Business News

Professor Kate McGrath. Picture courtesy Victoria University of Wellington Image Services. Continued funding of the MacDiarmid Institute for Advanced Material and Nanotechnology, hosted by Victoria University of Wellington, is confirmation of the contribution the Institute is making to New ZealandÕs economic future says Director, Professor Kate McGrath. The Institute is one of six Centres for Research Excellence (COREs) which the Tertiary Education Commission today announced will receive funding of just under $210 million over six years from January 2015. The MacDiarmid Institute is a national network of seven organisations five universities, one crown research institute and Callaghan Innovation bringing together researchers who develop and apply cutting-edge techniques in physics, chemistry and engineering and partner with business to take innovative new technologies to export markets. Named after Alan MacDiarmid, who was awarded the Nobel Prize in Chemistry in 2000, the MacDiarmid Institute was one of New Zealand’s first COREs. Professor McGrath says today’s funding announcement is an endorsement of the vision and plans the MacDiarmid Institute is implementing to deliver growth and value to New Zealand’s economically-important high-value manufacturing sector. She says the Institute is also making a significant contribution to mentoring emerging entrepreneurial scientists and training the next generation of science teachers who can motivate young New Zealanders to pursue science-based careers. “Our focus is on delivering excellent research and education, inspiring New Zealanders, training New Zealand’s future leaders and advancing this country’s future. Continued support for our work shows we are on track to progress this programme.” Professor Mike Wilson, Pro Vice-Chancellor and Dean of Science at Victoria University, welcomed the funding announcement and says Victoria is proud to host a world-leading Institute which includes many of New ZealandÕs top materials scientists. The MacDiarmid Institute has 36 Principal Investigators who come from Victoria University, the University of Canterbury, Massey […]

The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during April 2014, shows total sales in March 2014 increased 12.57% (year on year export sales increased by 29.33% with domestic sales decreasing 3.05%) on March 2013.  The NZMEA survey samplecovered NZ$403m in annualised sales, with an export content of 55%. Net confidence was at 0, down on February’s result of 35. The current performance index (a combination of profitability and cash flow) is at 101.7, up from February’s result of 98.7, the change index (capacity utilisation, staff levels, orders and inventories) was at 101, down from 105 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 104, down on February’s result of 107.67. Anything less than 100 indicates a contraction.  Constraints reported were 53% markets, 20% capital, 13% production capacity and 13% skilled staff. Net productivity was unchanged on last month. Staff numbers for March increased year on year by 0.33%. All staff segments, tradespersons, operators/labourers, supervisors, managers and professional/scientists, reported a moderate shortage for March.  “This month showed generally more of what we have been seeing over the last few months, domestic sales falling (it is worth noting that few of our members are directly related to construction), while export sales increases, however export sales are returning little margin with an elevated currency. Net confidence fell, indexes were mixed and staff numbers increased slightly.” “Comments were also mixed, but it is clear the exchange rate is having an effect on those supplying the domestic economy by increasing import competition, while remaining an issue for exporters.” “The Reserve Bank of New Zealand (RBNZ) raised interest rates for the second time last week which puts further pressure on the exchange rate. The RBNZ keeps on saying that the current level […]

Australian Productivity Commission Chairman Peter Harris says in a report that Australia hasn’t been productive in recent years .  “Australia’s productivity performance has fallen well behind that of most other developed economies for more than a decade. Reasons for this, include differences in the rate of investment growth. But the picture painted in the statistics calls for strong policy attention, particularly in the current era where the recent record terms of trade will no longer support continued income growth,” Harris said in a statement.  The report focused on three important areas: the effect of price distortions on productivity; Australia’s 2012-13 productivity performance and productivity in manufacturing. Agriculture, mining, manufacturing, utilities and information technology showed the most unproductive trends, particularly businesses of petroleum, chemicals, small wine-makers, artisan bakers and regulated pricing of electricity and water. The agriculture industry productivity fell at 5.8 percent, minging at -4.9 percent, manufacturing at -0.5 percent, electricity, gas water and waste at -1.8 percent and and information, media and telecommunications at 7.2 percent. However, he said a good sounding policy could effect change. Harris pointed out the current policies of water companies, for example, were forced to invest in more costly sources like desalination and recycling instead of deciding to charge more when there is lack of supply. The chairman said this reduced productivity for the water industry. While economic experts debated that Australia has no productivity problem because of labour productivity, the growth in the industries overall were feeble. “It’s a global bother, but we are the ones with persistent negatives and that’s a bother to me. Whatever the case, it means we are not doing well enough to justify continuing high growth in incomes.”  With the report, the commission sought to call the government to act on the problem through strengthening the labour market […]

 Today’s announcement by David Parker and the Labour Party if done well, might be a game changer, aligning monetary and fiscal policy to deal with the pressures that face our economy here and now, say the New Zealand Manufacturers and Exporters Association (NZMEA). NZMEA Chief Executive John Walley says, “This is a big step, but it is something that has developed around the world. The days of one target (inflation), one lever (OCR) monetary policy are numbered; we now live in a complex world of multiple targets, and multiple levers – crucially this change fits the framework of other policies announced by Labour last week.” “Targeting our external balance as well as inflation will lead to lower exchange rates over time, and consequently better outcomes for our entire economy, allowing New Zealand to earn its way in the world.” “The introduction of a savings lever to dampen inflationary pressures in addition to interest rates is a good move; it will remove the Reserve Bank option to deflate the tradeable sector in order to keep headline inflation inside the target band via an overvalued exchange rate.” “This is an important strategic change, combined with signalled fiscal policy changes to re-balance investment incentives (remove the capital gains tax exemption), encouraging greater value add from more research and development (R&D tax credits) and increasing productive equipment investment (accelerated depreciation); all speak to a coherent re-emphasis of the importance of the tradeable sector. We should never forget that a balanced current account matters to each of us as individuals and to us all collectively as a nation.” “I have seen comment that a lower exchange rate will result in higher costs, but an overvalued exchange rate is a sugar rush to consumption that has little substance. In any event, research by the Reserve Bank […]

AsureQuality is pleased to announce the appointment of John McKay as its new Chief Executive Officer (CEO), commencing 3 June 2014. John is an experienced international business leader who comes with proven experience in the food and dairy sectors and has a strong customer partnership approach. He is currently CEO of Hansells Food Group where he runs a diverse and complex business including four manufacturing sites, and sales and distribution companies in New Zealand, Australia and the United Kingdom. John has extensive international business experience in Asia, Latin America and Europe including the role of Global Brands Director for Fonterra based in Singapore and Marketing Manager (Europe) for American Express. He has experience working with and forming joint ventures, having worked with Fonterra’s joint venture partners in Venezuela, Taiwan and Malaysia.    

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 […]