Business News

The selection of former World Bank managing director Graeme Wheeler as the new Reserve Bank governor could be an opportunity for the bank to take a new direction on interest rates, as research by MYOB suggests even small cuts in the official cash rate could have a significant impact on New Zealand’s businesses. According to MYOB’s latest monthly panel interviews with business owners, 50% of businesses are affected either directly or indirectly by home loan rates. And a significant 79% of business owners said a fall in standard home loan interest rates of just 1% or less would have a positive impact on their business. “Graeme Wheeler will be an excellent new governor. By picking someone from outside the Reserve Bank, there is a real opportunity for a new vision and a new approach, and MYOB’s research shows that even a minor course change on interest rates would go a long way towards stimulating the economy and making life easier for New Zealand’s small businesses,” said Julian Smith. 14% of businesses interviewed by MYOB said they are directly affected by the cost of home loan interest rates as they had a mortgage themselves. 17% of respondents said they are indirectly affected because their customers or clients had a home loan. A further 20% said they are affected both directly and indirectly. Furthermore, 25% of small business owners use their personal home loan to finance their business. 35% of small businesses are financed through a business loan and a further 22% are financed through personal loans. “As this research shows, interest rates are very important for small business, as many business owners finance their business through loans, or rely on customers who are themselves supporting a mortgage. Even a small change to the OCR would go a long way towards stimulating […]

PIC CAP: Minister Steven Joyce views the Technopak’s world-first packing technology inside the NZ Food Innovation Waikato plant; Dave Shute, Plant Manager (L) providing an explanation. Hamilton, New Zealand – Economic Development and Science and Innovation Minister, Steven Joyce, joined 100 invited guests today at the Waikato Innovation Park to officially open its new spray dryer facility, New Zealand Food Innovation Waikato. The $11 million product development spray dryer facility is the only one of its type in New Zealand and is the Waikato component of the Government-sponsored New Zealand Food Innovation Network. Finance for the spray dryer came from Innovation Waikato Ltd debt and a Government grant of $3.95 million. Its capacity is one-half tonne/hour, making it one of the smallest commercial spray dryers in the world. Construction of the facility was completed in late April 2012 and took just eight months to take it from a bare paddock to a fully operational plant. Commissioning and testing was completed over the past month, with the first fresh milk converted to powder on 25 May. Fifteen Waikato companies have contributed to the project.

Forty years after starting out in business, self-made man Sir Ken Stevens has won the inaugural award, Exporters Champion for Exemplary Services to Export, at the Air New Zealand Cargo ExportNZ Auckland Awards 2012. Award winners were announced Friday night at a gala dinner at the Langham Auckland hotel. A ‘this is your life’ presentation acknowledged Sir Ken from childhood through to starting out in business in his late 20s with two small children, and growing it – Glidepath – forward to today’s global success. Sir Ken was New Zealand 2007 Export Champion and knighted the following year for services to export. Since then he has led trade missions to China, Vietnam and Malaysia, and addressed countless occasions to encourage businesses and inspire students. Si Ken is a real Kiwi bloke who loves his family, rugby, yachting and beer. The award acknowledges Sir Ken’s ongoing service to New Zealand business from exporters themselves, who know how hard a life of business travel can be on families, and how resilient and generous Ken himself always is. The company winners were: 1) Supreme Award and Winner of the Westpac Exporter of the Year Award 2012 (Total sales over $35 million) (The Supreme Award winner is selected by all the award judges from the winners of each category. The Westpac Exporter of the Year is a company recognised for excellence in building extraordinary and sustainable export growth.) Temperzone Ltd Temperzone Ltd designs and manufactures air conditioning systems for commercial, industrial and residential applications. The other finalists in this category were: Jack links NZ Ltd manufactures beef snacks that are a good source of protein and iron, with fewer calories, fat and carbs per serving than most other snacks. GMP Pharmaceuticals Ltd manufactures natural health products of Australia and New Zealand origin such as […]

