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NZ exporters and manufacturers cut jobs 19% as orders fall
Confidence held by New Zealand's manufacturing and export sector was less negative in June than in May but export sales and employment continued to fall over the month, with staff numbers down 19% from June 2008, a survey by the New Zealand Manufacturers and Exporters Association (NZMEA) shows. Export sales were reportedly down 19% from the year before, although domestic sales were up 3%. Overall sales fell 6% from June 2008. The June survey sample covered NZ$328 million in annualised sales, with 37% of them export sales. 
"Overall this month's sales are still getting worse but the rate of deterioration has slowed," NZMEA CEO John Walley said. "Domestic sales have increased for the first time since December last year due to a stabilising housing market and forecasts of domestic growth towards the end of this year, but exports and sustainable medium term growth continue to look weaker. This growth outlook presents further risks to the economy," Walley said.
"Policy settings generally, and in particular the Official Cash Rate (OCR), are driving this outcome. As confidence in the global recovery grows our higher interest rates have seen the re-emergence of the carry trade, which has overvalued our exchange rate. This is hampering the recovery of the tradeable sector," he said. The survey's 'current performance' index (a combination of profitability and cash flow) was 91, up from the previous month's 88.5; The 'change' index (capacity utilisation, staff levels, orders and inventories) increased to 96 from 94 in May, and the 'forecast' index (investment, sales, profitability and staff) was 96, up on the previous month's result of 90. Index scores than 100 indicate a contraction. Overall net sector confidence was negative 27%, better than the negative 58% in May and was the best result for 2009. Staff numbers for June fell by 19% from June 2008, the survey showed. The NZ Household Labour Force Survey released on Thursday showed nationwide unemployment jumped to 6% in the June quarter from 5% in March. "Commentary from respondents reported that order lead times are shortening, last minute decisions are being made, there are few forward orders and some payments are very slow. Generally, capacity is being reduced so overall jobs are lost. A few comments are positive and some have said July figures will be better; for others the 9 day fortnight is helping," Walley said. "We must avoid a return to the unbalanced and unsustainable asset driven consumption of the last cycle. The productivity review with Don Brash, the tax review and what appears to be an increasingly open minded approach from Bill English and John Key present opportunities to better align policy behind the real economy," he said. "Only time will tell if the political will is there to make the necessary changes this time round."
2 Comments
To NZMEA CEO John Walley:
To NZMEA CEO John Walley:
A lot of hard work, especially from the NZ industry needs to be done to make sure manufacturing becomes part of our NZculture. Only then we see positive changes, which will fulfil your demands you are asking for.
Quote:
"We must avoid a return to the unbalanced and unsustainable asset driven consumption of the last cycle. The productivity review with Don Brash, the tax review and what appears to be an increasingly open minded approach from Bill English and John Key present opportunities to better align policy behind the real economy."
"Only time will tell if the political will is there to make the necessary changes this time round."
Cheers Walter
We think we live on
We think we live on farm or theme park. If you take a look at
http://www.hotscience.co.nz/extrasciencevideos.php
Earnings from agriculture and tourism are vital; however of themselves they are not sufficient to return a first world living to all New Zealanders. Our export are roughly 25% each, primary, processed primary, manufactured goods and services. Manufactured goods have grown from 22% to about 32% of exports in the last decade, sadly during the current decade that growth has stalled.
We are doing all we can, and thankfully more and more people are rejecting the post inductrial fantasy so popular to those well installed inside the Wellington bubble. See:
http://www.mea.org.nz/document.ashx?id=421
Or for a lot more:
http://www.mea.org.nz/media/viewpoint.aspx
We must all do what we can and the more people that "get it" and push it with our leaders at every opportunity the sooner things will change.
Just a small point Walter
Just a small point Walter it is really about the real, traded economy. That is not only manufacturers but farmers, miners and even software writers - all those who compete on the global stage.
