Business News

New Zealand companies need to be more active in undertaking cross-border mergers and acquisitions if we are to fully capitalise on our intellectual property, our clean-green image and the other advantages we have as a country. Martin Gray, Head of Lead Advisory for Grant Thornton New Zealand, said that New Zealand was on a par with the global average (30%) when looking at companies planning to grow through acquisition in the next three years, but below the global average (24% compared with 33%) for cross-border acquisition. “With our size, geographic isolation and intellectual property, it is imperative that we are above the global average when it comes to cross-border acquisitions. We need to be involved in thoseparts of the value chain that provide the greatest margin for the value we bring to the table. “Where is the New Zealand strategy to help our companies acquire businesses internationally so that they become more involved in this chain, thereby reaping larger profits? “For New Zealand our stars are aligned when you look at our products, our position in the market and our intellectual property in sectors experiencing strong growth,” he said. New Zealand companies seeking revenue and value growth identified three key drivers for attaining these goals: building scale (61%), accessing new geographic markets (59%) and acquiring new technology or established brands (41%). Gray has worked with a large number of New Zealand corporates on their international expansion, particularly into Asian countries. With over 25 visits to China alone he has first-hand insight into how Asian countries value New Zealand’s products and services. “Just look at how overseas companies are able to come to New Zealand and buy our companies for higher prices. Ratherthan complaining about what these companies are willing to pay, we should spend more time exploring why the price […]

The passing of the law requiring unions to conduct a secret ballot of their members before going on strike is a welcome step, says David Lowe, Employment Services Manager for the Employers & Manufacturers Association. “Virtually every time there is a strike the employers finds individual union members telling them they don’t support it and would prefer to work,” Mr Lowe said. “A few outspoken people can make it appear there is strong worker support for a strike when in fact there may not be. “Quite a few unions, such as the Engineers Union already conduct secret ballots so this law change really only affects a few unions like the Maritime Union which have resisted them. “While it will still be a year before secret ballots become mandatory, and two years before unions must change their rules, employers will expect them to be carried out for every relevant occasion from now on.”  

Manufacturing activity dropped back into contraction after four months of expansion, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI). The seasonally adjusted PMI for April was 48.0 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was 5.8 points down from March, and the lowest level of activity since November 2011. For the first four months of 2012, the PMI has averaged 52.7, compared with 52.0 for the corresponding quarter in 2011. BusinessNZ’s executive director for manufacturing Catherine Beard said that after a positive first quarter to the year, the fall back in April was disappointing from the perspective of getting the sector back on track. “While the unadjusted results typically show a drop in activity from March to April, the fall for 2012 was sizeable, led by the key sub-indices of production and new orders. Also, the drop in activity was reflected in the pick-up of negative comments made by manufacturers. While there was no single reason for the poor showing, the high value of the New Zealand dollar, as well as low and slow demand, were the prevalent comments.” BNZ economist Doug Steel remarked “April’s PMI result was a significant dip. Equally though, just like we were reluctant to buy into the extreme strength in February as an indicator of rapid trend expansion, we are wary of taking April’s result as a signal of a new downtrend. The truth about the trend probably lies somewhere in the middle. It is encouraging that manufacturers, on net, are adding to staff levels.” Despite the fall in overall activity, two of the five seasonally adjusted main diffusion indices were in expansion in April. However, both production (44.6) and new orders (48.5) fell into decline, which makes up the […]

Around 430 small to medium-sized businesses from around New Zealand are being given a unique opportunity to pitch their products and services to government buyers at a free event in Wellington on 9 May. The Meet the Buyer event is being jointly run by the Ministry of Economic Development (MED) and BusinessNZ, and is the first of its kind involving government and business. MED’s Procurement Policy and Development Manager, Murray Heyrick, says the event will help small to medium-sized businesses get a foot in the door with government agencies. “We recognise that it’s not always easy for businesses to approach government agencies with their product or service. The idea of this pilot Meet the Buyer event is to give small to medium-sized businesses a platform to meet and greet the people who make the decisions about government procurement,” Murray says. “Government agencies are a significant part of the economy and better access to them as purchasers can make a big difference for local businesses both in turnover and building capability. MED is to be congratulated for bringing many agencies together to interface with businesses in this way,” says BusinessNZ Chief Executive Phil O’Reilly. Government buyers at the event include the Ministry of Social Development, ACC, the Department of Corrections, Police and Wellington City Council, among others. They are all interested in meeting suppliers who can provide a range of goods and services. Meeting times have been scheduled throughout the day. Other activities include the ‘KiwiBank Theatre’ and Mini-Expo. The ‘Kiwibank Theatre’ will host speed presentations from both business and government experts on a range of topics. The Mini-Expo will house a range of experts and organisations who support businesses and/or help them to do work with government. All are available to provide free advice and assistance throughout the day. They […]

