Business News

By Doug Green We all have followed the story of how Hillside Engineering in Dunedin, a division of Kiwi Rail, were not considered skilled enough to renovate and build rolling stock in New Zealand, to see manufacturing sent overseas to China. Recently rail workers from Lower Hutt presented a partition because their jobs are at threat. 12,000 people signed that partition a testimony to the concern being shown to putting people on the scrap heap. 40 workers in Dunedin were made redundant recently. KiwiRail sure does have a way of upsetting people! You don’t have to be Einstein to know that manufacturing in this country is heavily competed against by overseas companies, particularly from Asia. We all get the picture; components, parts and expertise are much cheaper in China. I was at a trade fair in Melbourne and overheard a conversation between a German industrial motor representative and an Australian importer. The Australian importer had recently cancelled his orders from the German company and could buy five times as many motors from China than he could from Germany, for the same price. His explanation to the German was that if “anything goes wrong with one of the motors I still have four motors left.” I hope we’re not working like this with the rolling stock coming in from Asia. Why run the risk when the work can be done here? If the initial argument was that there wasn’t the expertise to do the job then bring some on board. Even if they had to cross ‘the ditch’ or be brought in from Asia at least the work would stay in New Zealand. But let’s not worry about all this. It’s only part of the big picture for manufacturing in New Zealand. If Kiwi Rail says this is the way it […]

A Waikato University professor of strategy and human resource management Mark Harcourt says that raising the minimum wage, as Labour is proposing, would likely have little or no impact on either employment or prices, while giving low-wage workers a lot more income. Professor Harcourt says all employers pay it.”The minimum wage takes wages at the bottom end of the labour market out of competition and so its negative impacts on prices and employment, if they exist at all, are negligible. “An increase could even stimulate the economy by putting more money into the hands of people most likely to spend it. Certainly, any negative repercussions of raising the minimum wage, to the extent they exist at all, would be puny compared to the foreign debt-fuelled house price bubble of the 2000s.”

New Zealand’s construction industry can be certain that its future is in safe hands judging by the talent celebrated at an awards evening held in Wellington . Dunedin apprentice Ryan Keogh 22 (left) , was named the Registered Master Builders Carters 2011 Apprentice of the Year after competing alongside 10 national finalists from up and down New Zealand. Second place was awarded to Matt Saathof, 21, of Hastings who is employed by Gemco Construction in Havelock North. Twenty-year-old Tom Storey, employed by Simon Linton Construction Ltd in Ohope, took out third place. The competition judges said winner Ryan Keogh, employed by Naylor Love Construction Ltd in Dunedin and trained by the Building and Construction Industry Training Organisation (BCITO), performed consistently across the competition. The awards event was held at Wellington;s Te Wharewaka and was attended by the apprentices and their families, key representatives from the building and construction industry, 2010 Apprentice of the Year Isaac Alder and guest MC Te Radar.

Rises in the New Zealand dollar have cost exporters approximately $6.6 billion over two and a half years according to the New Zealand Manufacturers and Exporters Association (NZMEA). In February 2009 the NZ Dollar bottomed out at 52.3 on the Trade Weighted Index (TWI), but since then currency manipulation overseas and inaction in New Zealand have seen the NZ Dollar TWI rise to 72.1 in August. NZMEA Chief Executive John Walley says, “For every one percent the currency rises it costs New Zealand exporters approximately $200 million on an annual basis. Between February 2009 and August this year the NZ Dollar rose by 38 percent and it has averaged 13 percent above the February level over the last two and a half years. That has come at significant cost to the exporters that earn New Zealand’s living. “We have seen the impact with exporters such as Rakon announcing the negative impact of currency volatility – and these are the larger companies with an international footprint who are able to hedge more effectively to mitigate exchange rate problems – what chance do smaller players have?” “We have heard from the Government and the Reserve Bank that it is too hard to make policy changes in this area, but a $6.6 billion impact shows that intransigence comes at a massive cost. To put a scale on this, the sale of Air New Zealand and the energy State Owned Enterprises is projected to raise $7 billion as a one off. “For a Government that claims to champion the tradable economy it is unfathomable that they would standby and see the export sector taxed to death by a high currency. “There is no easy fix to an overvalued currency, but there are options available and they must be considered if New Zealand is to […]

The National Party’s announcement that it will slow down the full impact of the cost of the ETS on the economy is like saying instead of moving into 4th gear (full speed ahead) we will stay in 3rd gear a bit longer, when we should have been in 1st or 2nd gear at the most from the start of the scheme, says Executive Director of ExportNZ, Catherine Beard. “With National’s climate change policy, New Zealand will still end up with a high cost scheme relative to our international trading competitors. “Many of our trading competitors have accepted no international obligations to reduce emissions, even fewer have trading schemes. Of those that have, they have been very careful to craft their policy response in such a way that it does not put their energy intensive trade exposed companies at risk of becoming less competitive in international markets. “While some companies have had some allocation of free emission trading units to keep them viable, some of our largest exporters (e.g. food processing companies) have had no allocation at all and have taken on millions of dollars in extra costs. “These companies were not deemed to be large enough energy users to get an allocation because the test for allocation was based on an Australian threshold, designed for a much more energy intensive Australian economy. “While that may have worked to adequately protect emissions intensive Australian firms, it has left some of our biggest exporters in New Zealand exposed to a very substantial bill, which will only get bigger with the latest policy announcement. “The National Party policy statement says we should not get too far ahead of our trading partners on climate change mitigation measures for agriculture – so why would we for industry?”  

