Business News

  Where are the business opportunities currently for your company? Most of the growth opportunities for the manufacturing side of our business come from export, particularly in South East Asia, but our parent company has also recently made the move into the North American market.  How are you finding business conditions? In New Zealand currently it is a case of batten down the hatches and hold on to market share for our traditional manufactured products. The declining number of manufacturers, reduced maintenance spending, Government spending cuts and low rates of construction activity are making things difficult. What is the secret of your company’s longevity? We are fortunate to have good owners who have invested heavily in the company (not just during the good times) and allowed us to stay ahead of competitors with new machinery, manufacturing systems, tool design and quality. We have continued to invest in our brands and the relationships we have with distribution partners in New Zealand and around the world. What can be done – do you think – to assist NZ businesses in the present business climate? It would be easy to harp on about the New Zealand dollar and Government controls but we can’t go back to old protectionist days. Businesses need to adapt their own activity and products to stimulate growth. We would like to see some real effort to reduce compliance costs and generate more activity in the building and construction sectors but the fact is manufacturing in New Zealand has always been difficult and is unlikely to expand rapidly. Where do you export to? We export to Australia, South Pacific, Europe, and South East Asia. We are market leaders in Thailand, Malaysia and Singapore. The future? There are many possible options for our future, we continue to improve our production equipment […]

Chief Manufacturing Executive, Peter Sutton, and long standing employee Neville Wyatt, Quality Control, unveil the 50 year anniversary plaque. Patience and Nicholson is a proud Canterbury manufacturer going from strength to strength. Employing a 120-strong local workforce, the company first opened its factory in November 1962, with the aim to manufacture a small range of jobber drills for the New Zealand market. Half a century later, the plant produces more than 60,000 drill bits every day and its brands Evacut, P&N and Sutton are market leaders in the New Zealand, Australia, South Pacific and several South East Asian markets. General manager Kevin Donovan says significant growth has occurred since 1994, when it was purchased by Australian Sutton Tools, one of the largest family-owned tool-cutting companies in the world. The heavy investment that came with the acquisition allowed the New Zealand business to transform into a modern, efficient facility which was able to in turn acquire its own import company in 2000. Mr Donovan says the company has had to overcome its fair share of adversity over the years, with several ownership changes, margin reduction, the introduction of a new brand and various recessionary periods. “Despite difficult market conditions the company’s future looks bright, with brand development, new concept machines and environmentally friendly oil recovery presses all on the horizon,” he says. Plans for a modern, new plant are also being considered- although the building sustained only superficial damage in the Christchurch earthquake, bringing it back up to building standards will cost more than $400,000. Mr Donovan says the way staff, and members of the company’s own engineering team were able to react quickly and get strengthening work done within days, almost certainly saved the factory from closure altogether. “It has been an unsettling time for staff, the ‘can do, will […]

The University of Waikato says it has capacity to take on at least 100 more engineering students in the five programmes it offers. Tertiary Education Minister Steven Joyce announced last week that he’d gained 1000 extra places for engineering students at universities and polytechnics next year which he hopes will go some way to address the shortage of engineers in New Zealand. In the 10 years Waikato has offered professional engineering qualifications, numbers have steadily increased to 350 but the School has capacity for 450 says Associate Dean of Engineering Professor Janis Swan. The Waikato degree offers five engineering disciplines – mechanical, software, chemical and biological, materials and process, and electronic – all accredited by IPENZ, the Institute of Professional Engineers. Engineering and information technology are the two occupations in most demand and Mr Joyce sees lifting student numbers in those areas as crucial to economic growth. “We’re conscious of the demand to produce work-ready graduates,” says Professor Swan. “To that end we’ve developed strong relationships with businesses so all our second and third year students have the opportunity to gain work experience while studying – we have a dedicated unit for finding work placements and work experience is usually the best way into a permanent job.”    

