There is no crisis in manufacturing, Key says

Farra Engineering worker Terry Smith talks to Prime Minister John Key when the Mr Key visited several divisions of the 149-year-old engineering firm in Dunedin yesterday. Photo by Craig Baxter.

Manufacturers can expect little respite from the crippling strength of the New Zealand dollar, while tax incentives to boost performance are not on the Government's radar.

Prime Minister John Key spent about an hour at Farra Engineering in Dunedin yesterday, with chief executive John Whitaker, touring its design, stainless steel and fabrication divisions.

The divisions collectively produce high-end niche exports such as maintenance units for ultra-high-rise buildings and aluminium smelters worth millions of dollars, trucks for carrying explosives around Australian mines, through to recent large-tank fabrication for Speight's brewery and other smaller domestic contracts.

Mr Key was impressed with the array of designs under way, describing the work as that of "specialists" in what is a globally competitive niche market.

Recent data showed manufacturing was one of the hardest hit sectors in three consecutive years of decline in the number of all businesses around the country, with 3800 businesses lost in the year to February. About 950 of those were in Christchurch.

Manufacturing business numbers have been in decline for a sixth straight year.

Mr Key said business numbers were not necessarily representative of actual job numbers, and repeatedly cited opportunities in the more than $20 billion being spent on infrastructure and rebuilding work in general in Christchurch.

"There is no crisis in manufacturing; but some are doing better than others," Mr Key said.

The strength of the New Zealand dollar has been squeezing many exporters' margins for more than two years now, with calls for a change to Reserve Bank policy.

However, Mr Key expected "few changes" from new Reserve Bank Governor Graeme Wheeler, nor to see him divert from his predecessor's "orthodox" management of the interest-driving official cash rate having been on containing inflation within a 1%-3% band.

When asked if manufacturers could expect respite in the form of tax incentives, Mr Key said there were no such plans, but did not rule out consideration in time for next year's Budget.

• KiwiRail's Dunedin workshops in Hillside Rd have been for sale since April. Mr Key said several parties were considering purchase of parts, or all, of the operation.

simon.hartley@odt.co.nz