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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1/6/11

Currency ‘head wind’ more like a gale


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The Government and the Reserve Bank cannot continue to sit and watch as the currency appreciates say the New Zealand Manufacturers and Exporters Association (NZMEA). Any credible export based economic plan must deal with a persistently overvalued and volatile currency.

NZMEA Chief Executive John Walley says, “Over the past few days we have heard Bill English describe the exchange rate as a ‘head wind’ and John Key describe the reason for the rise as ‘inherent weakness in the US’. These comments underestimate the extent and scope of the problem.”

“This graph of the Trade Weighted Index over the past three weeks shows that it is not just a US dollar story. The New Zealand dollar has in fact been rising against almost all major currencies.”

“This graph going back much further indicates that exchange rate volatility has been a New Zealand story for some time, and the overvaluation problem has existed since about 2004. Is it any surprise that growth in the tradable sector stopped at the same time?”

“For exporters outside of commodities, those adding value to commodity exports and those making differentiated products, these currency levels are completely unsustainable. Inaction will cost growth and jobs.”
 



tags: exchange rate, currency volatility, tradable sector

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