Game on for exporters as dollar drops

Grinding Gear developed the game Path of Exile, says the currency fall will help them expand.

The drop in the New Zealand dollar has enabled local video games producer Grinding Gear Games to focus on expansion and growing its workforce, says chief executive Chris Wilson.

Grinding Gear, which developed the international hit game Path of Exile, is one of many local tech and manufacturing companies which had struggled with the high New Zealand dollar.

"When it hit somewhere around US88c that was difficult," Wilson said.

"For each American dollar we earned, which still took the same amount of effort, we were only getting a little over $1.10 and in the current state we're getting closer to $1.50 which helps, so we were having to be very careful with our spending in the last few years," he said.

Grinding Gear boss Chris Wilson.

"Almost all of our revenue is American dollars so the strong US dollar compared to the New Zealand dollar means we are able to expand the company more quickly because a lot of our development costs are paid for in New Zealand dollars and that basically means we can afford more salaries."

Manufacturing companies such as Fisher & Paykel Healthcare and farm products firm Gallagher Group, which both export to the US, also say the drop is good news, especially with most costs being in New Zealand dollars and revenue in other currencies. Fisher & Paykel Healthcare chief executive Mike Daniell said although his company had hedging in place, the high New Zealand dollar had still been a challenge.

"About 98 or 99 per cent of our revenue is generated in currencies other than the New Zealand dollar so if those currencies get stronger and the New Zealand dollar gets weaker that's a really good thing for us because that brings back more New Zealand dollars to New Zealand to pay the bills here," Daniell said.

"So we're quite encouraged by the move back to what you might call more normal levels, particularly against the US dollar."

William Gallagher chief executive of Gallagher Group said a US10c difference in the exchange rate equated to at least four or five million dollars on the company's bottom line, and although the company had produced good results over the past few years, it had to "paddle pretty hard" to get there.

New Zealand Manufacturers and Exporters Association chief executive Dieter Adam said members of the association were extremely happy with the drop, particularly as around 40 per cent of New Zealand manufacturing exports still went to Australia, which he said was a real problem when the dollar was close to parity with Australia earlier this year.

"From the perspective of our members it's really good because they obviously can't adjust their prices up and down with the variation in the exchange rate and a lot of them are probably too small to get a lot of benefit from hedging," Adam said. "Beyond the immediate benefit though is that the dollar has been on the way down for a while now and I think that's really encouraging people because it allows them to make more long-term adjustments in their planning."