New Zealand economic decline

Manufacturers threaten to quit NZ

Opposition's parliamentary inquiry hears firms on verge of leaving country because of high exchange rate.

NZ Herald,

29 January, 2013

More leading export companies are on the verge of moving overseas due to the high dollar, Opposition MPs were told yesterday by manufacturers, who challenged the Government to do more to control the exchange rate.

Labour, the Greens, New Zealand First and Mana were holding the first of a series of hearings into what they say is the crisis in manufacturing.

MPs heard from business and union leaders as well as the chief executives of several leading export companies.

All said the exchange rate was their biggest headache and most warned they were considering moving overseas to stay in business.

David Bennett, managing director of Pacific Helmets, which manufactures helmets for fire services and other specialist applications, said his company wanted to stay in Wanganui, where it began in the 1970s, "but things are against us".

In 2001, a helmet selling for US$100 would generate $250 for the company; today the same helmet cost the same to manufacture but was generating just $127, Mr Bennett said.

Even at the average exchange rate over the last 10 years the return on the helmet would have been about $140 to $150.

Today's exchange rate meant a loss of about $27, Mr Bennett told MPs.

"Now you multiply that across tens of thousands of helmets and then across lots of companies that sell products overseas and that's the dollars that we're missing out in the New Zealand economy."

Stewart Hyde, manufacturing manager of Wyma Engineering, which makes vegetable polishing and handling machinery, said his company was recognised internationally as producing state-of-the-art equipment.

But difficulties competing internationally with a high exchange rate had forced it to source about four-fifths of its componentry from overseas, mainly China.

That had cost about 40 local jobs. The company was now considering moving its final assembly overseas.

"The question I would pose is how much does the Government want us to stay in New Zealand?"

Economic Development Minister Steven Joyce yesterday said he didn't agree there was a crisis.

"Nobody is arguing that being a manufacturer isn't challenging - in my history in business every time in business is challenging - but going around and trying to talk down the New Zealand economy and talk about a crisis in manufacturing is not particularly helpful."

Hamilton Jets managing director Keith Whiteley said other countries were "moving away from the single policy setting and are using interest rates to control exchange rates. New Zealand has to start looking at those issues."

Minister Joyce warns 'not to talk up' crisis

Currency intervention a fool's paradise, says Joyce Joyce

Radio NZ,

29 January, 2013

The Labour, Green, New Zealand First and Mana parties are holding a parliamentary inquiry into manufacturing after the finance select committee blocked a request for a similar investigation.

Businesses and unions appearing before the inquiry said the sector is being hit hard by the high and volatile exchange rate.

Economic Development Minister Steven Joyce says the Government is doing all it can to help the manufacturing industry but will not intervene in the exchange rate.

… Mr Joyce told Radio New Zealand's Morning Report programme on Tuesday it "becomes a bit of a fool's paradise" for a Government to intervene in the exchange rate.

The minister said the last time that was done was in the 1970s and was a big mistake.

"We all know how that turned out when we took a bet with the kiwi dollar against the world and lost," he said.

"My view of it is that the dollar is pretty high for some exporters, and my feeling is that it will come back over time, because it is based around the fundamentals of what people think the world economies are doing."

Mr Joyce says nobody is arguing that being a manufacturer is not challenging, but just like any industry, it is challenging for different companies and at different times.

"It all depends on their mix of inputs, where they get their business from, who they're selling to and all those things.

"There is no generic crisis in manufacturing but I would certainly acknowledge it is challenging for some companies."

The Labour Party says this country has fallen behind the world with its monetary policy as the country's most high value exporters complain they are struggling against the high value of the dollar.

Labour's finance spokesperson David Parker says countries such as Switzerland, the US, Singapore and China are prospering by intervening in their currency markets in different ways.

"And yet New Zealand, we sit here like saps and we've got an exchange rate which is driving people towards the wall."

Mr Parker says manufacturers are also complaining about the tax system, saying it does not distribute money into productive parts of the economy

Listen to more on Morning Report

Redundancies gathering pace, says union

The political parties holding the inquiry say 40,000 jobs have been cut from the manufacturing sector in the past four years and change is needed to reverse the trend.

Engineering, Printing and Manufacturing Union general secretary Bill Newson said not only have jobs been lost, but in the past year the trend of redundancies in manufacturing increased markedly.

"Over last year we had an average of two separate companies for every week of the year that notified us of the need to talk about redundancies as a result of downsizing, closing down or sending work overseas."

Mr Newson says when the union spoke to the employers about the reasons for the redundancies, a common theme was the high and volatile exchange rate.

Exporter tells of moving jobs offshore

An exporter of vegetable processing equipment told the inquiry the company may be forced to source all its materials from China because of the high New Zealand dollar.

Wyma manufacturing manager Stewart Hyde said the engineering company is being crippled by the relentless rise of the dollar.

He says his company has now transferred more than 40 manufacturing jobs to China.

"The question I would pose is, to what extent does the New Zealand Government want us to stay here, what policy settings are going to change to make that happen."

NZ Post wants cut in minimum delivery days

Radio NZ,

19 January, 2013

New Zealand Post is proposing changes that would allow it to reduce the number of days it delivers mail to most addresses from six to three days a week.

The number of items mailed last year was down 24% compared with 2002.

Communications and Information Technology Minister Amy Adams said the company wants greater flexibility in its postal services as mail volumes are forecast to fall further.

"In light of those significant reductions in mail volume, New Zealand Post is seeking to make changes to the Universal Service Obligations it is bound by."

Under its current Deed of Understanding, New Zealand Post must provide delivery on six days a week to 95% of addresses.

It wants to change that to not less than three days a week delivery to 99.88% of addresses.

Ms Adams said New Zealand Post also wants to introduce more self-service kiosks.

Submissions on the proposals close on 12 March.