      Finding skilled workers is set to prove a challenge for engineering companies. To meet supply, a new and innovative approach is needed to attract our youth into vocational careers.     One solution is to introduce gaming simulations to students before they leave school. Gaming and school work are not usually two activities you would associate together – but gaming is increasingly making a presence in schools as the new way to engage and educate. Coined ‘edutainment’ – combining education and entertainment – TIG Welder – Welding Wall of Death is a welding simulation game which teaches and inspires, but is also fun. The game was developed by Competenz, the industry training organisation for the manufacturing and engineering sector, and is available to play in Flash and as an iPhone-application. It supports the bid to increase the supply of tradespeople by exposing students to what a career in the welding trade entails. In the game, players simulate a series of TIG (tungsten inert gas) welds with the aim to join together a steel wall, strong enough to protect from a deadly swinging demolition ball. A quiz is embedded throughout the game, ensuring students learn as they play. While it’s not exactly The Sims, the game is scored on an accuracy basis and requires a fair amount of skill to weld to a standard worthy of a high score. Welding is one of the key trades experiencing skill shortages. Currently 444 welding/fabrication apprentices are in training on-the-job in engineering companies nationwide, but industry has said it needs 1,412 more welders/fabrication in the next two years. Becoming trade qualified takes up to four years, so supply and demand is at a sizeable imbalance. TIG Welder is set to roll out in schools early next year and online from late October. […]

ExportNZ is welcoming the changes the Government is making to the services offered by the New Zealand Export Credit Office (NZECO). Catherine Beard, Executive Director of ExportNZ, says “This move shows the Government recognises the vital role exporters have to play in boosting our economy and the challenges they face in the process of internationalising Kiwi companies. “The NZECO performs a critical function for exporters, helping both large and smaller companies to do business overseas. This includes selling guarantees covering risks of the buyer’s country, overseas buyer repayment risks, and New Zealand exporter performance/repayment risks. “This latest expansion to the support the NZECO offers comes at an opportune time. China is an increasing focus for NZ exporters and the ability to do deals in the RMB will be beneficial. “In addition, NZ exporters are increasingly using global supply chains and the move to be more flexible on the amount of NZ ownership allows companies to access the service for subsidiaries or joint ventures. It will also be helpful for companies simply wishing to increase diversification in their business.”  

Its great to see advanced manufacturing and the related high value sectors winning ever increasing government recognition, the Employers & Manufacturers Association said after today’s announcement of the new direction and expansion for IRL. “A transformed institute with the right resources and skills to serve New Zealand’s manufacturing and related high tech businesses is very desirable,” said Kim Campbell, EMA’s chief executive (pictured left). “A large part of our manufacturing base is extremely sophisticated and more of it needs to become so, so the proposed institute is welcome news. “When you consider the total income per worker on average in NZ manufacturing is $404,000 compared to $82,800 per person from tourism* you can see the huge potential from such an investment. Some are double that. “Its also very appropriate that some of the institute’s funding should come from the proposed new Future Investment Fund to build the new asset, as this is the sort of infrastructure the country urgently needs.”    

The innovation policy released by the Government today is the best single action that could be taken to grow high tech manufacturing and services in New Zealand, says BusinessNZ, Chief Executive, Phil O’Reilly. “The planned advanced Technology Institute will operate in the border between business and science, providing a welcome focus on the development side of research and development. “Exploiting untapped opportunities in the high tech manufacturing and services areas including ICT will be a major step forward for New Zealand’s economy. “The economy needs both agriculture and high tech manufacturing and services to succeed. The Government is saying both are critical for economic success. “Plans to transform IRL into a truly national facility with operations in our two largest manufacturing and exporting centres Auckland and Christchurch are entirely appropriate and will be welcomed by the manufacturing and exporting sectors,” Mr O’Reilly said. “Meanwhile consolidating operations in Gracefield, Lower Hutt is a vote of confidence in the existing important work done in the Wellington region. “The potential for the resulting Advanced Technology Institute to boost New Zealand’s economic growth is exciting. “This undertaking will squarely address issues that in the past have led to valuable New Zealand-trained scientists leaving this country for opportunities overseas. “Linking business and science is one of the most important issues for technology and productivity growth in New Zealand. It’s also in line with business thinking, as shown in the recent Deloitte BusinessNZ Election Survey, which ranked better connections between science and business as the number one issue needing more government investment. The Government is to be commended for this forward-looking policy,” Phil O’Reilly said. Mr O’Reilly said the rest of the Powering Innovation Report recommending further action in the education sector should be paid close heed. “It will be important that the Government continues to […]

Executive Director of ManufacturingNZ, Catherine Beard, said the three main themes for manufacturers were around building talent to drive innovation, increasing government and private sector investment in R&D and building bigger companies through increased participation of local firms in government procurement tenders. “Manufacturing is hugely important to the economy and all political parties should have policies to boost the sector. It is the sector with the second largest share of GDP, is the largest employer in Auckland, the second largest employer nationally and produces around 50% of our exports.“ “In addition, manufacturing has high productivity per employee, is increasingly high-tech and is scalable with a relatively small footprint. This is the sector that needs to grow if we want to catch Australia.” Catherine Beard says talent driven innovation is at the top of the list to keep New Zealand Manufacturers competitive, and the government of the day has a role in supporting this, through; High quality vocational education and training services that are turning out people with the skills required in the workplace. Clearer pathways from school into the workforce and a high quality career guidance service. School and University programmes in Entrepreneurship. Clear incentives to Universities (e.g. via the PBRF) to connect R&D efforts to commercialisation success with the private sector. Students graduating from the education system with the skills to grow the economy (science, technology, engineering, maths, literacy and people skills). A more business friendly immigration system to fill skill gaps quickly and efficiently. “In addition to talent, we need to boost our collective investment in R&D. Increased R&D leads to increased innovation and it is the innovators that will be successful globally and create high value jobs.” “Last but not least, we need to ensure that local manufacturers get a fair opportunity to win the bigger jobs […]