Written By: - Date published: 5:10 pm, April 17th, 2008 - 73 comments
Categories: workers' rights -
Tags: workers' rights
With the loss of 500 ANZ National jobs to Bangalore India and 430 jobs from Fisher and Paykel to Mexico announced today, a pattern is emerging.
The race to the bottom has picked up speed. Companies are increasingly outsourcing their work to low wage economies, like China, India and Mexico, putting hundreds of New Zealand workers out of work.
And it will only get worse. As soon as companies feel the fear of low wage economy competition, they will similarly outsource or close up shop altogether and similar job losses will occur. It’s about time the New Zealand public put a stop to this downward spiral and that means supporting campaigns to stop this, refusing to buy goods made with slave labour and making sure that companies know we will not support them in their attacks on us and workers around the world.
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China is old news.
Jobs are leaving China for Vietnam.
Did the OP get lost? This isn’t indymedia.
So it’s not just tax payers jumping on planes and heading west, it’s companies too.
The great domestic decline, brought to you by the Labour led govt.
So we “lost” a few jobs. We also created 23,000 jobs in the last quarter and have record unemployment.
If you think the government should have a response to this, it should be to assist those who lost their jobs into industries in which we have a competitive advantage rather than demanding we artificially prolong inefficient sectors.
As for this:
“refusing to buy goods made with slave labour and making sure that companies know we will not support them in their attacks on us and workers around the world.”
I suppose you’d prefer it if developing countries’ economies regressed to where they were 30 years ago? You know, with the crippling absolute poverty rates and human rights abuses that far exceeded the current rates.
“refusing to buy goods made with slave labour and making sure that companies know we will not support them in their attacks on us and workers around the world.”
Unfortunately the vast majority if not all manufacturers of these kind of goods (whiteware etc) are or will manufacture in low cost countries, which also have the advantage of being closer to major markets, while not wanting to debate whether that is right or wrong, NZers not buying their goods won’t make a bit of difference to them and the alternative would be purchasing a product from another company who’s probably doing exactly the same thing.
lonelyavenger
People said the country was doomed when GM, Ford, Toyota & Mitsi’s stopped assembling cars in NZ. But what happened? The price of cars came down and the quality improved immensely.
I don’t think whiteware quality will improve anywhere near the magnitude that car quality did because we already produce internationally competitive whiteware, however it’s likely the price will come down which like the price drop on cars is good for consumers.
Burt
While I find it odd to be defending the government – the reality is manufacturing of these goods in NZ is going to decline and fade to zero under National or Labour and is common place around the world.
Pretty much the same is true for call centre support staff vast amounts of this are now ex Bangalore, Karachi, Mumbia etc.
Look on the bright side. When was the last time you saw bangaladeshi cheese or indian lamb chops in the supermaket.
hs
You are correct, but this lot has happened on Labour’s watch. As long as Labour continue to claim credit for the last 8 years of local economic trends and deny any responsibility (sledging it to international factors) for the current economic trends then it’s important to provide balance and remind people what is going on around us now is happening on Labour’s watch.
This sort of news was, as you say, to be expected. Labour have delayed signing the FTA till the time was right and that time was widely picked as being 2008 since about 2006. Just as tax cuts were planned for 2008 and so was the full implementation of a significant social spending programme. Labour’s policies were nicely timed to win a forth term, or so they thought.
CAPTCHA: willing miss – no argument with that!
Burt – don’t think the price will come down. The profits will go up. My F&P shares increased 15% today. I’ll be selling them tomorrow because I don’t want to be making money out of the exploitation of Mexican workers.
HS – I’ve managed to avoid buying non-sweat products for years. If anything it’s getting easier as the market for ethical goods grows.
When was the last time you saw bangaladeshi cheese or indian lamb chops in the supermaket.
How about Canadian bacon (about 40% from memory) and Chinese vegetables (pretty much all frozen vege except peas)?
One thing that was said when the car assembly plants were closing down was: Why should the jobs of a thousand people hold a country of 3m (now 4.2m) consumers to ransom by requiring tariffs to make the plants profitable.
Why should 4.2m people pay more for their cars so that 1,000 can have a job?
