MEActive - December 2016

16 December 2016

MEActive - December 2016

Welcome to the New Zealand Manufacturers and Exporters Association's monthly e-news, giving a series of updates on what we have been working on to make things better for manufacturers and exporters.

    • CEO Comment.
    • MEAlerts - Call for submissions and information you need to know.
    • NZMEA Events.
    • Media Coverage - Where we have been reported over the past month.
    • Media Releases - Circulated to all media by the NZMEA.
    • Latest Release on NZMEA Survey of Business Conditions - October.
    • NZ Manufacturer Magazine.
    • Figure New Zealand Graph.


CEO COMMENT:  Sistema Sale

This week we saw the announcement of the sale of Sistema Plastics to US multinational Newell Brands, in addition to the recent sale of Compac Sorting Equipment, another highly successful New Zealand manufacturing company, to Norwegian company TOMRA in October.

These sales, alongside the recent announcement of the closure of the General Cable plant in Christchurch, may well leave some detached from manufacturing wondering what is happening to manufacturing in New Zealand. In reality, the situation is generally ‘steady as she goes’, with manufacturing continuing to be the second-largest contributor to GDP and showing moderate long-term growth rates with less of the huge swings in export revenue, for example, that characterises the commodities part of our economy. Towards the end of this year, there has, however, been some weakness appearing in manufacturing exports that is presenting a challenge. 

Manufacturing is a huge contributor to the economy, driving exports, jobs, R&D and innovation, and has the potential to provide more into the future. We need to keep working to make sure Government and the public better understand this and to get Government to work with us on new ways to improve the environment manufacturers operate in. 

Within the manufacturing sector there is constant change, with companies closing down and new ones arising, and others growing their business. Most of our manufacturers are fully exposed to the rough winds of global competition, whether that’s in exporting, or in competing with importers in our domestic market, not to mention the effect of an overvalued currency hitting margins and competitiveness – this is nothing new to our members. 

Our manufacturers have made big changes, especially post-GFC, to get and stay fighting-fit in tough markets, and sometimes conditions change to an extent that makes it unsustainable to continue.

While each story needs to be examined on its own merits, there are common elements in the case of Compac and Sistema. Both have been built into large successful New Zealand manufacturing companies over the past three decades by owners who have put a lot of hard work and money into it. They now want to exit the company while ensuring the new owners will keep it on its steep growth path, and preserving jobs in New Zealand. This is a common problem as owner-operators get to the point where they want to move on and pass the reins over to the next generation. 

One might have preferred for these businesses to ‘stay in New Zealand hands’, but the reality is that our capital markets are thin, as we collectively prefer to invest in real estate rather than the productive parts of our economy.  We shall continue to advocate tax and other policies that address the current imbalance with incentives favouring investment in speculative assets such as housing over investment in productive businesses. 

In the case of Compac Sorting and Sistema, however, these deals also make a lot of commercial sense, as the new owners in both cases provide access to their resources, including vast marketing, sales and distribution networks.

As Brendan Lindsay says “Newell has the expertise and market access that will enable them to take the business to the next level and create new opportunities for the company, especially in North America.” Add to that a huge investment in a new production facility in Auckland and an employment guarantee for its 700 staff and you have a reasonable prospect of this deal working well for New Zealand, with the only possible downside being the common international business practice to minimise local tax obligations leading to a loss of tax revenue for New Zealand.

It is vital that we keep building our manufacturing base and capability to produce more high-value products, especially when the manufacturing eco-system relies on a network of capable manufacturers making up each other’s supply chains and building the industry’s general ability to produce complex goods and skills. Our focus needs to be on building an environment where manufacturing can grow and prosper. The availability of skilled staff, keeping up with changes in manufacturing technology, and a less punishing exchange rate especially with Australia, our main trading partner, will be critical for that.

We need to see quality discussion on how to make the most of our manufacturing base to grow exports and jobs going into the next election, along with some real policy proposals to improve conditions for manufacturers and exporters. 

MEALERTS:

SAVE THE DATE... Inaugural Manufacturing and Design Conference, 10-11 May 2017
A National Conference for Innovation in Manufacturing and Design. Held in Auckland, this is an exciting opportunity to consolidate, connect and collaborate with the New Zealand Manufacturing and Design (MaD) network at the inaugural manufacturing and design conference. You are invited to become an active member of this cross-disciplinary researcher network, focussed on New Zealand’s manufacturing economy of the future. Click here for more information.

Revised Harmonised System (HS Codes) - 1 January 2017
Every five years the World Customs Organization (WCO) revises the Harmonized System (HS) to improve it and accommodate advances in technology and changes in the patterns of world trade. The latest edition of the HS, which is due to take effect from 1 January 2017 has been released. Click here to view this Customs Release.

