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Exporters confident despite domestic outlook

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EMBARGOED UNTIL 0500 15 JULY 2008


Exporters confident despite domestic outlook

Auckland, 14 July 2008: The latest annual Export Barometer by DHL, the world’s leading express and logistics company, finds the majority of exporters had a positive increase in orders over the last year, and are feeling confident about the next 12 months.

The seventh DHL Export Barometer has revealed that while the overall level for growth in future export orders is marginally below the 63 per cent of 2007, the landscape for the last 12 months has been good for exporters, who enjoyed a net gain of 25% in export orders (proportion of exporters reporting export increases, less export decreases).

In the next 12 months the majority of exporters (59 per cent) anticipate an increase in their export orders. In terms of profitability, 54% of exporters expect an increase in profits, in the next year.

DHL Express General Manager, New Zealand, Derek Anderson said “Exporters are fairly resilient. It’s positive to see that despite some of the doom and gloom that’s being reported they are still making headway with their businesses.”

Staff head count is expected to rise with 38 per cent of exporters expecting to increase the number of full time staff in their organisations. This is more likely to be seen in the services sector than in other sectors.

Seventy three per cent of organisations plan to give staff a wage increase in the next twelve months, with the manufacturing sector more likely to expect a wage increase for employees than other sectors.

“What’s great to see is the investment in staff. Maintaining and retaining good staff is a priority, because you can’t run a successful company without them,” said Mr. Anderson.

Developed by DHL Express and conducted by ACA Research, the DHL Export Barometer remains the only large-scale evaluation of export confidence within this country. The results gauged the opinions of 350 experienced New Zealand exporters.

However exporters have still had their challenges. The biggest burden on exporters’ sales over the last 12 months has been the exchange rate, with 74 per cent of exporters citing this as a negative factor. This concern reflects a marginal rise from 2007 (72 per cent).

Overall, agriculture and manufacturing exporters have been hardest hit by the exchange rate over the past 12 months. Although this year, 71 per cent of exporters in the tourism industry reported the exchange rate as having a negative impact. In 2007, only 45 per cent cited it as having a negative impact.

Rising fuel prices / costs was also deemed a negative factor impacting sales for 59 per cent of exporters over the last 12 months.

“It’s definitely not surprising that exporters are feeling the impact of fluctuating exchange rates along with rising fuel costs, and the survey shows that the tourism sector has been hardest hit. As airfares go up, people are re-considering any major air travel, so of course that’s going to impact the tourism trade here,” said Mr. Anderson.

The survey also found that almost one in four exporters intend to take at least part of their business off-shore in the next two years, with Australia and China the top destinations being considered. One in three exporters in the manufacturing industry currently manufacture some of their components off-shore, primarily because of the lower labour costs.

“In an increasingly competitive global environment, businesses are looking for ways to keep costs down and that might mean moving manufacturing off-shore. What’s important is what is happening back in New Zealand and gearing the economy towards research and development. If we can keep that innovation here and leverage cheaper production overseas, it makes sense,” said Mr. Anderson.

Employers and Manufacturers Association Northern (EMA), CEO Alasdair Thompson goes further saying: “More New Zealand businesses investing off-shore is a positive trend, as it enables them access to international competitiveness factors, such as the price of labour and close proximity to markets.

“It’s no different to what businesses domiciled in the UK and US have been doing for many decades, to the benefit of their citizens in their home countries.”

An issue facing nearly half of all exporters is a skilled labour shortage with 49 per cent of exporters claiming they are being impacted. Of the 49 per cent, 37 per cent believe the situation could be addressed by providing incentives to New Zealand skilled workers to remain in New Zealand.

Shifting export markets
The survey revealed future export orders over the next 12 months are changing with a shift away from Europe, the UK, and Japan, compared to 2007. In 2008, 50 per cent of exporters indicated an increase in orders to Europe. This is down 15 per cent compared to 2007 when 65 per cent of exporters anticipated an increase. This is similar for the UK, which dropped 14 per cent, and Japan, which dropped 17 per cent, compared to 2007.

