Business News

Hamilton Airport has outperformed its 2012 financial and operational expectations, announcing a 240 percent increase on last year’s net profit after tax, a 25 percent increase in EBITDA and debt reduction of $400,000 during the year. Board chair John Birch said the airport had achieved a solid result for 2011/2012 because of good planning and delivering on major projects. “The focus this year has been on containing costs, paying off debt, improving and diversifying revenue streams and maintaining customer service levels. In many of these areas we have exceeded our statement of intent targets.” He added it was unfortunate that the announcement from Virgin Australia advising it would cease operating its Brisbane route came post-balance date and overshadowed a very good annual result. “Because aeronautical revenues fluctuate, the airport has had a long-term strategy to diversify its revenue streams, with developments such as Titanium Park and long-term leases. Looking ahead to the 2012/13 financial year the income from these streams will lessen the impact of the lost international flights,” said Mr Birch. In August 2011 the airport’s joint venture property business Titanium Park sold 12 hectares of land, the entirety of the Stage One development, to internet e-commerce retailer and logistics company Torpedo7. Construction of Stage Two of Titanium Park is currently under way. Hamilton Airport chief executive Chris Doak said the improved net profit after tax of $378,000, up by $267,000 on 2011, was primarily attributed to increases in property lease revenue, cost containment and lower interest costs from a reduction in debt. He added that despite the Rugby World Cup negatively affecting Hamilton’s domestic flight numbers during September, October and November 2011, total passenger numbers were maintained at 354,000, only two per cent fewer than the previous year. Overall aircraft movements increased by 16 percent from 102,000 to […]

  New Zealand businesses need to lift their game if they want to succeed in Korea according to New Zealand Trade and Enterprise research into the perceptions of New Zealand in South Korea. “There is a pool of goodwill and trust for New Zealand in Korea,” says NZTE’s Trade Commissioner based in Seoul, Graeme Solloway. “But the latest research indicates that while New Zealand is seen as being warm and trustworthy, there is also a perception that New Zealand has stagnated in the last 10 years, and that we don’t actively seek or chase business opportunities here.” “Like many places, Korea is a complex market, with its own unique business culture, and New Zealand businesses need to take the time to understand and appreciate the way that relationships and the local business culture work here, and operate a way that resonates with Korean customers,” Mr Solloway says. The  research builds on an initial survey completed in 2008 which found that New Zealanders were perceived as being friendly but not business minded. “Overall there has been little change in the Korean perceptions of New Zealand over the past two years,” Mr Solloway says. “There is a growing perception that New Zealand businesses are ill prepared for Korea and are not stepping up to Korean business standards. If businesses can do that, there are huge opportunities here for the waiting.” The research indicates that: There is a pool of goodwill and trust for New Zealand in Korea and Koreans enjoy working and playing with New Zealanders. New Zealand businesses are seen as slow and unresponsive and Korean businesses are losing patience and have easier business options to choose from. Koreans generally have positive perceptions of New Zealand food and beverage however specific product knowledge tends to be restricted to unprocessed foods such […]

After today’s CPI figure we expect the Reserve Bank to cut the Official Cash Rate on October 25th in an effort to lower the exchange rate, the Employers and Manufacturers Association says. “The CPI figure indicates inflation has moved below the agreed target of 1-3 per cent required of the Reserve Bank leaving ample room for a cut to the OCR,” said Kim Campbell, EMA’s chief executive (left). “We need the Reserve Bank to do what it can to give exporters a break and stimulate the economy,” he said. “This is the second consecutive quarter showing annual inflation running at or below 1 per cent and the trend is still downward. “In fact there was deflation in the tradables sector over the past year to September of 1.2 per cent. “With the economy flat as a plate and with some businesses in a perilous condition, our exporters need a cut to the OCR to help spur investment but mainly to retain the cross rate advantage we have had for exports going to Australia. “Other countries around the world are cutting their interest rates where they can while those at or very close to zero are printing money through quantitative easing in an effort to support their economies. “A cut to the OCR on October 25th, the date when the Reserve Bank is due to report again, would underpin business confidence and show monetary policy works.”  

