The company, a major global supplier of specialized respiratory
equipment for hospitals, is one of the first companies with Mexican
operations to disclose how it would respond to the Trump
administration's proposed tariff on imports from across the U.S.
Shifting production to New Zealand could raise production costs,
said Fisher & Paykel Healthcare's chief executive Lewis Gradon. The
firm did not yet know by how much because it was uncertain what the
Trump administration's policies were.
"Tariffs are never good," the CEO said in a phone interview with
"We've got two plants, one in New Zealand and one in Mexico. We have
the capacity to supply the United States from New Zealand if that
makes more economic sense," he said.
The White House said on Thursday Trump could pay for a wall all
along the border with Mexico with a new 20-percent tax on goods from
But the U.S. president's office later walked it back, saying it was
not endorsing the border adjustment tax and it was merely an example
of a way of making Mexico pay up.
"Anyone in business prefers stability and predictability. The
20-percent tariff seems to be evolving," Gradon said.
Fisher & Paykel would still manufacture products destined for its
non-U.S. markets in Mexico, Gradon said, and could benefit from the
cheaper labor costs there as the Mexican peso weakens.
The peso fell 0.6 percent against the dollar following the White
house's announcement that a wall on the southern border could be
financed with a new tax on goods from Mexico.
The peso was the worst-performing major currency last year,
weakening 20 percent against the dollar as Trump closed in on the
SECOND MEXICAN FACTORY
Jitters over the proposed tariffs sent shares in Fisher & Paykel
Healthcare down 3.1 percent on Friday, its largest daily percentage
loss in more than two months.
[to top of second column]
The firm's largest shareholders include Australian fund manager
Northcape, New Zealand state-owned insurer AC, and U.S. fund
Fisher & Paykel Healthcare, which produces devices including masks
for treating sleep apnea and humidifiers for mechanical ventilation,
is scheduled to start work this year on a second factory in Mexico,
where it currently employs about 700 people and produces almost a
third of its products.
The device maker originally began producing in Mexico in 2009 as an
insurance policy against any large scale disaster affecting
operations, such as an earthquake hitting New Zealand.
Now, its Auckland operations are considered the back-up option for
U.S.-bound exports, which along with Canada account for just under
half of the firm's revenues, as American protectionism grows.
Fisher & Paykel Healthcare expects full-year net profit after tax to
be between NZ$165 million ($119.44 million) and NZ$170 million,
according to forecasts provided in November.
(This version of the story was refiled to correct company name to
Fisher & Paykel Healthcare throughout)
(Reporting by Charlotte Greenfield; Editing by Bill Tarrant)
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