Without greater stability, without a anticiaption of a better return few will invest in the tradeable sector and growth will slow and probably stall. Take a look at some of the other threads here.
Of course it is all
Of course it is all about primary, but especially secondary of the NZeconomy what we are debating here.
What I miss here in NZ in comparison with Switzerland (my old home) is a national spirit/ pride of manufacturing. In general the public including through the media are constantly taking about consumption and primary economy only.
Your organisation needs to tackle this fundamental problem. Firstly and most important you have to build a strong, long lasting public relation/ PR campaign with the media. Without such a culture bankers/ investors economists/ politicians/ etc. will never understand. Without such a culture talented young people always have to leave the country, because the seeds to growth into strong trees have never been planted and therefore we never see a forest of opportunities/ potential. Without such a culture we will never prosper.
Walter: What comes first the
Walter:
What comes first the policy settings or the culture, we believe that we have the culture driven by the policy settings. We create biases to property and that is where the culture ends up. We have a level playing field and the economy will be more balanced. Policy drives culture, the best economic outcome of a complex adaptive system will really only be the best in the absence of systemic biases.
The biases in the New Zealand system have created the emphasis to property and away from activity or elaborate transformation, it may be that we lack the skills, the ability to play the that game anyway. But in the presence of policy distortions it might be wise to fix those and see if we really are up to it or not.
There are many such examples in New Zealand that have succeeded up to now, how much better they would have been and how many more examples there would have been given better policy is a matter for speculation. The presence of these few examples suggests we have a chance, but policy change has to lead culture change.
That is where we focus our efforts.
another good article from Brain
another good article from Brain gaynor in the herald pointing put how far imbalanced our economy has become in respect of housing v business investment. The stats are shocking - i draw out 2 points 1) we used to be more balanced and 2) we used to be roughly in line with other OECD countries but are now the worst when it comes to speculation on property relative to investment in business. NZ is on borrowed time.
Its a common theme that needs repeating. Unlilke John Walley, I dont hold out much hope from govt. we need a housing crash NOW.
here is the link http://www.nzherald.co.nz/business/news/article
here is the link
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1058...
Brian Gaynors article is, as
Brian Gaynors article is, as usual, excellent. But when you also read Bernard Hickey's article in the NZ Herald about the majority of MP's being property owning landlords it begs the question will the current economic policy favouring property ownership ever be changed. Until that happens NZ's economic progress will be severely hampered.
Is this what you are
Is this what you are looking for in NZ , Jimmy ?
http://www.reuters.com/article/ousiv/idUSTRE5745JP20090805
BTW I agree with you altough I might use the the term "property shock "
No where else to post
No where else to post this! from the Age "Asia-Pacific governments including Australia, Japan and Thailand had signalled they may sell inflation-linked bonds as improving economies threaten to boost the price of goods and services" now isn't this a very clear signal of what's coming?
John, One important action shouldn't
John,
One important action shouldn't exclude another. The following link is what I mean by: Importance and the way to achieve a NZ manufacturing culture:
The case for manufacturing is not based on aesthetics, academic fashion, or
policy trends; it is based on a close reading of history, the present environment, and what seems to be the logic of the functioning of the economy.
http://globalmakeover.com/sites/economicreconstruction.com/static/JonRyn...
Reading yours and Les comments it seems the NZMEA is fighting with the government for years in stead of working together engaging the government for co- operation. Not good!
http://www.jstor.org/pss/3106340
Walter the reality is that
Walter the reality is that we all try and work with governments. The issue is that few inside government actually have any real understanding of the issues facing the real economy.
Can you name an MP who was at some stage a manufacturing exporter.
There is a lot "belief" in governments and not a lot of experience of what actually happens at the coal face, but few will take the time to listen or learn.
It's this understanding gap that leads to the bulk of the issues and conflicts between the real economy people and politicians as the statements made are too simplistic for words.