The profit from F&P sounds big at $62m. But what is the company worth? What return on investment is $62m?
A proactive govt (which I would never accuse Labour of being) might offer F&P a tax free status for say 8 years to expand their operation for economies of scale in NZ. It’s a no brainer for the govt. F&P closing the NZ plant down stops all plant tax revenue from being received in NZ, stops all wage/salary tax revenue being received in NZ and will kill a large number of supplier industries. What do the govt want, the big carnage or cut the key player in a big circle some slack in the form of significant tax incentive and only loose the plant tax revenue from the whole shooting match?
“I’ll be selling them tomorrow because I don’t want to be making money out of the exploitation of Mexican workers.”
I don’t think you understand how economies develop. The choice for Mexican workers is not “high pay or low pay” it is “low pay or no pay”. Over time Mexico will develop into a higher wage economy. Unless of course too many people like you refuse to support that development and condemn them to eternal poverty.
Interestingly that part of Mexico has recently been victim of factories moving to China for even lower wages. That’s nature of the game; as soon as a country like Mexico’s wages start going up the factories leave for somewhere even cheaper. The right’s only answer is to cut our own conditions to compete. It’s called the race to the bottom for a reason.
Ummmm, 4.25 million New Zealanders standing against the tide of globalization that is two billion Chinese & Indians ? Yeah right.
“How about Canadian bacon (about 40% from memory) and Chinese vegetables (pretty much all frozen vege except peas)?”
So do you have to pay extra for the added pesticides and toxins in chinese vegetables or is that free? Maybe you should brush with that cheap chinese toothpaste and see where it gets you.
My point was that there are some things that NZ can produce cheaply and efficiently like diary products because we have a comparative advantage and the Chinese aren’t about to start a dairy industry are they?
These countries don’t have a comparative advantage at manufacturing – they just have poor workers who they shoot when they try to organise for a better deal. If your theory calls that ‘comparative advantage’ then I’d argue it’s bankrupt.
Tane
So why aren’t the workers rights based govt doing more? Why not give F&P some of the same massive tax incentives as offered to globally portable business like movie companies? A 10% flat tax rate for all employees perhaps? After all the workers would get a massive pay rise, the govt is still up on tax revenue and the company can post bigger profits and invest more capital in developing the business. Win win always beats a loose loose.
F&P are a significant exporter and innovator, a good example of a NZ brand which the govt could easily reduce the tax burden on to provide incentive for it to stay here.
Rather than subsidise them Burt – after all, where does it end? – I’d rather see the government do more to promote investment in skills and machinery and review our absurd monetary policy that punishes our exporters with high exchange rates due to its singular focus on inflation.
Labour’s making a start with the former, but I think you’ll need a major paradigm shift to see any action on the latter.
Tane
Tax incentives are a contract between the govt and the company, tariffs are a contract between the consumers and the govt. The significant difference is the govt negotiates with strategic companies to achieve shared gaols rather than make the consumers pay more for a sheltered workshop. Do we want any manufacturing business or do we not?
Tane, the advantage that China has is real whether or not you recognise it. It’s no use putting your head in the sand and calling it bankrupt. Is that seriously going to help FPA sell it’s washing machines in the US when a competing model in 50% cheaper due to cheap chinese labour?
And as for your claim that the right’s only answer is to cut NZer’s condition that is wrong. Key has repeatedly said that productivity is the solution to raising NZ standard of living which is something that Labour had three terms to address and we’re still sliding down the OECD.
Jay – you were doing real well until you got to productivity. Productivity is a ratio. That means if you produces 3000 units of output with 2000 units of input and then switch to a model that outputs only 300 units but does so with only 100 units of input your productivity increases. Hardly a decent measure.
We had that kind of productivity in the 90′s with wage cuts and layoffs. F&P will increase their productivity by paying poverty rates in Mexico. It is unsustainable. Sustainable productivity requires investment in skills and in plant and machinery. Key’s idea of productivity involves making us work harder for less. But we can’t.
Currently we are seeing poor productivity because business “investment” has been in buildings and fleet rather than in production capital.
