Manufacturing crisis deepens

Written By: - Date published: 7:34 am, November 7th, 2012 - 81 comments
Categories: Economy, exports, jobs - Tags:

Yesterday, 60 highly paid jobs at Rakon where lost and we learned 5,700 manufacturing jobs had been lost in the past year. The reason, the high dollar made manufacturing here untenable. Steve Joyce shrugged his shoulders and said it was the company’s call to do what made it profitable. Of course, it’s his government’s failures that are making going overseas the most profitable decision for Kiwi manufacturers.

We now have the lowest number of manufacturing jobs since the current statistical series began in 1989.

The scary thing is that Rakon’s job losses aren’t actually that extraordinary. Since June 2008, an average of 40 manufacturing jobs a workday have been lost. 5 an hour, every workhour, for 51 months – 45,600 all up.

So, still no crisis in manufacturing?

(and don’t the facts nicely puncture the myth that manufacturing has been in long-term decline in New Zealand? – in fact, the number of manufacturing jobs was within 20,000 either side of 225,000 for two decades until four years ago when it began to collapse and the collapse is continuing still)

81 comments on “Manufacturing crisis deepens ”

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  1. Colonial Viper 1
    7 November 2012 at 7:52 am

    I can’t see any political force in NZ ready to reverse this quarter-century trend against global pressures and FTAs.

    25 years ago China had the manufacturing capability of producing cheap plastic goods and transister radios. Today they produce iPad Minis and BMWs.

    Even manufacturing giants like Japan and South Korea have had to relocate factories to China.

    Joyce is right of course: 8-10 people on Rakon’s board decided the fate of those NZ workers; the company Directors will get bonuses for destroying NZ employment.

    • karol 1.1
      7 November 2012 at 8:33 am

      CV: I can’t see any political force in NZ ready to reverse this quarter-century trend against global pressures and FTAs.
       
      Well David Cunliffe reckons that Labour will try by working closely with the hi-tech sector to help businesses to flourish, and create more jobs in NZ.  He says:
       

      “Labour has the bold, innovative ideas needed for a new economy. Labour’s research and development tax credits would be a direct advantage to Rakon and other companies in the sector. We are also considering an accelerated depreciation allowance to support investment in new technology

       
      But of course, the proof will be in the actual policy; in the details.

      • Colonial Viper 1.1.1
        7 November 2012 at 9:06 am

        I think David will do well in his objectives – he’s a very smart capable guy who understands the pressures on the sector. But consider the size of the problem – halting the loss of 40 manufacturing jobs per work day. Then reversing the trend to gain say 40 manufacturing jobs per work day.

        – High tech manufacturers need far less workers than traditional process fabrication eg. a large NZ factory like Fisher and Paykel or Cadburys might have 500 jobs. A large NZ software firm might have 50 staff.

        – There is a significant lag time: hiring decisions take months to make, then months more to fill the vacancy approved.

        – New companies and start ups take many years to reach any kind of employment scale. For the first few years of operation they are unlikely to take on more than 5-10 people.

        – The development of human capital required to launch, build and grow high tech enterprises takes decades and billions in investment. Of course it can be done but it will not shift employment numbers for years. Our history is that we train young people up and then immediately bleed them overseas.

        For instance, DTB feels that NZ can become a leading light in advanced CPU manufacturing. I have said to him, sorry there’s no chance you can out design ARM or out manufacture Intel or IBM, at least within the short term (say 10 years). That kind of capability has to be developed over many years, and if you wanted to do it faster can only be brought forwards with investments of tens or hundreds of millions.

        The consequence of this is that the most appropriate strategy for NZ high tech manufacturing is to fill niches, but those niches are tiny, tend to be very expensive to get into and don’t require many workers. Consider Rakon, who developed a niche of frequency control/oscillation componentry over many years; yet still only have a small staff. The closure of traditional manufacturing like a paper mill destroys far more jobs.

        The bottom line is that Cunliffe can succeed at all his strategies and we get nothing more than a temporary halt in the erosion we have seen for the last 25 years – the same as we can see in that graph in 1994 and 2002.

        • Draco T Bastard 1.1.1.1
          7 November 2012 at 10:33 am

          I have said to him, sorry there’s no chance you can out design ARM or out manufacture Intel or IBM, at least within the short term (say 10 years).

          And you’d be wrong. Takes a few years to build the actual factory which would put us on par with all other IC manufacturers. Over those years you take people who are interested in developing CPUs etc and you have them start to develop them (Remember, we already have electronics capability and training) by the time the factory is going we’ve started to develop a strong team and our present niche designers can now get the stuff made in NZ rather than sending it out to other manufacturers in other countries.

          On the side you have the universities doing R&D into improving the factories and training more people for working in the sector and doing research. Considering employment at other such facilities around the world I figure just one plant would hire between 10k and 15k people.

