MEActive - September 2015

18 September 2015

CEO COMMENT: Getting a Good Trade Deal for Manufacturers

As manufacturers and exporters, trade is always at the heart of our businesses.  The small size of New Zealand’s domestic market means our manufacturers generally need to seek out export markets relatively early in their growth path.    We can all appreciate the growth opportunities trade has provided in the past, and continues to provide.  New Zealand as a whole has benefitted from our past Free Trade Agreements (FTA), most notably the China FTA. 

While the China FTA bought many benefits, most significantly for primary exporters, it was not without difficulties and challenges, which we should keep top of mind as the negotiations for the largest FTA, the Trans-Pacific Partnership Agreement (TPPA), are undertaken. 

The FTA benefit mentioned most often is tariff reduction, and it is easy to understand why. Tariffs directly add to the cost of taking a New Zealand product into a market, putting it at a disadvantage to the local competition.  In the past there has been significant progress in the removal of tariffs, but some do remain.  Once again, this has a larger effect on primary industries, which have a history of more established protectionism around the world, particularly in markets with their own primary producers, such as the U.S, Canada and Japan.  Some manufactured goods still face tariffs, and there no doubt their removal would be a great outcome, improving the competitiveness of our businesses on the world stage. 

The big issue for manufacturing exporters often are the less visible non-tariff barriers to trade.  These non-tariff barriers can include quotas, export duties, trade restriction or sanctions, complex import protocols and procedures, and technical barriers to trade.  Rather than making goods less competitive in export markets, as tariffs do, these non-tariff barriers can sometimes stop New Zealand products from getting in to markets at all. And sometimes they add compliance costs equivalent to what used to be the tariffs in place for the same goods.

One common non-tariff barrier is in product testing and certification, which in itself is a common and legitimate way of ensuring products into a country meets domestic standards. These can, however,  turn into a barrier to trade when the certification process is not properly worked out or unduly arduous.

This issue reared its head for exporters of electrical goods to China.  Following the signing of the China FTA, exporters of electrical and electronic goods were subject to safety and emissions regulations.  Like many other closed or developing territories China has their own quality system and a pre-qualification and testing requirement for electrical goods entering the country.

As a consequence, a special New Zealand certification body was required to comply with the Chinese import protocols under the FTA, but this was not put in place; so any company wishing to sell electrical goods into China could not take advantage of the FTA. This issue continued for five years, until persistent efforts from MFAT, NZTE, and the NZMEA allowed exporters to circumvent the bureaucratic errors, inactions and ineffective actions; however a complete solution including a testing regime is still not in place. 

The key point here is, when undertaking FTA negations, including the TPPA, a commitment to refrain from setting up non-tariff barriers needs to be part of the deal to ensure that manufacturers can fully benefit from our trade agreements.  Negotiators have to understand and keep the interests of manufacturing exporters at heart, as well as those of our primary producers, to truly get a good deal for New Zealand.  

In terms of the TPPA, making the deal public once negations are completed would allow businesses to see the details, gain confidence and ensure some of these more complicated non-tariff issues have been dealt with, so our manufacturers and exporters can make the most of global trade.

MEALERTS:

HSNOCOP 24 - Above ground stationary tanks with integral secondary containment
Worksafe New Zealand is consulting on a proposed amendment to the Code of Practice HSNOCOP 24 Above Ground Stationary Tanks with Integral Secondary Containment.  The Code applies to the design and installation of above ground stationary tanks with integral secondary containment. Click here to review the proposed changes.  Submissions close 2 October.

Reducing Harm When Working with Organic Solvents - Fact Sheet
WorkSafe New Zealand has released a fact sheet that provides advice for employers on how to reduce the exposure of workers to organic solvents in the workplace.   Click here to download the fact sheet.

NZMEA EVENTS:

The events page on our website has more information on upcoming events. Click here to view our interactive calendar.

North
29 September Workshop: Achieving a Competitive Edge - Auckland.
29 September Workshop: Capitalising on Value Added Benefits - Auckland.
9 October HR Workshop:  3 Issues in 3 Hours - Auckland.
19 October Invitation to Leaders' Network - Auckland.
20 October Workshop:  Excellence in Customer Service - Auckland
30 October HR Workshop:  Termination - from Start to Finish - Auckland.
South
6 October Workshop:  Achieving a Competitive Edge - Christchurch.
6 October Workshop:  Capitalising on Value Added Benefits - Christchurch.
22 October Workshop:  Just in Time (JIT) - Christchurch.
22 October Workshop:  Leader Standardised Work and Gemba Walks - Christchurch.
29 October Forum:  Business Strategy, Governance and Decision Making - Christchurch.