To be honest I don’t think the answer lies with NZ businesses. They’re just too short-sighted and stupid to look after themselves. That’s why the govt has had to step in with the R and D fund – the useless free-market pricks were never going to invest in their futures – even as they drifted closer to their beloved market’s maw.
In my honest opinion I think we should let them hang themselves rather than provide them with corporate welfare. Like Roger Kerr says “the greatest freedom of the free market is the freedom to fail.” The only problem is they’ll drag us down with them…
Robinsod
The country has ridden on them as a business and tax payer and an employer and a flagship product for decades. Their roots are deeply established in protected markets and the changes began by the Labour govt in the 80′s has delivered this outcome. Now you denigrate them for protecting the best interests of the business and the shareholders. The give (tariffs) has gone (are almost completely gone) the tax take continues and they are expected to tough it out against cheaper competition?
If the company fails financially through staying in NZ and delivering large tax dividends to the govt and declining dividends to the shareholders the jobs are also gone.
We wanted movie business in NZ so we gave them significant tax incentives, do we not want manufacturing?
Burt – the tariffs on whiteware were actually extened by the FTA. The company has just had a direct tax cut of 3% and all sorts of R and D tax breaks. The Dunedin plant got a rates holiday and public money to help it invest in plant expansion, many of its workers have been provided with tax credits in the form of working for families.
What has changed over the last few years is the ownership of F & P. Far more of it is owned by overseas financial institutions whose primary interests are large short-term profits.
You just don’t get it so you? New Zealand is the second best country for ease of doing business – that’s according to the great neo-liberal institution that is the world-bank. This is international late-capitalism at work and it will finish us. A decent left government (and I don’t think Labour is quite that) may allow us to weather the storm a little better. National would scupper the ship and sell it as scrap.
Robinsod
Incase you didn’t notice the operation is leaving while Labour are in power and after 8-9 years of Labour govt. Trying to focus on what National might do is locking the stable door after horse has bolted. Get a grip man – the company is paying lots of tax in the form on PAYE. I know that’s actually paid by the workers but it will stop being paid by the workers once F&P stops paying them.
I hope they all find jobs, then only the manufacturing business and associated smaller businesses supplying the plant will be the only tax revenue lost through having a head in the sand approach about 30% taxation.
Robinsod I’m so glad you can write off NZ business with such gross generalisations.
It’s a pity that you toss around words like productivity and sustainability with what appears to be little understanding of how they fit together. Productivity is making more with less and making the right kinds goods that people demand. Your version sounds rather incoherent and biased toward cutting costs which I never advocated.
You seem to only focus on one part of the equation, what businesses pay their workers while ignoring that they are constrained by how much they can sell their products for. Look at the comparison between FP Appliance and FP Healthcare. Appliances is operating in an innovative but competitive market where their profit margins are dropping in their major market but Healthcare is fine because there is a lot less competition and the margins are great – there are no mass redundencies there (Which is why I brought shares in Healthcare instead of Appliances)
I found your idea that businesses are investing too much in building to be a little ignorant of reality. In wellington the market is driven by Labour expansion of the public sector. We’re seeing total returns (capital plus income) of over 20% for the past 3-4 years here for class A office space here. If Labour wasn’t so fanatically dedicated to raising the numbers of policy analysts (very productive aren’t they) then that investment would have flowed into productive capital.
If the govnt, both national and labour, were concerned about the long term growth then they would seriously start to fund basic research in universities better as well as govnt research institution. I don’t see that happening anytime soon irrespective of whoever wins the next election.
Irrigate, if you’re so keen to stop jobs going overseas, do you agree that the Government should do more to ensure local businesses are able to compete globally?
Businesses, particularly exporters, are being held back by Labour’s economic mismanagement. Economic inefficiency and rampant government expenditure have driven up inflation and interest rates for the last nine years, having the knock on effect of artificially inflating the strength of the Kiwi dollar.
Some of the more inflexible provisions of the ERA have held back labour productivity, driving up costs. Low after tax incomes – partly due to the Government’s record of high taxation – have driven many of our skilled workers to Australia or elsewhere, making it harder for businesses to employ the right people. The RMA has made it difficult for businesses to expand their manufacturing plants. Even Labour’s record of lumping more responsibilities on Local Government have contributed to the problem by driving up business rates and adding more costs on to producers. I think if you are serious about keeping jobs in New Zealand, you should start by supporting measures that will ease the pressure on companies like F & P.
