Latest manufacturing stats send a clear warning

Media Release 23 November 2007.

Latest manufacturing statistics send a clear warning.

The New Zealand Manufacturing and Exporters Association (MEA) says that the latest data from Statistics New Zealand showing the decline in manufacturing jobs in the September 2006 quarter is part of a long term, but accelerating trend that threatens the critical mass of skills and embedded capability in the New Zealand economy.

“A growing number of New Zealand’s larger manufacturing companies are being sold offshore, being forced to change business model and reducing local operations, while there is an emergence of smaller niche orientated high tech firms and start-ups”, says Chief Executive John Walley.

“The Government hopes that these firms will deliver higher returns to the economy through design and intellectual property content in the future, yet unless they are better supported by our policy settings, they will also struggle to survive and grow to deliver a high number of jobs”.

The MEA predicts that job losses in manufacturing are likely to continue and accelerate into the future as long as policy settings favour assets over activity.

The research conducted by the MEA in August this year showed that the number of jobs within manufacturing was in long term decline compared to other sectors, and the latest statistics are further confirmation of this trend. Since 1989, jobs in the manufacturing sector have fallen around 20,000 whilst total jobs in the economy have increased by over 540,000.

“The concerning aspect of this latest data is that although manufacturing ranks as the 3rd highest creator of jobs overall since 2001, it is now one of only two sectors to be losing more jobs than it creates”, says Mr. Walley.

“All time highs on the NZ$, cheap imports of questionable quality, trade distortions of many kinds, even government grants to relocate operations offshore, taxation settings that favour assets not activity – what else is to be anticipated?”

“The domestic sectors are absorbing some of the lost manufacturing jobs but there are serious question marks over how long this will be the case as the decline of the tradable sector filters through to the rest of the economy, and starts to impact on the viability of other sectors. Loss of productivity is tracking the loss of productive activity. If we want to see more productivity we need more, not less, investment in the manufacturing sector”, says Mr. Walley.

“We desperately need policy settings for one economy, policy settings that support and encourage productive activity generally”.

“Our economy has reached a point whereby a broad comprehensive overhaul of policy is needed. The select committee on monetary policy is a useful starting point, the inquiry must follow through to action, to put an end to the two economies problem and boost the productive sector in New Zealand”.

MEA – the authentic and independent voice for manufacturers and exporters.

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