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Businesses Must Gear Up For Challenge From China

7 September 2005

Manukau Businesses Must Gear Up For Challenge From China

A new report into the economic and business challenges facing Manukau City indicates that local companies will find it hard to compete with low-priced manufactured products from fast growing China, and in future years from India. It predicts many will not survive.

The BERL report, to Manukau City Council, also highlights other pressures that will impact on Manukau’s business community: a shortage of skilled workers, large numbers of unsuitably qualified school leavers, and rising oil prices.

Manukau has consistently had strong growth and economic expansion in recent years, averaging five per cent annually over the last decade. This has produced big increases in the number of businesses, thousands of new jobs each year and opportunities for local residents.

However the report says the city has to work smarter to maintain growth in the face of tougher competition, market changes and other challenges.

China’s explosive growth as a manufacturer is a major factor which will put intense pressure on many local companies. It is expected that the competition will sooner or later put all manufacturers and exporters trying to compete on low cost out of business. Perhaps half of Manukau’s current manufacturing businesses are unlikely to survive unless they make strategic changes. India is also fast developing as an economic power closely behind China.

The rising cost of oil is another challenge. It will push up prices, inflation and interest rates and hinder growth unless alternative sources of energy can be found, or energy efficiency use is improved.

The labour supply continues to be a headache to employers trying to fill vacancies, but facing a huge skills gap.

Manukau Mayor Sir Barry Curtis says, “Jobs are going begging and there continues to be a shortage of both skilled and unskilled staff. In the most recent survey, forty per cent of Manukau companies had trouble finding skilled or professional staff, and thirty five per cent could not find fill vacancies for jobs such as drivers, warehouse and clerical staff.

“It’s a very serious issue, and it’s absurd that so many teenagers are leaving
school each year woefully unprepared for the job market. We need more engineers and scientists, not people whose only skill is rapping.”

In fact, with the ageing of the population and low birth rates throughout the developed world, there is an international shortage in many professions and competition to attract and retained skilled labour is increasing.

The challenge to produce, attract and retain educated and skilled workers will become more intense over the next decade.

Despite improvements in recent years, too many local school students are leaving without qualifications, often with poor reading and writing skills and no plans for tertiary study. Low achievement levels continue, in particular among Maori and Pacific students, and Manukau’s unemployment rate is regularly above the national average despite the abundance of jobs.

The booming national economy over recent years has had little impact on the number of job seekers, which has only fallen slightly.

A target for improvement has been set : the Tomorrow’s Manukau ten-year plan for the city sets a target of having 90 per cent of students leave school with NCEA level one qualifications.

On the other hand, the report says Manukau has clear strengths:

- strategic location
- growing tourism market
- strong manufacturing base with growing high value-added industries
- cultural diversity
- business-friendly council.

The report says that to enable growth to continue, the city will have to:

- ensure the city retains a quality environment to attract people and skills
- ensure education attainment levels are lifted
- expand business services to support high value manufacturing for new and niche markets
- produce goods and services for the global export markets
- invest in sound infrastructure including transport networks
- develop business and activities in tourism and events

ENDS

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