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David McConnell, chair of ATEED (left) chats to Prof Torger Reve By Kevin Kevany Could this be ‘the dawning of the Age of Competitiveness’ for New Zealand? The omens are good at year-end 2011, with all of the right signals suddenly lighting up and a passionate advocate of the need for a country to be both competitive and ‘attractive’ to succeed in the rapidly maturing global world trips through Auckland. That’s Prof Torger Reve, a leading thinker and doer, when it comes to his homeland Norway. He sees interesting parallels between his country and our own which made for a stimulating discussion after his presentation to the 14th Annual Global Conference of The Competitiveness Institute (TCI) held in early December, under the aegis of ATEED (Auckland Tourism, Events and Economic Development). Prof Reve is one of approximately 3,000 leading practitioners ‘action people’  focused on the role of competitiveness, ‘clusters’ and innovation, belonging to that ‘knowledge platform’, who challenged New Zealanders to get with the global plan. The world has moved on from whingeing about manufacturing moving to the East, or our North. He’s predicting it could go to the Middle East next. Oil-rich Norway, encouraged by the likes of Reve, isn’t resting on its petroleum treasures and has already ‘clustered’ itself around existing – and dating – strengths to enjoy the lowest unemployment rate in the world and the highest GDP per capita. They also have the highest labour costs in the world. So they clearly know what competitiveness is all about. No debates about lifting the minimum wage there. And they are prepared to share with a country that has many similarities, or as Reve notes, one that is also: small, beautiful, blessed with resources, and remote. Given there are currently signs that the RWC win on sheer guts […]

Manufacturing activity improved enough over December to be back in positive territory, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI). The seasonally adjusted PMI for December was 51.9 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was up from 46.0 in November and 46.7 in October. Over 2011 the PMI averaged 51.5, compared with 53.0 in 2010. BusinessNZ’s executive director for manufacturing Catherine Beard said that although it was pleasing to see a return to expansion for the last month of 2011, overall the year was a challenging one for manufacturers. “While the average level of activity in 2011 was up on 2008 and 2009, it fell behind 2010’s result. Like the sword of Democles, global uncertainty continues to hover over most manufacturers doing business in international markets. Also, domestic events (both natural and man-made) have contributed to changes in orders and production throughout parts of the year.” BNZ senior economist Craig Ebert said the positive bounce back in December validated the bank’s view taken in October and November that the negativity in those months was probably over-stated. “While it’s a relief to see the positive December result, the seasonally adjusted reading of 51.9 can hardly be called strong. There are still lingering reservations around the survey’s details and the industry’s overall inventory management.” Four of the five seasonally adjusted main diffusion indices were in expansion during December, as opposed to only two in the previous month. Employment (52.7) led the way for the first time since March 2011, while new orders (52.0) increased 5.7 points from November. Finished stocks (51.8) rose 0.5 points, while production (50.0) experienced no change for the second time in four months. Deliveries (49.8) improved 1.6 points over the month, although […]

The Consumers Price Index (CPI) has dropped 0.3% in the December quarter and inflation increased by 1.8% year on year, well within the target band. That allows plenty of room for monetary policy that supports exports say the New Zealand Manufacturers and Exporters Association (NZMEA). NZMEA Chief Executive John Walley says, “With problems continuing in Europe and a weak domestic economy, inflation pressure is likely to remain low for a prolonged period. That means every effort should be made to bring down the exchange rate to support the export sector. That means an Official Cash Rate cut next week and more policy changes over time.” “The RBNZ has persistently overestimated inflation pressure in the economy; we have been calling for further cuts for some time, now is the time to act.” “Using the exchange rate to defuse headline inflation caused by the domestic economy is a failed strategy. It is the primary reason for growth in the export sector stalling from 2004 until now. This practice will have to stop at some point if our economy is to rebalance.” ”It is worth noting that tradable inflation went down 0.9% in the December quarter.” A better strategy for the Reserve Bank would be to: • Target non-tradeable inflation; • Use Loan to Value Ratios to control credit volumes; and • Specify the amount of savings (deposits) banks are required to raise in New Zealand to limit offshore exposure. “Had this been done 10 years ago debt levels and servicing costs would have been lower even if average interest rates had been higher. Overall the New Zealand economy would now be better balanced with higher wages, more jobs, more savings and better housing affordability,” says Mr Walley. “With headline inflation dropping there is no reason to hold up interest and exchange rates […]

Hiring intentions in the South Island are at an eight-year high, according to the latest Hudson Report Employment and HR Trends. A net 40.1% of employers in the region intend to increase permanent staff numbers in the first quarter of 2012, which is more than double the national average. “Treasury has predicted that the influx of government and insurance money will contribute to an economic rebuild that is now likely to be larger and longer lived than previously thought,” says Roman Rogers, Executive General Manager, Hudson New Zealand. Across the rest of New Zealand, a net 18.0% of employers are planning to increase their net permanent headcount between January and March this year, which is down 4.6 percentage points (pp) on last quarter, and down 6.4pp compared to the same time last year. “While this represents a relatively sizeable change in net sentiment, many employers are considering the potential impact of external factors, like recent events in Europe, and carefully assessing their current talent pool before taking on new hires,” says Rogers. “Nearly two-thirds of employers are planning to hold their staff levels steady. We’re seeing a strong focus on driving productivity and performance among existing employees complemented by strategic hires of high performers.” “Furthermore, we expect high demand in certain roles, such as project managers in the construction and IT sectors as well as for customer facing IT specialists. “Now more than ever, in a turbulent economic climate, the cost of a bad hire is crippling. It is essential that employers have a robust process in place to rigorously assess and secure the best people for their businesses.” Nationally, information technology is the most confident sector with a net sentiment of 43.4%. The telecommunications sector is increasingly buoyant, up 6.4 pp to 32.4% this quarter, coinciding with structural changes […]

