Business News

  -Nick Inskip Between April and early September 2012, Chinese Domestic steel prices dropped by almost 20%. With lower input costs, Chinese manufacturers gained a significant advantage in quoting on orders for export, further harming New Zealand’s domestic manufacturing base which has yet to fully recover from the effects of the global financial crisis (GFC). The downturn in the domestic price for steel in China came as oversupply coincided with a slowdown in their economy, which by any standard is still growing strongly. But prices for domestic steel in China are beginning to rise again with the prospect of some reduction in their input advantage. The Chinese Government’s National Development and Reform Commission, which is charged with the role of economic planning, has announced a range of new stimulus projects that are estimated to be worth more than CNY 1 trillion (NZ$ 190Billion). This is approximately a quarter of the stimulus package the Chinese announced in response to the GFC in 2008, and represents their level of concern at slowing growth. As a small economy, New Zealand manufacturers are impacted by our low level of domestic growth and by the penetration into the domestic market of cheap imports. For New Zealand manufacturers to have a level playing field, they should also have similar support from Government through demand created by stimulus. But that is not enough; if they are to compete on an equal basis, the stimulus needs to be earmarked for local manufacture. We often hear about trade agreements preventing government from preferentially supporting local manufacturers. It is hard to believe that any of the NZ$190 Billion the Chinese are spending in their latest stimulus package will be open to tender from New Zealand manufacturers. So what New Zealand manufacturers are fighting against is an unfairly tilted playing field, […]

Politicians’ lamenting the latest job losses while at the same time proposing to pass a law that imposes more costs on business – by Mondayising Waitangi and ANZAC Days – does not make sense, says the Employers and Manufacturers Association (EMA). “Actions speak louder than words,” EMA’s Employment Services Manager David Lowe told the Transport and Industrial Relations Select Committee this morning on the Mondayising proposal. “Mondayising these days is simply legislating a holiday. Where do people think the money to pay for extra holidays will come from?” “Waitangi and ANZAC days are commemorative days and will be celebrated on the day they fall regardless. “Some businesses do support the Mondayisation – mainly tourism that benefits from a long weekend, and owner-operators who get a day off too. “But the large majority of employers do oppose the law and are frustrated at those who wring their hands in angst over job losses and then vote for laws that make matters worse,” he said.  

By Doug Green Fisher & Paykel, the Kiwi company with the fantastic Kiwi can do attitude, has been around since 1934 starting out selling surplus fridges in Auckland’s Queens Arcade. When high import tariffs arrived in 1938 the company commenced their own manufacturing of appliances. Now look where they are today. The Chinese company, Haier, which brought into Fisher & Paykel Appliances in 2009, wants the intellectual property – which raises the point how long will Fisher & Paykel continue to manufacture in New Zealand? Share prices are being bandied around at present – everything from $1.20 to $3.31 each. Shareholders are currently scratching their heads about selling the 63 percent of the company that Haier doesn’t own. Some of Fisher & Paykel’s products like direct drive motors and compressors help boost revenue through sales to other manufacturers. The drives could add up to $35m to pre-tax earnings in the next four years while compressors could add up to $7m in licensing royalties. It’s possible that Haier wants the whole Fisher & Paykel package included in its bigger operation, taking the IP back to China. With Haier raising its head again it begs the question: How do we keep the iconic industries that make great products and employ our people from being sold overseas? It’s a very good buy for Haier and the shareholders and not too good at all for the people who work there, if it comes to pass that future production takes place in China. Globalisation is rife, it doesn’t need to raise its head  it’s everywhere. The world is a small (business) place. Fisher & Paykel comes from a small country, initially started by two men with ancestry from Russia. Look how far the company has come. Where’s it going to go next?

