Business News

Prudent advance signalling will have led to today’s OCR change being factored in by markets, easing concerns of a strengthened dollar, says BusinessNZ. Chief Executive Phil O’Reilly says changes in interest rates need to take into account the unique situations facing markets since the global financial crisis, including the fact that globally and in New Zealand, interest rates are at historic low levels. “The lessons of the past suggest that if we don’t start early enough, we may have to tighten more later. “Given that monetary policy is focused on inflation one or two years down the track, it will be important that the Reserve Bank monitors activity carefully, taking account of factors driving inflationary pressures. “Government can support the Reserve Banks policy through controlling spending, sound regulatory policy and promoting competitive markets,” Mr O’Reilly said. “A key concern is to ensure that land supply is not artificially constrained, which could cause further inflation in the housing market.”  

A cross sector forum focusing on the post-quake recovery process, progress, problems and solutions will be held in Christchurch on Friday 28 March. Seismics and the City 2014 Building Momentum is the third in an annual series for public and private sector and community organisations involved or interested in the rebuilding of Greater Christchurch in the wake of the quakes of 2010-11. The event, at the new Rydges Latimer Hotel on the fringe of the new city core, is a timely opportunity for organisations to update themselves on latest developments, voice feedback and help turn visions into strategies and action plans.  Forum convener Lyall Lukey from SmartNet says, “While the rebuild is finally starting to ramp up there is traffic congestion on the on ramp and the need for a more integrated approach to get things flowing. The challenge is to balance speed and momentum with direction and getting it right.” He says that there is an obvious need for enhanced cross sector collaboration to drive the implementation of the rebuild. “The post quake recovery and renewal process should not be a spectator sport. Organisations and individuals will support what they help to create and they need to be engaged in both planning and implementation. “Imagineering always needs to precede engineering. Open dialogue not closed group think will enhance decision making and help organisations tasked with facilitating or implementing different aspects of the recovery to stay on track.” Forum topics include frank appraisals of Canterbury’s post- recovery from different perspectives and updates on the current state of play, what is in the pipeline, the main roadblocks and how they can be removed. Flooding caused by the recent heavy rain has put the spotlight on land slump, drainage and infrastructure issues partly connected to recent seismicity and highlighted the need for […]

The Reserve Bank of New Zealand’s (RBNZ) decision to increase the OCR by 25 basis points to 2.75% today is too early, and has the potential to further damage the tradable sector; say the New Zealand Manufacturers and Exporters Association (NZMEA). NZMEA Chief Executive John Walley says, “Early increases in our OCR puts us further out of line with the rest of the world in terms of monetary policy, which will have the effect of appreciating our already overvalued exchange rate. This is a major concern for exporters and import competing manufacturers.” “The OCR increase will marginally increase borrowing costs for firms, but for most exporters, the margin lost through the exchange rate is an order of magnitude greater and as such much more damaging.” “While the RBNZ once again has said they do not believe the current level of our exchange rate is sustainable in the long run, we are yet to see any policy response that does more than shed crocodile tears about the problem.” “This change, and more generally the absence of a real policy response, will not be welcomed by the traded sector.” “Inflation is important, but inflation pressures reside in the non-traded economy and interest rates do little to moderate inflation in that sector; reductions in headline inflation rely on deflation in the traded sector. For the traded sector the exchange rate determines what sort of margin gets banked, and margins are thin right now.” “We saw all this before in the lead up to the global financial crisis, demonstrating the need for better targeted tools for the RBNZ to tackle inflation, without the broad and damaging effects of an overvalued exchange rate on the tradable sector from the OCR carpet bombs.” “LVR “speed limits” were a step in the right direction, and seem to […]

Labour MP Darien Fenton is wrong in claiming business wants a minimum wage of $7 an hour. No suggestions for that amount have ever been made. BusinessNZ has never called for the minimum wage to be reduced. New Zealand business wants to see a higher average wage, through a stronger economy based on higher skills, innovation and productivity. With a higher average wage, business would expect to see the minimum wage, as a percentage of the average wage, set appropriately. Too high a minimum wage as a percentage of the average wage stops the economy from growing and reduces young people’s chances of gaining employment. New Zealand’s minimum wage as a percentage of the average wage is the highest in the world, at 51 percent. Since 1999 there have been extensive increases in the New Zealand minimum wage rate, increasing faster than the average wage. BusinessNZ Chief Executive Phil O’Reilly (left) says the need is for a stronger economy, and a minimum wage set at 25 percent of a much higher average wage rate over time.      