The BusinessNZ Planning Forecast indicates continued patchy growth in the short term, but with pockets of optimism as the housing market begins to show signs of life and the Christchurch rebuild starts to gain momentum.  Despite an increasingly subdued global outlook, there are underlying factors which should act in New Zealand’s favour in future, including the growing shift of world economic activity to the Asian region.  “While short term projections are largely flat, the medium and longer term outlook for New Zealand is improving,” said BusinessNZ economist John Pask. The BusinessNZ Planning Forecast incorporates BusinessNZ’s Economic Conditions Index (ECI) which tracks 33 indicators, including GDP, export volumes, commodity prices and inflation, debt and confidence figures. The ECI sits at 8 for the December quarter, up 9 on the previous quarter and up 3 on a year ago. The BusinessNZ Planning Forecast for the December 2012 quarter is here on www.businessnz.org.nz    

Historic sweeping changes at the helm of China’s ruling communist party signals the beginning of a new era for the Chinese people and a once in a decade opportunity for New Zealand to consolidate its relationship with the emerging economic powerhouse. Last week, Mr Xi Jinping was confirmed as the man to lead China after being elected as the General Secretary of the Communist Party of China (CPC) and the Chinese Military. PwC Partner and China sector spokesperson Colum Rice says, “The change in leadership happens only once every ten years, so the world is witnessing an historic moment. And just how Mr Xi and his new team cope with the enormous responsibility of leading China for the next decade will be pivotal, not only for the Chinese people but New Zealand’s economic future also.” Mr Xi’s father and predecessor, Mr Xi Zhongxun, was one of the first leaders to execute the ‘Open China Policy’ which saw China surge ahead and become the world’s second largest economy, overtaking Japan in 2010.  PwC Partner and Food and Agriculture sector spokesperson Craig Armitage says, “The success by previous leaders of the CPC means the pressure is on the new leaders to keep the economy growing at a similar rate. Yet, that isn’t going to be easy with growth already slowing from 10% a year to around 7 percent, which is the lowest rate since the start of the Global Financial Crisis.”  In his first speech since being elected, Mr Xi’s set out to allay any fears China’s economic growth is a thing of the past. He covered three key areas in his speech, all of which Mr Rice and Mr Armitage believe will be positive in advancing trade between New Zealand and China.  Those included: • Improving Chinese People’s wellbeing. • Advancing […]

Small business owners are hands-on, expecting growth and aware of their development needs according to a new survey of BNZ small business customers released today. The nationwide, survey “BNZ Spotlight on SMEs” highlights small and medium business (SME) owner sentiment and outlook, employment intentions and the realities of owning and running a SME business in New Zealand. Key findings: • 70% are looking to grow their business, either now or in the future • 61% are working harder than a year ago • SME owners rate themselves most highly in relationship and communication skills • Marketing, finance/cash flow and money management are the major challenges for SME owners • Most owners are “hands on”, only 5% have managers • Owners rate themselves 6.4 out of 10 for overall skills, and • One in four intends to hire in the next 12 months  “While businesses are growing or looking to grow, many are not confident that they have the marketing and finance skills in-house to sustain growth over the long-term,” says BNZ Executive and Director of Retail Banking, Andy Symons.  “New Zealand’s economy needs success in our small and medium businesses. With a need to bring GDP per capita up in line with OECD levels, service organisations such as BNZ must form strong, long-term partnerships with SME businesses to ensure they have the tools and support that will allow them to achieve their full potential.” The study found that just over a third (36%) of respondents nationally report their business is growing and a further 34% say their business is stable, but looking to grow in the future. Strong themes of hard work, service ethic, quality workmanship and doing right by customers were evident in growing businesses or those with the intention to grow. In keeping with growth intentions, a quarter […]

The service sector breathed back into life during October, according to the BNZ – BusinessNZ Performance of Services Index (PSI). The PSI for September was 57.4. This was up 7.5 points from September, and the highest result since November 2011 (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). Compared to previous October results, the 2012 value was the second highest recorded since 2007. BusinessNZ chief executive Phil O’Reilly said that there were certainly some notable reasons to raise a glass for the current results. “Both activity/sales and new orders/business were either struggling or heading in the wrong direction in recent months, so a strong turnaround for both to lift the overall result has come at the right time. Comments from respondents also provide a telling story. In September, only 47% of comments were positive, which rose to 62% in October.  “Last month we asked whether the Xmas/seasonal effect would help steer the sector back into positive territory. Looking at those who provided positive comments, this seems to be the case, along with various growth stories outlined citing a larger customer base, improving business efficiency and winning tenders.”  BNZ economist Doug Steel said, “In the context of some horrible economic indicators for the third quarter, the big bounce in the October PSI is very welcome. While one needs more than one month’s data to be sure of genuine bounce in activity, it is a first step to suggesting a reasonable rebound from a soft patch earlier in the year.” The seasonally adjusted BNZ – BusinessNZ Performance of Composite Index or PCI (which combines the PMI and PSI) for October showed the two options for measuring the PCI back in healthly expansion. The GDP-Weighted Index (56.9) increased 7.7 points from September, […]