Electricity Ashburton Ltd’s decision to move to the major industrial subdivision, Ashburton Business Estate (ABE) in mid-Canterbury, could not have come at a better time. The electricity network is developing a 2.65ha site at ABE that will house its 100 staff in three buildings covering administration, a workshop, a stores building and open yard storage. General manager Gordon Guthrie said the locally owned co-operative was originally attracted by the ability to house all its operations on one large site, as it is currently split between a town location and industrial area. Its workshop and administration centre is currently located in the heart of big box retail while the storage facility is in an older industrial area. “The retail area has grown up around us and we don’t need to be here. We liked Ashburton Business Estate because it allowed us to be on one site, it has excellent transport access and it’s a safe site on the outskirts of town,” Guthrie said. “We really feel as though our decision has been vindicated after seeing what happened in Christchurch following the earthquakes. We also reviewed our plans and are now building to Category 4, to ensure that we can operate in a major civil emergency.” Electricity Ashburton expects building to be complete by October with its shift to ABE earmarked before Christmas. It will be the second resident in Ashburton Business Estate, following Canterbury Longrun Roofing. Established in 1969, LongRun manufactures steel roofing, cladding and accessories for the building trade. Marketing agents Noel Gilchrist and Brent Bailey of Colliers International in Christchurch are talking with several other parties eyeing ABE, and say that easy access to road, rail, sea and air transport networks is a key attraction. These include: * South Island main trunk rail line * State Highway 1 * […]

Auckland manufacturing businesses are getting a helping hand to grow their market share thanks to series of workshops designed to fast track them towards innovation and export. The Fast Track Business Series, an Auckland Tourism, Events and Economic Development (ATEED) initiative, targets companies in a development stage, wanting to take on a new direction with support and expert advice. ATEED?s General Manager Business and Sector Development, Clyde Rogers, says while the series is targeted at all industries, he hopes manufacturing businesses will register. “The manufacturing sector, whether its niche, food and beverage or bio-health plays an important role in our economy. These companies hold huge export potential which is key to their individual success and Auckland’s economic well-being,” says Mr Rogers. “As New Zealand is such a small marketplace, manufacturers often need to think globally once they have reached the limit for significant expansion in New Zealand. Done successfully, this assists their long term sustainability which is mutually beneficial for them and the economy. “These workshops are designed to complement the aspirations of businesses that are ready to take that next step in its development plans.” The Fast Track Business Series, held in different locations across Auckland, consists of workshops, focused on different growth components such as planning, international marketing, finding international distributors and getting ideas to market. “ATEED’s dedication to these aspirational businesses doesn’t end there,” adds Mr Rogers.” Our team of specialists, and targeted programmes and services, are available to support these businesses as they continue their growth journey.” Each Fast Track workshop will be facilitated by experienced presenters from Auckland service providers. Upcoming workshops Fast Track Ideas to Market (Part 1) Fast Track to Global Marketing Fast Track to Finding International Distributors and Tradeshow Tips Fast Track to Succession Planning Fast Track Ideas to Market (Part 2)) […]

Though Auckland is a world class city for livability, the business environment is being short changed, the Employers and Manufacturers Association (EMA) told the hearing on Auckland Council’s long term plan today. EMA said the Council’s plan to charge Auckland businesses $150 million more than if there were no differential demonstrates the issue. “Business ratepayers are being called on to shoulder an unfair share of the city’s rates and future debt repayments,” said EMA’s Peter Atkinson. “The business rate planned means businesses will pay 2.63 times more than other ratepayers, or $150 million a year more than if there were no differential imposed. “Auckland now sets its rates based on the capital value of property but other cities that do the same, such as Tauranga, do not also penalize their businesses with a rates differential,” Mr Atkinson said. “Tauranga is a stand out city for growth. “As a result of the penalty Auckland’s businesses will pay the lion’s share of the city’s debt over the next 10 years which is set to nearly triple from $2.9 billion to $8.4 billion. “This is not a recipe for making Auckland business friendly. The Council is planning to hamstring our businesses and job opportunities. “It would be far better to increase the Uniform Annual General Charge (UAGC) from $350 to $650. “The average UAGC across Auckland’s previous eight councils used to be 18 per cent of rates but now its being reduced to 12 per cent. “We have said for years the UAGC should be the maximum allowed by law which is 30 per cent, but as an interim measure we would be pleased to see it increased to $650 per property, which would be 23 per cent.  Other matters raised were: • Objection to waste water differential • Planning for business land […]

