Business News

Manufacturing activity improved enough over December to be back in positive territory, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI). The seasonally adjusted PMI for December was 51.9 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was up from 46.0 in November and 46.7 in October. Over 2011 the PMI averaged 51.5, compared with 53.0 in 2010. BusinessNZ’s executive director for manufacturing Catherine Beard said that although it was pleasing to see a return to expansion for the last month of 2011, overall the year was a challenging one for manufacturers. “While the average level of activity in 2011 was up on 2008 and 2009, it fell behind 2010’s result. Like the sword of Democles, global uncertainty continues to hover over most manufacturers doing business in international markets. Also, domestic events (both natural and man-made) have contributed to changes in orders and production throughout parts of the year.” BNZ senior economist Craig Ebert said the positive bounce back in December validated the bank’s view taken in October and November that the negativity in those months was probably over-stated. “While it’s a relief to see the positive December result, the seasonally adjusted reading of 51.9 can hardly be called strong. There are still lingering reservations around the survey’s details and the industry’s overall inventory management.” Four of the five seasonally adjusted main diffusion indices were in expansion during December, as opposed to only two in the previous month. Employment (52.7) led the way for the first time since March 2011, while new orders (52.0) increased 5.7 points from November. Finished stocks (51.8) rose 0.5 points, while production (50.0) experienced no change for the second time in four months. Deliveries (49.8) improved 1.6 points over the month, although […]

The Consumers Price Index (CPI) has dropped 0.3% in the December quarter and inflation increased by 1.8% year on year, well within the target band. That allows plenty of room for monetary policy that supports exports say the New Zealand Manufacturers and Exporters Association (NZMEA). NZMEA Chief Executive John Walley says, “With problems continuing in Europe and a weak domestic economy, inflation pressure is likely to remain low for a prolonged period. That means every effort should be made to bring down the exchange rate to support the export sector. That means an Official Cash Rate cut next week and more policy changes over time.” “The RBNZ has persistently overestimated inflation pressure in the economy; we have been calling for further cuts for some time, now is the time to act.” “Using the exchange rate to defuse headline inflation caused by the domestic economy is a failed strategy. It is the primary reason for growth in the export sector stalling from 2004 until now. This practice will have to stop at some point if our economy is to rebalance.” ”It is worth noting that tradable inflation went down 0.9% in the December quarter.” A better strategy for the Reserve Bank would be to: • Target non-tradeable inflation; • Use Loan to Value Ratios to control credit volumes; and • Specify the amount of savings (deposits) banks are required to raise in New Zealand to limit offshore exposure. “Had this been done 10 years ago debt levels and servicing costs would have been lower even if average interest rates had been higher. Overall the New Zealand economy would now be better balanced with higher wages, more jobs, more savings and better housing affordability,” says Mr Walley. “With headline inflation dropping there is no reason to hold up interest and exchange rates […]

Hiring intentions in the South Island are at an eight-year high, according to the latest Hudson Report Employment and HR Trends. A net 40.1% of employers in the region intend to increase permanent staff numbers in the first quarter of 2012, which is more than double the national average. “Treasury has predicted that the influx of government and insurance money will contribute to an economic rebuild that is now likely to be larger and longer lived than previously thought,” says Roman Rogers, Executive General Manager, Hudson New Zealand. Across the rest of New Zealand, a net 18.0% of employers are planning to increase their net permanent headcount between January and March this year, which is down 4.6 percentage points (pp) on last quarter, and down 6.4pp compared to the same time last year. “While this represents a relatively sizeable change in net sentiment, many employers are considering the potential impact of external factors, like recent events in Europe, and carefully assessing their current talent pool before taking on new hires,” says Rogers. “Nearly two-thirds of employers are planning to hold their staff levels steady. We’re seeing a strong focus on driving productivity and performance among existing employees complemented by strategic hires of high performers.” “Furthermore, we expect high demand in certain roles, such as project managers in the construction and IT sectors as well as for customer facing IT specialists. “Now more than ever, in a turbulent economic climate, the cost of a bad hire is crippling. It is essential that employers have a robust process in place to rigorously assess and secure the best people for their businesses.” Nationally, information technology is the most confident sector with a net sentiment of 43.4%. The telecommunications sector is increasingly buoyant, up 6.4 pp to 32.4% this quarter, coinciding with structural changes […]

New Zealand’s currency overvaluation cannot be simply put down to economic weakness elsewhere say the New Zealand Manufacturers and Exporters Association (NZMEA). It is the monetary policy contrast between the RBNZ’s inaction and the interventionist policies overseas that accounts for a persistently overvalued currency. NZMEA Chief Executive John Walley says, “The ‘there is nothing we can do’ mind-set needs to change. The economic weakness of others we can’t control but our own policy response we can. Changes need to be made to support an export lead recovery for New Zealand.” “Over the past year we have seen other countries ‘independent’ central banks taking action to lower their exchange rates, whether through quantitative easing in the United States and the United Kingdom, capital controls in Canada and Brazil, or direct currency management in Switzerland and Singapore.” “There has been no such action in New Zealand and our export sector, particularly the high added value sector, continues to suffer as a result.” “It is complacent to suggest there is nothing we can do when many countries have successfully supported their export sectors,” says Mr Walley. “We need sensible and pragmatic policy from the Government and the Reserve Bank to provide similar support our export sector. We are an export exposed country – we cannot simply sit back and pretend we cannot have some control of our own destiny.”  

