Survey shows manufacturing improvement for Otago Southland

There are concerns around having sufficient workforce for the upcoming horticulture season in Central Otago. Photo / Stephen Jaquiery

Manufacturing in Otago and Southland has had its highest result in the latest Performance in Manufacturing Index since November last year.

The index for July was 56.7 points, a further improvement on the previous month. A PMI reading above 50 indicates that manufacturing is generally expanding; below 50 that it is declining.

The survey was undertaken before last week's Covid-19 alert level announcement.

In the regional breakdown in categories, new orders were above 60 which was encouraging, Otago Southland Employers Association chief executive Virginia Nicholls said.

Production levels and deliveries of raw material were the same, and employment levels and stocks of finished products were in decline.

Machinery and equipment manufacturers were having a mixed time, with some experiencing increased demand, and others are struggling in the Covid-19 environment.

The export red meat sector and export wood processors were experiencing steady sales while the construction sector was still "clawing back" lost production time.

It had been more difficult to fill roles for several industries, including agriculture and aquaculture and there were concerns that, with borders closed, there was a skills shortage in some skilled and unskilled roles.

Horticulture had some concerns with the start of the season in September, and peak workforce requirements depending on the season in late December-early January.

There were calls for Immigration New Zealand to allow migrant workers in the country to temporarily alter their visa conditions to support the horticulture harvest season, Nicholls said.

"In Central Otago they have had a comprehensive recruitment strategy, but workers are struggling to be able to move and find accommodation in Central for these roles."

There was still frustration with Immigration NZ which continued to struggle with processing inquiries, she said.

"INZ must urgently provide clarity for companies wanting to bring in critical high-skilled workers from overseas who are supporting the economic recovery efforts. There is no cost to the taxpayer to allow these specialist workers in, along with appropriate quarantining, and so we are at a loss why these requests are not being processed."

Earlier this week, in response to concerns raised about the effect on the agricultural contracting sector, an INZ spokeswoman said it understood the effect Covid-19 and the border restrictions were having on some sectors and employers.

The bar for being granted an exception was set high to help stop the spread of Covid-19 and help protect the health of people already in New Zealand.

In June, new immigration instructions came into effect which set out specific criteria for determining whether someone was an "other critical worker" and could be granted an exception.

Nicholls said there continued to be issues around aircraft capacity for international air freight particularly from Southland.

Nationally, New Zealand's manufacturing sector also showed further expansion, with a seasonally adjusted PMI for July of 58.8. That was up 2.6 points from June and was now the highest result since April 2018.

Employment (46.5) remained weak and in contraction for the fifth consecutive month.

BNZ senior economist Doug Steel said July's PMI had firmly set up the idea that manufacturing GDP would bounce back strongly in Q3 after what was surely a very large decline in Q2.

"The latest virus outbreak calls that into question and adds to the reservations that we already had for growth in Q4," he said.