KEY POINTS:
Over the past year or so, I have added my voice to the growing chorus of manufacturers and exporters who are saying, contrary to popular opinion, that we may not have got everything right in this country as a result of our painful restructuring.
I must admit that
I have quite enjoyed this argument and if I didn't think that the cost of failure to this country was so huge, I could have had a really good time with this subject.
It is the contention of a number of us as exporters that the so-called level playing field, including the recent Free Trade Agreement with China is, in export terms, far from level.
Our economy has become largely import-oriented and we are achieving this on the strength of money loaned to us by overseas financiers, who are now in trouble.
Our politicians are not too concerned about this imbalance, as the theory is our exports and "natural market forces" will eventually correct this imbalance.
You have to remember that many of us were saying this over 18 months ago without the hindsight of the Wall St meltdown. Courtesy of the Wall St problems we are now in a position to see more clearly what the outcome of those market forces might be.
The major global financial problems we are experiencing have largely come about as a result of rampant "free market capitalism", overlaid in many instances by greedy and corrupt corporate oligarchs and their armies of supporting henchmen.
Ours have eventuated from an apparent inability to address a problem and tackle it squarely. I believe that we still have time to do this. Let's look at the situation.
Before the Wall St meltdown, Asian exporters were fierce and determined competitors with the complete and unqualified endorsement of their Governments. They were offered incentives to get out and sell and they did so.
Since the crash, and the realisation by economies of Asian countries that they must export their way out of their problems, those established incentives have continued and in some cases increased.
Add to that the fact that many have currencies that are currently even more devalued than our own, you begin to realise that New Zealand exporters are in a major fight. The difference is that, back in our corner, our trainer/coach and our politicians are sitting back having a cigar and encouraging us with the information that the "market" is on our side.
What we need is for our present (or future) government to get a list of manufacturers and exporters initiatives and priorities under way.
The opponents of local manufacturers and exporters - such as the importers lobby group - run a good campaign on the advantages of letting our manufacturing sector decline.
If I understand this argument correctly, we produce dairy and other primary products very efficiently, therefore we should concentrate on that and let more efficient manufacturers do what they do in exchange for our dairy products. Aha, you say, there is a flaw with that because other economies have tariff restrictions on our dairy exports.
"No problem," says our Government. "We will remove all our tariffs. It will wreck a few of our industries, but it will be an encouragement for all these other Governments who will see what we have done and copy us."
They haven't, of course. No sane person thought they would. So, a New Zealand manufacturer and exporter could be excused for feeling unloved and unwanted.
But it becomes apparent that this is not so in other parts of the world. A New Zealand manufacturer is very welcome in Australia and other countries.
So welcome, in fact, that to some the first offer is a 10-year tax holiday. The next incentive is slightly less direct but is a plus just the same, coherent industry plans and low-cost export finance that does not involve the exporter in having to mortgage his grandmother's flat to get it!
But hey, we have never had it so good. When we go overseas to sell our product, we find ourselves sitting on the plane next to an Asian exporter who is being supported by all sorts of incentives from his/her Government, and with the added bonus of having their manufactured goods still protected at home at an average 15-30 per cent plus tariff.
When we sell to his or her country we have paid for our raw materials in US dollars (even locally smelted aluminium) and we will pay for our freight in the same currency and at premium rates.
There is the beginning of a feeling of defeatism in this country. Maybe we are just too small to make it on our own?
I believe the situation we are in has nothing to do with our ability to make it in larger world markets. It has everything to do with teamwork and leadership.
Also clearly, we need much stronger global regulatory and supervisory structures, and greater transparency to prevent the sort of extravagance, recklessness and greed, which has contributed to current problems.
We, like many other small countries, such as Singapore, Chile, Denmark and Norway, have a successful and proven economy. All we need is for our Government to get a list of export initiatives and priorities under way, and to build confidence in the productive sector. We need to set in place assistance and incentives similar to those used by others to generate a trade surplus while we were generating our $6 billion expected trade deficit this year.
* Gilbert Ullrich is CEO of Ullrich Aluminium, a transtasman manufacturer and exporter.