The NZIER report released today, Lifting Export Performance prepared for Export New Zealand is a timely reminder of the challenging issues facing us if we are to improve our standard of living, the Employers and Manufacturers Association says. “Boosting exports is vital to lift New Zealand’s economic performance,” said EMA chief executive Kim Campbell (left). “This report asks the difficult questions why we are not improving our export performance faster, and in a fresh way,” he said. “It underscores that we must not underestimate the challenges of scale and distance our businesses face. “New Zealand has to compete for investment dollars the same as every other country, and for us to attract investment in productive enterprise we need to focus on doing extremely well those things where we display demonstrable strength. “But to grow our exports we will also need to specialize and diversify further. “To do that we could introduce new policies and practices to offset the challenges faced by some of our exporters, though there is no silver bullet. “Its gratifying the report agrees our company tax rate is too high for a country of our size, location and modest income levels. We should aim to get ours to 20 per cent, comparable with Switzerland or Chile. “We note it says government spending can have unintended consequences and act as a tax on exports. “Keeping Government spending under firm control, and the public saving more, will have far more impact on the exchange rate than trying for a quick fix such as printing money. “All New Zealanders must understand we cannot achieve higher standards of living without funds to invest in productive businesses. “The report remains silent on the gains to be had from investing in manufacturing; every job created in manufacturing delivers five more in the wider […]

A new report Lifting Export Performance, carried out by the New Zealand Institute of Economic Research (NZIER) on behalf of ExportNZ, is shining a light on what is holding New Zealand back, the effectiveness of export policies, and how best to move forward.  ExportNZ Executive Director Catherine Beard says the report is a sobering reality check on the state of the nation’s export performance and how vital it is to get the policy framework right.  “This report focuses on addressing New Zealand’s big issues – its smallness and isolation. One of the obvious ways to overcome these problems is to make NZ a bigger country with bigger companies. We need a national debate on population policy and how big we should be by 2060. “You can’t fake scale. We need to grow the population through immigration and build companies of scale. Once grown, the challenge is then keeping these companies in New Zealand so the country benefits from them. The alternative is selling out to other countries and losing talent overseas for better jobs and better pay. “How do we keep successful companies of scale in NZ? The report outlines a variety of issues New Zealand policymakers and firms need to address now and into the future”. NZIER Deputy Chief Executive John Ballingall says “Boosting our exports requires first-rate policy settings and creative, collaborative actions from New Zealand firms. There is no silver bullet, and a medium- to long-term perspective is required. We need to ensure existing capability-enhancing policies are delivering value for money. Our immigration, tax, welfare and foreign investment policies need to enhance rather than restrict the ability of New Zealand firms to gain scale. And we need to see more examples of firms working together in strategic alliances to build presence offshore.”  Key points from the report: […]

New Zealand’s manufacturing sector returned to a minor level of expansion in October, although the sector remains in a flat state, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).  The seasonally adjusted PMI for October was 50.5 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining).  This was 2.0 points up from September and the first level of expansion after four consecutive months of no expansion.  Over the last quarter, the PMI has averaged 48.8, and the year to date at 51.2.  BusinessNZ’s executive director for manufacturing Catherine Beard said that any return to expansion is obviously positive news, but no one should think this is the immediate start of better times ahead for the sector.  “Looking at the history of the survey, we’ve just come out of the longest consecutive period of contraction since 2009.  On the plus side, an improvement in production and a sharp rise in the number of positive comments by manufacturers are welcome.  However, new orders remain historically low, while those employed in manufacturing have been in decline for five consecutive months. BNZ senior economist Craig Ebert said the October result gives hope that the sector is stabilizing after going through a rough patch in recent months. “The best way to describe the latest PMI result is ‘relief’, however headwinds for the manufacturing industry still prevail. The NZ dollar remains high, international demand is patchy, and the NZ economy is looking a bit bumpy and hesitant, including in employment. Until we see a more concerted and consistent pulse in the PMI, we’ll stay reticent about the sector’s immediate growth prospects.” Three of the five seasonally adjusted main diffusion indices were in expansion in October.  This was led by production (53.8), which experienced its […]