Business News

The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during February 2013, shows total sales in January 2013 increased 7.71% (export sales increased by 17.23% with domestic sales decreasing 0.02%) on January 2012.  The NZMEA survey sample this month covered NZ$221m in annualised sales, with an export content of 49%.  Net confidence rose to -9, up from the -14 result reported last month. The current performance index (a combination of profitability and cash flow) is at 99.5, down from 101 in December, the change index (capacity utilisation, staff levels, orders and inventories) went up to 100 from 97 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 102.75, up on December’s result of 101.75. Anything less than 100 indicates a contraction. Constraints reported were 82% markets and 18% production capacity.  Staff numbers for January increased year on year by 2.03%.  “We are seeing positive increases in exports for January, but confidence, although improved on last month is still negative.” says NZMEA Chief Executive John Walley. “Overall trends are hard to pick, but it seems they are zero to slightly positive in recent months.” “Markets and exchange rates are once again seen as the biggest constraint to growth. With better news, at least for now, from the economy we hope that the Reserve Bank will move quickly on the introduction of prudential tools, such as loan to value ratios, to push back on house price inflation, without bringing more upwards pressure on the exchange rate. ” “We also received comment that finding entry level staff is difficult, especially in the Christchurch region as the rebuild gathers a little pace.” “The overall feeling is that things remain a struggle but efforts endure, however if the dollar continues to appreciate their future […]

BusinessNZ and ManufacturingNZ welcome plans by the Government to make it easier for local firms to participate in Government tenders. Executive Director of ManufacturingNZ, Catherine Beard says BusinessNZ has been working on this issue with officials in the Ministry of Business, Innovation and Employment for some time.  “We welcome the comments from Minister Steven Joyce that the Government is looking to reduce barriers to New Zealand firms winning Government tenders, or at least participating somewhere in the supply chain.  “Things we would like to see would include Government Procurement Managers getting to know the local capability in the market before they go out to tender, as well as giving longer lead times to allow local companies to respond and put together joint venture proposals on larger jobs. “We would like to see a requirement for Government Procurement Managers to consider the “whole of life“ cost of a project, not just go for the lowest price, which can be a false economy when it leads to costly repairs. Local firms tend to provide a higher quality product which is better value. They also have the ability to tailor make a solution and are on the ground for back up and support.  “We would also like to see the introduction of local industry participation plans, which are used in Australia and many other countries. They stipulate that on large projects, Procurement Managers have to show that they have considered local capability and where it could fit in the supply chain.  “Central and local Government and SOE’s make up a big part of our economy and are often responsible for the big projects as well. We need to get our firms better engaged with a view to them winning bigger jobs and in turn becoming businesses of scale that can compete globally.”  

Fonterra’s commitment to invest $20 million over 10 years in a waterways conservation partnership with DOC demonstrates a recognition by business of its dependence and impact on ecosystem services says the Sustainable Business Council.  “Without fresh, quality water, it’s not just our environment that will suffer, but our economy too,” says Penny Nelson, Executive Director of the Sustainable Business Council.  “Fonterra plays a major role in New Zealand’s primary industry-based economy, and this initiative to improve the biodiversity and water values in some of the catchment areas it affects is exciting. It’s really encouraging to see business’s commitment to conservation partnerships scaling up. We fully support this new partnership and look forward to seeing more New Zealand companies engaging with DOC in this manner. “Fonterra and DOC are actively engaged in the Sustainable Business Council’s ecosystem services work programme. There are some really useful corporate tools & training that have been developed by the World Business Council for Sustainable Development which are starting to be used in New Zealand”.  

