Manufactured crisis torpedoed

August 16, 2013

The manufacturing crisis the opposition has been trying to manufacture has been torpedoed by facts:

New Zealand manufacturing activity rose to its highest level on record for a July month, reflecting a broad expansion.

The BNZ-BusinessNZ performance of manufacturing index rose 4.3 points to 59.5 in July from June, the highest result for a July month since the survey began in 2002 and the third highest monthly result on record. A reading above 50 indicates the sector expanded, while a fall below 50 shows contraction.

New Zealand manufacturing is underpinned by domestic demand from the construction sector on the back of the rebuilding of earthquake damaged Christchurch and demand for housing in Auckland, the nation’s biggest city. Domestic demand is outweighing a weakness in our biggest export market of Australia, where an economic slowdown and the higher New Zealand dollar are crimping demand.

“Production and new orders continue to lead the charge, with signs that employment is starting to join in,” Doug Steel, an economist at Bank of New Zealand, said in a statement. “The strength is broad-based with expansion indicated by all major sub-indices across industries, regions and firm size.” . . .

Bad news for the opposition is good news for employment and the economy.

The ODT profiles a company which counters the gloom merchants:

Despite constant talk of recession and a so-called ”manufacturing crisis” people in rural Otago are still better placed now than at any time since the introduction of Rogernomics in the 1980s to set up in business, an Oamaru cheese manufacturer says.

Whitestone Cheese was set up in a defunct Oamaru garage at the height of government deregulation and a severe rural economic downturn in 1987.

The company, now exports to eight countries and employs about 40 full-time and 20 part-time staff at its Oamaru factory and up and down the country.

Managing director Bob Berry said today’s rural economy was still a ”much more positive environment” for business than it was 30 years ago.

”In our rural communities it was very difficult in the ’80s, but out of adversity often come opportunities. . . .

Whitestone Cheese began in adversity and has succeeded.

It is proof that opportunities are there for those with the courage to seize them, and that some of those opportunities are in manufacturing.


Jobs come, jobs go

June 17, 2013

The opposition couldn’t have picked a worse time to be wasting their time and our money manufacturing a crisis about a manufacturing crisis.

New Zealand manufacturing activity rose in May to the highest level since June 2004, led by new orders and production, stoking optimism the economy may be picking up pace.

The BNZ-BusinessNZ performance of manufacturing index rose 4 points to 59.2 in May, the highest level in nine years and the strongest reading for May since the survey began in 2002.

The monthly survey suggests manufacturing may not be as weak as suggested in government figure this week showing sales volumes fell 0.6 percent in the first quarter and indicates companies are confident enough to take on more workers.

Machinery and equipment manufacturing led gains in May, with a reading of 67.4. . . .

The good health of manufacturing was on show at last week’s National Fieldays:

Prime Minister John Key says the National Fieldays are a perfect example of why New Zealand’s manufacturing sector is at its highest level in nine years. . . .

“New Zealand is well placed to be doing well in manufacturing,” Key said at Fieldays.

“What you’re seeing here at the Fieldays is actually a lot of innovative manufacturers who are developing products.

“I think we’re (New Zealand) a good place to do business. We’ve got a good, stable democracy, we have an English court and law system and we’ve got a competitive economy,” he said.

Those who think we’ve got a crisis here might take a look at India:

As many as 14.08 million jobs were lost in the five-year period ended in 2009-10 in the agriculture sector which engages almost 60 per cent of the workforce in the country.

The job losses in the manufacturing sector during the five year period from 2004-05 to 2009-10 was 5.03 million as per the draft 12th Five-Year Plan approved by the country’s apex policy making body National Development Council (NDC) in December last year.

According to the data analysed in document, employment in the agriculture sector in absolute terms was 237.67 million in 1999-2000 which increased to 258.93 million in 2004-05 and then fell to 244.85 million in 2009-10.

Similarly the workforce engaged in manufacturing sector was 44.05 million in 1999-2000, which increased to 55.77 million in 2004-05 and then came down to 50.74 million in 2009-10. . .

Jobs come and jobs go. In spite of all those losses, there were gains in some areas and overall employment increased:

 . . . However, the employment in non-manufacturing sector increased from 20.84 million in 1999-2000 to 29.96 million and 48.28 million in 2004-05 and 2009-10 respectively.

The workforce in electricity, gas and water supply also saw a decline from 1.30 million in 2004-05 to 1.25 million in 2009-10. The other sector broadly in services sector saw a surge in employment.
 
The overall employment in the country has jumped from 396.76 million in 1999-2000 and 457.46 million in 2004-05 and it was 460.22 million in 2009-10.

In 1841, over one in five workers (22%) were in the Agriculture and fishing industry.

This has now fallen to under 1%. But we produce an awful lot more food than we did back then.

In 1841, a third of the working population (36%) worked in manufacturing and in 1901 this was at a similar rate of 38%.

This has now fallen to 9%. And we do indeed still manufacture an awful lot more by value than we did back then.

How can that be?

The answer to how we did both is that we invented machines that did a lot of the work of those people. Yes, this did indeed mean that these people thus became unemployed: which was the very point of making the invention. The point of the mechanical hay baler is to make manual hay balers unemployed. The point of the robot riveter is to make human riveters unemployed.

And thus those made unemployed by the technological change can go off and work in services. Which is how we all become richer: we’ve now got the machines doing the food and the manufacturing, the humans doing the services and we get all three: food, manufactured goods and services.

Think about it for a moment, if we still had 22% in farming and 36% in manufacturing then that’s 58% of the people. Currently 81% of the population work in services (there’s a bit in construction, water etc as well). If we’ve 58% who cannot be in services because they’re in food or manufacturing then we’d, just as in 1841, only be able to have 33% working in services. So, which half to two thirds of the services we currently do get would you like to give up simply because we don’t have the people available to do them? OK, we all agree the diversity advisers can go but beyond that?

Quite. By mechanising agriculture and manufacturing we’ve been able to get the production of both of those that we desire and also have a vast expansion of services that we also get to enjoy. We have more thus we’re richer. And that of course is the point of doing such mechanisation: to make us all richer and long may it continue.

Machines have replaced a lot of jobs. They’ve also increased productivity and freed people to do things machines can’t.

Jobs come and jobs go and more jobs come. It’s not a recent phenomenon, it’s been happening for centuries as new inventions make it easier to do old jobs.

Instead of manufacturing a manufacturing crisis the opposition should be putting their energies into finding solutions for the problem of people who don’t’ have the skills, and sometimes the will, to do the new jobs.


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