          That kind of capability has to be developed over many years, and if you wanted to do it faster can only be brought forwards with investments of tens or hundreds of millions.

          Try billions but if we go with a positive money supply the country can easily afford it. If there’s one thing that needs changing more than anything else is our monetary system. Without changing that then anyone’s plans for developing NZ’s economy/society is doomed to failure simply because the private banks will end up with all the benefit/wealth.

          • Colonial Viper 1.1.1.1.1
            7 November 2012 at 10:49 am

            You’re a smart guy DTB, and what you say looks so-so OK in theory, but, uh, no.

            Takes a few years to build the actual factory which would put us on par with all other IC manufacturers.

            Who you gonna get to do this for starters? Fletcher Building? And yes we could print money, but semicon fab equipment suppliers don’t accept NZD.

            EDIT – also having a building stuffed full of fab equipment doesnt put us on a par with anyone, just like having a fleet of stealth fighters sitting in sheds at Ohakea doesn’t put us on a par with the US Air Force.

            You need to think it through a little bit more.

            However, you could get a 90nm facility going for $200M-$300M if you were going for functional instead of bleeding edge.

            • Draco T Bastard 1.1.1.1.1.1
              7 November 2012 at 12:14 pm

              Who you gonna get to do this for starters?

              Whoever can do it. Preferably NZ based. Best option, IMO, would be to directly hire a few people who have built these things before and then use their knowledge to train up NZ tradespeople.

              And yes we could print money, but semicon fab equipment suppliers don’t accept NZD.

              They may be willing to do so or we can print the money and buy US$ or whatever currency the sellers want. That’s what the ForEx is for.

              also having a building stuffed full of fab equipment doesnt put us on a par with anyone,

              And that’s why we ramp up training and start building up an institutional knowledge base.

              However, you could get a 90nm facility going for $200M-$300M if you were going for functional instead of bleeding edge.

              Better to do bleeding edge as there would be more demand for it and it would still be able to do 90nm anyway (although why anyone would want 90nm is beyond me as it uses more power).

          • Paul Campbell 1.1.1.1.2
            8 November 2012 at 5:32 pm

            Sigh – wishful thinking if ever I heard it – I AM a CPU designer, who knows maybe the only person who’s made a living of it in NZ – spent a decade doing it in silicon valley, I don’t any more now that I’ve moved back to NZ – IMHO it’s a stupid business to get into without backing willing to throw away millions – most CPU building startups fail – not because they don’t produce cool innovative CPUs (we did) but because if you can’t find a market – thousands of programmers willing to give up the CPU architecture they know and love – you’ll probably fail. Even if you manage to avoid the patent mine fields it’s a crap shoot that you will probably lose.

            Remember IIT probably turns out 100 times more chip designers than all NZ’s universities – I’ve worked with them, they’re really good.

            Building fabs is a whole different business – expensive, environmentally risky and you’re in competition with people who have billions to spend and have already spent it ….. unless you have your own products to build you’ll have to tempt others to build their chips with you, that’s hard, probably you’ll have to do it by being the low cost leader, competing with new fabs in China – which means it’s going to be a robot fab, not many people working there.

            Every country, every town on the planet has a plan to become the next Silicon Valley – they can’t all do that – but just remember it’s not a new bright idea, it’s an idea that everyone has already had.

            That’s not to say we shouldn’t encourage our tech people to start companies in NZ, we should, we want to keep them rather than have them continue to hemorrhage overseas – but we shouldn’t put all our eggs in one tech basket – diversity is a real strength

            • Colonial Viper 1.1.1.1.2.1
              8 November 2012 at 6:16 pm

              Cheers mate.

            • Draco T Bastard 1.1.1.1.2.2
              8 November 2012 at 7:07 pm

              thousands of programmers willing to give up the CPU architecture they know and love

              There’s pretty much only one architecture to build to as far as CPUs go and that would be x86.

              Even if you manage to avoid the patent mine fields it’s a crap shoot that you will probably lose.

              Patents are an issue. I’d like to get rid of them as they’re getting in the way of innovation but that’s unlikely to happen before the complete collapse of the present system. That said, if you can get the instruction set going without hitting any patents and either as good as or better performance from the two main x86 producers it should be a go.

              Building fabs is a whole different business – expensive, environmentally risky and you’re in competition with people who have billions to spend and have already spent it ….. unless you have your own products to build you’ll have to tempt others to build their chips with you, that’s hard, probably you’ll have to do it by being the low cost leader, competing with new fabs in China – which means it’s going to be a robot fab, not many people working there.

              Agreed but I’ve been advocating as much automatics as possible all along and the country has billions to spend and won’t go bankrupt no matter what happens.

              As for own products, well, it’s a fab plant – use it to produce any and all IC’s that it can from any source. Anyone from small backyard designers to multi-national conglomerates.

