By RACHNA LAL
Fiji Hardwood Corporation Limited (FHCL) has closed operations at the Waivuna sawmill and Navutu manufacturing yard.
In a statement yesterday, Fiji Hardwood said the closure was a result of massive sustained financial losses since 2004.
Both installations ceased operations yesterday.
“The Navutu yard and Waivuni sawmill were overpriced when they were purchased in 2004 from Fenning Pacific Limited for $3.5 million and $2.5 million respectively,” the company said.
“Although a valuation was completed prior to the purchase, it was proven not to be accurate.
“The averaged combined losses for the two operations were well over $4.5 million per year for 2005 and 2006, and averaged more than $2 million for each year over the eight years to 2013.”
Dilapidated state of operations
The statement said equipment at both operations required reinvestment, maintenance and modernisation at the time of their purchase.
“However, mismanagement and ineffective management, failure to develop value-adding operations and a disregard for the value of the assets resulted in the dilapidated state of the operations over the past years,” he said.
“The board of FHCL recently reviewed restructure plans and recommendations provided by their international hardwood forestry consultants, the Forestland Group and concurred with their findings concerning the closure of the operations.
“It was determined the mandatory reinvestment of substantial funds required to modernise the operations was untenable.”
The company said Fiji Hardwood could not responsibly add to its already huge burden of Fijian taxpayers.
Grants and loans
Fiji Hardwood received more than $15.9 million in outright Government grants from 1998 until 2006.
“With minimal attention previously to debt service, it had also accumulated more than $21.4 million of Government-guaranteed loans by 2010,” the statement said.
“Significant progress has been made over the last two years to reduce the outstanding Government-backed loans.
“The organisation is currently working with the Fiji Development Bank to consolidate the loan and accelerate its reduction.”
Plans for staff
The two properties will soon be advertised for sale by tender.
Fiji Hardwood said the successful purchaser of the property will be encouraged to re-employ the total staff (permanent and temporary) of 76 workers at Navutu manufacturing yard and 111 workers at Waivunu sawmill.
“Should the new buyer require it, FHCL will provide employee records for the purpose of re-hiring the workers,” the company said.
“The FHCL board assures the affected workers and their families that their welfare is uppermost in its deliberations.
“Employees will be paid 30-days leave in lieu of notice, redundancy pay of one week’s wages for each year of employment and all outstanding annual leave and long-service leave entitlements.
“These payments are in addition to the paid leave that the FHCL board provided all Navutu and Waivunu employees over the past three weeks from May 31, 2013.
“The three-week leave was not deducted from employees’ accumulated leave and was in addition to the leave that they had already earned.”
Constant thefts
Fiji Hardwood said it was regrettable that the Navutu and Waivunu locations had been repeatedly targeted by thieves.
“Approximately $25,000 in cash and equipment plus a significant amount of timber has been stolen in the past 14 months alone,” it said.
“Police are in the process of investigating these crimes.
“The FHCL board appeals to those responsible to return the missing items, which are the property of every Fijian taxpayer.
“If thefts continue, the properties may as well sell for lower prices which could jeopardise the re-employment prospects of its Navutu and Waivunu workers.”