Business News

By Sir Ken Stevens, KNZM,Chairman, Glidepath Group. If you haven’t got the message yet – you may have missed the bus. 2011 has dealt us some hearty blows and some poignant messages. I think that we’ve all seen tightening margins and increased competition for what is a smaller pot. My guess is that 2012 will be even tougher and that a great shake out will be seen. My strategy will be: doing what we do – better for less – and that’s what we all want as consumers, do we not! I’m in the commercial aviation industry. 16 years ago I could fly roundtrip to Brisbane for $1040. Today, it costs just $570 with advance purchase. See the pressure that we the consumers are driving into our markets? We all need a strategy to deal with this. The airlines must have found one as they are still in business. And that’s where we need to be this time next year – still in business. While you are at the beach this New Year consider this:- Plan to reduce your overall costs of goods – if not you will suffer in 2012 Can you trim your overhead by 1/3 and still get by? Are your processes and technologies truly world class – someone else’s will be. How are your sales processes – are you connecting effectively – providing real value – what’s your follow up like – do you truly listen to your customer or give them what you think best? These are simple thoughts and are well capable of being implemented in 2012. There are no tangible reasons for us to expect an uplift in business confidence in 2012. Export markets will be doubly tough but then exporters are resilient creatures and will get through. The rest of you will […]

  Strategic Elements Ltd is involved in an aggressive program of field work on the West Coast of New Zealand. The West Coast field work marks the start of a wider program aimed at discovering large new sources of valuable strategic and precious metals. Results will be reported from each prospect as the Company receives information from its geological team. A company-wide phase of activity is intended over the next few months that includes: (1) Fieldwork across a number of projects on the West Coast NZ. (2) Fieldwork on the Mandamus rare metals project on the East Coast NZ. (3) Grant and commencement of work on a significant new tungsten/tin project in Ireland. (4) Fieldwork on Australian projects. (5) Airborne geophysical surveys to detect geological bodies hidden under cover. Managing Director Charles Murphy said “an intense period of activity has started that will lead us strongly into the New Year. General market conditions are still tough; however we are positioning ourselves to take advantage of any rebound that may occur in the first quarter of 2012.” The field team has begun to comprehensively explore through a geologically rich belt adjacent to the regional ‘Alpine Fault’ on the South Island. They will progressively commence work on each prospect until the end of January 2012. It is believed the west coast region has considerable mineral potential, however much of the surface area contained within the project is covered by vegetation due to humidity and rainfall. The project area has remained highly underexplored due to the covered surface. Critically, airborne geophysical data that can identify geological bodies under the covered surface has never been available. However a sudden escalation in exploration is expected, with the NZ government funding a multi-million dollar airborne geophysical survey to provide information on what lays hidden beneath the surface […]

  Employers are taking a positive outlook into 2012; 44% of them report they are likely to increase their staff numbers next year, says David Lowe, Employment Services Manager for the Employers and Manufacturers Association. The signal is from the EMA’s Annual Employment Round Up Survey conducted last week with 508 responses. The survey has been run for the past 5 years. “We attribute the resilient employment outlook to some extent to the useful changes to employment law brought in at the start of the year,” Mr Lowe said. “About half the businesses report the employment law changes passed last year have assisted them. “The problems the law changes addressed are not significant for all businesses but for those that are affected they tend to be very significant. “Nevertheless the extent that the new laws have helped is a surprise given they have been in place just nine months. “For instance 79% of employers in the survey make use of trial employment periods which they say encourage them to hire sooner than they otherwise might. “Other findings include 60% of employers are finding it hard to recruit skilled employees with 39% reporting difficulty finding suitable staff in general. “Job security is an issue. 34% of employers report no one left to work elsewhere during 2011, and a further 35% said only ‘a few’ had moved on to new jobs. “Employees who are aware the business they work in is in good shape are cautious about moving to another employer they know far less about. “18% of employers in the survey said that at least one of their employees had left for Australia. “69% of employers reported they are open to consider shifting from ACC to a private insurer when a law change makes this possible. 15% say they will definitely […]

The time has come to end the disruption on the Auckland waterfront, the Employers and Manufacturers Association says. “Business and the public are tired of the cat and mouse game the union has engaged on at the Auckland port,” said Kim Campbell, EMA’s chief executive. “Its difficult to understand what the endgame is intended to be. No one understands what the union is trying to achieve. “Now the Port of Tauranga has confirmed no more ships can divert there for the last two weeks of the year due to a KiwiRail shutdown, highlighting Auckland’s vulnerability. “Meanwhile damage is being caused to many other businesses dependent on the port for their imports and to supply export markets. “Jobs are being put at risk. “Auckland ratepayers should be up in arms because ultimately they are footing the bill. “The union responded last week to a 10 per cent pay increase on its hourly rate for members with yet another strike notice! Most Auckland workers would be very happy to get such an offer. “The port needs flexible work practices for our businesses to be competitive – the Maritime Union needs to recognize that and join the rest of us in the 21st century.”  

Kim Campbell The decision by Maersk to permanently shift its Southern Star container shipping service from Auckland to Tauranga is most concerning, the Employers and Manufacturers Association says. “Auckland importers and exporters can ill afford the extra time and cost of freighting goods to and from Tauranga or via other alternatives,” said Kim Campbell, EMA’s chief executive. “Shifting more containers to and from Tauranga won’t help our carbon footprint with unnecessary rail freight and more trucks on the road. “Longer lead times, and increased costs are not what we need. “All businesses need to adopt more flexible work practices to retain their competitiveness, and the law must ensure managers are able to manage a business. “Any suggestion that a union owns jobs in a workplace is completely outdated. “The longer term implications are that New Zealand’s reputation as a supplier of quality goods, and our credibility as an exporter are being put at risk. “It’s one thing to disrupt the supply of Christmas presents with all the pain that causes our retailers, and another entirely to cause permanent damage to a major part of New Zealand’s supply chain. “We certainly hope this is not the beginning of an exodus of work from the ports of Auckland. “We note the Ports of Auckland will withdraw its lock out notice if the union withdraws its strike action.”  

