Comments

David Thompson Posted:
So very, very true. It beggars belief that we consider ourselves to be a developed nation when so much of our economy is based on selling milk powder or logs. BTW, I own a Plinius amplifier (my second) that drives a set of Theophany speakers.
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David Thompson Posted:
A robust but sobering report. It concerns me that confidence is rising, yet sales and exports are down and "manufacturers and exporters are still lagging behind other sectors". Surely we should wait until we're earning more money before we start spending more?
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siemens Posted:
Yes true! The only thing that will never die in this world is the nature and its science behind it. Great post.
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Kieran Ormandy Posted:
Thanks for the question Steven, Germany has seen increases in manufacturing employment since 2009, and Switzerland has had stable manufacturing employment between 2006 – 2011, even in the face of ongoing Euro-zone issues. Korea has seen increases in manufacturing employment since 2008 and Israel experienced large increases since 1998, while being stable over the last 4 years. Singapore has had increases in manufacturing employment over the last two years. These countries all value their manufacturing sectors and work to protect them, this is reflected in the above numbers and their performance through the GFC. Note data around the above examples was sourced from OECD labour market stats.
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John Walley Posted:
Point one: you should have no doubt what our Association says publically represent the views of our members. Point two: we don’t knee jerk responses, if you trace back our comments around NZPower you will see them link all the way back to our research in 2004 and 2005. All that material is fully linked from our comments above. Point three: you will note our comments on major users, sadly the same advantage does not accrue to smaller industrial users. The perverse incentives of the LRMC approach in all this are well known. Point four: the NZMEA is not like any other Association in New Zealand we admit only manufacturers and exporters into membership, and our public expressions are the views of that restricted membership.
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5/11/10

Survey - Sales up but margins shredded


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The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during October 2010, shows total sales in September 2010 increased 23% (export sales increased by 16% with domestic sales increasing 28%) on September 2009.

The NZMEA survey sample this month covered NZ$432m in annualised sales, with an export content of 35%.

Net confidence dropped to -11, down from the 40 result reported last month.

The current performance index (a combination of profitability and cash flow) is at 99.5, down from 107.5 in August, the change index (capacity utilisation, staff levels, orders and inventories) remained at 100, and the forecast index (investment, sales, profitability and staff) is at 103.5, down on Augusts’ result of 104.75. Anything less than 100 indicates a contraction.

Constraints reported were 78% markets, 11% capital and 11% skilled staff.

Staff numbers for September increased year on year by 6%.

“Sales numbers have continued to grow this month despite toughening trading conditions,” says NZMEA Chief Executive John Walley. “Sales volumes are slowly increasing, but respondents have reported difficulty in converting interest into sales due to the uncertain environment.”

“This difficulty and increasing concerns about the currency moving ever higher have seen the confidence rating turn negative for the first time in 2010.”

“Growth depends on patchy market strength and margins on the lottery of currency movements. Manufacturers buying materials in US dollars and selling to Australia are doing well at the moment, but anyone selling in US dollars and Euros is having a really tough time.”

“Skill shortages are starting to reappear with hands on engineers and software developers hard to recruit. There is the potential for these to get much worse with the Government removing 55 million dollars of apprentice training. If these funding cuts to the trades are persistent, expect to see serious shortages in five years or so.”

“The major difficulty for export investment remains the high currency. While other export dependent nations seem ready to try any measure to maintain the international competitiveness of their currency. New Zealand perpetuates the myth that nothing can be done.”

A recent comment from BERL in their Monthly Monitor sums up the situation:
“When countries as small as Mauritius are intervening to stabilise their exchange rate and are being complimented on it by the IMF, one wonders why the New Zealand authorities think it is beyond them.”

“The argument that nothing can be done is an abdication of responsibility; the damage that the exchange rate is doing to our tradeable sector is irrevocable.”

 

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tags: survey, skill shortages, margins, currency, sales volumes

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