Union representatives from Hillside Workshops are expected
to speak at the manufacturing inquiry in Dunedin today.
Photo from ODT files.
There was a ''significant chunk'' of New Zealand's
manufacturing sector that was performing admirably and it was
about time it was recognised, BNZ head of research Stephen
There was a perception the country was seconds away from the
complete and utter destruction of New Zealand's manufacturing
It would appear from reports that 100% of New Zealand's
manufacturing production was sent offshore and that all sales
were made in US dollars, he said.
As a consequence, the soaring New Zealand dollar against the
US currency had destroyed any chance of anyone making any
''A modest exaggeration perhaps, but the widespread
perception is that not only is the manufacturing sector dying
but that its death will also undermine the New Zealand
economic expansion that is under way.''
It was true that some manufacturers were struggling, Mr
Toplis said. By most measures the dollar was overvalued
against many of its trading partners' currencies and it was
true the strength of the currency was having a significant
adverse affect on many manufacturers.
''But it is plain wrong to extrapolate from this that all and
sundry are in a mess.''
In the case of many New Zealand manufacturers, much of their
intermediate consumption was imported, whether that be raw
materials or fuel. The net cost of the currency's
appreciation was often much lower than gross cost, he said.
Mr Toplis said that if there was a nail in the coffin of the
argument that manufacturers were in crisis, surely it was
what manufacturers themselves were saying about their plight.
According to the latest ANZ business opinion survey, a net
48.7% of manufacturers were optimistic about their outlook.
That was a ''massive'' 21 points above the average for the
It also meant that manufacturing was the most optimistic
sector in the country, he said.
Today, the Opposition-led manufacturing inquiry will hold a
session in Dunedin with union representatives for the
now-closed Hillside Workshops and Summit Woolspinners set to
speak. Summit closed last month with the loss of 192 Oamaru
jobs. The inquiry into the loss of 17,000 manufacturing jobs
in the past 12 months will be held at the Otago Museum from
On Friday, the New Zealand Manufacturers and Exporters
Association - no friend of the current Government - said its
survey of business conditions completed during February
showed total sales in January increased 7.71% with export
sales increasing by 17.23% and domestic sales falling 0.2% on
The survey sample covered $221 million in annualised sales
with an export content of 49%.
Net confidence rose to -9%, up from -14% reported in January.
Chief executive John Walley said staff numbers for January
increased year-on-year by 2.03%.
''We are seeing positive increases in exports for January but
confidence, although improved on last month, is still
negative. Overall trends are hard to pick, but it seems they
are zero to slightly positive in recent months.''
Markets and exchange rates were once again seen as the
biggest constraint to growth. With better news, at least for
now, from the economy, the association hoped the Reserve Bank
would move quickly on the introduction of prudential tools to
push back on house price inflation.
Mr Toplis said the Business NZ-BNZ performance in
manufacturing index also showed confidence to be ''relatively
lofty'' in the sector, and so too did the New Zealand
Institute of Economic Research's quarterly survey of business
''From our perspective, the medium-term outlook for the core
manufacturing sector looks relatively promising.''
New Zealand trading partner growth was expected to be at or
above average and the building sector was set to boom and
would support domestic sales, he said.
But there was unlikely to be substantial relief from the
currency, and global excess supply would remain problematic.
Also, the food and beverage sector would suffer from the
current drought and there was no suggestion that
manufacturing output would return to its 2005 peaks any time
soon, Mr Toplis said.
The manufacturing sector faced serious issues and many
manufacturers were struggling and would struggle to survive.
But talk of the death of the sector as a whole was wildly
premature, he said.
Furthermore, suggestion that all that was needed for success
was an adjustment to the currency was misplaced, Mr Toplis