Business News

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 […]

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.