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Castalia Manufacturing Report Welcome

Castalia Manufacturing Report Welcome - 27 February

The recent report “New Zealand Manufacturing Sector: Its Dynamics and Competitiveness” completed by Castalia has some good analysis and reiterates the importance of manufacturing to the New Zealand economy, say the New Zealand Manufacturers and Exporters Association (NZMEA).

NZMEA Chief Executive John Walley says, “We always welcome any new analysis on the importance of the manufacturing sector in New Zealand. New Zealanders need to understand how truly vital manufacturing is to the future of everyone, not a declining, optional extra in the economy.”

“The report did miss a significant body of information from the Manufacturing Inquiry, that report had many comments from a wide range of manufacturers.”

“The report skates round the elephant in the room for all exporters and import competing companies, the exchange rate. The exchange rate problem is mentioned in passing but gets scant attention and no solutions. Quite rightly the critical importance of investment is underlined, but investment requires a margin that an overvalued exchange rate just destroys.”

“Resource based manufacturing (5 of the 15 in the sample) is bound to New Zealand because the raw materials are here and they are not likely to leave. The value-add manufacturers (10 in the sample) are more mobile, and are largely here because the ownership is here (6 of the 10 value-add manufacturers). They might leave one day for logical reasons of policy, cost or market. New Zealand can’t do much about markets, so we need to work hard on good policy and lower costs.”

“It was good to see that 5 out of the 10 value add manufacturers in the sample had received their share of the $200m funding from Callaghan Innovation. It is not surprising that these firms do not speak to harshly of the current environment.”

“Sample bias plays a big part in this sort of work, looking at the “stars” takes attention from those at the threshold of failure who should really be the focus of the discussion if declining trends are to be reversed.”

“Those who are doing well in the current environment are always going to be less critical and more supportive of the status quo; samples need to be wider to ensure a real understanding of the sector.”

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