A widening current account deficit needs Government policy attention say the New Zealand Manufacturers and Exporters Association (NZMEA). Statistics New Zealand released their Balance of Payments and International Investment Position for the March quarter this morning showing a current account deficit of 4.8 percent of GDP, up from 3.7 percent last year, and a larger deficit than was predicted. NZMEA Chief Executive John Walley says, “Addressing the current account deficit is much more important than addressing the Government deficit, and with Government’s bailing out financial institutions there is little to distinguish private debt from public debt in any case.” “Reducing the current account deficit is essentially about increasing export incomes and encouraging local savings so that our assets remain in our hands – much of the current account deficit comes from repatriated profits from foreign owned companies based in New Zealand.” “The Government must do its bit to encourage the rebalance. On the export earnings side a lower and more stable exchange rate is the key issue and making Kiwisaver compulsory would help on the savings side.” “The International Monetary Fund has estimated that a 15 percent drop in the exchange rate would be needed to balance the current account. The Trade Weighted Index is currently hovering around 70 – a 15 percent drop would take it to a far more acceptable level below 60. Government policy has to do more than simply go ignoring this requirement.”  

Mexico’s bid to enter TPP negotiations demonstrates the power of multilateral trade deals, says ExportNZ. The Trans Pacific Partnership started life as a relatively small agreement between four disparate countries – Brunei, Chile, Singapore and New Zealand – but is now the subject of negotiations with several major Pacific economies. ExportNZ Executive Director Catherine Beard says the decision by those initial four countries to work towards an independent trade deal, because of the lack of progress of the Doha world trade negotiations, was a good call. “The TPP has now attracted Mexico, the world’s 14th largest economy, into the negotiations. “Significantly, this move has occurred with the full support of the US, another member of the TPP negotiations, and a country whose full membership of TPP would have major benefits for New Zealand. “Full credit to New Zealand’s trade negotiators for this milestone in their work on behalf of our exporters and economy,” Ms Beard said.      

For the first time in 20 years the government is putting money into a wide-ranging review of New Zealand’s workplace health and safety system and Auckland businesses are being invited to have their say about it. The cost of workplace injuries in New Zealand is reported at $1 billion per year. “The changes coming out of this review will impact every business,” said Paul Jarvie, Health and Safety Manager for the Employers & Manufacturers Association. “A lot has changed in the last two decades – safety issues are quite different to what they were in the 1980’s,” Mr Jarvie said. “The review will be wide ranging and significant given the recent investigations into the Pike River disaster and the Christchurch earthquake. “Labour Minister Kate Wilkinson has said she wants to see workplace accidents reduced by 25 per cent by 2020. EMA wants to know what Auckland business thinks. “The review will cover the current health and safety legislation, incentives to operate safe workplaces, getting employees more engaged with safety, and enforcement options. “We want to see a shift in emphasis so safety inspectors can partner with businesses to support and encourage their compliance in the first instance. “So we support the role of the modern regulator as practiced in Australia, Japan and other countries where workplace safety inspectors are empowered to advise and assist businesses meet their obligations, and help them create a safe workplace culture while retaining their powers to investigate and police.”  

Phil O’Reilly Increased levels of new business/orders is assisting service sector expansion, according to the latest BNZ – BusinessNZ Performance of Services Index (PSI). The PSI for May was 56.8. This was almost identical to the April result (56.7) and the highest result for any month since November 2011. A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining. The 2012 May result was also the second highest value recorded for that month since the survey began in April 2007. BusinessNZ chief executive Phil O’Reilly said that the solid and consistent result for May was pleasing to see, as it was built on key elements of the Index remaining strong. “Like last month, the key indices of new business/orders and activity/sales experienced a swing upwards, with the former at its highest point since November 2011. It is also the first time since 2007 that new orders/business have posted consecutive post-60 values. On top of this, the Northern region has gradually seen an improvement in overall activity levels, which is important in building momentum. “If we also take into account the improved manufacturing result via the PMI, combined, the sectors display a level of activity that is certainly encouraging heading towards the middle of the year.” BNZ senior economist Craig Ebert compared the impressive progress of New Zealand’s PSI to that of the USA, Europe, Australia and China. “New Zealand’s PSI is fast becoming something of a leading light on the global stage. It has overtaken America’s PSI, and unsurprisingly it’s far stronger than the Euro-zone’s, but who would have thought it would be far stronger than Australia’s? It is also fast catching up with the always sturdy, but recently slowed, Chinese PSI. “Add this to the much-recovered PMI and one gets […]