I have been a businessman since the early 80s and also been a CEO of many medium size companies and so I thought I knew about the economy, business and finance. It wasn't until I came back from overseas in 2001 and started some technology startups (that export around 75M) that I started to understand that we have two economies and the fight each other each and every day at almost every level.
Now if I as a CEO running companies in New Zealand, Australia and Singapore didn't know the frustrations and issues facing New Zealand manufacturers and exporters then I guess I should be patient with our politicians who where after all trained as teachers, farmers, lawyers and civil servants, FX trader and "property speculators".
The problem is they really think they know the issues and have a balanced view and it's that arrogance that's causing the problem.
Selwyn you are just confirming
Selwyn you are just confirming my earlier thoughts.
I think it helps to
I think it helps to look at the flow of money into and out of the country.
Money borrowed (in) for real investment in productive exporting output can have the interest charged (out) repaid by export earnings (in).
Money borrowed (in) for non-productive asset price inflation (eg houses) in the country must have the interest repaid (out) from export earnings (in).
Thus the exporting sector is supporting more than itself.
Having borrowed the money for housing, a crash in prices would not reduce the debt owed. As a nation we have saddled ourselves with that debt which must be repaid or else we lose more assets due to defaults.
Ultimately in a debt-based money system someone, or some country, has to fail to repay the debt and loses their assets to the banks. The constant "boom-bust" "business cycle" or "rowing of the economy" gradually siphons wealth from the poor to the rich.
Our export industry and other foreign income earning industries are saddled with this burden. Without it they would be doing very much better.
Economics is a field of
Economics is a field of study that has been hijacked and used by special interest groups over the years... Even the word "Economy" has lost its true meaning.. It has become this "thing".. that is "alive"... and needs to be "Managed and fed and protected"
Economics is full of paradoxes and contradictions...
eg.. A mining company started a gold mine in Montana.. They extracted $350 million in profit... Ten years later the State of Montana spent $1 billion on cleaning up the toxic tailing waste that was left behind.. ( from the book collapse)
Common sense tells use that the whole exercise was a LOSS... and a permanent degradation of the enviroment.
Economics tells that that is was a "SUCCESS" that contributed $1.35 billion to GDP.
Economics places NO VALUE on the exploitation of resourses..
Economics , in isolation, can be VERY FLAWED ...
I have a friend who sells productivity and efficiany software to small to medium siized Manufacturers.
In the last 8 yrs he has witnessed DOZENS of manufacturers close down and shift their manufacturing to China... and are now "Importers"
Common sense shows what a tragic loss this is... The loss in value goes way beyond the price of the finished product...
Common sense makes us notice the loss of jobs, the loss of "intellectual property", the loss of money flowing thru the local economy.... etc etc
BUT economics is blind to all this... Economics sees this as a GAIN for the economy since prices are now cheaper...
Just like the gold mine in Montana, Economics is Stupidly Blind to the obvious.... until it is almost to late
AHHHHHHHHH................
Steve / Roelof: spot on,
Steve / Roelof: spot on, well said in very few words.
Reading this articles/ comments above
Reading this articles/ comments above I think I'm surrounded by losers. Not one person supported or even debated what I'm saying, but only quoted negative events.
After weeks of participation not only reading, but also writing articles in this blog, I'm seriously concerned about our economy.
Any middle and long term plans from the government/ industry to achieve some common targets ?
Where does the money come from, we are spending ? How much 16 Billion - oh yeah great !
W.Kunz : We should smile
W.Kunz : We should smile whilst Rome burns, and Nero fiddles with himself ? Look at the actions of "leaders" overseas, or at the inactions of our "leaders" here in NZ, and you can understand why many of us bloggers are a touch sad, and cynical, at this juncture. Not a matter of being losers, as you put it, but more of a frustration that we know that we as individuals, and as a nation, can achieve so much more. And as we turn to Wellington, all we see are the greedy piggy politicians sucking at the expense account trough, instead of doing some of the hard work we pay them for.