New Zealand’s currency overvaluation cannot be simply put down to economic weakness elsewhere say the New Zealand Manufacturers and Exporters Association (NZMEA). It is the monetary policy contrast between the RBNZ’s inaction and the interventionist policies overseas that accounts for a persistently overvalued currency. NZMEA Chief Executive John Walley says, “The ‘there is nothing we can do’ mind-set needs to change. The economic weakness of others we can’t control but our own policy response we can. Changes need to be made to support an export lead recovery for New Zealand.” “Over the past year we have seen other countries ‘independent’ central banks taking action to lower their exchange rates, whether through quantitative easing in the United States and the United Kingdom, capital controls in Canada and Brazil, or direct currency management in Switzerland and Singapore.” “There has been no such action in New Zealand and our export sector, particularly the high added value sector, continues to suffer as a result.” “It is complacent to suggest there is nothing we can do when many countries have successfully supported their export sectors,” says Mr Walley. “We need sensible and pragmatic policy from the Government and the Reserve Bank to provide similar support our export sector. We are an export exposed country – we cannot simply sit back and pretend we cannot have some control of our own destiny.”  

Businesses adding value to food, beverages and ingredients are among the 27 finalists in the 2012 New Zealand International Business Awards, which recognise the myriad of ways companies now do business globally. Hamilton-based BioVittoria has harnessed the calorie-free sweetness of China’s little-known monk fruit to create an all-natural food sweetener. The company is setting itself up to compete in the US$50 billion per annum world sweetener market. Yoghurt-lovers around the globe are latching on to the Kiwi fresh yoghurt making system EasiYo. The company manufactures and markets yoghurt makers and milk powder-based yoghurt mixes to consumers and foodservice customers around the world. Westland Milk Products, which now owns EasiYo, manufactures and sells more than 90,000 metric tonnes of dairy products a year, 84 percent of which is sold overseas. The majority of Westland’s core business is ingredients for other businesses, particularly those making nutritional products. Canary Enterprises started out to ‘Make Butter Better’. With butter as its base product, it has created time-saving butter-based products for commercial kitchens, such as butter medallions, butter rosettes and pastry butter sheets. The company is now focused on ‘Making Food Fabulous’. Dunedin company Seperex Nutritionals develops its bioactive research discoveries, such as peptides and lipids found in milk and seafood, into export earning food and health ingredients. GMP Pharmaceuticals offers a one-stop shop for small New Zealand health supplement developers wanting their product manufactured, packed, exported and even launched. Gourmet burger chain BurgerFuel has transitioned from a burger factory to an ideas factory, enjoying particular success in the Middle East. Winners of seven categories at the awards, which are run by New Zealand Trade and Enterprise (NZTE) and strategic partner ANZ, will be announced on Wednesday 21 March. Information about the finalists can be found at www.nzte.govt.nz/awards.            

Numerous niche and high-tech manufacturers are among the 27 finalists in the 2012 New Zealand International Business Awards, which recognise the myriad of ways companies now do business globally. Manufacturing finalists include firms designing, making and servicing refrigeration and heating systems, magnets used in electronic goods, dental equipment, storage and packaging solutions, and aircraft engines and baggage systems. Seven of the eight business leaders who are finalists in two categories that celebrate an emerging and an outstanding leader in international business also have links to manufacturing industries. Winners of 10 categories at the awards, which are run by New Zealand Trade and Enterprise (NZTE) and strategic partner ANZ, will be announced on Wednesday 21 March. Information about the finalists can be found at www.nzte.govt.nz/awards. NZTE Chief Executive Peter Chrisp said it was fantastic to have 27 businesses representing a wide variety of industries and regions as finalists in the prestigious awards. “This year’s finalists are using our country’s world class technology, reputation and skills to develop high value brands and push out into new markets. These are ambitious, internationally focused businesses that New Zealanders should be proud of. “Sharing their stories helps build understanding of what is required to succeed internationally as well as giving us an opportunity to recognise the contribution they’re making to New Zealand,” Mr Chrisp said. David Green, Managing Director, Institutional New Zealand at ANZ, said New Zealand companies were capitalising on the growing global demand for diversity of products which New Zealand produces well. “While global economic confidence has declined, our export growth is evidence of a domestic economy which is favourably positioned for global trade flows. The 2012 finalists reflect New Zealand’s progressive move away from our traditional markets. “Historically, 80 percent of our exports went to Europe and the Americas, the majority to […]

The draft inquiry report by the New Zealand Productivity Commission on the international freight transport services raises some useful and sensible recommendations to improve the productivity of New Zealand’s international freight, says BusinessNZ. Chief Executive Phil O’Reilly says the productivity of international freight services is highly significant for New Zealand. “Around 30 percent of our GDP is generated from the exports of goods and services, so freight services productivity can impact on the productivity of a substantial number of New Zealand enterprises. “BusinessNZ strongly agrees that councils should carefully consider what their ownership objectives are and how these objectives are best pursued. These are central to the performance of organisations. “The draft report makes some useful suggestions for improving the governance of ports and airports, which are worthy of careful consideration. “Also of particular note are the recommendations around improving employee relations to promote better trust, shared values and outcomes, and more productive workplaces. “BusinessNZ considers the Productivity Commission’s draft recommendations worthy of active consideration by the Government and port stakeholders.”