  Job Destruction is the title given to a category by Department of Statistics when they record job losses around the country. On the positive side, they also have a category called Job Creation. When we look at their statistics we see that (for example) Northland lost 290 jobs in manufacturing in June 2011, Waikato 1,140, Bay of Plenty 700, Gisborne/Hawke’s Bay 760, Taranaki/Manawatu/Wanganui 1,450, Tasman/Nelson 380,Canterbury 3,550, Otago 610 and Auckland3, 320. Between the March and June Quarters of that year, there were ten percent more people made redundant – 11,790 to 12,880. There is so much debate and analysis in this small country as to where manufacturing is going. And the subject matter being considered to make business conditions better are far-reaching,…and not finding jobs for people in the Manufacturing Heartland is but one of them. For example: The Australian and New Zealand Productivity Commissions are looking at what economic integration between the two countries might mean. Do we become a mini EU – and what happens if one of the two countries goes belly up – can the other financially support it? The Treasury is asking for ideas that can be undertaken by the New Zealand Productivity Commission to improve productivity. Youth unemployment is a major concern and regions like the Waikato are presently looking at a ‘lost generation’ with twenty percent of young people currently without work. The exchange rate. To tinker with it, to not tinker with it NZMEA has one view, EMA another. A change to Trans-Tasman tax laws. The over valued dollar which is seeing people made redundant from companies such as Solid Energy, Tiwai Point aluminium, Mussel Processors Ltd and Norse Skog. Plus Goodman Fielder reducing the number of its manufacturing factories. A reduction is needed in company tax rates. Australia is […]

Australia  and New Zealand are unlikely go down the European path and create a single currency. A study looking beyond 30 years of close economic ties between the two countries has found there would be no benefit to further integration through a trans-Tasman monetary union. But the draft report on closer economic relations (CER), jointly prepared by the Australian and New Zealand productivity commissions, did find that barriers between the two countries remain, particularly in regulations areas affecting services trade and investment. Australian Prime Minister Julia Gillard and her New Zealand counterpart John Key requested the study by the two commissions in March to identify further initiatives to strengthen the economic relationship and outcomes for both countries. The aim is to encourage a seamless market between the two countries that will allow citizens and businesses to have a “domestic-like” experience in either country. “How far future policy initiatives go ultimately must emerge from good public policy processes focused on achievements of net benefits,” Australia’s Productivity Commission chair Gary Banks said in a joint statement on Tuesday. The report identifies some 20 policy initiatives to promote beneficial economic integration. “CER has been a very successful venture, with initiatives that would not have been possible with any third country,” New Zealand Productivity Commission chair Murray Sherwin said. “There is more that can be achieved to the benefit of both Australia and New Zealand.” However, the commissions concluded a single-currency and monetary union would not generate net benefits and should not proceed. Monetary union entails a number of costs and implies a loss of autonomy over monetary policy and exchange rate flexibility – important tools for macroeconomic stability. “This means that in the event of an economic shock to New Zealand, but not to Australia (or vice versa), adjustment through the exchange rate […]

  Auckland Council’s strategy for economic development launched today is commendable and seems achievable – as long as the resources are made available to carry out the planned actions, says the Employers and Manufacturers Association (EMA) chief executive Kim Campbell. “Growth projections are modest and achievable – to raise exports by 6% above current levels, real Gross Domestic Product ( the annual value of the region’s goods and services) by 5% and productivity by 2% annually over the next 10 years,” he says. “The Innovation Hub is a really good idea. In fact all the features of a world-class city that we want to see are included in this plan. “But there is too much in there; it’s highly aspirational – so the question is: where is the funding to carry out these five main goals? 1. Grow a business-friendly and well-functioning city; 2. Develop an innovation hub of the Asia-Pacific rim; 3. Become internationally connected and export-driven; 4. Enhance investment in people to grow skills and a local workforce; and 5. Develop a creative, vibrant international city. “We hope the Council has the economists available to cost these developments properly and allocate real resources. “Unfortunately councilors are up against ratepayers’ concerns about their rates going up every time they talk about putting resources aside,” Mr Campbell says. “Auckland is lucky to have this strategy detail because having no plan is a plan to fail. But more than that, it is a workable plan, with clear actions associated with each priority. “And it’s focused on the issues Auckland sorely needs to develop. “We will continue to work with the Council to help put this plan into action  

