Business News

Catherine Beard There is no denying that manufacturing in New Zealand has suffered as a result of the global financial crisis, just like many other countries. But, it’s imperative to realise that we have come off better than most, recognise what we can do to improve New Zealand’s situation and leverage our advantages in the global marketplace. What happens in manufacturing matters to New Zealand because manufacturing is still a big employer – the biggest in the Auckland region, and second largest in the country. It accounts for nearly 50 per cent of New Zealand’s exports. Manufacturing as an employer has been fairly static over the last three years – bumping along in very slight expansion mode, but the key message is that the backward slide (over the whole sector) has stabilised somewhat. So, the questions to be asked are, “What can New Zealand do to grow its manufacturing sector?” and “What can we do to get more people off welfare and into more manufacturing jobs?” We need to tackle the problem from both ends – demand and supply. Growing the manufacturing sector and creating more jobs will pull more people into manufacturing, but we also need to make sure there is a good supply of qualified manufacturing workers. The challenge of getting people off welfare comes down to ensuring those people are work-ready and jobs are available for them. When the economy is growing slowly and there are not so many new jobs being created, the people most affected are the unskilled and school and university leavers who are looking for their first job. Also in tough economic times, people are more inclined to hang onto to their jobs, so there is less movement amongst jobs. While things might seem tough in NZ, they have been tougher in other […]

By Bruce Goldsworthy Recently the government rolled out the initial stages of its welfare reform programme requiring beneficiaries at least to look for work. Not surprisingly many people asked where are the jobs these people are supposed to get? With unemployment at 6.7 percent, they said, where are the jobs for those genuinely wanting to work, even semi-skilled people, let alone those with few skills? Let’s make some things clear. There’s absolutely no shortage of work! It’s a truism the world is full of it. In fact there are vast resources of work, of great value to the community, or for private purposes, provided someone is willing to pay for it. The last point is of course the flaw in the argument. Though there might be useful work waiting to be done, often there is no money to pay people to do it just now, or organise the doing of it. It follows if more money was available more jobs could be created provided the products or services resulting from it were sufficient to encourage someone to pay for it. So how do we make the sort of jobs that generate products and services for which there is a market value equal to or exceeding their costs of labour and other inputs? For thousands of years the world’s wealth has grown as our adventurers and entrepreneurs have expanded our horizons, markets and market choices. The innovations they developed and the successful risks they took have been the main engine of our steadily rising standards of living. Such processes are not about to stop, but they do need revisiting and the processes themselves can require re-inventing. Let’s consider the Auckland waterfront. We hear from the two companies contracted by the port to supply labour that they have been inundated with applicants […]

Organisations wanting to improve their environmental credentials and their bottom line are lining up for the Eco Smart Business programme. That’s largely due to the big benefits reported by last year’s participants. One company cut its vehicle operating costs by over $100,000 and waste management costs by 50% annually. Another reduced its waste costs by 39% while a fourth lowered its energy costs by 30% and another cut theirs by 40%. To recognise them today the Eco Smart Business programme presented the following four Trailblazer awards: • Energy Trailblazer Award– The Pink Bin Company for saving 40% on energy use; • Waste Trailblazer Award – Floorcraft (NZ) Ltd for a 39% reduction in waste cost by donating waste carpet for weed matting; • Transport Trailblazer Award – Eco Insulation for saving $100,000 per annum through focused route management and a fuel efficient fleet replacement programme. Also the new fleet is generating three or four sales leads a week; • Eco Warranty Trailblazer – Greenscene Ltd for excellent implementation of the Environmental Management System and understanding, awareness and contribution by all staff. Other interested parties are being invited to sign up. The Eco Smart Business programme consists of five, half-day workshops where participants use an online system to measure their environmental footprint including energy use and waste management. On an online system they then set up their own Environmental Management Plan which can lead to Eco Warranty certification and ultimately to meeting the ISO 14001 international environmental standard. EMA’s aims are to help businesses save money and become more attractive to consumers and other parties in the supply chain, who are all demanding increasing proof of environmental credentials. Other benefits of the programme, according to its participants, include: • Providing the planning structure to continue to strive towards enhancing and protecting […]

NZ Manufacturer publication is saddened by the news of the passing of Sir Paul Callaghan. We knew Sir Paul as an advisor to the publication; he also contributed articles on business in New Zealand and was all in favour of promoting our ‘Innovation Culture.’ He also believed in “telling the stories of our successful businesses and celebrating those successes.” We will miss his vision as we continue on. -Doug Green  

Two of the issues constantly on our minds are productivity and jobs. They are not easy issues to address, nor are there easy answers to them. This month, we have seen the announcement of the new super government department – Business, Innovation and Employment – to be led by Steven Joyce which is bringing (supposedly) greater efficiencies for the business community and – unfortunately – job losses. I wouldn’t be a public servant for all the tea in China or Sri Lanka because your job is at someone else’s whim. How else can you describe the current situation? When I asked how this refinement of government process – as with the addressing of the welfare beneficiaries situation – is beneficial and not monstering people to save money, I had some pretty decent feedback from business-related organisations. This feedback ranged from ‘its about time government departments became more efficient’ to ‘stop- gap measures to save money can only be dressed up so far – where are the private sector jobs coming from?’ To ‘here we go again letting Australia pick up the slack for us by providing a place for people to continue to find work’. And then there’s productivity. Input per worker or the amount of value that each of us adds to our daily toil. Murray Sherwin, Chair Productivity Commission says that a country’s ability to improve its standard of living over time depends almost entirely on its ability to raise output per worker (see Page 12). And if our GDP per person continues to decline per person then, naturally enough, this affects our standard of living. From being a worldwide top performer in the 1950s New Zealand’s current GDP performance sees us at our around 26th in the world, sliding down the list of nations. Murray Sherwin says […]

