Business News

The Reserve Bank’s decision to hike the Official Cash Rate (OCR) again will stifle the export growth that needs to lead the economic recovery say the New Zealand Manufacturers and Exporters Association (NZMEA).  There have been warnings from across the tradeable sector on the damage OCR hikes will do; this advice needs to be heeded. NZMEA Chief Executive John Walley says, “Reserve Bank Governor Dr Alan Bollard noted that domestic demand, retail spending, housing turnover and business investment are all weak; this begs the question: why has he raised the rate again?” “Hiking interest rates on the basis of business confidence and commodity prices is always going to be a risky practice.  These are among the most volatile and unreliable forecasters of where the economy is going.  Both of these indicators have dropped since its last announcement so the Reserve Bank should have put prudence before pride and put interest rates back on hold.” “This must force some action from our politicians.  The way the world is now we cannot afford to have a central bank policy that simply ignores growth today in order to focus on possible inflation a year or so down the track, particularly when most other central banks are pushing the ‘lower for much longer’ outlook.” “As most of the others go ‘lower for much longer’ the RBNZ needs to accelerate the macroprudential measures to deal with inflation rather than using interest rates which tend to lift  the exchange rate and are so damaging to the traded economy.”

by HERA Director Dr Wolfgang Scholz With the recent decision of government-owned Crown Research Institute NIWA to contract the multi-million dollar upgrade of its research vessel Tangaroa to a Singapore dockyard, and the KiwiRail announcement that the Auckland light rail trains will be imported, the Heavy Engineering Research Association (HERA) analysts have two other interesting case studies to add to the list of recently imported or to be imported heavy metals based articles. HERA’s statistical analyses showed that from 2008 to 2009, New Zealand experienced an increase of $43 million in the value of imported steelwork in the single category of articles used in steel structures. This import value increase has to be seen in context of significant rises in steel cost during 2008/09 and also the worldwide recession, where pressure was put on everyone to win contracts at all cost from a reduced number of projects and this includes importers. This $43 million is not a large increase but in our calculations for this category alone, we have lost over 150 direct jobs. This is serious enough to mean that our industry should be alerted to this trend and monitor developments, and be ready to take action to fight for our market share. Heavy engineering is of strategic importance to the NZ economy be it for food processing, petro-chemical, infrastructure, mining, marine, defence or the transport industry. Steel construction innovation has provided a viable alternative to concrete construction and is continuing to provide considerable cost savings and sustainable alternatives to our economy. Our heavy steel fabrication industry has remarkable depth of capabilities due the relative isolation of New Zealand and has grown continuously since the 1990’s at well above the general rate of GDP increase. Our heavy fabricated metals product sector has also built a considerable export market, amounting […]

The recently held EMEX 2010 was a success. Judging by the comments from exhibitors a lot of business was done because the decisionmakers turned up. Those with the spending power came along, saw what their company needed and bought equipment. EMEX 2010 brought together the latest in machine tools, manufacturing software, engineering and electronics equipment. The exhibitors who took part are key players within New Zealand manufacturing, as were the visitors. Overall, a thoroughly satisfying event. Read more in NZ Manufacturer’s June EMEX 2010 Review. To take part please email me words@xtra.co.nz. -Doug Green

New Zealanders involved in food production have a buoyant long term future once the current economic squeeze on the rural sector eases up, according to Agriculture Minister David Carter. Speaking in the latest edition of Bayleys Real Estate’s Country magazine, Mr Cater said that with primary sectors generating around two-thirds of New Zealand’s merchandise export earnings, there was the sufficient scale, market share and well-developed supply chains to ensure true international competitiveness. “As I see it, the world is facing two major challenges – climate change and feeding a growing population. It is common sense that food be produced in the most suitable locations, and by the most efficient producers. New Zealand can offer both of these in spades,” Mr Carter told Country magazine. “This is reflected in where New Zealand agriculture stands globally. We are the largest dairy exporter in the world, a significant beef exporter, and the world’s biggest sheepmeat exporter.” “Looking ahead, our food and fibre producing capability will be even more important because of a growing world population and increasingly scarce natural resources,” he added. “Global population growth means that the world has to increase food production by 50 percent in the next 20 years. Coupled with this is the strong likelihood of economic growth in our key trading block of Asia-Pacific nations – and this can only mean better market access conditions for New Zealand agricultural products across the world. “This is why I’m optimistic about the long-term outlook for New Zealand’s primary sector. The prospects remain good for the decade ahead as long as our producers stay on top of their game, remain innovative, are supported by government, and don’t allow standards to slip.” Mr Carter said that as global trade continued to pick up from the troughs of the recession, countries would be […]

The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during February 2010, shows total sales in January 2010 decreased 3% (export sales decreased by 32% with domestic sales increasing 15%) on January 2009. The NZMEA survey sample this month covered NZ$452m in annualised sales, with an export content of 28%. Net confidence rose to 45, well up from the -11 result reported last month. The current performance index (a combination of profitability and cash flow) is at 100.5, down from 101.5 in December, the change index (capacity utilisation, staff levels, orders and inventories) rose to 99 from 98 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 104.5, up on December’s result of 101. Anything less than 100 indicates a contraction. Markets were the only reported constraint. Staff numbers for January 2010 decreased year on year by 13%. “Confidence has turned positive this month after two years in negative territory but that will be little comfort until sales and jobs start to pick up,” says NZMEA Chief Executive John Walley. “There are reports of markets starting to improve but there is still a fair way to go to get back to normal. A persistent concern is the exchange rate which continues to hit profitability even in industries where sales have improved.” “A lower cross rate and continued growth in the Australian economy will help manufacturers selling to Australia, particularly if they buy materials in US dollars. Overall markets are still soft and remain the only reported constraint. Europe is particularly weak.” “Better index numbers show that things might improve, but it is not the ‘v’ shaped recovery we had hoped for.” “Lower sales and a drop in staff numbers show that, at best, we are bumping along the bottom.” […]

EMEX 2010 is the show piece for the latest manufacturing equipment and technology for New Zealand businesses. Companies have taken the opportunity to display to decisionmakers some of the “goods” available to assist them maintain their competitiveness and move ahead in local and overseas markets. There is a belief that  manufacturing is starting to hold its own again and that national and world economies are beginning to regain some momentum after a very difficult time economically. We still need government to show a greater commitment to the manufacturing sector and provide incentives to companies who live an breathe on the workshop floor! So just what is it that brings about success? Research, planning and development and implementation are essential. And – of course – this all becomes possible with the right equipment. In these times we can all sail solo. Modern technology allows us to do this by choosing manufacturing processes which use the latest cnc equipment, or software, or machine shop tools to our advantage. Treat EMEX 2010 as the perfect place to update and upskill your workplace equipment and plan for a more successful future. -Doug Green