Fran O'Sullivan on business

Business analysis and comment from Herald columnist Fran O'Sullivan

Fran O'Sullivan: Opposition exaggerates plight of manufacturers

69 comments
Jobs are still being created and signs of recovery are growing

Safe Air's contracts to upgrade the air force's Hercules and Orion fleets are due to end within 12 months. 80 jobs are tipped to go.
Safe Air's contracts to upgrade the air force's Hercules and Orion fleets are due to end within 12 months. 80 jobs are tipped to go.

David Shearer, Russel Norman and Winston Peters will have an opportunity to present themselves as the "government-in-waiting" when they turn up to HamiltonJet's premises on Monday to release the results of their parliamentary inquiry into the future of manufacturing.

The trio will endorse a range of prescriptions from "Manufacturing: the New Consensus, a Blueprint for Better Jobs and High Wages".

Mechanisms to deal with an "overvalued and volatile dollar" - which include making the dollar and jobs additional priorities for the Reserve Bank, not simply tackling inflation and tax credits, will be back on the agenda to spark R&D expenditure and you can expect to hear plenty of rhetoric about dealing to "speculators" who have invested in the property market instead of the productive economy.

The Opposition politicians will be presenting their report as a "blueprint for better jobs and wages".

The trio were going to hold their fire until Monday.

But the expected loss of around 80 jobs at Blenheim's Safe Air operation had their spin-meisters pumping out the press releases yesterday afternoon to spruik the Monday event. Labour's finance spokesman, David Parker, said the expected loss of 80 Blenheim jobs was proof positive that action must be taken to revive New Zealand's "struggling exporting manufacturers". Norman quickly chimed in with a "me too" statement.

The truth is rather more complex.

The jobs are not being cut simply because the dollar is overvalued, as Parker and the unions have stated.

Air New Zealand's statement said that contracts to upgrade the Royal New Zealand Air Force's C-130 Hercules and P3 Orion aircraft fleets were due to end in the next 12 months, and "it is necessary to reposition the business for reduced future work flow".

But with Safe Air being one of Blenheim's largest employers, the town will be hit hard.

And it will give added impetus to the Opposition trio's cause when the leaders of the Labour, Greens and New Zealand First parties converge on Christchurch minus their fourth partner, Mana's Hone Harawira.

The four parties launched their investigation after National MPs blocked an inquiry on the issue by Parliament's finance and expenditure committee.

The problem is that when the four parties launched their inquiry under the banner headline "Manufacturing in New Zealand is in crisis", they pointed to jobs being lost at an alarming rate with "a real danger that if the trend continued New Zealand would become a nation that only exports raw commodities".

To some extent that statement again over-egged reality. Jobs are still being created in manufacturing - including at the Haier-owned Fisher & Paykel Appliances. There is no danger New Zealand will be reduced to exporting only raw commodities. That is political hyperbole. But the metrics are compelling nevertheless.

Over a four-year period manufacturing jobs have fallen by nearly 40,000 (16.7 per cent); the number of manufacturing businesses has dropped by more than 1300 (6.1 per cent); the annual value of manufactured exports was down by 12.4 per cent; and manufacturing profits fell by 17.4 per cent.

One of my first casual jobs was working on the line at the old Shacklock factory in Dunedin, where we made electric ranges. It was mind-numbing work - there was exposure to asbestos and a pay rate two-thirds that of men. But there was pride in an honest job well done and camaraderie. And for many it was a job which enabled them to earn wages and keep their families.

Fisher & Paykel Appliances' products are much more sophisticated than the simple stoves we made back then. The IP behind the F&P products is world-class, as it is with many other top-notch manufactures such as HamiltonJet.

The big question is to what extent some of the inquiry's recommendations will be redundant by the time there is a change of government.

Already the dollar has slid in value as the US dollar appreciates.

Ironically, the latest BNZ-BusinessNZ Performance of Manufacturing Index (also released yesterday) shows the highest level of manufacturing since June 2004 with strong growth in new orders and production and employment also rising.

Parker has a point when he says much of the growth is from building and construction opportunities from the Christchurch rebuild and early slaughtering of herds because of the drought.

But the reality is the correction process is under way.

- NZ Herald

Have your say

We aim to have healthy debate. But we won't publish comments that abuse others. View commenting guidelines.

1200 characters left

Sort by
  • Oldest

© Copyright 2014, APN New Zealand Limited

Assembled by: (static) on red akl_n3 at 14 Jul 2014 14:14:46 Processing Time: 1444ms