Business News

Despite another dip in expansion, manufacturing activity managed to keep its head above water, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI). The seasonally adjusted PMI for September was 50.8 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining).  This was down from 52.7 in August, along with an average result of 52.7 for the first nine months of 2011. BusinessNZ’s executive director for manufacturing Catherine Beard said that the fourth consecutive slip in expansion was disappointing in terms of building momentum for the sector. “The overall PMI result for September showing minor expansion almost parallels the views by respondents being evenly split in terms of major influences on business activity being positive or negative.  On the negative side of things, comments received tended to focus on a lack of both domestic and offshore orders, while positive comments were spread amongst various influences, with no one issue dominating. “With Xmas soon approaching, it will be interesting to see if the slow slide can be abated with a pick-up in production and new orders.” BNZ economist Doug Steel noted some stiff headwinds that the manufacturing sector has faced over recent times, such as weak domestic construction, a generally strong NZ dollar and concern around world economic growth. “Still, we take some solace from the fact that the PMI remains above the 50 mark, even with the headwinds outlined. And we remain optimistic for manufacturing as some of these headwinds are expected to at least abate or even become tailwinds next year.” Despite another dip in expansion, four of the five seasonally adjusted main diffusion indices were still in expansion during September.  New Orders (51.5) led the way, followed by employment and finished stocks (both at 51.2).  Production (50.8) fell […]

The alliance of seven local councils covering the top half of the North Island and representing over half of all New Zealanders is bold and very welcome, the Employers & Manufacturers Association says. The Upper North Island Strategic Alliance or UNISA just signed is to facilitate collaboration in the north on economic development, transport, tourism, emergency preparedness, ports, waste and water. “The UNISA initiative will facilitate business development by helping align the seven councils’ strategies and objectives,” said Kim Campbell, EMA’s chief executive. “We’ll do everything we can to help make the new initiative a success,” he said. “The Alliance recognises the growing significance of the ‘golden quadrangle’ of the Auckland, Northland, Waikato and Bay of Plenty which EMA has been promoting. “Having all the councils in the north share their plans and aspirations should lead them to share as well their tangible resources and expertise far more. “Its very positive to see our local councils showing leadership in this way. “The initiative stands to help immediately with decision making over cross boundary issues such as the integrated management of the Hauraki Gulf, the Firth of Thames and the Kaipara Harbour, and on such things as transport and building standards,” Mr Campbell said. The UNISA involves Northland Regional Council, Whangarei District Council, Auckland Council, Waikato Regional Council, Bay of Plenty Regional Council, Hamilton City Council and Tauranga City Council.  

  New Zealand tax law’s unfair treatment of intellectual property owners is undermining the Government’s efforts to encourage an innovation economy, according to an intellectual property commercialisation expert. Paul Adams, Chief Executive Officer of intellectual property commercialisation firm EverEdge IP, says the Income Tax Act (2007) taxes patents and patent applications unfairly because it treats them as an asset when they are in someone’s possession, but taxes them as income when sold. “Money spent on patents must be capitalised and therefore treated as an asset, rather than a tax deductable expense. Yet revenue earned from selling patents is considered to be income and taxed at income tax rates. Paul Adams “From a tax perspective, patent owners are getting the worst of both worlds. This approach punishes innovators for developing intellectual property assets.” Mr Adams commented that if Labour introduced an encompassing capital gains tax patent owners would be further penalised. The approach to patent taxation has the potential to undermine the development of New Zealand’s innovation sector because it encourages innovators to locate their intellectual property offshore. Relocating intellectual property offshore is even more compelling when New Zealand’s high tax rate on royalties is taken into account. Other countries, such as Singapore, Belgium, Spain and the Netherlands, are attractive because they have very low tax rates for income derived from intellectual property. Mr Adams is aware of a number of New Zealand businesses that have relocated their intellectual property overseas as a result of our tax regime. “This legislation makes absolutely no sense. R&D tends to base itself where intellectual property is held. With this regime there is no incentive to keep patents in New Zealand. The country ends up missing out on high value job creation, innovation and export revenue.” Further the law is not well understood and many […]