Businesses adding value to food, beverages and ingredients are among the 27 finalists in the 2012 New Zealand International Business Awards, which recognise the myriad of ways companies now do business globally. Hamilton-based BioVittoria has harnessed the calorie-free sweetness of China’s little-known monk fruit to create an all-natural food sweetener. The company is setting itself up to compete in the US$50 billion per annum world sweetener market. Yoghurt-lovers around the globe are latching on to the Kiwi fresh yoghurt making system EasiYo. The company manufactures and markets yoghurt makers and milk powder-based yoghurt mixes to consumers and foodservice customers around the world. Westland Milk Products, which now owns EasiYo, manufactures and sells more than 90,000 metric tonnes of dairy products a year, 84 percent of which is sold overseas. The majority of Westland’s core business is ingredients for other businesses, particularly those making nutritional products. Canary Enterprises started out to ‘Make Butter Better’. With butter as its base product, it has created time-saving butter-based products for commercial kitchens, such as butter medallions, butter rosettes and pastry butter sheets. The company is now focused on ‘Making Food Fabulous’. Dunedin company Seperex Nutritionals develops its bioactive research discoveries, such as peptides and lipids found in milk and seafood, into export earning food and health ingredients. GMP Pharmaceuticals offers a one-stop shop for small New Zealand health supplement developers wanting their product manufactured, packed, exported and even launched. Gourmet burger chain BurgerFuel has transitioned from a burger factory to an ideas factory, enjoying particular success in the Middle East. Winners of seven categories at the awards, which are run by New Zealand Trade and Enterprise (NZTE) and strategic partner ANZ, will be announced on Wednesday 21 March. Information about the finalists can be found at www.nzte.govt.nz/awards.            

Numerous niche and high-tech manufacturers are among the 27 finalists in the 2012 New Zealand International Business Awards, which recognise the myriad of ways companies now do business globally. Manufacturing finalists include firms designing, making and servicing refrigeration and heating systems, magnets used in electronic goods, dental equipment, storage and packaging solutions, and aircraft engines and baggage systems. Seven of the eight business leaders who are finalists in two categories that celebrate an emerging and an outstanding leader in international business also have links to manufacturing industries. Winners of 10 categories at the awards, which are run by New Zealand Trade and Enterprise (NZTE) and strategic partner ANZ, will be announced on Wednesday 21 March. Information about the finalists can be found at www.nzte.govt.nz/awards. NZTE Chief Executive Peter Chrisp said it was fantastic to have 27 businesses representing a wide variety of industries and regions as finalists in the prestigious awards. “This year’s finalists are using our country’s world class technology, reputation and skills to develop high value brands and push out into new markets. These are ambitious, internationally focused businesses that New Zealanders should be proud of. “Sharing their stories helps build understanding of what is required to succeed internationally as well as giving us an opportunity to recognise the contribution they’re making to New Zealand,” Mr Chrisp said. David Green, Managing Director, Institutional New Zealand at ANZ, said New Zealand companies were capitalising on the growing global demand for diversity of products which New Zealand produces well. “While global economic confidence has declined, our export growth is evidence of a domestic economy which is favourably positioned for global trade flows. The 2012 finalists reflect New Zealand’s progressive move away from our traditional markets. “Historically, 80 percent of our exports went to Europe and the Americas, the majority to […]

The draft inquiry report by the New Zealand Productivity Commission on the international freight transport services raises some useful and sensible recommendations to improve the productivity of New Zealand’s international freight, says BusinessNZ. Chief Executive Phil O’Reilly says the productivity of international freight services is highly significant for New Zealand. “Around 30 percent of our GDP is generated from the exports of goods and services, so freight services productivity can impact on the productivity of a substantial number of New Zealand enterprises. “BusinessNZ strongly agrees that councils should carefully consider what their ownership objectives are and how these objectives are best pursued. These are central to the performance of organisations. “The draft report makes some useful suggestions for improving the governance of ports and airports, which are worthy of careful consideration. “Also of particular note are the recommendations around improving employee relations to promote better trust, shared values and outcomes, and more productive workplaces. “BusinessNZ considers the Productivity Commission’s draft recommendations worthy of active consideration by the Government and port stakeholders.”  

The Government’s announcement that it is banning industrial gas certified emission reduction units (CERs) from being purchased in New Zealand will potentially have a serious knock-on effect to the costs felt by businesses and households, says BusinessNZ Chief Executive, Phil O’Reilly. “BusinessNZ supports emission trading as the most effective means of delivering an efficient carbon price into the economy. However, it’s imperative that businesses are able to find the least cost form of carbon abatement wherever it is. “Kiwi businesses will be forced to buy higher priced units, resulting in increased costs for both business and households at a time when they can least afford it. Trade-exposed businesses, already at a disadvantage because their competitors do not face a similar price on carbon, will potentially have their international competitiveness further undermined. “It would be better – as we advocated – if the New Zealand Government instead worked with the UN on issues of environmental integrity of CERs. Only then if they are found to be flawed, consider banning them, if not, why impose extra costs on New Zealand? “The Government’s decision appears to call the future use of all CERs into question, undermining a key fundamental element of the trading scheme. “Just because the EU and Australia has made the decision to ban industrial gas CERs, before the UN has completed its work, does not mean it is right for New Zealand to follow. The EU has a whole different set of motivations, including the swap-out of old Soviet-era technologies for more carbon efficient ones in the Eastern European countries. New Zealand is already well ahead of the game, with over 70 percent renewable energy and businesses operating at world-best carbon intensity practice. The only thing banning industrial gas CERs here will result in is greater costs.”  

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 […]