Callaghan Innovation is inviting applications from businesses wishing to become part of an expanded network of business incubators throughout New Zealand. The network will include a new type of technology-focused incubator aimed at encouraging more innovative, complex technology-based start-ups. These will be in addition to the founder-focused business incubators already enhancing the survival and growth of early stage, high-growth businesses. A request for proposals document (RfP), issued today, follows extensive consultation with the New Zealand start-up support community, the Ministry of Business, Innovation and Employment, New Zealand Trade and Enterprise, the New Zealand Venture Investment Fund, and international experts including Israel’s leading thinker on technology incubators, Oren Gershtein. The RfP seeks proposals from parties interested in being appointed founder-focused or technology-focused incubators. The new type of technology-focused incubator will be a privately owned business focused on the commercialisation of complex intellectual property primarily sourced from publicly funded research organisations, such as universities and Crown research institutes. They will be also able to access a new repayable grants programme on behalf of the start-up companies they incubate. Under the programme, the Government will contribute up to $450,000 over two years to eligible companies resident in technology-focused incubators. The incubator owners will need to provide at least $150,000 themselves additionally in order to qualify for the full amount. This pilot repayable grants programme has been allocated $31.3m over four years. “New Zealand has not been creating enough high value companies,” says Callaghan Innovation GM of Accelerator Services Chris Somogyi. “The modified Incubator Support Programme and the new Repayable Grants Programme that comes with it were designed to address this shortcoming and will remove much of the risk currently preventing the private sector from investing in early-stage, IP-rich start-ups.” “The creation of the new tech incubators is a significant step within the New […]

The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during February 2014, shows total sales in January 2014 increased 10.0% (year on year export sales increased by 32.56% with domestic sales decreasing 5.17%) on January 2013. The NZMEA survey sample this month covered NZ$342m in annualised sales, with an export content of 49%. Net confidence was at 21, down on December’s result of 30. The current performance index (a combination of profitability and cash flow) is at 98.7, down from 101.7 in December, the change index (capacity utilisation, staff levels, orders and inventories) was at 102, down from 103 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 107.17, up on Decembers result of 103.67.  Anything less than 100 indicates a contraction. Constraintsreported were 57% markets, 36% production capacity and 7% skilled staff. Productivity for January was unchanged on last month. Staff numbers January increased year on year by 0.93%. All staff segments, tradespersons, operators/labourers, supervisors, managers and professional/scientists, reported a moderate shortage for January. “This month continues the trend we have been seeing through recent months, with exports gaining ground and domestic sales falling.  Some of this export improvement can be attributed to some particularly large respondents reporting significant year on year increases.  Things are starting to look better on the surface, but many are still cautious,” says NZMEA Chief Executive John Walley. “Indexes are again fairly mixed, with net confidence and performance down, while the forecast index improved.” “Concern remains around our overvalued currency and the absence of any policy response, reducing margins and putting import competing manufacturers under price pressure.  The signalled OCR increases by the Reserve Bank of New Zealand (RBNZ) over the coming months have the potential to make this worse.” “There are other […]

