Joyce floundering on manufacturing

Written By: - Date published: 11:27 am, September 11th, 2012 - 15 comments
Categories: australian politics, Economy, employment, exports, spin - Tags:

Talk fast, shoot the messenger, and spin like a top. That’s Joyce’s style, trying to defend the indefensible; National’s neglect of New Zealand’s manufacturing industry.

He tried it on the Nation a couple of weeks ago, and again on Morning Report this morning. Amidst all the gabble, Joyce attacked John Whitaker, CEO of the highly respected and long-established Dunedin company Farra Engineering.

Whitaker said:

The government is not looking after manufacturers, and should take a leaf out of Australia’s approach. The New Zealand government is so hell-bent on being squeaky clean so they can enter into trade agreements with anyone and everyone so they actually neglect their own, where every other country has a lot more importance placed on their manufacturing industry and go out of their way to support them.

That criticism obviously stung – in true Joyce style, his response was to get personal and   shoot the messenger:

With the greatest respect to that gentleman in Dunedin he really does need to go and have a look around – most of the manufacturing organisations I talk to –he hasn’t been hit hard by it  — yet  — New Zealand firms are getting more competitive –to suggest that is not happening really is a little bit ungracious from one of two in the industry.

One or two? It’s Joyce that needs to go and have a look around. They’re all saying that government is not doing enough for manufacturing industry. Whitaker’s right, and they’ve been saying it for years. Australia does a lot more for its own industry, as I know from the time I was on the Industrial Supplies Office management committee under the last National government who had no  interest in using government purchasing to support New Zealand Industry. And it was this National government that refused to insist that KiwiRail build railway wagons at Dunedin’s Hillside workshops, which would have kept jobs and a manufacturing industry cluster in Dunedin.

So on to the spin. Manufacturing went up in the last quarter, says Joyce. That’s not what the latest Performance of Manufacturing Index, produced by BusinessNZ says.

The BNZ-BusinessNZ seasonally adjusted PMI for July stood at 49.4, which was a further 0.6 points down from June and again representative of the sector in a holding pattern. Compared with previous July results, the 2012 value was the lowest since 2008.

Joyce also banged on about how Norske Skog were going to invest in biofuels. David Cunliffe blew a hole in that line – National abandoned Labour’s support for biofuels in 2009.

All Joyce can say is that New Zealand firms have to get more competitive. But in the big wide world, the first thing New Zealand needs to do to compete is to look after its own. That’s where Joyce and National miss the mark by a mile.

15 comments on “Joyce floundering on manufacturing ”

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  1. marsman 1
    11 September 2012 at 12:00 pm

    Wonder what a cost-benefit analysis of Steven Joyce would show?

  2. Carol 2
    11 September 2012 at 1:08 pm

    I don’t know that this is exactly counted as “manufacturing”… but how many more times are we to see this happen?

    Kiwi initiative, starts up small successful business, and once it’s become successful, it’s taken over by some big foreign corporation?

    http://www.stuff.co.nz/business/small-business/7652788/US-giant-snaps-up-Wellington-software-firm

    • Bored 2.1
      11 September 2012 at 2:18 pm

      It is taken over because any business owner with half a brain has an “exit strategy” in mind when they start a business….and it is usually a multiplier of profitability or a similar measure. Owners are not charities, they want to sell to save them time and effort actually having to earn what others will pay for the business.

      • Carol 2.1.1
        12 September 2012 at 9:35 am

        It’s not the owner selling that I mind, Bored, but the fact that it is foreign corporates that keep taking over these businesses.

  3. tracey 3
    11 September 2012 at 1:17 pm

    Thanks for the title of the thread, I can’t get that awful image out of my head!!!!

  4. Bored 4
    11 September 2012 at 2:12 pm

    Joyce knows jack sh*t about economics: he is however a very sharp businessman. Unfortunately he has not quite worked out the difference. Business people generally act similarly on all issues: its revenue, costs, margin etc. That’s fine except they do this regardless of the environment they are in: it is a single overarching model. Economists by contrast can suggest how to adjust the business environment to get real outcomes. If Joyce and his advisors were astute they might have noticed that the current economic model is broken and instituted a different form. Like what?

    Lets look at what I heard re the Kawerau shut down…..paper was imported from Asia to print the new Herald…wow that’s clever. So add the cost of benefits for the displaced workers, the cost of redundancies, the loss of tax income, the capital destruction etc etc to the cost of paper from Asia….what is the real cost to NZ? There is a very real logic to import controls: no capitalist economy industrialised without import protection. No industrialised economy stayed competitive with new comers without import controls….

    Whether import controls are good is another issue: what is driving the latest iteration of laissez faire is the mobility of capital. The logic of it is that capital will go where the best returns are. And f**k the locals from the new “rust belt”.

    • Draco T Bastard 4.2
      12 September 2012 at 12:03 am

      Economists by contrast can suggest how to adjust the business environment to get real outcomes.

      Considering that most of them wouldn’t know what an economy was if they tripped over one I wouldn’t be too sure about that.

    • Kevin84 4.3
      12 September 2012 at 7:20 pm

      Agreed, we need Tariffs. We need them on a more local level though, as you have shown no industrialised state has developed without tariffs, so I think that if we allowed the councils around Northland and the Eastern North Island to implement their own ones (within in NZ), then I think we can get some real development there. Wouldn’t it be great if Fisher & Paykel could build a plant in Kaitaia, and Northland communities could stop the people of Northland importing those cheap Fisher & Paykel appliances from Thailand or Dunedin that under cut Northland jobs. Likewise for the eastern Bay of Plenty and the East Cape.

