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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Sales growth starts to stall

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The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during November 2010, shows total sales in October 2010 increased 3% (export sales decreased by 4% with domestic sales increasing 7%) on October 2009.

The NZMEA survey sample this month covered NZ$522m in annualised sales, with an export content of 29%.

Net confidence rose to 0, up from the -11 result reported last month.

The current performance index (a combination of profitability and cash flow) is at 102.5, up from 99.5 in September, the change index (capacity utilisation, staff levels, orders and inventories) was steady at 100, and the forecast index (investment, sales, profitability and staff) is at 107, up on September’s result of 103.5. Anything less than 100 indicates a contraction.

Constraints reported were 80% markets and 10% skilled staff and 10% capital.

Staff numbers for October decreased year on year by 1%.

“Sales growth stalled in October as the rise in the New Zealand dollar hit the tradeable sector,” says NZMEA Chief Executive John Walley. “Low margins due to the currency pressure and worries that the world economy is showing few signs of a sustained recovery are the main concerns expressed by our respondents.”

“The currency lottery remains the overriding issue for manufacturers and exporters. Even firms who are able to cope with the currency at these elevated levels are concerned because there is simply no good reason for the currency to be where it is today, so it might be anywhere tomorrow – returns from export efforts have become completely unpredictable.”

“Add market uncertainty to an unpredictable and overvalued currency and investment in capacity expansion and associated job growth are a long way off.”

“Our members find it impossible to reconcile the statements from the Government and its officials that our economy needs to rebalance with their inaction on the currency problem. The policy loose end that is the exchange rate requires management not indifference. The high value-add exporters get hit hardest by currency fluctuations, yet these are exactly the businesses that New Zealand needs to create a high wage economy.”

“The concerns expressed by Standard and Poor’s and the Treasury about New Zealand’s debt position make policy changes all the more urgent. As Treasury Secretary John Whitehead mentioned, the only factor separating New Zealand from countries requiring bailouts such as Ireland and Greece is relatively low levels of Government debt, but the longer the Government has to stimulate the economy in the absence of private sector investment the worse the public debt situation becomes.”

“We need to see measures to lower the uncertainty faced by the tradeable sector. Only growth in the tradeable sector will get us out of this slump; that means managing the exchange rate, saving more and taxing assets and income equally.”


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tags: survey, margins, rebalancing, exchange rate, standard and poors


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