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Manufacturers Scrambling To Supply Demand

Media statement
Thursday, December 18th, 2003

Manufacturers scrambling to supply demand, Christmas boom

Manufacturers in Auckland and Waikato are racing to catch up with new orders, the Employers & Manufacturers Association (Northern) reports.

The ANZ-Business New Zealand PMI shows new orders are running well ahead of production levels, so much so that manufacturers are falling behind in the replenishment of their stocks of finished goods, said Bruce Goldsworthy, EMA's Manager of Manufacturing Services.

"This year manufacturers have shown they can manage sharply reduced returns from exports and a rising currency if the home market is performing well," Mr Goldsworthy said.

"Since November 2002 the dollar has risen by 28 per cent against the US currency, yet manufactured exports have dropped just six per cent worth $11,750 million, excluding processed meat, dairy and similar agricultural commodity exports.

"Our manufacturers have retained their Australian markets with manufactured exports across the Tasman holding at about $4430 million for the year (ended September), about the same as for 2002.

"They are also demonstrating their niche competitiveness in the battle for market share resulting from the reducing price of imports on the home front.

"But the exchange rate is plainly holding back any expansion in export markets while a lack of skills in addition is restricting growth on the local market.

"The PMI for November shows manufacturing activity in the northern half of the North Island should continue well into the New Year since new orders (67.4) were indexing well ahead of production (63.9) and stocks of finished goods were in deficit (45.8). A figure above 50 represents expansion; below indicates contraction.

"The performance of manufacturers in Canterbury and Otago-Southland were even more buoyant at an overall PMI of 69.1 and 73.4 respectively.

"Long may the good times roll!

"The big mid term risk is that Government will take advantage of today's golden economic weather to add more costs and compliance, and shackle business with the new Holidays law and the Employment Law Reform Bill.

"When conditions turn down, the extent of business opposition to these inflexible measures will become apparent."


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