Lonleyavenger – how many of the 23,000 jobs were created in the public service. F&P is a flagship NZ company, innovative, long term focussed, world class products. Whether things would have been different if interest rates were more realistic and the exchange rate wasn’t propped up to artificially high levels is now moot but swift action is now needed to foster a business environment that supports productive investment in order to create alternative jobs for these people.
Jay – it’s not hard to write off large chunks of business when you see how poor New Zealand’s management is. Your attempt to blame lack of productive capital investment on “bloated bureaucracy” is amusing though I must say! A classic example of the Kiwi business mind’s refusal to take personal responsibility.
Oh and Jay? Cullen’s moves to change universities from bums-on-seats businesses includes a greater focus on funding for research (though I would agree that it is not enough). It was National that instituted a funding model that incentivised high student numbers over research work.
Ted – you are wrong on so many basic facts I don’t know where to start.
a) Noone has a “right” to a job.
b) These job losses are a direct result of Labours policies. WFF, Interest Free Loans, extra regulations, Kyoto etc. All of these have pushed the cost of compliance up, and forced organisations to relocated overseas where they can do what they are actually supposed to, deliver a profit for their shareholders.
If businesses can’t make decent profits, then they can’t employ people. Its that simple.
You guys go on about the need for higher wages, we can’t have higher wages unless companies are making a higher return on investment. Kill that return, and you destroy all chance of a higher wage benifiting the employees.
MikeE – you seem a little slow so I’ll repeat myself – New Zealand is the second best country in the world for ease of doing business.
If anything Interest free loans and WFF have made it easier for NZ business by providing inducements for skilled and educated Kiwis to stay in NZ (rather than go overseas for higher wages) and have eased wage demands, respectively. “Extra regulations” means nothing and I suspect you’ve used the term because you can’t actually name one (hint: that’s because there aren’t any). Thailand has provided massive subsidies for F and P and I’ll guarantee Mexico has as well. They also offer a huge saving in terms of wages. Are you suggesting we should start doing the same? ‘Cos bro, if you want to work for $2 an hour then I suggest you head to Mexico and start doing so immediately.
Oh and you’re right. Nobody has a “right” to a job but they do have a right to a job that offers a proper wage and safe working conditions. Mexico doesn’t and that’s the only real reason F and P are heading over there (just ask their Californian workers).
Sod
Not wanting to rain on the parade of your fatuous argument with Mike but just because NZ has a rating from some agency as having an easy environment is as irrelevant to F&P’s decision to move this part of their manufacturing offshore as it would be to a foreign manufacturer considering manufacturing in NZ.
The decision F&P made was based simply on economics.
HS – Um bro, I know that. Mike was arguing it was over-regulation. I was simply pointing out that was false and that the World Bank (hardly just “some agency”) survey confirms that.
If you want to talk “fatuous” I suggest you consider reading comments properly before wasting your time making irrelevant comments…
Sod
Damn your eyes.
You were clearly implying that because of the ‘ease of doing business’ in NZ and your previous comments that F&P and their like should be remaining in NZ to manufacture and one should only buy “ethical” products (another rating agency perhaps).
Such bombast is non-sensical.
Oh. I thought my last par pretty much covered the fact that it was an economic decision.
And bro, “such bombast” is a pretty bombastic phrase in itself – you seem to be getting all self-referential on me you pomo mofo you.
Some of you will remember hearing the old manufacturing mantra that “a kiwi worker was worth 8 from a developing country”.
This is patently no longer true (if it ever was). I would be interested in others thoughts on the suggestion that the average worker in New Zealand has got lazier.
I know from first hand experience through spending time doing work with manufacturing centres throughout Asia that the guys on the floor are pretty amazing. The inventiveness, iniative and straight out hard work that they display is in stark contrast to their NZ counterparts.
Calling them “slave” labour as some have here is a bit disingenuous. They may be paid less but putting things in perspective they are alot better off than their parents were and are pretty happy about that on the whole.