Production facilities for the Smart Drive and AquaSmart washing machines and clothes dryers - both now located in Auckland - are to be moved to a purpose-built facility in the Kingdom.

"The decision to move the laundry plant out of New Zealand wasn't one that was taken lightly," said John Bongard, chief executive officer and managing director.

The Thailand plant continues the firm's push for international expansion, being the fourth offshore manufacturing facility in recent years. It follows the acquisitions of DCS in the United States and Elba, Italy, and the relocation of the in-house laundry and motor production facility to the US, Bongard said.

A number of factors have contributed to this decision. Competitors are already supplying laundry products to the Australasian market from low-cost countries like China, Thailand and South Korea.

The recent announcement by a major competitor in Australia that they will be moving their laundry production facility to Asia will eliminate the import duty preference that Fisher & Paykel Appliances currently enjoys. Margins for laundry products have been under increasing pressure for a number of years.

The relocation of facilities will take place over the next 12 months. Additional inventory will be manufactured in order to cover the lead times for the transfer and recommissioning of the plants. The move will involve shifting plastic injection-moulding machines and dies, fabrication equipment, assembly equipment and metal pressing facilities.

Initial production is expected to commence in Thailand by March next year.

Once the lines are fully operational, the expected financial benefits are in the vicinity of US$10 million to $15 million (Bt348 million to Bt522 million) per annum, at a one-off cost in the order of $20 million to $25 million, both at pretax levels.

Additional cost savings are also expected from the sourcing of some raw materials and purchasing parts from local vendors in Thailand. These overall savings will be offset partially with a small increase in working capital.

Capital expenditure is estimated at $13 million.

The relocation will lead to an estimated reduction in the Auckland-based work force of about 350 positions.

"Most of our competitors supplying the Australasian market do so from facilities in low-cost Asian countries which offer generous manufacturing incentives. Also the environment in New Zealand for our type of manufacturing operation has deteriorated due to a combination of factors, such as high interest rates, persistently high exchange rates and some trade and tariff policies," said Bongard.

"Our laundry margins have suffered considerably over the past four to five years. Without this relocation to Thailand our continued future in laundry design and manufacture would be doubtful. The ongoing research and development for these products will continue to be based in New Zealand."