              …but we shouldn’t put all our eggs in one tech basket – diversity is a real strength

              Which is what I’ve always been advocating.

              • Paul Campbell …
                8 November 2012 at 8:12 pm

                Actually one could argue at the moment that the x86 is on its way out and the ARM is in ascendancy – I wouldn’t start work on an x86 clone at this point – Intel and AMD have the patents in this area pretty sewn up – and they are known for having a lot of lawyers (to the point the bulk of my 20 patents have to do with ways to get around Intel’s x86 patents ….)

                You certainly need to find a way around Intel’s very basic patent on mixing segmentation and paging if you want to play in that space (though arguably that patent has prior art up the wazoo) besides the “simple instruction set” of the x86 is an order of magnitude more complex than the ARM or other riscs – making it go fast is not a simple matter.

                More importantly you don’t take a bunch of people who’ve never built a chip, put them in a room and expect them to turn out world class stuff – you certainly don’t bet a few million on them – you do hire a team of people who’ve done it before, you spend as much money on good people as you possibly can, and add a few new people to the mix – I’ve done enough Silicon valley startups to know what not to do 🙂 – and even then chances are you will fail – you’re taking a bet that 2-3 years from now people will want your bright idea, and that somewhere else in the world there aren’t 3 other teams doing the same thing

                These days fabs are targeted to particular processes – the process you use for dram is very different form what you use for a high end CPU (probably carefully tuned to get the mips) vs. a commodity standard cell part that’s designed for cheap. Taping out to say TSMC means that lots of different companies are sharing the same process and have to make compromises to fit while Intel will tune its CPU fab specially.

                I do see some muddied thinking in your argument here – you think a fab will employ a lot of people but you propose making a robot one to compete with China that doesn’t need any ….

                I’m being very negative here, mostly because I know how seductive this sort of thing is – NZ seems to suck up the “Think Big” meme every few years and never learn the lesson – just look at the stupid stadium they built here in Dunedin – a financial disaster that the rugby heads who created it refuse to do anything to help solve.

                I do think we should be designing chips in NZ, even with CPUs, I’d probably license a core though and build something more interesting around it there’s lots of opportunity to do neat stuff at the moment and building chips as a business is much more approachable than it was when I fell into it 20 years ago – but tape them out in Taiwan or Korea rather than building a fab here.

                But before you can do anything you need to do something about the NZ VC community who don’t really understand how to do this sort of thing – they expect you to provide a working thing, ready to ship – try and go out and ask for $3m for development of something big and adventurous and you just get blank faces – I know I’ve tried – bunch of wusses

                • Colonial Viper …
                  8 November 2012 at 8:37 pm

                  Now its funny you say these things. I think you are spot on every single count.

                  You certainly cannot expect an Intel/Micron 22nm process designed for homogenous NAND chips to be able to fabricate CPUs or APUs taped out for a Global Foundaries process.

                  And yeah, NZ VC’s and Angels are gutless shite. Seriously people, if you’re going to wait for Apple or TATA or the DoD to become a confirmed buyer of our fully working and shipping product before you decide to invest your million dollars, WHY THE FUCK WOULD WE STILL NEED YOU

                  • Draco T Bastard …
                    8 November 2012 at 9:07 pm

                    You certainly cannot expect an Intel/Micron 22nm process designed for homogenous NAND chips to be able to fabricate CPUs or APUs taped out for a Global Foundaries process.

                    Then we build better factories. It’ll take longer to get going but that’s how the cookie crumbles.

                    • Colonial Viper …
                      8 November 2012 at 10:19 pm

                      you’re asking a fish & chip shop to make croissants. Doesn’t work. Its not that a pastry bakery is any better than a takeaways…they just do very different things.

                • Draco T Bastard …
                  8 November 2012 at 9:04 pm

                  I’m being very negative here, mostly because I know how seductive this sort of thing is – NZ seems to suck up the “Think Big” meme every few years and never learn the lesson – just look at the stupid stadium they built here in Dunedin – a financial disaster that the rugby heads who created it refuse to do anything to help solve.

                  A rugby stadium isn’t a productive endeavour. That place should never have been built but the council bought the BS about how tourism would get a boost due to having international games there.

                  Despite me wanting to have NZ build a multi-billion dollar fab plant I’m not really in to Think Big meme.

                  But before you can do anything you need to do something about the NZ VC community who don’t really understand how to do this sort of thing – they expect you to provide a working thing, ready to ship – try and go out and ask for $3m for development of something big and adventurous and you just get blank faces – I know I’ve tried – bunch of wusses

                  Best thing that could be done about the VC community is to ignore them, make them realise exactly what they’re worth – nothing. Use government funding for R&D and build.