Despite a slight improvement from the previous month, New Zealand’s manufacturing sector remained stubbornly in contraction during September, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI). The seasonally adjusted PMI for September was 48.2 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). While this was 0.8 points up from August, it represented the fourth consecutive month of no expansion in the sector. Over the last quarter, the PMI has averaged 48.3. BusinessNZ’s executive director for manufacturing Catherine Beard said that although the September result did not sink further than August, details behind the main result need to be outlined. “Although the employment sub index bounced back from August, the continued drop in new orders to its lowest point in more than three years may have an adverse effect on production numbers in the months ahead. When examining the comments put forward by manufacturers, the low number for new orders does not come as a great surprise given terms such as ‘lack of demand/orders’ and ‘slowness in orders’ were prevalent.” BNZ senior economist Craig Ebert said the September PMI is more likely to be temporary turbulence than tragedy. “While the data are worryingly weak-looking, they are about current conditions more than the way ahead. Talk that the industry is in crisis is overblown. Manufacturers’ expectations for output over the next three months remain positive.” Four of the five seasonally adjusted main diffusion indices were in contraction in September. While finished stocks (50.6) bucked the trend with its first level of expansion since May 2012, new orders (45.9) fell a further 2.0 points from August and experienced its lowest value since May 2009. The remaining indices improved somewhat on August. Employment (49.2) increased 3.7 points, while both production (49.9) […]

Working has to be a lot better than being on the dole. Right? Motivation, future direction and ‘career’ all come into the picture for our young people’s tomorrow. And while working they are entitled to be paid a reasonable wage for their efforts. However, the announcement this morning by Kate Wilkinson, Labour Minister that 16-19 year olds will get $10 an hour is a huge joke for the obvious reasons: throwing our youth onto a cheap labour pool and secondly providing them with greater incentives to move to Australia. It is very hard to figure out who in this government has a grip on job creation, incentives for job creation and the future of manufacturing in this country. On Friday there is a gathering, called for by the EPMU to talk about the urgency facing the jobs market. Why has this taken so long to organise? Where are the jobs going to come from? There are large numbers of young people unemployed – just look to the Waikato if you want to ask about the ‘lost generation’. They need jobs and a living wage not a special government works approach to their future. -Doug Green  

Experts say the possibility of expansion at Kyocera Industrial Ceramics Corp. reflects a new paradigm taking place in global manufacturing that starts with shrinking cost differences between production in China and the U.S. That shift, as well as rising global consumer spending, are expected to increase the demand for components made by Kyocera Industrial Ceramics, which supplies unnamed technology companies, President David Williams said. He stressed the parts being made are for manufacturing equipment, not household items. “But you would be shocked at the number of ceramic components in your house,” Williams said. The parts tolerate much higher temperatures than those tolerated by metal components. “Ceramic is a miracle material,” said Pat Cotter, the company’s Vancouver-based vice president of administration. “It’s incredibly strong and can do a wide range of things in various high-tech applications.” Analysts expect more U.S. plants will produce high-tech components, as the cost of everything — from shipping and storage costs to protection of intellectual property — continue to rise. Couple the issues with China’s rising wages and the global economy is starting to shift, said Harry Moser, president and founder of the Reshoring Initiative, a nonprofit based in Kildeer, Ill. He said approximately 50,000 manufacturing jobs have been “reshored,” or production moved to the U.S., since January 2010. That’s because a few “tipping point” industries have discovered it’s cheaper, when weighed against wages in China that are rising at about 15 percent annually, Moser said. By comparison, Moser said U.S. wages increased by between 2 percent and 3 percent a year. “There are a lot of products that it makes more sense to make here,” said Moser, whose nonprofit analyzes and measures cost differences between offshoring and reshoring for private companies. The trade association-supported group’s goal is to get those firms to stay in the […]

An urgent summit this Friday aims to tackle what organisers say is a deepening jobs crisis. The Engineering, Printing and Manufacturing Union (EPMU) says the summit is being held in response to a string of recent manufacturing redundancies and a trades drain, as more New Zealanders move to Australia for work. Unions, economists and business and political leaders will attend, including Green Party co-leader Russel Norman, Labour finance spokesman David Parker and New Zealand First leader Winston Peters. EPMU national secretary Bill Newson said the summit showed there was an emerging consensus that the Government needed to take a more active role in the economy. “No one who has seen the mass redundancies of recent months or the numbers of Kiwis heading to Australia can be unaware of the deepening jobs crisis in this country and the need for a new approach.” Mr Newson said the hands-off approach to the economy was broken and the Government needed to step up and support the manufacturing sector and the jobs it provided. “There are alternatives, and as a country we need to discuss them. This summit is about bringing together the new consensus and we welcome anyone interested in the future of our country to join us in planning a new way forward.” The summit comes after Mr Parker was (Sunday) critical of the Government’s response to the record numbers of New Zealanders heading to Australia. He said an analysis of Statistics New Zealand figures for the year to August 2012 showed when unemployment rates peaked in the first quarter of this year, so too did the number of young New Zealanders migrating to Australia. “National claims that the record numbers of Kiwis heading to Australia isn’t their fault; it’s because our neighbours are doing so well. But a close look at […]