Commercialisation staff from research organisations across New Zealand and Australia will be developing their expertise and abilities in transferring technologies to industry hands next week. The Kiwi Innovation Network (KiwiNet), a consortium of New Zealand universities and crown research institutes collaborating on research commercialisation, are partnering with Knowledge Commercialisation Australasia (KCA) to present the KCA Fundamentals of Technology Transfer Course to New Zealand for the first time. WaikatoLink Chief Executive Duncan Mackintosh, a KiwiNet member and Vice Chair of KCA says, “We’re really pleased to be able to offer KCA’s course for the first time in New Zealand to all research organisations in response to strong demand for commercialisation training. By improving commercialisation capability in our research organisations we can achieve greater commercial outcomes for the country.” Held over two days on September 20th and 21st in Auckland, the course targeted at recently recruited commercialisation staff will cover the various elements associated taking technologies to market including: inventions, patents and copyright: legal issues; negotiating and licensing, evaluating opportunities, marketing and managing the relationship. Dr Alastair Hick, Vice Chair Professional Development KCA says, “The Trans-Tasman partnership between KCA and KiwiNet will allow budding tech transfer professionals across New Zealand and Australia to develop key relationships and ultimately identify collaboration opportunities in the future. This course is one of a number of initiatives in place to foster our Trans-Tasman partnership and we are pleased to run this course in New Zealand, after successful courses in Australia in 2009 and 2011.” Nigel Slaughter, General Manager Commercial at WaikatoLink, a speaker at the workshop says, “Attendees will be exposed to high caliber speakers, interactive activities and practical examples. We will also be able to gain valuable materials and expertise to continue providing fundamental knowledge and skills to up and coming commercialisation staff in the […]

This year’s Global Competitiveness Index gives valuable feedback for New Zealand’s quest for competitiveness, says BusinessNZ. Chief Executive Phil O’Reilly says New Zealand’s rise in overall global ranking, from 25th to 23rd place, underlines the value of the country’s current focus on competitiveness. “This result is partly due to some other countries’ slip down the rankings – including the US and Denmark – and partly due to New Zealand’s reasonably steady performance and policy path,” he said. This year the Global Competitiveness Index introduced further surveying of innovation factors, given the importance of innovation to growth and competitiveness. Mr O’Reilly said innovation was a key focus of New Zealand’s current Business Growth Agenda, and New Zealand’s slight rise in ranking on innovation and sophistication factors, from 28th to 27th place, was welcome but much more needed to be done. “The Competitiveness Index underscores what we already know – that New Zealand is underperforming in areas including companies’ ability to innovate, clustering of knowledge-intensive businesses, and supply of scientists and engineers. It gives urgency to policy work now being done around education, R&D funding and the cluster functions of the Advanced Technical Institute.” New Zealand again scored well for its institutions, lack of corruption (1st among all 144 countries surveyed), absence of trade barriers, and ease of starting businesses. This year’s top 10 ranked countries for overall competitiveness were Switzerland, Singapore, Finland, Sweden, Netherlands, Germany, US, UK, Hong Kong and Japan.        

Global accounting body CPA Australia says it welcomes the release by the Financial Markets Authority on Monday 3 September of its Guidance Note – Disclosing non-GAAP financial information. David Jenkins, New Zealand Country Manager for CPA Australia, says the FMA Guidance Note, and the Australian Securities and Investments Commission’s Regulatory Guide 230: Disclosing non-IFRS financial information, represent common thinking on how non-GAAP financial information is to be presented in transaction documents and investor communications other than financial statements. “Trans-Tasman investment is important to the economic growth of Australia and New Zealand,” says Jenkins. “Setting the boundaries for these communications in this way will be good for investment in both countries.”  

If growth in Australia slows a little bit it will still be in much, much better shape than here. If GDP dips to six percent in China they’ll still be doing well. And here? If Solid Energy closes the door in Greymouth there are lots of miners who will cross the Tasman to work in Australia because the need for underground mining personnel is as strong as ever. GDP continues to be affected with job closures every other day. Aren’t you getting sick and tired of the continual job losses and the number of people being thrown onto the unemployment heap? Of the numbers crossing the ditch so much so that ministers in the Victorian Government want to know when the exodus from NZ is going to stop? Aren’t you sick and tired of the prime minister trotting off overseas to hold meetings which essentially do little more than attempt to hold his popularity up? The conditions here are out of balance – business tax, low wages, government cuts, people staying in jobs because there is not another to change to. Incentives are dire, and the high technology (sector) is quickly separating itself from the manufacturing sector with fewer numbers of people employed…and high yield returns from manufacturing overseas. The march in Greymouth this afternoon was a grave reflection of Solid Energy as a caring employer, one who only cares about the bottom line. To devastate Greymouth, to take the jobs, to cause upheaval in any community is shameful. To do this after the mining tragedy leaves a bitter taste all round. -Doug Green