      I find it distressing when people go and buy a cheaper product on TradeMe from another province and import into their local province – and in doing so hurting local jobs. I cannot believe that some Waikato firms will outsource their IT projects to foreign Auckland, Wellington and Canterbury firms. What happened to local pride and community social justice. This Free Trade mantra of the past 30 years has been a disaster. We need internal tariffs NOW! We need local councils to subsidise local business now!

  5. Ed 5
    11 September 2012 at 2:16 pm

    The Radio NZ links may need to be amended

  6. Tiresias 6
    11 September 2012 at 5:56 pm

    I’ve taken a lot of stick on this site for my declaration that I intend buying as many Meridian et al shares as I can afford if and when they become available (all things being equal), but I’ve also put a lot of money into Windflow, a New Zealand company which has developed a world-leading wind turbine including world-leading wood-laminated blades made by techniques developed by Auckland boat-builders, and am watching that investment in NZ ingenuity, technology and jobs going down the tubes because the Government won’t lift a finger to encourage or support it. So forgive me if I won’t invest in any more NZ companies that don’t have a rock-solid market share – a’la power generators – and will look to put my more speculative investment funds off-shore where Governments encourage and nurture such things.

    If they’re not peddling a unique product in demand (and can fend off the inevitable foreign take-over) the only way New Zealand companies facing a high dollar and high transportation costs can ‘compete’ is to cut costs, and that means cut jobs and/or wages.

  7. captain hook 7
    11 September 2012 at 7:52 pm

    oh well.
    we can all sit around now downloading illegal movies on ufb.

  8. Carol 8
    12 September 2012 at 9:38 am

    And Cunliffe supports, Mike Smith’s post here, and is critical of Joyce’s ad hominem against John Whitaker:

    http://blog.labour.org.nz/2012/09/11/playing-the-ball-not-the-man/

    So how did Steven Joyce respond? As Mike Smith has noted at The Standard, Joyce said:

    … [John Whitaker] really does need to go and have a look around – most of the manufacturing organisations I talk to –he hasn’t been hit hard by it — yet — New Zealand firms are getting more competitive –to suggest that is not happening really is a little bit ungracious.

    “Ungracious”? Really?

    And how arrogant is it to suggest that this successful exporter can’t see the world for himself and form his own views?

  9. Poission 9
    12 September 2012 at 10:03 am

    QA Yesterday.

    http://www.scoop.co.nz/stories/PA1209/S00155/questions-and-answers-september-11.htm

    . Rt Hon WINSTON PETERS (Leader—NZ First) to the Minister of Finance: Does he agree with the New Zealand Manufacturers and Exporters Association, the International Monetary Fund, and the Reserve Bank of New Zealand that the New Zealand dollar is overvalued?
    Hon BILL ENGLISH (Minister of Finance): We do agree with their level of discomfort about the high level of the New Zealand dollar, but we certainly do not agree with the view held by the Manufacturers and Exporters Association that the New Zealand dollar should be devalued to US60c. This would amount to around a 25 percent devaluation, implying an exchange rate against the Australian dollar of just 58c. That means a drop in income and living standards across the board in New Zealand of about 20 percent. If they think there is a gap between us and Australia now, then following the Manufacturers and Exporters Association call for a 25 percent devaluation, that gap would widen into a chasm and thousands of New Zealanders would be leaving for Australia because of its much higher standard of living

    Rt Hon Winston Peters: Does he agree with John Walley, Chief Executive Officer of the New Zealand Manufacturers and Exporters Association, that the overvalued dollar has cost the exports sector up to $10 billion over the past 3½ years?

    Hon BILL ENGLISH: No, I do not agree with that. We do agree that the high level of the exchange rate does put a lot of pressure on exporters. The Government is taking every measure it can to exercise its indirect influence on the exchange rate to help our exporters be more competitive. But we do not agree with the view of New Zealand First, the Manufacturers and Exporters Association, and the Labour Party that the New Zealand dollar should be significantly devalued. That would cut the incomes and the standard of living of all New Zealander

    and

    Hon STEVEN JOYCE: Well, I am not sure about new ideas so much as reheated, failed, old ideas from around 40 years ago. I have seen a proposal from a Mr Walley of the New Zealand Manufacturers and Exporters Association to somehow bet against the world markets with taxpayers’ funds and seek to devalue the New Zealand dollar by roughly 25 percent. That would reduce the purchasing power of every New Zealander by around 25 percent. It would increase food prices, fuel prices, and the cost of living by around the same margin, and massively widen the income gap with Australia as the result of a 58c exchange rate against the Australian dollar. If the members of the Opposition want to sign up to that prescription, then it is over to them, but I cannot think of a more destructive economic policy for this country

    The obvious take home message is the introduction of a bogeyman,that a lower exchange rate will fuel inflation,costs and the standard of living ie a focus on the negative attributes.

    The foremost problem in the exchange rate is the high levels in short term flows the so called cash and carry trade which takes advantage of the high nz overnight rates.

    To remove the short term flows we need to increase the Witholding (WHT) tax on short term investments and decrease the WHT on long investments by a step down cascade.

    A number of countries such as Switzerland have introduced this to reduce currency appreciation.( which has the interesting property of increasing the tax flow)

    A sustainable trading range in the usd of 70-72c is sustainable,and would return investment to the productive sector.