Damien Grant: Economic tide has hit manufacturing

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Photo / Richard Robinson
Photo / Richard Robinson

David Shearer and his cohort of prospective coalition partners, the Greens, Mana and NZ First, are holding a show-trial into who killed the manufacturing industry.

Forty thousand manufacturing jobs have disappeared, Shearer declares.

What he does not say is those 40,000 jobs have gone since a peak right before the 2008 recession and almost half of that loss occurred in the final year of the last Labour government.

But if Shearer and his band of the grumpy and frumpy were to take the time to read the Department of Statistics September 2012 Economic Survey on Manufacturing, they would learn that total sales in the sector have been static.

Falling from a high of $24 billion in 2008, it is now sitting at $23 billion, measured in 2010 dollars.

The industry has become more productive; jobs have gone, but sales have not.

Shearer is known to enjoy the surf, so he will understand it is best to ride the waves - not try to turn them back.

Manufacturing jobs that have gone are not coming back and there is nothing he, Graeme Wheeler or King Canute can do about it.

As well as his plan to build slums for the urban poor in areas where there will never be any employment - manufacturing or otherwise - he is granting a platform for the vested interests of the likes of the Manufacturers Association to cry about the exchange rate.

The Manufacturers Association complains a survey conducted by ExportNZ last year showed that, despite grumblings on the issue, only 11 per cent of exporters expected deterioration in sales or employment in the next year, with most expecting both to increase.

When asked what the major barrier to export growth was, only 13 per cent complained of their lack of competitiveness, while 17 per cent mentioned exchange rate volatility.

The losses in manufacturing since 2008 have been more than made up for by new jobs in education and training, health and professional services.

Most of those displaced by the fall in manufacturing will not be rehired in professional services, but we employ fewer typists and lighthouse keepers than we used to.

Cutting the exchange rate will not bring jobs back quickly.

Manufacturing is capital intensive; any upturn in jobs will take many years.

In the meantime, those of us not engaged in the sector would be paying more for imported products such as petrol. Particularly distressing, the cost of upgrading my smartphone would rise.

Manufacturing jobs have been killed because the economic tide has moved.

Shearer knows it, or should know it.

He may be king one day and if he is telling us he can control the tides of economic change, then he is going to look pretty silly on the beach after the next election.

Unless he loses and goes surfing.

- Herald on Sunday

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