The recent report “New Zealand Manufacturing Sector: Its Dynamics and Competitiveness” completed by Castalia has some good analysis and reiterates the importance of manufacturing to the New Zealand economy, say the New Zealand Manufacturers and Exporters Association (NZMEA).  NZMEA Chief Executive John Walley says, “We always welcome any new analysis on the importance of the manufacturing sector in New Zealand. New Zealanders need to understand how truly vital manufacturing is to the future of everyone, not a declining, optional extra in the economy.” “The report did miss a significant body of information from the Manufacturing Inquiry, that report had many comments from a wide range of manufacturers.” “The report skates round the elephant in the room for all exporters and import competing companies, the exchange rate. The exchange rate problem is mentioned in passing but gets scant attention and no solutions. Quite rightly the critical importance of investment is underlined, but investment requires a margin that an overvalued exchange rate just destroys.” “Resource based manufacturing (5 of the 15 in the sample) is bound to New Zealand because the raw materials are here and they are not likely to leave. The value-add manufacturers (10 in the sample) are more mobile, and are largely here because the ownership is here (6 of the 10 value-add manufacturers). They might leave one day for logical reasons of policy, cost or market. New Zealand can’t do much about markets, so we need to work hard on good policy and lower costs.”  “It was good to see that 5 out of the 10 value add manufacturers in the sample had received their share of the $200m funding from Callaghan Innovation. It is not surprising that these firms do not speak to harshly of the current environment.” “Sample bias plays a big part in this sort […]

PIC CAP Carl Bass, President and Chief Executive Officer of Autodesk (centre) with (left to right) Glenn McMinn, President, Delcam North America; Clive Martell, Chief Executive, Delcam; Steve Hobbs, Development Director, Delcam; and Bart Simpson, Commercial Director, Delcam. Autodesk, Inc. completed its acquisition of Delcam, one of the world’s leading suppliers of advanced computer-aided manufacturing (CAM) software, on February 6th.  Delcam will operate as a wholly-owned, independently-operated subsidiary of Autodesk, with no significant changes planned for Delcam’s business. Autodesk, Inc. is a world leader in 3D design, engineering and entertainment software. Customers across the manufacturing, architecture, building, construction, and media and entertainment industries – including the last 18 Academy Award winners for Best Visual Effects  use Autodesk software to design, visualise and simulate their ideas. From design professionals, engineers and architects in all of the Fortune 100 companies to digital artists, students and hobbyists  Autodesk software is helping people unlock their creativity and solve important challenges. Autodesk has more than 7,300 employees worldwide and is headquartered in San Rafael, California. Headquartered in Birmingham, UK, Delcam’s range of design, manufacturing and inspection software provides automated CADCAM solutions for a variety of industries, ranging from aerospace and automotive to toys and sports equipment. The company has more than 30 offices worldwide and approximately 700 employees.  “Autodesk brings to Delcam increased financial strength, unparalleled expertise in design, and a long history of making technology accessible to broad audiences. Through sharing our technology and expertise, this transaction will transform industries and improve how the world is designed and made,” said Delcam’s Chief Executive, Clive Martell. “By maintaining the basic structure of Delcam’s business, Autodesk is reflecting its trust in, and respect for, Delcam’s solutions, leadership and organisation. We are excited to come together and further the vision, development and implementation of technology for digital […]

The ‘new’ living wage has shifted the goalposts and appears to be more about politics than public policy, says BusinessNZ.  Last year the living wage campaign said $18.40 should be the living wage, calculated on the basis of the living costs of a family of four. The promoters now say the living wage for this year should be updated to the higher rate of $18.80. “But the report shifts the goalposts,” BusinessNZ Chief Executive Phil O’Reilly said. “The increase from $18.40 to $18.80 is not based on the same methodology as last year.  “Using the same methodology, for the same family of four, would show the new living wage should really be $22.89. “If last year’s formula said $18.40 was needed for a living wage, and the same calculations now show $22.89 is required, why isn’t the campaign seeking $22.89 an hour?” Mr O’Reilly asked. “Either the original calculations were flawed, or the campaign is just picking numbers out of thin air.” Mr O’Reilly said decision makers could not have confidence that the living wage figures were soundly based. “This switch in the figures used is important for taxpayers and ratepayers who are being asked to pay for the campaign. Wellington ratepayers are now funding the living wage policy for council employees and taxpayers would be funding it for all government employees under Labour Party policy. “There can be no confidence in a living wage proposal set on an arbitrarily changing basis.”