Canning Vale Weaving Mills to lay off 140, shift work offshore

Australia's biggest towel company and second last manufacturer, Canning Vale Weaving Mills Ltd, will make about 140 staff redundant when it closes its manufacturing facilities.

A company spokesman said high labour costs made it unprofitable to manufacture towels in Australia after almost three decades of production.

The company presently has about 210 employees and expects to retain around 75 warehouse and distribution staff at its premises in Canning Vale when it turns its focus onto its already existing imports business.

The company is working with Hudsons Outplacement agency to find new jobs for staff, some of whom have worked there for 20 years.

The decision to close its local manufacturing operations followed a fall in profit last financial year, according to records lodged recently with the Australian Securities and Investments Commission.

The company's net profit fell to $673,000 in the year to June 2005, from $1.7 million in the previous financial year.

Canning Vale said this followed a 14 per cent fall in sales to $53 million, which it attributed to "the difficult retail trading climate experienced during the latter half of the financial year".

With the closure of Canning Vale's manufacturing operations, the only remaining Australian towel manufacturer will be Hobart-based Australian Weaving Mills Pty Ltd.

The lower profit occurred despite the company getting a $4.9 million grant from the federal government (up from $2.2 million in the previous financial year) under a textile industry restructuring scheme.

The Perth company, which was established in 1977, is majority owned by chief executive Frank Prainito, with a 60 per cent stake.

Other shareholders include AMP Capital Investors and private Sydney textile company Charles Parsons Holdings.

Chairman Michael Perrott also has a small stake in the business.