MEActive - February 2017

11 April 2017

MEActive - February 2017

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:  Onwards and upwards in 2017!

A warm welcome to 2017!  I hope everyone was able to take some time off to rest and relax before, hopefully, a busy year for our members.  As we enter the New Year, many things seem uncertain, particularly in the realm of global politics, after 2016 ushered in changes that were unexpected to most.  Domestically, things appear reasonably solid, but the exchange rate, access to skills and housing with its associated risks are key challenges – the lead-up to the next election will hopefully mean a quality discussion on how to address these issues and put growth in manufacturing and exports back towards the top of the agenda - the NZMEA will be pushing to make this happen.

Globally, slow economic growth in spite of massive money-printing by key central banks, low inflation, rising debt, inequality and climate change remain as key concerns looking throughout the year, paired with increasing political discontent and anti-establishment movements in many areas.  Not to mention, the continued technological change in processes and automation that both holds great potential for productivity, and raises further political questions on jobs and incomes.  The question is, what should we expect the impact of all these uncertainties to be on the orders we expect from our customers off-shore?

Around the world, since the GFC, growth policy has relied more heavily on monetary policy, through record low interest rates and quantitative easing, than Government spending.  One unknown is - what will happen when interest rates rise, as we can already see in the US?  Unless coinciding with strong growth in their economies, this will be a big challenge for a number of countries with high debt, such as those in the southern Eurozone, and those with highly leveraged housing sectors, such as Australia and New Zealand.  We may well see additional policy around housing debt both here and abroad to try and limit and risks to financial stability, as the Reserve Bank of New Zealand has already discussed in 2016. 

Social unrest and political instability as a result partly of income inequality and a skewed distribution of wealth here and abroad has been on the agenda for some time. It was listed as one of the top three risks in a number of recent international reports, including the recent “Global Risks Report 2017”, by the World Economic Forum.  The report highlights how higher inequality can act as a drag on an economy, as highlighted in an OECD report a few years back. The key, both New Zealand and abroad, will be finding the right policy set that helps address the issue while also creating a more productive economy with higher incomes.   

Lastly, growing anti-globalisation and anti-establishment sentiment is pushing politicians and politics to the fore who are hostile to multi-lateral trade agreements – or at least they say so.  Time will tell if Brexit and the election of Trump, are just blips in the future of global trade, or a sign of more to come.  Regardless, New Zealand does need to keep looking for areas of quality trade agreements, while improving our existing agreements to gain more access for manufacturers.  Recent signs from Bill English’s meeting with Angela Merkel were encouraging when it comes to negotiating an FTA with the EU, but how our own negotiations with the UK will go in the face of Brexit remains to be seen.

How all these developments move the level of the exchange rate will be a vital factor.  While the latter half of 2015 saw some of the long awaited downward correction towards a fair value, in 2016, the exchange rate trended upwards significantly all year.  On the TWI, it moved from around 72 at the start of 2016, up to around 78 by the end of the year. 

Much talk this year will focus on the US Dollar, as the Federal Reserve looks to increase rates once again – which could further exasperate the situation of economic areas with high debt and low growth, such as parts of the Eurozone, for example.  Any further correction downward in our cross rate with the U.S would help, however, other rates, such as the Australian Dollar, may be even more important for manufacturing exporters.  Going into the election here, it will be important to have further discussion on how to address our problem of a stubbornly overvalued exchange rate. 

At this early stage, it’s hard to tell exactly where 2017 will lead us, especially in terms of doing business overseas – significant opportunities and risks lie ahead. 

MEALERTS:

SAVE THE DATE... SouthMACH Engineering Expo - 24-25 May 2017
SouthMACH is the South Island’s premier technology trade show celebrating the heartland of NZ Manufacturing.  Returning to Christchurch in 2017 this biennial event gives you the opportunity to come face-to-face with the experts behind the key innovations entering the New Zealand market.  NZMEA will have a stand showcasing some of our members - contact us if you would like to be involved.  Click here for more information on SouthMACH2017.

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

Leaders' Network - Christchurch
Monday 20 February - Invitation to NZMEA Leaders' Network - Christchurch.  Click here for more information or to register.
This month we have Henry Lane, MD of Corvecto presenting about virtual reality in manufacturing.

Monday 20 March - Invitation to NZMEA Leaders' Network - Christchurch.  Click here for more information or to register.
The guest speaker for March is Andrew Little, Leader of the NZ Labour Party.

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 December

DEMM

Manufacturing confidence hit in September. Magazine

1 December

DEMM

News – General Cable. Magazine

2 December

MSCnewswire.co.nz

The NZMEA: We Need a Freight Solution. Internet

2 December

Voxy.co.nz

Manufacturers call for urgent South Island freight solution. Internet

2 December

Scoop.co.nz

We Need a Freight Solution. Internet

7 December

MSCnewswire.co.nz

Domestic Sales Improve While Exports Continue Downward – NZMEA Survey October 2016. Internet

7 December

Voxy.co.nz

Domestic sales improve while exports continue downward – NZMEA. Internet

12 December

News.xinhuanet.com

Exchange rate, market conditions take toll on New Zealand exporters. Internet

13 December

Stuff.co.nz

170 jobs to go in General Cable factory closure. Internet

13 December

Scoop.co.nz

Sistema Sale. Internet

13 December

MSCnewswire.co.nz

NZMEA on Sistema sale. Internet

13 December

Voxy.co.nz

Sistema deal makes commercial sense – NZMEA. Internet

14 December

The Press

Jobs appeal as cable maker sacks 170. Newspaper

14 December

NZ Manufacturer

Steady year for manufacturing. Magazine

15 December

Otago Daily Times

Call for talks on manufacturing. Newspaper


MEDIA RELEASES:

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

Date

Title

2 December

We Need a Freight Solution

7 December

Domestic Sales Improve While Exports Continue Downward

13 December

Sistema Sale


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 gross expenditure on R&D in New Zealand, as well as the OECD average.  New Zealand has consistently lagged behind the OECD average in terms of the proportion of spending on R&D we undertake.  Within this, manufacturing is one of the largest spenders.  However, New Zealand clearly has catching up to do bring us closer with countries with compete with on the world stage.  Increasing R&D spend and efficiency needs to be a focus of the upcoming election.  

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.