Bill English was criticised a few weeks ago for suggesting that lower wages here was a competitive advantage.
What do the critics say now that Heinz Watties is moving some of its production from Australia to New Zealand?
After an extensive review of the trans Tasman manufacturing footprint and capabilities, the decision has been made to consolidate production of sauces, beetroot, and some canned meal products from facilities Girgarre (Victoria), Brisbane and Wagga Wagga (NSW), to facilities in Hastings.
Heinz Wattie’s Chief Operating Officer Michael Gibson says Heinz operates a number of factories across Australia and New Zealand and share production between the two countries depending on how customers and consumers can be best served in both markets. The decision to consolidate manufacturing is a critical step in the plan to become more competitive in a challenging environment and to accelerate future growth.
It all comes down to costs of production:
Australia’s supply chain director, Mike Robinson, says the change is the result of a global productivity review, and is not a result of the strong Australian dollar.
“There is pressure on suppliers from customers and consumers. But there are a number of factors,” he said.
“The cost of raw materials, labour, energy. All of these have pressure on suppliers which mean that we have to maintain competitiveness.”
People are going west across the Tasman but if production moves east to New Zealand then people will follow.
Australia is rich in natural resources but it doesn’t have the plentiful supply of water which helps us produce electricity at a cheaper cost.
Having lower wages isn’t good in the long term but can be a factor which helps economic growth in the short term. As the economy grows, wages will increase .
Hat tip: Adolf at No Minister