Steven Joyce is peddling manufacturing make-believe, wrongly claiming the sector has been growing for the past two years, says Labour’s Economic Development spokesperson David Cunliffe. “Steven Joyce is living in a dream world on manufacturing. Today he said ‘the manufacturing sector has been growing in the past two years’. That’s factually incorrect: the manufacturing index has been in negative territory for a quarter of that time. “We’ve seen 40,000 manufacturing jobs lost since 2008, when National came to power. We’ve seen massive layoffs in Kawerau, Huntly, Spring Creek, Tiwai Point, Christchurch and South Auckland. “More jobs are said to be on the line at Mataura Freezing Works, Glenbrook Steel, Tiwai point and others. “Yet Steven Joyce wrongly claims the sector is booming. Misusing labour force statistics can’t hide the reality being faced by thousands of Kiwi families. “The Government won’t go into bat for our exporters and manufacturers. Labour will. We know Kiwis need a strong manufacturing sector to create good jobs that pay a decent wage. We will work with industry and provide the right policies to get manufacturing moving. “The essential reasons manufacturers are struggling are the overvalued New Zealand dollar, an anti-growth tax framework that rewards speculation over manufacturing, and an absence of government strategy for industry sectors and regions. “Steven Joyce says our dollar is high because our economy is strong. The hundreds of jobs being lost week after week disprove his fantasy theory. If the currency reflected the strength of the economy, businesses would be performing and hiring, not firing. “The Minister just glosses over real world problems with glossy brochures that he calls a growth agenda, and name-calling anyone who disagrees with him. “The global economic authorities that he is blindly dissing include the OECD, IMF and Nobel laureates like Joseph Stiglitz, as well […]

Options to deal with the exchange rate, such as the Green Party’s recommendation to start quantitative easing, need to be explored say the New Zealand Manufacturers and Exporters Association (NZMEA). Quantitative easing is one of a number of measures that could be used to remove pressure on the exchange rate and a debate is needed on how these can be best used. NZMEA Chief Executive John Walley says, “It is clear that New Zealand’s exchange rate is the key problem behind our poor export performance, and the resulting job losses we have seen over the past couple of months. Any denial of this problem is simply economic negligence.” “The quantitative easing Russel Norman described over the weekend is one of the options that are being used overseas to deal with exchange rate competitiveness. Spending the money directly into the earthquake rebuild and building foreign reserves are both worthy objectives but they are different issues – it is worth noting that those who say printing money is a problem are happy to borrow and pay interest on money printed by other central banks.” “There are other options available to deal with the exchange rate and protect the real economy; Switzerland offers a good example here.” “It is true that a lower exchange rate will mean higher petrol prices and more expensive imports in general, but sooner or later a flat line economy means no jobs, and therefore, no flat screen TVs.” “That is essentially the choice that confronts us.”  

  The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during September 2012, shows total sales in August 2012 decreased 2.75% (export sales increased by 10% with domestic sales decreasing 12.9%) on August 2011. The NZMEA survey sample this month covered NZ$580m in annualised sales, with an export content of 50%. Net confidence remained about level moving from -11 last month to -10 this month. The current performance index (a combination of profitability and cash flow) is at 102, down from 104.5 in July, the change index (capacity utilisation, staff levels, orders and inventories) went down to 100 from 101 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 101, down on July’s result of 103. Anything less than 100 indicates a contraction. Constraints reported were 90% markets and 10% skilled staff. Staff numbers for August increased year on year by 2.4%. “We have seen the impact of long run problems in the economy over the past couple of months,” says NZMEA Chief Executive John Walley (pictured). “We have seen some firms reach a tipping point due to the continued affects of a high NZ Dollar.” “At a wider level the general theme of comments is that while many firms are able to tread water with the currency this high there are very few investing in future development. This will be a longer term slow growth or contraction story.” “Sales continued to bounce around in August with export sales increasing year on year and domestic sales falling. With conditions remaining poor for manufacturing exporters this low to zero growth and volatility is expected by many to continue for the foreseeable future.” “Index numbers were down on last month but an increase in staff numbers is a welcome positive.” “Respondents […]