NZIER’s Quarterly Survey of Business Opinion (QSBO) shows steady economic activity in the September 2011 quarter. Firms’ experienced trading activity is broadly unchanged (+2% from +3%) on a seasonally adjusted basis. This is consistent with annual economic growth of around 1.5%. Activity was stable in the September quarter. Retail and services sectors picked up, but manufacturing and construction slowed. Canterbury is rebounding from the earthquake disruption, but the rest of the country is flat. Retailers are expecting a bumper end to 2011, which may be attributable to the Rugby World Cup”. The survey shows a resilient economy heading into the latest phase of global economic uncertainty. However, most of the survey responses were received before the RBNZ’s interest rate announcement, our credit downgrades and the rapid deterioration in global sentiment. Canterbury rebounding from earthquake disruptions Activity is picking up, particularly for retailers and builders. The services sector, which was hit hardest, continues to struggle. Investment intentions have soared in Canterbury, to replace lost capital. Building investment intentions have surged, but they are slowing elsewhere in the country. Firms remain cautious about expanding while demand remains patchy. Contained inflation Easing costs and pricing intentions suggest inflation will be contained over coming quarters. There is emerging inflation in the construction sector, with prices rising for the first time in three years. This may be related to the Canterbury rebuild. Outside of the construction sector, inflationary pressures are subdued. Activity indicators are also flat outside of Canterbury. Heightened global tensions have already affected Australian business confidence, but Kiwi firms are still surprisingly optimistic. The RBNZ is clearly mindful of these risks and the OCR is likely to stay unchanged at 2.5% for some time.  

PwC (formerly known as PricewaterhouseCoopers) has signed a Memorandum of Understanding (MoU) with China Development Bank (CDB). The MoU was signed at Premier House, Wellington today by President of CDB Shanghai Branch GUO Lian and PwC Chief Executive Officer Bruce Hassall. On hand to witness the signing was Chinese Vice Premier HUI Liangyu and New Zealand Deputy Prime Minister Hon. Bill English. Mr Hassall believes China will be an increasingly important source of funding for New Zealand businesses and infrastructure projects and the MoU will enhance PwC’s market leading position working with New Zealand and Chinese businesses to facilitate investment and trade and is a genuine win win for all parties. “Signing this MoU is a landmark event in continuing to strengthen the relationship between PwC and CDB. CDB is committed to helping investment and development in New Zealand and particularly assisting with the reconstruction of Christchurch,” says Mr Hassall. Mr Hassall adds “today’s signing signals the first step on what we at PwC believe will be a constructive and positive path for the benefit of Christchurch businesses and the wider New Zealand economy.” By signing the MoU, PwC and CDB have agreed to cooperate on major development projects with particular emphasis on reconstruction and investment in the Canterbury region of New Zealand following the Canterbury earthquakes, as well as in agriculture, infrastructure, natural resources and finance.  

Delcam,which is represented in New Zealand by Camplex, held its annual Asian Technical Summit in Zhuhai, China, from 6th to 8th September as part of the celebrations of the fifteenth anniversary of the founding of its Delcam China subsidiary. The Summit is held each year to present the latest developments from the company to its leading customers, academicians and the technical media in the region. This year’s meeting, which was sponsored by HP, was the eleventh in the series and the second to be held in China. Close to 200 delegates attended, mainly from China but also from 10 other countries. The Summit featured presentations on the latest versions of Delcam’s range of CAM systems before their official launch at the EMO exhibition. Updates were also included on the other software in the Delcam portfolio, including the company’s design and inspection programs, plus the dedicated software for the footwear, orthotics and dental industries. Guest speakers alongside the Delcam presentations included Alastair Morgan, Consul General from the UK Consulate in Guangzhou, Kexin Chu, CEO/Chairman of First Auto Works Die Manufacturing Co., Ltd., Marco Kormann from Adidas Group, and Naoto Kitayama from Japan’s Tatematsu Mold Co. Ltd. Delcam formed its Delcam China subsidiary in 1996 after making initial sales into the country through its joint ventures in Taiwan and Hong Kong. Delcam China now employs more than 50 staff in its headquarters in Beijing and regional offices in Shanghai, Shenzhen, Chengdu, Xi’an, Wenzhou, Qingdao and Quanzhou. In addition, the Delcam Hong Kong and Delcam Taiwan joint ventures operate two offices each in mainland China, and there are more than 30 reseller offices in the country. The Summit comes at a time when Delcam is setting new records for its business in China. Sales of software have increased by more than 50% in […]

