New Zealand’s lift out of recessionary times could be under-way by the end of the year.
And manufacturing must play a major part in that economic shift.

So too should the nation’s ITO sector if the skill-set amongst our workforce is to provide the expertise needed to boost productivity, and ultimately, export earnings in decades to come.

That’s the word from Dr Ganesh Nana, Chief Economist of Business and Economic Research Ltd (BERL), who believes New Zealand will soon be on a path back to economic growth – thanks in part to the recession remaining mainly in the metropolitan areas of the country.

However, Dr Nana believes there must first be an investment boost of 50-100% into industry training to ensure long-term development in workforce up-skilling, investment that hinges on more government leadership and funding, along with greater commitment from manufacturers.

Dr Nana says the proposed $300 million investment in further training over five years is simply not enough for New Zealand to gain the economic momentum it needs to grow the economy and compete more closely with first world countries.
With over 250,000 Kiwis having, at best, a level one qualification, he is adamant ITOs have a key role to play in transforming the New Zealand economy.

“When you consider the manufacturing sector has not put any more jobs into the New Zealand economy in the past ten years, and in fact has reduced the number of jobs from 276,000 to 268,000, there simply must be a drive to turn this stagnation around and it can be done,” says Dr Nana.

“Outside of the manufacturing sector, there have been 400,000 new jobs created in the New Zealand workforce in the same period. There is no reason why manufacturing can’t, and shouldn’t, be growing also but it is critical we have the right level of training available to ensure the skills are there in our workforce to help that happen. Some parts of New Zealand still don’t realise ITOs exist, nor the benefits they provide. So that needs to change also.”

However, Dr Nana warns that ITOs and companies alike need to ensure there is more focus on training workforce returnees outside of school leavers to develop higher skill levels and more productivity. In particular, he cites a greater need for ITOs to work with those in their thirties and forties, given they still have at least 20 years of working life left.

“The level of training out there now is very good and the ITOs have been doing a great job with limited budgets. Given more funding and resources, training could be boosted even further. For too many years there has been a short term approach to up-skilling, where we as a country tend to only look one or two years ahead. Now, more than ever, we need to be investing in a 20-30 year plan,” says Dr Nana.

“The fact is, we can compete on the world market. We just have to find ways to do things smarter. We will always have a skills shortage and the exchange rate will always be a challenge. And there is no doubt we have moved to a more service oriented economy with more low paid workers in retail and tourism. But it is within our grasp to change – we just have to stop making excuses.”

While most economists deliver forecasts based on financial markets and paint a picture of doom and gloom, the land and resources available to the New Zealand economy, along with people, technology and innovation remain sound, according to Dr Nana.

“Coming out of recession times will be tough, but not as bad as it could be. Manufacturing itself provides around $25 billion or 14% of New Zealand’s GDP annually, so it is an area of strength and there is no need for panic.”

To highlight New Zealand’s manufacturing strength, Dr Nana says there is currently more than $3 billion worth of manufactured machinery and equipment exports occurring annually and it is only a snapshot of broader manufacturing activity.

And this is despite a decline in manufacturing jobs from the year June 2008 to June 2009, of 5000, compared to an 18,000 decline in all jobs.
“Certainly when this recession started, it was very much Auckland based but it is also impacting on Christchurch now. However, many of the regions are less affected at this point and I believe we have now seen the worst of the recession. Skills will be essential to the turnaround because a boost in skills leads to more productivity,” says Dr Nana.