NZTE Roadshow - Winning International Government Business Workshops
19 - 23 October - Whangarei, New Plymouth, Palmerston North and Invercargill

This free roadshow features a lineup of speakers who will cover the key markets of opportunity for New Zealand businesses – the USA, Australia, the UK and the EU. Speakers will be complemented by exporters sharing their own experience and insights. There will be a panel and Q&A with the speakers, plus you’ll also walk away with some handy ‘how-to’ guides for each market.  Click here to register or to view the roadshow programme and the speaker's profiles.

City Date Time Venue
Whangarei 19 October 9:00am - 1:00pm Marina Room
Kingsgate Hotel
9 Riverside Drive
Whangarei
New Plymouth 20 October 9:00am - 1:00pm Copthorne Hotel Grand Central
42 Powderham Street
New Plymouth
Palmerston North 21 October 9:00am - 1:00pm Hokowhitu Cafe, Manawatu Golf Club
19 Centennial Drive
Palmerston North
Invercargill 23 October 9:00am - 1:00pm Aparima Room
Ascot Park Hotel
Corner Tay Street and Racecourse Rd
Invercargill

MEDIA RELEASES

Media releases submitted by the NZMEA during August.  Click here to read the latest media releases.

7 August Sales bounce back but still in the red, confidence improves.

MEDIA COVERAGE:

Where the NZMEA have been reported over the past month.

1 August DEMM Engineering & Manufacturing Manufacturing sales make a turn in May – 3 July. Magazine.
5 August Stuff.co.nz Canterbury unemployment up slightly. Internet.
6 August The Press Canty unemployment rises. Newspaper.
6 August NZ Herald Gloombusters: Bringing manufacturing home. Newspaper.
7 August NZ Manufacturer Magazine Sales bounce back but still in the red, confidence improves. Magazine.
7 August Scoop.co.nz Sales bounce back but still in the red. Internet.
7 August Stuff.co.nz Manufacturers buoyed by kiwi dollar fall. Internet.
7 August Yahoo.co.nz Sales bounce back but still in the red, confidence improves. Internet.
7 August Guide2.co.nz Sales bounce back but still in the red, confidence improves. Internet.
7 August Voxy.co.nz Sales bounce back but still in the red, confidence improves. Internet.
7 August Business Standard New Zealand manufacturing sales down. Internet.
7 August Daijiworld.com New Zealand manufacturing sales down. Internet.
7 August Aucklandnews.net New Zealand manufacturing sales down. Internet.
8 August Taranaki Daily News Dollar’s fall buoys manufacturing. Newspaper.
8 August The Press Exporting manufacturers build in confidence. Newspaper.
8 August The Nelson Mail Dollar’s fall buoys manufacturers. Newspaper
8 August The Southland Times Dollar’s fall buoys manufacturers. Newspaper
8 August The Timaru Herald Dollar’s fall buoys manufacturers. Newspaper
8 August The Manawatu Standard Dollar’s fall buoys manufacturers. Newspaper.
10 August Radio New Zealand Falling dollar wins back business. Radio.
15 August Radio New Zealand How low will the economy go? Radio.
18 August Radio New Zealand Local firm ‘winning customers from China’. Radio.
20 August Scoop.co.nz Solid, sustainable growth as economy adjusts. Internet.
20 August ShanghaiDaily.com Falling New Zealand dollar driving export growth: Finance Minister. Internet.
24 August NZ Manufacturer Helping businesses succeed through technical innovation. Magazine.

MEASSISTS:

The following are the MEAssists that were circulated during the month. The MEAssist programme is a free service for members, where companies ask for guidance and responders share experiences and offer feedback (please note this is not a selling service).  Contact the NZMEA for more information.

NZ MANUFACTURER MAGAZINE:

You can read the latest edition of NZ Manufacturer Magazine online for free here.

FIGURE NEW ZEALAND GRAPH:

Above is a graph listing the reported reasons for innovating in New Zealand, as a percentage of innovating businesses that reported them.  While increasing revenue is the most commonly reported reason, it is interesting to note increasing productivity is number two – as this can be directly related to process innovation.  A number of the other common reasons are more directly related to process innovation, rather than innovation of new products or services.

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.net.