Pacific Island countries contribute far more to the New Zealand economy than many people realise. In the past year ending June 2011 our trade surplus with the Pacific Islands was more than $1.3 billion! We need to balance our Pacific trade by ensuring we are actively encouraging exports to New Zealand; working in partnership not just making handouts; not forcing our values on other cultures but working with them to harvest the resources that are available; helping in setting policies that ensure resources are farmed not stripped. Multi-lateral trade is the aim of business groups that have been active in the Pacific Islands for many years and one of these groups, covering all the Pacific Island Countries is The New Zealand Pacific Business Council. The New Zealand Pacific Business Council Inc. (NZPBC) was formed in early 2005 as a not-for-profit incorporated society. The Council is a multi-lateral, private enterprise driven membership organisation whose primary objective was to promote and facilitate “two-way” trade and investment between New Zealand and 26 Pacific countries and territories within Polynesia, Melanesia and Micronesia. Whilst our focus is still on ‘two-way’ trade we recognise the importance of supporting trade between island countries – hence our interest in ‘multi-lateral’ trade. The NZPBC consists of over one hundred New Zealand companies interested in, or operating in the Pacific Islands. Members also include the Ministry of Foreign Affairs and New Zealand Trade and Enterprise. Over the past six months the NZPBC has revved up its operation to ensure members have more opportunities to meet Pacific trade visitors, to network amongst each other, and participate in trade missions to the Pacific. Business After 5 functions are held each month, and three trade missions are planned per year (some in conjunction with other business councils) and the newsletter and web site […]

August saw a mix of results that kept manufacturing in expansionary mode, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI). The seasonally adjusted PMI for August was 52.9 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). Although this was down slightly on the July result of 53.2, almost all results since November 2010 have been above 50.0 and within a relatively narrow band between 52.7 and 54.7. BusinessNZ’s Executive Director for manufacturing, Catherine Beard, said that the negatives for August were equally matched by positives elsewhere. “Over the last four months we’ve experienced the steadiest period of activity since the survey began in 2002,” she said. “Looking at the current month, while elements of the manufacturing sector, such as those by region and sub-industry fared worse in August, this was counteracted by pick-ups elsewhere, notably the Otago-Southland region and the metal product manufacturing sector.” BNZ economist Doug Steel said that it is important to look at all information in assessing economic performance. As ever, it pays not to read too much into any one number. While this is true at the best of times, it is especially important now with so many moving parts. “August’s PMI continues a remarkably steady run over recent months, but masks considerable and widening variation in the detail. While this variation reflects the many factors pushing and pulling the economy, it is encouraging to see the overall trend remain positive,” Doug Steel said. Despite the dip in expansion, four of the five seasonally adjusted main diffusion indices were still in expansion during August. Deliveries (55.8) led the way with a result similar to June 2011, followed by new orders (54.3). Encouragingly, production (53.7) increased 1.2 points from July 2011, while finished stocks […]

The Reserve Bank of New Zealand (RBNZ) should take the Swiss National Bank’s lead at the Official Cash Rate announcement on Thursday and take action on the exchange rate say the New Zealand Manufacturers and Exporters Association (NZMEA). Switzerland, like New Zealand, is a small trade exposed economy that relies heavily on export revenues and they have recently moved to peg their currency to support and maintain the competitiveness of their exporters. Philipp Hildebrand, Chairman of the Governing Board of the Swiss National Bank made the announcement: “The Swiss National Bank is therefore aiming for a substantial and sustained weakening of the Swiss franc. With immediate effect, it will no longer tolerate a EUR/CHF exchange rate below one Swiss franc twenty. The SNB will enforce this minimum rate with the utmost determination.” NZMEA Chief Executive John Walley says, “This is the sort of approach New Zealand needs to take. It does not require a currency peg as the Swiss are using, any number of approaches can be adopted, but whatever the method chosen the same overt commitment to deal with an overvalued currency needs to be demonstrated to get the right reaction from currency markets.” “As a comparison the RBNZ’s largely hands off approach encourages the currency markets to play that predictability without fears of any sustained intervention.” “New Zealand must look to advance its own interests as the rest of the developed world are doing – this requires action from the Government and the RBNZ. More of the same don’t scare the horses approach will see an ever declining tradable sector and worsening debt problems as a result.”  

The agreement struck for government to provide funding for workers required to ‘sleepover’ as part of their workplace arrangements has been cautiously welcomed by the Employers & Manufacturers Association. “Its good the sleepovers issue is to be resolved, but some employers will be nervously waiting to see how far the government’s generosity will extend,” said David Lowe, Employment Services Manager for the EMA. “Employers are pleased the government is prepared to stump up with the funding necessary to settle the case,” he said. “However the precedent affects more employers than just those in the disability and health care sectors, and it remains to be seen if the legislation applies to all employers, or just those who are government funded, or those who are government funded through the health vote. “Some employers in education and other sectors will be nervously watching how far the breadth of the proposed legislation will extend before giving it an unqualified tick.”