The release of a new report by IPENZ, ‘Realising Our Hidden Treasure’, provides valuable information on the real possibilities of boosting New Zealand’s economy and standard of living, while protecting our natural environment, says ExportNZ Executive Director Catherine Beard. “We’re on a downward path compared to other OECD countries, and we need to look at all of our country’s means of raising our economic base so New Zealanders can enjoy a high standard of living. “If we can’t raise our earnings per capita, we will continue to slide downwards as we lose our best and brightest to other countries. “There are responsible ways of realising the untapped resources New Zealand is sitting on, and we need to have a mature and informed discussion about this as a country, given the large potential benefit to all New Zealanders. “Reaching an agreement on developing New Zealand’s natural resource wealth, while safeguarding our natural environment, is now an urgent priority.”  

The New Zealand Manufacturers and Exporters Association (NZMEA) is advocating an Official Cash Rate (OCR) cut next week in response to the problems in Europe and the USA. A cut would help to take some pressure off the currency in the short-term and add some kick to any OCR rises later on. NZMEA Chief Executive John Walley says, “It is naïve to think that we will be insulated from the problems in Europe. While only around ten percent of our exports are sold there the impact of debt problems there will make it more difficult for New Zealand to borrow offshore.” “The US Federal Reserve, Bank of Canada, Bank of England, Bank of Japan, European Central Bank and Swiss National Bank have agreed to lower the interest rate on US dollar liquidity swap lines by 50 basis points. Clearly other central banks are taking concerns in Europe seriously.” “The terms of trade decline reported by Statistics New Zealand yesterday demonstrates the urgency of acting to help exporters. The more we earn offshore the better the position of NZ Inc if problems do strike. An OCR reduction would help with this.” “A cut in the OCR now would also be likely to keep more mortgage holders on floating interest rates making OCR rises in a year or two more effective at restraining non-traded inflation.” “We continue to promote a Reserve Bank Act that targets non-traded inflation rather than headline inflation, but an OCR cut, in line with what our trading partners are doing, would help keep pressure off the currency in the short-term.”  

The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during November 2011, shows total sales in October 2011 decreased 6.33% (export sales increased by 0.68% with domestic sales decreasing 9.84%) on October 2010. The NZMEA survey sample for October covered NZ$507m in annualised sales, with an export content of 36%. Net confidence rose to -10, up from the -36 result reported last month. The current performance index (a combination of profitability and cash flow) is at 103, up from 100 in September, the change index (capacity utilisation, staff levels, orders and inventories) went up to 100 from 98 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 104.25, up on September’s result of 101.5. Anything less than 100 indicates a contraction. Constraints reported were 70% markets, 20% production capacity and 10% skilled staff. Staff numbers for October decreased year on year by 4.88%. “Domestic sales have continued their decline this month while export sales have been flat. A rise in all three indexes suggests things may get brighter, but we may be looking towards the second half of next year before any significant growth in sales is evident,” says NZMEA Chief Executive John Walley. “The big concern from this survey is the reduction in staff numbers. Firms reducing staff numbers clearly aren’t expecting sales to pick up anytime soon. Confidence has also remained negative for the ninth month out of ten this year.” “Comments from manufacturers continue to centre on the exchange rate with firms bemoaning its high level and struggling to predict currency movements.” “Tough market conditions were reported and the gas pipeline problem also restricted sales for those affected. The Canterbury earthquakes are also having a lasting impact with some firms seeing increased sales due to construction […]

In the end, it was the predictability which became the reality with National winning another term in office. Now that the election is done and dusted I look forward to seeing how business fares and what – if anything – will change. Consider this: *Jobs need to be created. *The minimum wage urgently needs to increase. *Will National see advantages in the Green’s environmental plans as a way of making a better way of life for New Zealanders? *Where do our manufacturing sectors gain further traction in their search for overseas markets? And what are the changes that need to be made to support and enhance their efforts? *Selling the assets – who will be better off? -Doug Green    

A real change in economic policy is needed from whoever forms the next government say the New Zealand Manufacturers and Exporters Association (NZMEA). It is clear that our policy framework has encouraged consumption fuelled by debt rather than savings and export investment; this must change if our economic decline is to be reversed. NZMEA Chief Executive John Walley says, “All political parties agree we have to grow the real (traded) economy, what differs is how that will be done – the right argues that more of the same will fix it, but under the policy ‘status quo’ the real economy has been in decline since 2003. In our view change is fundamentally necessary, and it is a triumph of hope over experience to anticipate better outcomes while changing nothing.” “Changenz.co.nz talks about the past and current decline and the required changes as we see them. It is clear that Labour have adopted some of these positions – new policy targets for the Reserve Bank and a Capital Gains Tax. It must be acknowledged that they have moved on from the economic position they held in the past.” “On the other hand the minimum wage rise and further welfare commitments will undo some of those advantages and show a lack or understanding of where the world is today. National’s don’t rock the boat strategy at least does not impose extra costs on businesses. No party ticks all the boxes.” Whatever happens on Saturday, for the real economy to grow faster policy settings have to be rebalanced. We must borrow less through a mix of tax changes and spending cuts, and most importantly earn more by: • Targeting monetary policy at non-traded inflation. • Balancing the tax mix to include capital gains. • Fiscal incentives to support traded sector investments. “Sooner or […]