to wind down production at Golden Bay and the same amount of time to get the lines up and running again.
Fletcher Building chief executive Ross Taylor says the company will need skeleton crews on site this week to turn the plant off, and would be keen to see some sort of exemption applied for his company too.
“We know from previous experience we can continue to operate safely and are seeking guidance from the Government on this situation,” he told Newsroom.
Red Stag general manager Tim Rigter says his sawmill takes “a few hours” to get back up and running after a shutdown. Anyway, there’s no point keeping a saw mill operation open over lockdown if it can’t get a supply of logs.
Still, Newsroom understands both Red Stag and the other big supplier of building timber, Carter Holt Harvey, asked the Government to allow their plants to stay open during Level 4, but were turned down.
“Our industry is not seen as essential,” Rigter says.
“People who are already waiting on houses to be finished will find themselves waiting another two to three months.”
– Julien Leys, Building Industry Federation
That is just not true – at least in the middle of a housing crisis, Julien Leys says.
“Now we will be behind again. Unfortunately this lockdown is going to add to delays when we come out. People who are already waiting on houses to be finished – or even started – will find themselves waiting another two to three months.”
Meanwhile, Pan Pac will wait out this lockdown, hoping it doesn’t go on too long, Tony Clifford says. Then he will be back on the Government’s case about Covid accreditation.
Maybe this time someone will listen.
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