Manufacturing activity bounced back from April’s dip to show strong expansion for the current month, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI). The seasonally adjusted PMI for May was 55.7 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This is 7.5 points up from April and is the highest level of activity since February 2012. For the first five months of 2012 the PMI has averaged 53.3, compared with 52.5 for the corresponding time period in 2011. BusinessNZ’s executive director for manufacturing Catherine Beard said the improvement in manufacturing activity was built on some crucial upswings from the previous month. “The key sub-indices of production and new orders showed a significant upswing from April, while the Northern and Canterbury/Westland regions went from decline to expansion in activity. Comments from manufacturers were also more positive, with Australia remaining a sizeable focus for export opportunities. Interestingly, a number of manufacturers could not identify a main positive influence. Instead, it was an overall steady increase in activity from various facets of their business. ‘With four of the last five months in expansion, 2012 is continuing on a better growth path than seen in recent years.” BNZ Economist Doug Steel said, “It is heartening to see a solid PMI result in May. While there are obvious risks from the European situation ahead, recent trends in the PMI suggest the manufacturing sector has made decent positive contributions to overall GDP growth in both Q1 and Q2 of 2012.” The increase in overall activity meant all five seasonally adjusted main diffusion indices also showed expansion in May. This was led by production (58.8), followed by new orders (57.3), which combined make up the greatest weight of the overall result. Employment (52.2) experienced […]

Overly optimistic forecasts are again behind the decision not to cut the Official Cash Rate (OCR) say the New Zealand Manufacturers and Exporters Association (NZMEA). Continued low growth, and broader economic conditions that prevent any realistic expectations of faster export growth, justify a cut. NZMEA Chief Executive John Walley says, “It is clear to anyone involved in the export sector that current performance is poor and prospects for future growth are no better. This is largely the result of the Reserve Bank’s high interest rate policies that drive up the exchange rate reducing export returns.” “The International Monetary Fund (IMF) has stated that a 15 percent drop in the NZ Dollar would be needed to balance our current account in their Country Report on New Zealand – this should be an aim for the Government, Treasury and the Reserve Bank.” “The overcooked forecasts we see underpinning the actions of the Reserve Bank and Government are a result of a lack of absent connections to the real economy by our institutions. Clearly those building these forecasts are out of touch with our trading reality.” “We need a cut in the OCR next time around and a clear statement that more will be done in the macroprudential area to take some speculative pressure of the currency and give exporters a chance. Quite why the Reserve Bank stands by as 95 percent home loans reappear in the market again so soon after a housing bubble is beyond me.”                

One of New Zealand’s best known innovators, Sir Ray Avery, is calling upon kiwi innovators and innovative organisations to get recognised. As ambassador for the New Zealand Innovators Awards, which are now open for entries, he sees recognition as a key component in advancing innovative ideas and technologies. “I encourage you to enter the Awards. I did, and I won, and it changed everything. Get out of the laboratory, or your shed, and encourage others to do the same thing so we can all celebrate how clever we are as Kiwis on the world stage – it’s our time to shine”, says Sir Ray. The New Zealand Innovators Awards celebrate and recognise great kiwi innovations, inventors and organisations that have invested in developing new products, services and ventures as well as improving the performance of their people and teams. Sir Ray was a winner at the awards in 2008, when they were known as the Bayer Innovators Awards. Bayer is once again the main sponsor, in partnership with Idealog Magazine and Ideas Accelerator. “The awards are a great way of celebrating innovation across a broad spectrum of areas, disciplines and industries. We have many innovative organisations here in New Zealand, so as a nation we need to shout about our success loud enough for the rest of the world to hear,” says Louise Webster, owner Ideas Accelerator and awards director. Enter now or to nominate someone for entry into the awards, go to www.innovators.org.nz Award categories for 2012 • Innovation in Design & Engineering • Innovation in Environment & Agriculture • Innovation in Health & Science • Innovation in Hospitality, Food & Beverage • Innovation in Information Communications Technology • Innovation in Manufacturing • Innovation in Marketing & Communications • Innovation in Media, Music & Entertainment • Supreme New Zealand […]