Manufacturing and Wholesale is emerging as one of the bright spots of the New Zealand economy as the sector posted big revenue gains, despite difficult economic conditions and continuing pessimism about the pace of the economic recovery, according to a new study. The MYOB Business Monitor, a regular survey of over 1000 small and medium enterprises, found that the Manufacturing and Wholesale sector had the most revenue gains of any business group over the last 12 months. 44% of businesses in the sector reported revenue rises in 2011. Looking at 2012 revenue forecasts, Manufacturers are also the most positive about their prospects, with 57% expecting revenue growth over the next 12 months. Just 3% of businesses in the sector expected their revenue to fall, the lowest of any sector surveyed. This optimism is being fuelled by reports of just over half of Manufacturers indicating they have more work in their sales pipeline for the next 3 months (April – June 2012). MYOB General Manager Julian Smith said these results showed the importance of the Manufacturing and Wholesale sector to the wider New Zealand economy. “What this survey shows is how important the Manufacturing and Wholesale sector is to the New Zealand economy, as it continues to grow and succeed despite some very difficult economic conditions. To see such strong growth at a time when many other sectors are struggling highlights the huge contribution the sector is making.” Much of the sector’s strong showing over the past year has been driven by positive results from the Auckland region, where 54% of businesses in the sector were reporting revenue gains. Christchurch’s Manufacturing and Wholesale businesses also performed well, with 40% reporting an increase in revenue. However, manufacturing businesses in the Wellington region are not performing as well, just 20% of business owners […]

The latest inflation statistics demonstrate the wealth transfer from the traded economy to the non-traded economy. This must stop say the New Zealand Manufacturers and Exporters Association (NZMEA). Statistics New Zealand’s March quarter figures show non-traded inflation up 1.2% from the previous quarter with traded inflation down -0.4%. NZMEA Chief Executive John Walley says, “New Zealand’s monetary policy essentially works by lifting the level of the exchange rate to suppress inflation in the traded sector. The problem with this method is that inflation in the domestic economy remains unchecked. Over a period of time this has lead to lower activity in the traded sector while spending has not been restrained in the domestic economy.” “Since 2004 non-traded inflation has averaged 3.8% while traded inflation has averaged 1.75%. Essentially the traded economy is subsidising activity in the non-traded economy.” “The current account deficit shows the problem with this strategy,” says Mr Walley. “When you run a deficit you have to sell assets or borrow as the Government is doing now.” “Instead, export success, and therefore the exchange rate, must become a focus of monetary policy. This will help reduce foreign debt, increase foreign earnings and, over the long run, increase growth and incomes.”  

Expanding the Auckland convention centre will boost the national economy, says BusinessNZ. “The business-to-business benefit of a larger convention centre is significant,” says BusinessNZ Chief Executive Phil O’Reilly. “Travellers coming to larger international conventions in New Zealand will increasingly see New Zealand as a place to do business. We saw that happen during the Rugby World Cup, with the highly successful Business Club venture. A world-class convention centre could help bring a significant boost to inward and outward investment. “But this is all dependent on size of facilities. Size matters when pitching for big events, and New Zealand is currently missing out on large international conventions. “Big conferences centres like Singapore, Las Vegas and Dubai thrive because their facilities meet size thresholds. New Orleans’ recovery from Hurricane Katrina was faster because it quickly rebuilt its very large conference facilities. Attracting big events brings new direct spending as well as much other associated economic activity. “For Auckland, the prospects include increased revenues for hotels, local tourism, catering, entertainment and other associated businesses. Air New Zealand and domestic transport business like rental vehicles, taxis and others would all benefit from an expanded Auckland conventions sector. “Conference-goers often return later as tourists, bringing long-term economic benefits. For a distant country that has to work harder to attract visitors and tourists, a fit-for-purpose convention centre is needed. “These are some of the very significant benefits that should not be overlooked in the current debate about the expansion of the SkyCity convention centre.”