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Interlock – another one bites the dust

9 February 2005

Interlock – another one bites the dust

Interlock – yet another New Zealand manufacturing icon bites the dust.

The Interlock withdrawal from Wellington shares many of the characteristics of the withdrawal of Electrolux from Christchurch. Foreign ownership, foreign decision making, operational rationalisation and significant price pressure brought on by globalisation.

The Government rush to implement preferential trade agreements with Asia is driven by the desire to open markets to the New Zealand Primary sector. At the same time the Government is lifting the cost base of employment throughout New Zealand.

The impact of these changes sits most heavily on small locally owned manufacturing companies. Without any clear policy support for manufacturing the conclusion must be that Government has little interest in growth for the high value manufacturing sector in New Zealand.

Many countries have direct and significant support for research and development, have much more supportive depreciation rules for investment in productive equipment and better support their innovative, locally owned, small to medium sized companies than does New Zealand.

Some believe that this issue is becoming critical; the slow erosion of the manufacturing base may well be at the point where we start to lose the vital infrastructure that supports our manufacturing exporters. If that happens the decline in our manufacturing sector will accelerate quickly.

The issue is not really about trade barriers or even preferential trade agreements. In manufacturing trade barriers have been negligible for a long time. It is really about the dynamics of global competition.

Without any particular interest in New Zealand, international decisions will be driven by price only thinking.

Our salvation in this new world will be based on competitive activity with an interest in New Zealand; primary without doubt – the grass grows here; tourism absolutely – the sights are here.

More than any other, the presence of a manufacturing sector is policy driven. If we want a manufacturing sector we had better get policy behind our locally owned, innovative and productive manufacturers.

ENDS

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