Business News

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 […]

The Sustainable Business Council welcomes the Pure Advantage Report as a useful contribution to thinking on greening the NZ economy. “In fact, the greening of all sectors of the economy is important,” said Penny Nelson, Executive Director of the Sustainable Business Council (SBC). “SBC agrees with a number of opportunities identified and is working with its members in a number of these areas already. “SBC is introducing corporate training in identifying impacts on ecosystem services, with tools developed by the World Business Council for Sustainable Development and the World Resources Institute while working with the Department of Conservation on increasing business understanding of biodiversity and developing opportunities to partner. “Scaling up resource efficiency is another area of work. SBC members are focusing on how they can increase the resource efficiency of their operations and influence increased resource efficiency in their supply chains, while supporting other mainstream business in New Zealand to scale up in this area. “Where there are areas of focus in common, SBC will work with Pure Advantage to identify how our initiatives can be aligned to make a bigger difference for greening the NZ economy,” Ms Nelson said.  

The latest Household Labour Force Survey has shown a 0.5 percentage point increase in the unemployment rate, to 7.3 percent seasonally corrected (actual 7.2%) in the September 2012 quarter; the highest since 1999. The number of people unemployed rose by 13,000, while the labour force participation rate remained unchanged. NZMEA Chief Executive John Walley says, “This shock is no real surprise to manufacturers and exporters. The Government and Reserve Bank continue to see economic strength where we see none – they need to get out more”. The high exchange rate has fuelled job losses in the manufacturing and export sectors ruining their ability to compete in world markets. Two companies, Dynamic Controls and Rakon Ltd recently announced potential combined job losses of up to 120 people. Rakon outlined plans to shift part of its production overseas in response to the overvalued and volatile New Zealand Dollar, and Dynamic Controls are losing volume and profitability for the same reason. Their departure will have flow on effects to the wider supply chain; applying new pressures on other New Zealand firms. These will be reflected in the December 2012 quarter. “Any claim that ‘there no crisis’ is now pretty hollow. On the news that Australia is quietly printing money, New Zealand becomes lucky last on the broadening of monetary policy. How long will Government and the Reserve Bank ignore the changing global context?” “The first step in fixing a problem is to admit a problem exists. We will have to face this sooner or later, the longer it takes the more damage will have been done”. “Jobs in manufacturing and exporting have a high value to the economy; the on-going defence of the status quo, the ‘what crisis’ mind-set is hard to comprehend”.  

Picture: Metals New Zealand Chairman Noel Davies, award winner Nick Calavrias and Jean Smith, wife of the late Keith Smith.     Every once in a while, each industry needs to stop and take a snapshot of who and what companies are performing exceedingly well. Be it an individual who has done much for the industry, or a company who has been innovative or brought in much-needed export dollars into the country. At the Metals NZ Conference next May, HERA (the Heavy Engineering Research Association) will present awards designed to recognise individuals who have significantly contributed to the NZ metals industry and those HERA member companies that have demonstrated significant achievements in terms of exporting and innovation. The HERA Awards will be presented along with awards from the Metals New Zealand partners, such as SCNZ’s Awards for Excellence in Steel Construction, will be presented to recipients at the Industry Awards Gala Dinner at the Classic Flyers Aircraft Museum, Tauranga on the 9th of May, 2013. The Awards are peer-based and therefore, we welcome nominations identifying those individuals and engineering companies who have excelled in the following three categories: 1. HERA Award for Distinguished Service to the NZ Metals Industry 2. NZ Metals Engineering Exporter of the Year 3.Most Innovative NZ Engineering Company Please download the nomination form from the InFocus section on the front page of the HERA web site (www.hear.org.nz)Ê for one or all categories and return to HERA before 28th February 2013. Past winners of the Distinguished Service Award were Keith Smith (2004), Stuart Thompson (2006), Charles Clifton (2008) and Nick Calavrrias (2011). Exporters of the Year Award winners were Warratah Engineering (2004), BBC Technologies (2006), FraneCAD (2008) and A&G Price (2011). Most Innovative Company award winners were Cuddon Engineering (2006), Windflow Technologies (2008) and Howick Engineering (2011). Conference […]

Stephanie Grieve, a health and safety specialist lawyer with Duncan Cotterill, said the release of the Royal Commission findings on the Pike River tragedy had important implications for companies involved in the Christchurch rebuild. The Royal Commission’s report has recommended changes that would require directors to positively ensure their company has an effective health and safety management system in place. Although the focus of the RCI’s enquiry was on health and safety in the context of coal mining, the Commission has expressly acknowledged that this recommendation is much broader and is intended to raise this issue across all sectors. The report comes at the same time as an Independent Taskforce on Workplace Health and Safety is considering similar proposals to increase accountability of companies, their boards and senior managers. Grieve said that changes to increase compliance obligations were almost inevitable. These are likely to require directors to have a much more hands-on role in implementing health and safety, especially in larger companies. This would bring New Zealand into line with corporate governance requirements in other countries. The move towards greater responsibility will inevitably add to the duties and risks faced by directors, already under fire for their role in the downfall of some finance companies. The Christchurch rebuild is already a major focus for the Ministry of Business Innovation and Employment (formerly Department of Labour) and those involved will undoubtedly be affected by any regulatory change in the area of health and safety.  