-Gary Hartley, GS1 New Zealand Will it be the beef, vegetable or horsemeat lasagne this evening Madam? Europe’s mounting horsemeat scandal will provide a rich diet of jokes for some time. A ‘hoofdunnit’ is how British papers are describing the urgent investigation into how Romanian horsemeat ended up in French supermarkets posing as beef in heat-and-eat dinners. Of course it’s no laughing matter for French food manufacturer Comigel or for its suppliers who risk huge brand damage. And the episode is a great reminder to New Zealand’s meat industry – farmers, processors, marketers and distributors -about the importance of truthfully representing products to the consumer and indeed, to every other party in the supply chain. We can safety assume that no New Zealand meat export supply chain looks as bizarre  or as unappetising  as that of Comigel. The latter was buying frozen meat through a chain that included French, Dutch and Cypriot traders, with the meat source (unknown to Comigel till the scandal broke) being a Romanian slaughter house. Our meat products are rather less commoditised and our supply chains less opaque. But horsemeat is horsemeat. The core principle is the same for every product and every supply chain -you have to know what you are selling or buying, and to be able to truthfully inform others about it. That horsemeat is, anyway, widely eaten in parts of continental Europe is hardly the point. The scandal breaks at a time of increasing sensitivity to the core principle among European consumers, regulators and food companies. Have no doubt that the stakes are about to rise for everyone who supplies meat for consumption in France, Holland or the United Kingdom (where there is absolutely no appetite for horsemeat). Just as well we have technology that can enable whole-of-supply-chain track and trace on […]

  -Adam Bennett* It only takes three questions to start your firm on a journey that could end with global recognition and practical support for your export strategy. In 2009, New Zealand took a bold step and re-cast the 45 year old Export Awards, creating the New Zealand International Business Awards. The Awards, run by New Zealand Trade and Enterprise with the support of Strategic Partner ANZ, is the country’s most prestigious awards programme for internationalising businesses. Like every new exporter, we were nervous and excited about the decision to change. But, much like all of you, we realised there was more to celebrate in global business than just selling containers of ‘stuff’. That’s why the programme recognises the new approaches businesses are taking to achieve international success. It is a celebration of the passion and vision of New Zealand’s most outstanding international businesses and business leaders. New Zealand manufacturers in particular have grasped this opportunity with enthusiasm. As we hear the litany of doom and gloom about manufacturing in New Zealand, it would be easy to assume that manufacturing is in crisis: that everyone is shutting down, packing up and leaving; and that no new jobs are being created or industries expanded. But previous winners like Sistema, Triodent, Simcro and Fastmount are proof that New Zealand manufacturing businesses are finding global success. Just hearing from past participants reassures me that we all can learn so much from their stories. Allin Russell from Sistema, winner of Best Use of Design category in 2012, reflected; “It does wonders for morale – the best part of winning was telling our hard working staff that we had won. It was like a football match, everyone erupted, beaming with pride. We’re now at the stage where we attend significant conventions around the world because […]

 A collection of 36 rare and historic Caterpillar tractors will stay in New Zealand – thanks to Ben Gough, executive director of Gough Group and his sister, Gina Satterthwaite. The Canterbury-based brother and sister have secured a deal which will see the machines and associated equipment remain here following the sale in Rotorua of the privately-owned New Zealand Caterpillar Experience. The Experience has operated for the last seven years, and is well known world-wide as a unique collection of rare machines. “When the owner, Lindsay Willis, contacted us to see if we were interested in buying the collection, it was too good an opportunity to pass up,” said Ben Gough. “The collection is uniquely Kiwi, and reflects the contribution the Caterpillar brand and the Gough Group has made to the development of New Zealand infrastructure and farming.” The unique legacy of the collection was also a key element in the decision for Gina. “The history of the machines is also the history of our family, so retaining it in New Zealand, rather than losing it overseas, was an easy decision for us,” she said. All the machines in the collection were sold or serviced by the Gough Group, and several of them are extremely rare, with only a handful of machines worldwide, including a 1928 Auto Patrol, one of only two known examples in the world, and a Speeder from 1937. Initially the collection will be moved to a private location for storage while designs are developed for its new long term home. Planning has not yet begun but the intention is to have the historic machines on public view again at some stage in the future.                                