John Walley: "Without a anticiaption
John Walley: "Without a anticiaption of a better return few will invest in the tradeable sector" Look where the "rich" put their money, hedge funds etc....anything that gives a 20%+ return per annum. So by and large we can forget them, in fact you want them out, all they seem to do is buy up companies, asset strip them, load them with debt and move on fast......So that leaves institutions and mom and pops...and mom and pops are last for a reason....by the time the financial sector and the institutions have finished with shares etc there is little scope left for mom and pops to do anything but lose money....they simply dont have the information, sophistication and dont get it in a timely manner to stand a chance....so they invest in housing, or even more poorly....So its as much a how do ppl invest in the tradeable sector as is it worth it....Some things like making the murky financial practices transparent instead of some of the murkiest in the world would help, ie make it safe, or at least a level playing field....however lisening to the NZX (who dont seem to make a huge amount of money) the system as it is keeps them in business ie the too big to be allowed to fail scenario....so mom and pops money/losses helps keep them going....
Next I suppose provide "vehicles" for investment...ones that dont have "managers" who take a fat profit whether they make or lose money for moms and pops....
Fat chance.....
In short mom and pops and manufacturers are being scammed by the men in the middle...until they are cut out I dont see things as fixable.
regards
Walter - link on over
Walter - link on over to:
http://www.interest.co.nz/ratesblog/index.php/2009/07/30/2025-taskforces...
I've tried to answer your questions there.
"surrounded by losers." - would you have a greater or lesser risk of losing if you started an export focused productive enterprise in the present taxation, monetary policy environment, that is, retain the status quo, without the changes the likes of NZMEA and PEC advocate?
Cheers, Les.
Les : Probably most of
Les : Probably most of the bloggers on this web-site could come up with a series of changes to the present taxation and monetary policy, which would positively assist businesss and entrepreneurship, in our country. And there would be a common theme amongst many of the changes. The question is, if some of the problems and their solutions are so obvious to us, why did the Labour Gumnut 1999-2008, and the current Nat. Gumnut, just not " get " it ?
Best wishes for your treatment : Roger
Roger - why, see tail
Roger - why, see tail end of this comment:
http://www.interest.co.nz/ratesblog/index.php/2009/07/30/2025-taskforces...
Les : Gotcha ! Seem
Les : Gotcha ! Seem to have missed the tail end ( vauged out a tadge ! ) . Am struggling with these flipping boxes. Which colour are you in ? They've given me way too much grey........Hey, do a bit of snooping in the U.K.........curious if the topics that concern us in NZ have a similar thread over there. Keep writing, 'cos we do read your blogs.
Roger - yep, that comment
Roger - yep, that comment was on the long side, but think I got to a point where it was worthwhile to give a more detailed illustration of how the 'command economy' approach combined with a lack of appropriate policy is failing us, IMO. Plus, it's worth considering just how short and curly those $$$s are, eh.
Walter - noted your reply on the other thread, but how about have a go at my question in response to your "losers" comment, above at August 10th, 2009 at 9:47 am and give some reasons for your answer, what ever your answer. (I'll try to engage as best I can, but it will not be so convenient from now on.)
Cheers, Les.
Roger - how will more
Roger - how will more of this affect us?
Benn on a UK 'food revolution'
http://news.bbc.co.uk/1/hi/uk_politics/8192069.stm
(NZ get's a mench.)
Went to a farmers market at the weekend and on the butchers stall they had a sign "These products only come 12 Food Miles." I have to say, the rabbit and carrot pies were really good. A bit like KFC perhaps, but with less fat.
Cheers, Les.
Les the new carbon tax
Les
the new carbon tax announced today will cost 30k for every 100 Hectares or $300 a hectare or $100 a cow. There is no money in farming so I guess we will be borrowing to pay it. rabbits may be exempt -for now. Carrots will be taxed but I havnt worked out the price per carrot.
