The manufactured crisis

Remember the manufactured manufacturing crisis the opposition spent so much of their energy and our money on last year?

The news on it is bad for them but very good for the rest of us:

New Zealand’s manufacturing sector started 2014 on a healthy note, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).

The seasonally adjusted PMI for January was 56.2 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). The sector has now been in expansion for 16 consecutive months, with the last six months also averaging 56.2.

BusinessNZ’s Executive Director for Manufacturing Catherine Beard said that despite the usual seasonal effects of Christmas and the holiday season, the sector has begun the way it finished off 2013.

“Positive comments from manufacturers revolved around a growing confidence by consumers, further gains in building construction and continued high levels of new orders, both domestically and offshore. In particular, the metal product sector is currently benefitting from the strong residential construction boom, which will no doubt continue for some months to come.”

BNZ Economist Doug Steel said it would be easy to understand if the PMI had lost a bit of heat in January, given the hefty lift in the NZD/AUD exchange rate. But the PMI has barrelled on, as domestic demand strengthens. . . .

This provided the opportunity in Question Time yesterday:

Hon STEVEN JOYCE: Of the 16 different industries measured by the household labour force survey, employment rose in 11, including manufacturing, which does debunk another myth often heard around this building. There is no doubting that the high New Zealand dollar is a challenge for exporters, but the January Performance of Manufacturing Index, which was released today, shows manufacturing has now been in expansion for 16 consecutive months, which is, weirdly, precisely the exact same time since the Opposition announced the start of its inquiry into a manufacturing crisis. I quote from the Performance of Manufacturing Index today, which says that manufacturing punched above its weight regarding job growth in 2013. It accounted for 13.5 percent of jobs added in the New Zealand economy overall last year, which is more jobs than were added in Australia in the same period. . .

There is a cloud on the horizon though:

Hon STEVEN JOYCE: . . .  The Government has more than 350 initiatives under the Business Growth Agenda that are helping businesses grow, because that is how employment grows. I contrast this with policies that would put a chill on industries, that would cause their hiring intentions to freeze, and companies themselves might not even survive—for example, if you nationalise the electricity industry or double the cost of the emissions trading scheme on households and businesses, or if you impose new taxes on every single business in the country. . . .

The left demonise business without realising its the goose that lays the golden eggs of employment and economic growth.

The recovery is real but it’s not yet robust and a change of government with policies that would undermine business confidence could easily reverse the hard-won progress that’s being made.




9 Responses to The manufactured crisis

  1. robertguyton says:

    Rio Tinto know how to play this Govwernment:
    “Last year, the government agreed to subsidise foreign-owned Rio Tinto to the tune of $30 million. At the time they were pleading poverty; now its clear that they played us for suckers:

    In a year where its aluminium subsidiary was able to extract a $30m payout from New Zealand taxpayers, world mining giant Rio Tinto has delivered a larger than expected profit and dividend – despite the prices of most of its products falling.

    Rio’s underlying profit in 2013 was up 10 per cent on the previous year to US$10.2 billion, above analysts’ expectations of $9.7 billion.

    Net profit, which included impairments, was $3.7 billion.

    That $30 million could have paid for a full school lunch program which would have made a serious difference to child poverty. Instead, its gone straight into the pockets of this company’s foreign shareholders. That noise you can hear is them laughing all the way to the bank (and trampling over hungry kids to get there).

    And this is National’s “better economic management” in a nutshell: robbing kiwi kids to subsidise foreign fatcats. Isn’t it time we had a government which actually worked for us, not big business?”

    I/S NoRightTurn


  2. Mr E says:

    Before you go supporting these claims with absolute gullibility, take a moment to think. Is the local smelter – Rio Tinto? No – they’re part of the Pacific Aluminium, a subsidiary of Rio Tinto, and Sumitomo Chemical Company. The name applied is New Zealand Aluminium Smelters
    Did the government deal with Rio Tinto as you scandalously suggest? Think hard. It’s not rocket science.

    Southport’s majority share holder is ES – You’re a Councillor. And Southport is facilitating the importation of Palm Kernel Extract. Even investing flat stick to keep up.

    Considering your logic – Bullying Rio Tinto for Tiwai’s dealings, is like blaming you for Palm Kernel Extract importation.

    If you struggling with the concept – Answer me this. How much profit did NZAS make this year?


  3. robertguyton says:

    By all means ping me for the importation of PKE, Mr E. I’d love to take such a charge to the council for their response. I’m as uncomfortable about that as you are and have been vocal in calling for comment on the issue.
    The Rio Tinto ‘people’ were not involved in the negotiations with the Government over the Tiwai smelter? Colour me amazed! Their profits are disconnected from the Tiwai smelter? Colour me astonished!


  4. Mr E says:

    Is that speculation I smell?

    Or perhaps it is organic lentils being cooked at the mansion?


  5. Mr E says:

    Your quote Robert

    “I don’t think I can influence the Council’s continued relationship with SouthPort any more than I already have”


  6. TraceyS says:

    Robert’s pointed right at the justification for more mining and industrial activity in areas where there is already some. That if an area has multiple large factories, mines, or other big employers then it is not so easy for one of them to leverage their negotiating position:

    “Anyone who can take a business away has its community over a barrel and has its workforce over a barrel,” he (Bill English) said.

    And another barrel seen here:

    “During the question time, the more than 250 delegates heard Mr Wilkes say that if Oceana “can’t afford the increases, we will chuck it [in]” at Macraes.”

    If an area is thriving with activity, it’s not such a big deal.


  7. Willdwan says:

    It’s not every day that I agree with Robert, but I’m buggered if I can see why Rio Tinto (what a stupid name) felt we owed them 30 mill.


  8. Mr E says:

    Willdman. Rio tinto has investments in all sorts metal mining. Aluminium has been losing money for years. Millions. Consequently Rio tinto had been trying to sell Pacific aluminium which includes other aluminium operations.
    Here in Invercargill staff were feeling the pains of a shrinking company.
    They’d tried to get long term cheap power, but negotiations stalled. The alternative was a one off payment to keep operations viable. I understood. I saw the people fear for their jobs for years. I was pleased with the Government.


  9. Gravedodger says:

    Jesus wept Guyton, I hope you have well planted riparian strips between the crap you exude and the nearest waterway, pollution much methinks.


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