Business commentator Rod Oram explained how energy efficiency can fuel business innovation and growth at an EECA Business process heat workshop, held recently in Auckland. Consuming energy worth more than $2 billion dollars every year, process heat systems (furnaces, boilers and ovens) are used in most industries – from bread making to milk powder production, and timber processing. EECA Business Project Manager Pramesh Maharaj says improved process heat systems efficiency is one of the biggest opportunities for New Zealand manufacturers to make cost savings, increase productivity and enhance green credentials. “The workshop was a great success. Having more than 50 process heat users and energy efficiency experts sharing their experiences and knowledge really helped raise awareness of the opportunities in process heat. “Participants particularly enjoyed hearing Rod Oram explain how process heat energy efficiency connects to the big picture for the national economy,” he said. Rod Oram also spoke about the critical need for senior level executives, particularly CEOs and CFOs, to make energy efficiency a business priority. The workshop included case study presentations from companies that have benefited from improved process heat efficiency. Highlights included wood processor Nelson Pine, that saved more than $2.5 million in two years through improved process efficiency and reduced heat wastage; and Energy Plant Solutions, which recently installed a 95% efficient boiler and heat recovery system for a new milk powder near Balclutha. Pramesh Maharaj says EECA Business expects to hold similar workshops over the coming months. EECA Business has grants available to assist businesses put six-monthly boiler tune-up regimes in place. Up to 40% of the cost of a two-year tuning regime (maximum of $5,000 per site) is available for sites with total boiler capacity of 1.5 MWt or more. See www.eecabusiness.govt.nz/boiler-tuning-grants There is part-funding towards base-level or investment-level energy audits of heat […]

-Dan Taylor -Trade Commissioner, Melbourne With a reputation for innovation, niche solutions and a strong results focus, New Zealand manufacturers enjoy a solid reputation in Australia. We also have the advantage of geography, language and legal systems, but New Zealand companies can’t be complacent, and still need to be smart operators to have the best chance of success across the Tasman. For companies that are smart and focussed, the attraction is clear. As well as being the only market of scale where we have geographic advantage, Australia remains New Zealand’s premier trade partner. The numbers are compelling – 23 per cent of our exports end up in the Australian market, representing NZ$10 billion annually. A quick look at the enormous breadth of the exported goods and services suggests that for almost anything New Zealand has to offer, there is a home in Australia. Australia’s recent economic success has been underpinned by a booming resources sector, and while prices have come down from their record highs, there is still plenty of upside. The once in a generation opportunities provided to New Zealand manufacturing businesses by the resources and mining boom remain, so long as companies focus on their core capabilities and are willing to put in the effort. WhatÕs particularly interesting from a manufacturing perspective is that as these mining and resources projects mature, they are moving from a construction focus to a focus on efficiency and productivity – an area where New Zealand manufacturers are well placed to take advantage of the opportunities. Investment into the sector is still strong, with $A260 billion of capital expenditure committed over the next 2 – 3 years, while export volumes are expected to triple from their 2001 levels by 2020. This drive for efficiency and productivity gains is also being seen in other […]

Inland Revenue’s latest tax tightening proposals will hit smaller businesses the hardest with extra compliance costs, the Employers and Manufacturers Association says. “The impact of the new taxes on car parks along with the proposal to tax the personal use of mobile phones and laptops will aggravate compliance costs for all businesses but especially SMEs,” said Kim Campbell, EMA’s chief executive.  “Its absolutely not worth IRD proceeding with this.  “A recent national survey or ours found 47 per cent of employers allow the personal use of smart phones, and 35 per cent allow personal use of tablets and laptops provided for business purposes. “72 per cent provide free car parks for their staff. * “Trying to tax things like this will simply see many employers ceasing to provide them. “Their employees won’t be happy, employers don’t want to do it, and the tax revenues collected will be at best miniscule.  “The cost to SMEs of tax compliance is typically three times more per person employed than for larger firms.  “IRD’s policy advisors would be much better directed to work out how New Zealand could cut its company tax rate thereby attracting more overseas companies to pay their tax here and lift their revenues rather than stalking small dividends like this. “At the same time cutting the company tax rate would boost investment. “Some of the thinking on taxing specialised work clothing, meals and accommodation allowances also needs to be reworked.”