Its completely daft, they must have rocks in their heads.
Andrew I think I'd borrow
Andrew I think I'd borrow to protect the planet (if it's possible to protect it) but I would not borrow a cent to allow PAYE deductions on secondary properties.
Our tax laws are nothing short of a "poverty tax". In so many whys it's a tax on the poor that distroys the entire economy. So at least relatively speacking I'd borrow to reduce carbon emissions.
Selwyn - effectively, you will
Selwyn - effectively, you will be paying for it, the cost will be passed on or food producers will fail.
What did I miss Andrew?
What did I miss Andrew? Are they really going to try and get blood out of a stone?
Its here, Talking on the
Its here, Talking on the radio tonight of min cost of $30 a head per/week for everyone in country.
http://www.stuff.co.nz/national/2737705/Ambitious-emissions-target-annou...
Prime Minister John Key said the targets were credible and responsible.
"It seeks to balance our economic opportunities with our environmental responsibility. The target is going to be a big ask for New Zealand because our gross emissions are already 24 percent above our 1990 levels," Mr Key said.
A 10 percent to 20 percent reduction was close to Australia and other countries and well above the United States.
Les - Q: how did
Les - Q: how did they get the Rabbit into the pie? - Hey maybe the carrot is more effective than the stick after all.
All this talk of a
All this talk of a dollars per cost per head is scaremongering Bull S%^t, Some of us lead more unsustainable existances than others... The chap that drives his Hummer down to the Cafe for a Latte, will pay more than the Chap who Cycles. That's totally fair?
mouse - I don't know
mouse - I don't know exactly, but their are three methods I've used:
1) snare and net a warren, stick a ferret or pole cat in the burrow. Rabbits come whizzing out into the snares and nets. Take a long stick to force into hole and dig to if ferret or polecat starts to gorge a Bugsy. (Good method when I was nipper.)
2) 12-gauge.
3) Strap an armchair to front of quad. Bolt ammo box to armchair. Get strapped in. After dark a two-man (sorry two-person) driver/shooter team heads off to meadows, fields, maybe even a paddock or two, if the horses are stabled that is, (paddocks are for horses over here) and zip along carefully shooting the quarry with auto 12-gauge. Always best to notfiy the local bobby so when the neighbours complain about the noise they can be told it'll be over soon and it's all in a good cause. Sure is, if you can get em' with one cart. and not knock too much flesh off you can get a quid a Bugsy. 100 - 200 in night is not unusual, but definitely don't drink and drive, especially as there might be two to three quads on the job.
I guess in terms of carbon miles 1) is best, but 3) takes some beating for fun - and more quickly minimising the risk of disease, which is the prime purpose of this kind of outing.
As for emissions and all that, I've not changed my views since we last discussed, but hope that both sides would stop knee-jerking, get things in perspective and take a course that stops us from living in either the toilet or the compost heap.
Cheers, Les.
Mouse Ive a friend who
Mouse
Ive a friend who has been working on emissions from farms, mainly Methane,Nitrogen etc. The animals are big emitters and would be an essential part of reducing our carbon footprint. These figures are an estimated cost of reducing carbon from farming by both reducing stock intensity and also storing carbon at the levels presently proposed. For a dairy farm its around $30k for a 100 hectare farm.
Les - the stick option
Les - the stick option looks like a whole lotta fun, when you put it that way.
AndrewJ - That's serious $30k/100
AndrewJ - That's serious $30k/100 ha... That's a serious adjustment. what do you think the chances of getting a kiribati refugee milking for less than $12.50hr with 4 weeks holiday are?
The way you have described
The way you have described this is very thorough. I will link your blog page to mine.
I just wanted to say
I just wanted to say kudoos! I was searching on Yahoo when I found your blog. After spending some time on your blog I've come up with some great ideas for my site. I just thought I'd let you know