Exporters who currently service China, South Asia and Australia anticipate the highest increase in exports to these regional destinations in the next twelve months. Over the past three years China has risen up the ranks for future exports, from fourth in 2006, and second in 2007, and in 2008 is the primary regional destination for exporters in the next 12 months.

“Again, we’re seeing that the increased fuel costs are impacting exporters, combined with exporters focusing on closer, increasingly accessible markets. Exporters are being smart about where they are focusing their efforts,” said Mr. Anderson.

Government and Free Trade Agreements
The DHL Export Barometer has revealed that 68 per cent of exporters believe a change in the New Zealand Government will have a positive impact on their business, especially exporters in the manufacturing and agriculture sector, with 75 per cent and 73 per cent respectively. Exporters in the tourism sector are more likely to believe a change in the current government will have no effect on their business.

“Everyone, not just exporters, has been feeling the impact of the slowing domestic economy. This could be a knee-jerk reaction for change,” said Mr. Anderson

Similarly not surprised by the findings, Employers and Manufacturers Association Northern (EMA), CEO Alasdair Thompson said “It seems all governments tend to run out of steam after three terms. It will be interesting to see what happens in November.”

Similar to 2007, Free Trade Agreements with the USA and China are nominated as having the most positive impact on exporters’ businesses. While the USA got top ranking for having a very positive impact, the Pacific region received the lowest at four per cent.

Although China was close to the USA in having a very positive impact on exporters’ business, at eight per cent China also ranked as having the highest “very negative” impact and “somewhat negative” impact (10 per cent) on business among all of the countries surveyed.

ENDS

For more information or to arrange an interview with Derek Anderson, General Manager DHL Express New Zealand, Alasdair Thompson, CEO, Employers and Manufactures Assn (Northern), Peter Townsend, CEO, Canterbury Employers Chambers of Commerce,
Duncan Simpson, CEO, Otago-Southland Employers Association or Bob Walters, CEO, Export New Zealand, please contact:

About the DHL Export Barometer
The DHL Export Barometer is an initiative aimed at analysing export confidence in New Zealand and identifying export trends, and was first launched in May 2004. It is based on nationwide independent research, examining the business outlook of New Zealand exporters, highlighting changes in overseas market demand and providing insights into the factors impacting on New Zealand export trade.
Conducted by ACA Research, the 350 exporters surveyed were grouped into four main industries: agriculture/food and beverage, manufacturing, tourism and services. The New Zealand DHL Export Barometer is comparable to the Australian DHL Export Barometer, launched in November 2003. Both Barometers are issued on an annual basis.

In 2008, DHL partnered with the EMA Northern, EMA Central, the Canterbury Employers Chamber of Commerce (CECC), the Otago-Southland Employers Association (OSEA) and Export New Zealand.

About DHL Express New Zealand
DHL Express New Zealand employs over 350 staff at nine locations. The company has a strategic joint venture with New Zealand Post, Express Couriers Ltd. This venture compliments DHL’s international offering, through the provision of domestic courier and logistics services via CourierPost, Pace, Contract Logistics and Roadstar Transport.

In 2004, DHL Express New Zealand was awarded the Contact Centre Manager of the Year by TUANZ and was again General Services sector winner of the CRM Contact Centre awards in 2005 (for the third consecutive year). DHL is a corporate sponsor of Surf Life Saving New Zealand, business partner of New Zealand Trade and Enterprise and supporter of Fashion Industry New Zealand.

About DHL
DHL is the global market leader of the international express and logistics industry, specializing in providing innovative and customized solutions from a single source.

DHL offers expertise in express, air and ocean freight, overland transport, contract logistic solutions as well as international mail services, combined with worldwide coverage and an in-depth understanding of local markets. DHL's international network links more than 220 countries and territories worldwide. Some 300,000 employees are dedicated to providing fast and reliable services that exceed customers' expectations.

DHL is a Deutsche Post World Net brand. The group generated revenues of more than 63 bn euros in 2007.

For the latest news and happenings about DHL in Asia Pacific, please visit http://press.ap.dhl.com.

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