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Management Side
Orora CEO says cheap energy means US trumps Australia

AUSTRALIA (From news reports) -- The chief executive of $3.3 billion packaging giant Orora says the North American economy has better prospects over the next year than Australia's, largely because of substantially cheaper energy prices and lower cost pressures on households.

Orora has 15 manufacturing plants and 60 distribution centres in North America, and 29 plants and 38 distribution centres in Australasia. The $2.04 billion in sales revenue from the North American businesses meant it overtook the Australasian unit as the company's biggest revenue generator for the first time in 2016-17.

Chief executive Nigel Garrard has implored politicians and policymakers around Australia to put aside partisan politics and fix the energy problems fast, arguing it would take a number of years for any solutions to flow through to the economy. Orora is eyeing North America for further acquisitions.

Mr Garrard said businesses had been warning policy makers for a number of years of the impending problems in Australia and the handicap from high energy prices.

"It took us a number of years to get here and it will take us a number of years to get out," he said. "I would ask our governments and politicians to put partisan issues aside."

Mr Garrard said Orora's gas bills had effectively doubled in the past three years, and electricity prices in South Australia, where it operates a large wine bottle manufacturing plant, had doubled in the last year.

The company's recycled paper mill in Sydney's Botany was facing an extra $6 million to $8 million in electricity costs this financial year and would look to take an increasing amount of power from a renewable energy and water treatment plant that Orora is building.

He expected economic growth to be better in North America than in Australia, with employment growth running at higher levels and rising costs - such as housing and electricity - less of an issue for American consumers.

"They've probably got less cost pressure to households," he said.

Orora was split off from Amcor in 2013.

Orora is one of 27 companies which set up an electricity buying group in South Australia. The group includes OZ Minerals, cement maker Adelaide Brighton and international grains giant Viterra.

They received the all-clear from the Australian Competition and Consumer Commission in May to be able to bargain as one entity with power generators for better electricity prices.

Mr Garrard said the recent rise in the dollar was unwelcome, but it was not yet at a level where Orora would need to tweak its strategy.

"Anything above US85¢ and US90¢ for a sustained period would cause people to look at changing their behaviour," he said.

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