Higher dollar seen as threat

By John Maslin


A New Zealand dollar surge against the US currency could force Wanganui export manufacturers to move offshore to remain competitive.

That bleak picture has been painted by Wanganui manufacturer and exporter David Bennett of Pacific Helmets.

Mr Bennett's company has been making helmets for fire services and specialist applications since the early 1980s from a Castlecliff factory but the unending pressure from the NZ dollar has him predicting a gloomy future.

He said there was growing concern about how high the kiwi dollar could get against the US dollar.

"There has apparently been talk in Treasury that it will go as high as 90 cents US and beyond. That for us would have to be a threshold," he said.

At that level, he said, his company would be among many having to seriously consider shifting their business base out of Wanganui and moving overseas to survive.

Mr Bennett said the biggest threat was the exchange rate "and as long as the United States and other countries continued to print more money it will continue to be a major problem".

He said manufacturers were worried that despite all the warning signs in the export markets, "no one has a business plan for New Zealand".

"In fact nothing has changed in that regard over the last 20 years or more. The rest of the world has changed business models so why not us?"

Mr Bennett was one of a group of representatives of the Manufacturers' and Employers' Association who spoke late last month at a hearing organised by Opposition parties.

Mr Bennett and his colleagues said the exchange rate was their biggest headache and most warned they were considering moving overseas to stay in business.

He said Pacific Helmets was working its costings around 83 cents US.

"That's okay in the short term but if the exchange rate gets out of hand then we've got problems. Sitting at 90 cents US for any length of time is a real worry."

The kiwi dollar fell as low as US82.94c on Thursday after the release of weak employment data, before recovering to US83.05c.

Mr Bennett said in 2001, a helmet selling for US$100 would generate $250 for the company; today the same helmet cost the same to manufacture but was generating just $127.

Even at the average exchange rate over the last 10 years the return on the helmet would have been about $140 to $150. But today's exchange rate meant a loss of about $27 for his company.

"If you multiply that across tens of thousands of helmets and then across lots of companies that sell products overseas, that's the dollars that we're missing out in the NZ economy."

He said it was fortunate most of his product went into Australia where the exchange between that country and NZ was "manageable" but in other export markets the company got "hammered".

"There's always the upside which is demand and sales, but the critical point is in your margins. If any company can't make a profit then it has problems," Mr Bennett said.

"The point is do we want to see manufacturing stay in NZ? It provides a lot of jobs so the economy is not simply dominated by the primary industries.

"There's great innovation going on in this country and Wanganui has got some good examples of that. And we employ a lot of people."

He said he had no idea what was holding Government back from putting a solid business plan in place.

"No one can tell me there's no other way we can do business."

- Wanganui Chronicle

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