Business appreciates transparent reporting on infrastructure plans, says BusinessNZ. Commenting on the latest Treasury update on progress across New Zealand’s infrastructure sectors, BusinessNZ Chief Executive Phil O’Reilly said it showed large amounts of infrastructure investment underway and planned, an improving information base for decision-making, and improving integration of the many elements required. “Among other things, the report clarifies specific undertakings such as the Canterbury rebuild and the further development of Auckland’s transport system. “It provides evidence of the need for more performance management data and the use of demand management tools in roading networks. “It also sends a positive message that central government wants more private sector investment and wants to improve New Zealand’s regulatory settings to incentivise this. “All this helps bring more certainty for informed business investment and decision-making.”      

Waikato Chamber of Commerce is applauding Hamilton City Council’s draft economic development agenda saying it heralds a return to “core functions” and supports ease of business in the city. Chamber chief executive Sandra Perry(left) said the agenda, signed off by council this week, is positive for businesses in Hamilton, with a focus on the regional economy encouraging for the Waikato. “It’s reassuring to see the council has recognised the city’s economic success is interdependent on the whole region’s economic well-being. This is absolutely vital for wider economic development moving forward,” Mrs Perry said. Mrs Perry, who spent more than 12 years leading the city’s former economic development agency, said the council’s commitment to working with businesses, industry groups and other councils in region is encouraging. Chamber president Tony Begbie agreed, saying he is keen to see the plan in greater detail. “It’s good to see the council recognise that to be globally and national competitive is a Waikato Inc. value proposition not just Hamilton city. The chamber is certainly ready to actively contribute to economic development and the greater Waikato business sector,” Mr Begbie said. The new plan, to be distributed to businesses and industry groups, focuses on clarifying the council’s role in economic growth and establishing a clear set of economic priorities. Working with the business community and industry sectors and preparing baseline economic indicators for the city is also on the agenda.  

  By Tony Collins CEO,New Zealand Chambers of Commerce Northland While we have a very diverse economic profile in Whangarei and Northland, the importance of manufacturing cannot be overlooked. In 2011 manufacturing accounted for 21.3% of Whangarei’s total GDP. It was the largest contributor to the districtÕs growth and also an area where Whangarei has a significant comparative advantage. Not surprisingly, much of this manufacturing is closely related to Northland’s traditional primary industries in particular forestry and farming. The presence of Refining NZ at Marsden Point is another major contributor which may skew the overrepresentation when compared to the national average. The challenge for Northland is to widen the base of its manufacturing and lessen the dependance on a few large key businesses. Northland’s close proximity to Auckland, our deepwater port, rail connectivity, ultrafast broad band and a good supply of commercial Greenfield land, means that there is an opportunity to encourage inward investment for firms that would have traditionally considered the North Shore as their preferred place of operations. When taken into account along with a low risk of natural geological disasters, good schools, a pleasant climate and outstanding natural environment, Northland becomes a particularly attractive place to establish a manufacturing business. While it is important to continue to add value to primary products before they leave our region and the country, this does not mean that we should not also be focusing on innovative and technology based manufacturing. Several Northland companies are performing internationally in this area in a very successful manner. These companies often occupy a niche international market and operate largely unnoticed by the wider community. To grow our regional economy and increase our productivity requires innovation and the identification of those international niche markets where our comparative lack of size can actually be a competitive […]

The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during October 2012, shows total sales in September 2012 increased 3.07% (export sales increased by 38% with domestic sales decreasing 18%) on September 2011. The NZMEA survey sample this month covered NZ$384m in annualised sales, with an export content of 50%. Net confidence fell from -10 last month to -33 this month. The current performance index (a combination of profitability and cash flow) is at 98, down from 102 in August, the change index (capacity utilisation, staff levels, orders and inventories) went down to 98 from 101 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 96, down on August’s result of 100. Anything less than 100 indicates a contraction. Constraints reported were 89% markets and 11% skilled staff. Staff numbers for September increased year on year by 1.7%. “You would think with strong growth in exports year on year we would be seeing sentiment follow, but as always sales are vanity, profits are sanity – and of course profitability is ruined by the exchange rate,” says NZMEA Chief Executive John Walley. “The first OCR review by the new Reserve Bank Governor produced much of the same; an overblown view of inflation pressure of the back of growth in the domestic sector. We have seen all this before.” “Meanwhile the Government is in denial of the problems facing the manufacturing sector; in denial of the policy options being used elsewhere, even claiming they don’t work when they are manifestly successful.” “This comes down to culture, if you have a do nothing mind-set doing anything is always going to be a bit too hard and you would need to think.” “Consider the Swiss decision to impose a limit on the rise […]

The report on infrastructure released today gives a transparent account of progress in this key area, says BusinessNZ. Chief Executive Phil O’Reilly says business wants good infrastructure provision as part of an integrated set of plans for advancing economic growth. “Appropriate infrastructure investment brings more certainty to the environment for business and promotes more private sector business investment. “Moreover, investing in infrastructure is good for job growth – jobs involved in the building of infrastructure assets themselves, as well as jobs generated through economic growth enabled by infrastructure. “It is encouraging to see an integrated plan for future infrastructure provision that also includes issues such as sustainability, skills training, affordable housing, facilitation for volume builders and specific needs for Christchurch’s rebuild. “Infrastructure assets are expensive and long-lasting, and if well planned and coordinated bring confidence for enterprise. “BusinessNZ suggests it would be worthwhile to review legislation that regulates infrastructure in New Zealand. “It would be useful to consider how to unlock greater levels of private investment in infrastructure and to assess whether our regulatory framework strikes the right balance between serving and protecting consumers, and incentivising appropriate levels of investment. “Given our increasingly integrated infrastructure landscape, BusinessNZ also agrees that it would be useful to assess whether New Zealand has too many industry specific regulators.”