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No secret just deep: dark: depression!

2 June 2005

No secret just deep: dark: depression!

The latest Canterbury Manufacturers’ Association Survey of Manufacturers completed during May 2005, shows total sales in April 2005 were up over 5.5%, domestic sales up just under 2% and export sales increased by just over 13.5% on April 2004.

The Canterbury Manufacturers’ Association survey sample this month reported just over NZ$840m in annualised sales, with an export content just under 40%. The result is an accurate indicator of the health and performance of the manufacturing sector.

“Holiday impacts year on year could have played to the upside in 2005 against 2004 but nevertheless sales show a bit of a bounce back on last month” said John Walley, Chief Executive of the Canterbury Manufacturers’ Association. “Trends show that the percentage increase in sales fell steadily over the past year, still in positive territory but is now close to contraction.”

“Falls in profitability are tending to even out, the pain is holding as against getting worse, perhaps just as well if things get much worse we might see the manufacturing sector decimated.”

“Confidence has dropped through the floor, high exchange rates, closures, cheap imports with the blossoming prospect of more to come.”

The current performance index (a combination of profitability and cash flow) stands at 95 down from 99 last month, the change index (capacity utilisation, staff levels, orders, and inventories) 103 up from 101 last month, the forecast index (investment, sales, profitability and staff) 103 down from 104 last month.

“Our members continue to express feeling of abandonment, the idea that government has forgotten or sees manufacturing as the unavoidable road kill from FTA’s with low cost countries. Or worse, the notion that government sees the loss of manufacturing to New Zealand to be part of a natural development process is getting stronger as more air time is given to the trade agreements and of the Prime Minister’s visits to Asia.”

“The demand for New Zealand to negotiate harder on matched tariffs, technical and other standards and then really enforce the agreements is growing from our members and manufacturers around the country.”

“The loss of core capability will be difficult to replace, yet hardly a day passes without the loss of product and jobs to China – hard to see it right now but it will begin to show soon.

Early development plans are building in offshore sources so in the medium term cyclic product replacements will be dropping out of the system.”

Constraints focused only on staff and markets, with the market accounting for the constraint for 75% of respondents. Staff numbers reported an increase in the month of about 10%. Net sentiment in late May dropped from –6 to –25 breaking last months record of the largest year on year fall for some years. From April 2004 at + 41 a 66 point drop on the year. Things are feeling really black out there. For more information contact: John Walley on 021 809 631
CANTERBURY MANUFACTURERS' ASSOCIATION Survey of Business Conditions – April 2004 compared with April 2005
SAMPLE SIZE: The Survey respondents represent elaborate transformed manufacturers with annual sales of approximately $841 million.
CHANGE OVER 12 MONTH PERIOD (The table below represents the above returns expressed as percentages)
Apr Mar
TOTAL TURNOVER: Export /Domestic ratio 36/64 50/50
% Change in Total Turnover INCREASED 5.66 -3.29

DOMESTIC TURNOVER: % of respondents reporting a rise 57 43
% of respondents reporting a fall 21 50
% of respondents reporting no change 21 6
% Change in Ave Domestic Turnover INCREASED 1.7 -9.02

EXPORT TURNOVER: % of exporters reporting a rise 33 45
% of exporters reporting a fall 44 45
% of exporters reporting no change 22 9
% Change in Average Export Turnover INCREASED 13.52 3.18

STAFF NUMBERS: % of respondents reporting a rise 80 35.2
% of respondents reporting a fall 20 47
% of respondents reporting no change 0 17.6
% Change in Average Staff Numbers INCREASED 10.08 -4.80
CHANGE OVER 12 MONTH PERIOD (The table below represents the above returns expressed as percentages. Last month in brackets.)
Large Fall
(Over 15%) Modest Fall
(2.5%-15%) No Change
(Within 2.5%) Modest Rise
(2.5%-15%) Large Rise
(Over 15%)
Apr Mar Apr Mar Apr Mar Apr Mar Apr Mar
Profitability (YoY) 44 29 0 12 13 24 44 18 0 18
Cashflow (YoY) 19 12 19 24 31 29 25 18 6 18
Exchange Rate (YoY) 6 13 31 31 44 31 13 19 6 6
Investment Forecast 31 24 0 6 38 35 31 29 0 6
Sales Forecast 6 6 6 18 31 18 50 47 6 12
Profit Forecast 13 12 6 12 19 18 56 41 6 18
Staffing Forecast 6 6 13 12 44 47 38 24 0 12
Confidence Very Negative Negative Positive Very Positive
6 12 38 24 38 35 13 12 6 18
Constraint Production Skilled Staff Capital Market
0 12 25 18 0 0 75 71

Net Confidence Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
2003 +21 -6 +12 -11 -5 +12 -6 0 +11 +40 +29 +33
2004 +5 +19 +41 +41 +36 +50 +12 +20 +7 0 -7 +5
2005 +13 -13 -6 -25

Index (base =100) Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
Performance 105 100 99 95
Forecast 103 98 104 102
Change 104 99 101 103

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