NZMEA EVENTS:
The events page on our website has more information on upcoming events. Click here to view our upcoming events or see below.

Supervisor Training - Job Relations (JR) - Two Day Programme - Christchurch
Tuesday 28 February, Wednesday 1 March

Job Relations (JR) teaches managers how to develop and maintain a relationship that will engender trust and cooperation from their work groups, prevent many problems from arising, and minimise the impact of those that do arise.  Click here for more information.

This two day workshop will teach a proven routine for handling problems when they do arise, showing managers how to get the facts, weigh options, make decisions, take action and check results, with a focus on the outcome being to help service or production.

MEDIA COVERAGE:
Where the NZMEA have been reported over the past month.

Date

Media Organisation

Title

1 November

DEMM

Right move in the wrong direction. Magazine

1 November

DEMM

Business conditions back to growth. Magazine

7 November

Voxy.co.nz

Manufacturing confidence hit in September - NZMEA. Internet

7 November

Scoop.co.nz

Manufacturing Confidence Hit in September. Internet

7 November

Interest.co.nz

Bernard Hickey reviews the day’s business. Internet

7 November

Sharechat.co.nz

Manufacturers’ confidence collapses to lowest level since March 2014. Internet

7 November

NBR

Manufacturers’ confidence collapses to lowest level since March 2014. Internet

7 November

MSCnewswire.co.nz

Manufacturing Confidence Hit in September. Internet

8 November

Hive News

Hive News Tuesday: NZMEA Survey. Internet

8 November

Scoop.co.nz

Manufacturers’ confidence collapses. Internet

8 November

NZ Herald

Confidence of firms falls. Newspaper

9 November

Scoop.co.nz

General Cable Proposed Closure - NZMEA. Internet

9 November

MSCnewswire.co.nz

General Cable Proposed Closure. Internet

14 November

Stuff.co.nz

Businesses prepared for earthquakes, limited disruption reported. Internet

14 November

Scoop.co.nz

Upper South Island Earthquake Response. Internet

14 November

Voxy.co.nz

Upper South Island earthquake response. Internet

15 November

Stuff.co.nz

KiwiRail looking at ferry service from Wellington to Lyttelton. Internet

15 November

Marlborough Express

‘Business as usual’ by week’s end. Newspaper

15 November

Nelson Mail

‘Business as usual’ by week’s end. Newspaper

15 November

Manawatu Standard

‘Business as usual’ by week’s end. Newspaper

15 November

Waikato Times

‘Business as usual’ by week’s end. Newspaper

15 November

The Press

‘Business as usual’ not far off. Newspaper

15 November

The Southland Times

‘Business as usual’ by week’s end. Newspaper

15 November

The Timaru Herald

‘Business as usual’ by week’s end. Newspaper

15 November

Taranaki Daily News

‘Business as usual’ by week’s end. Newspaper

15 November

Stuff.co.nz

Wellington-Christchurch ferry link considered as SH1 quake repairs cause freight chaos.  Internet

16 November

Radio New Zealand

Freight costs tipped to rise following quakes. Radio

16 November

The Press

Broken lifelines. Newspaper

16 November

Marlborough Express

KiwiRail mulls new ferry service. Newspaper

16 November

Nelson Mail

KiwiRail mulls new ferry service. Newspaper

16 November

The Dominion Post

Ferry service could relieve freight logjam.

22 November

NZ Manufacturer

Proposed changes to skilled migrant category. Magazine

MEDIA RELEASES:
Media releases submitted by the NZMEA during October.  Click here to read the latest media releases.

Date

Title

7 November

Manufacturing Confidence Hit in September

9 November

General Cable Proposed Closure

15 November

Upper South Island Earthquake Response

NZ MANUFACTURER MAGAZINE:
Click here to read the latest edition of NZ Manufacturer Magazine online for free.

The NZMEA has been approached by Doug Green, editor of NZ Manufacturer magazine.  Doug is wanting to write articles under a section called Rural Manufacturing. If you are outside of the main centres or related to rural sectors and would like to be interviewed for an article please contact the NZMEA and we will pass your details on to Doug to contact you directly.

FIGURE NZ GRAPH:

The above graph shows the expected time for break even for R&D investment for businesses, broken up betweem Primary, Manufacturing and Services.  Manufacturing and services have very similar break even times.  However, there is a difference between these and primary, which strongly favors the longest expectations of 5 years or more for break even.  

For more graphs related to manufacturing and exporting, as well a large collection of data on New Zealand presented in a simple visual way, visit www.figure.nz.