In his lunchtime speech, John Key outlined the following: A single, dedicated ministry of business, innovation and employment would integrate the work of the economic development ministry, the department of labour, the science and innovation ministry and, in a major surprise, the department of building and housing (DBH). “This new department will help to drive the Government’s priority of building a more productive and competitive economy,” Key said This is all very well in the light of wanting to reduce costs and the size of the public sector. It is good news if the private sector can benefit. It is bad news for those being made redundant and facing the real option of going across the ditch to find work. Primarily, we have been served up a money saving exercise dressed up as progress. Nothing yet is obvious as to how the business community will be better off – addressing the dollar, more incentives for exporters, reduced costs for running a business, more factories to be built? And, most importantly, where job growth will come from. Streamlining and improving efficiencies is one thing –a vision- not a cost saving exercise for the future – is another. How do you see it? What positive difference will these changes make? Where is your company going in the future? -Doug Green www.nzmanufacturer.co.nz  

BusinessNZ welcomes the announcement of a new Ministry of Business, Innovation and Employment. Chief Executive Phil O’Reilly says pooling and coordinating services and policy relevant to business within a single ministry makes a lot of sense. “Reducing current levels of duplication will be appreciated by many enterprises. “A single, dedicated business-facing government department, focused on delivering results, will be a great improvement on the current situation. “A results focus where managers will be held accountable for achieving specific objectives, rather than just managing a department or agency, will better align the public sector with private sector practice. “However, significant changes in the way the new merged ministry will operate will require close attention by Government to ensure the changes are implemented successfully.” Mr O’Reilly also welcomed the expectation that all transactions with government will in future be digital. He said other expectations outlined by the Prime Minister today – including more people achieving NCEA level two and advanced trade qualifications – indicated the Government was serious about planning for a more competitive economy.

Manufacturing activity experienced a sizeable lift in activity for February, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI). The seasonally adjusted PMI for February was 57.7 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was up from 50.8 in January and the highest monthly value since April 2010. The February 2012 result was also the highest February value for activity since the survey began in 2002. BusinessNZ’s executive director for manufacturing Catherine Beard said that the strong upturn in activity for February was welcome, but whether this indicates a true turn around in the fortunes of the manufacturing sector remains to be seen. “There’s no doubt that after four months of lacklustre results, February’s main value is a return to the levels of expansion consistently seen in the first three years the survey was running. Also, the fact that the key sub-indexes of production and new orders experienced a large lift is a good indicator for proper growth in the sector. “However, with the global market still flat at best, we would be cautious at this stage to think the sector has turned any corner in terms of sustained growth.” BNZ economist Doug Steel remarked, “February’s PMI result is one out of the box. A very strong reading with a lot to like in the details too. But it is only one month and in the context of a generally low level of manufacturing activity in recent years, we see it as early signs of growth off a low base.” Four of the five seasonally adjusted main diffusion indices were in expansion during February, led by new orders (63.1) and production (61.9) with both recording their highest results since 2004. Employment (51.3) was largely unchanged from […]

Auckland Council should not become involved any further with the strike actions at the port, the Employers and Manufacturers Association says. “Businesses are increasingly alarmed at efforts by our local politicians to involve themselves in the port disruption,” said Kim Campbell, EMA’s chief executive. “A report that Auckland councilor Richard Northey plans to use his position as chairman of a Council subcommittee to recommend that the Council overturn management decisions at the port is provocative. “A request by other councilors for the Mayor to call a special meeting to discuss the port is unhelpful. “We are concerned actions like these will only prolong what has been a difficult but highly proper process undertaken from the outset in good faith by the port management. “To many businesses the dispute has always been more about the survival of the union rather than the interests of the workers directly involved. “That many of those on strike are being offered jobs at the port at similar rates of pay to those they had previously is a testament to this.”  

Unless the Government finds its innovative mojo, moves to increase the efficiency of the public sector are likely to bear little fruit. In a just released White Paper Alastair Boult, National Director, Government Advisory Services for accounting firm Grant Thornton New Zealand, said that tinkering with mergers of government departments is not enough. “To achieve lasting efficiencies and long-term gains, the public sector as a whole needs to recapture its drive for innovative thinking, something not seen in this country since the ambitious reforms of the 1980s and 1990s. “Those reforms transformed the public sector, changing the structure, organisational capacity and performance of government. New Zealand was once a pioneer and led the world in modernising government. “To reform our present public sector we need to regain our innovation mojo from the last century. We need to change, not tinker,” he said. According to the White Paper, innovation in our private sector continues to grow while creative thinking in our public sector has fallen by the wayside. “The chronic lack of innovation in our public sector has led to declining efficiency, poorer services and a loss of value for taxpayers. Compared with other developed economies, our public sector is slower and less effective. Put simply, we are not being smart about the way we approach our public services.” How can we achieve this? “We need leadership from the top that recognises the significant role innovation plays within government. We need public sector management that creates and supports innovation processes and we also need a culture that tolerates failure, encourages creativity and embraces new ideas.” According to Alastair Boult, the Government’s rhetoric is not matching its own record of supporting innovation. “When measuring investment into research and innovation, New Zealand continues to place at worrying low levels. Both government and business […]