                  This whole process starts off with changing the financial system in NZ. Until that changes I wouldn’t even think of starting up an SME never mind building a multi-billion dollar IC fab unit capable of producing the latest and greatest CPUs as the private banks end up with all the benefit and the economy crashes again.

                  • Paul Campbell …
                    8 November 2012 at 9:49 pm

                    But spending billions of govt money on a single very risky endeavour is “think big” at its worst – remember 7 out of 10 of funded tech startups fail (that’s 7 out of the 10 that pass with the VCs, people spending their own money decide that it’s a bet worth taking). 1 succeeds and you make your huge profit (covering the losses for the other 7) and the rest sort of muddle along.

                    So don’t do one think big billion dollar startup, do 1000 million dollar startups, and don;t just give them govt funds to fritter away, you’ll just create a giant rort. Instead have them find matching money in the private sector (the VCs) and make sure that that money is real – having the VCs with some skin in the game is going to give you the due diligence that the government may not have the internal experience to provide

                    Even if you do this you need to handle the political side – if the govt (doesn’t matter what party it is) starts making investments with public money and most of them fail, remember you see the loses from the failures early long before you see the returns from that one success, then the opposition (again doesn’t matter which party) is going to pounce and make a big fuss about the waste of public money – I think that it’s just too tempting a target whoever does it.

                    I think there is a place for the government in this sort of economic development, if only because the VCs really don’t do it here, but we need 1000 little companies rather than one big one.

                    More importantly though people just have to take their bright idea and get of their back sides and just do it – I’m sitting in Bangalore India working with a supplier right now – from here I can see 3 buildings going up (and a 6 story boring block surrounded by buses with the ANZ logo on it … guess who answers the phones) – exposed rebar seems to be a motif here – people are just doing it, we need to too

                    • Colonial Viper …
                      8 November 2012 at 10:21 pm

                      🙂

                      Reminds me of something I read on ibanker

                    • Paul Campbell …
                      9 November 2012 at 12:24 am

                      BTW just for the record – my politics are largely lefty – but I’ve lived in this world for the past 30 odd years, so I speak the language and know where a lot of the bodies are buried – I’m sorry if I sound a bit like a neo-con I’m not – but we have to live (and work) in this world

                • lprent …
                  8 November 2012 at 10:57 pm

                  Anything that you can get a gcc compiler using the instruction set is all that is required. You can pretty much build the operating system and open source apps from there. As far as I’m concerned I just build the same code for x86 and ARM’s for everything Linux, Windows, Android or Mac – and looks like iOS eventually. The only point for a x86 architecture would be for windows. But the cost of any closed source system is prohibitive.

                  But I’d agree with Paul. You are better off doing hardware outside the fabs with a hell of a lot less expenditure. There is better value in designing and building specialized boards for vertical markets. When you can get the required fabricated chips for at most a few dollars each and build a vertical market board with a BOM of bugger all, then you find the mos of your costs as being writing code and PR.

                  And there are so many general purpose chips floating around this country already. And even if we had to grow our fuel, chips would be almost the perfect cargo. Mostly what we’re short of is good electronics and software engineers and investment capital to use them.

                  • Paul Campbell …
                    8 November 2012 at 11:14 pm

                    Yup – if you’re rolling your own CPU one of the first thing you do is hire a compiler team – you ought to have linux et al booting on your architectural simulator (and eventually your verilog/etc sim, and even in gate sim if you’re adventurous) long before you see silicon – a good compiler is as important as fast silicon

                    Mind you the first CPU startup I worked for, I wrote the first compiler while I wrote gates before we had enough funding to hire a compiler team – it was a DSP, gcc wasn’t appropriate

                    One of the great things at the moment is that the open source hardware movement is flowering, back when I started in this biz people use to wire wrap boards in their garages and start their own hardware companies, about the time PCI came around everything changed, you had to make your own chip to play and the home brew scene went into eclipse … things are changing – I’m involved in the Dunedin makerspace, and I’ve been teaching people how to make their own PCB boards – it’s helped because we have easy access to fabbing cheap PCBs in China $10 for 10 boards 5x5cm double sided/through holes, means if you’re learning you can afford to screw up and try again – we’ve made dozens of boards this year (I’ve probably done 15 different ones myself).

                    So it’s easy to design hardware here – but expensive to manufacture – we really don’t have the infrastructure or the market, you really have to be thinking exports from the very start

                    • lprent …
                      8 November 2012 at 11:49 pm

                      I’m highly unconcerned with hardware apart from assembling my own systems from boards and wiring the oddity cables. But if a hardware engineer gives me some working hardware and an instruction set then I’ll be able to extract the whatever grunt the device has in useful software. Currently ARM9, resistive touch, and colour frame buffers via a Debian kernel.

                      Haven’t done direct DSP’s for quite a while, just talked to them via drivers. Same with assemblers.

                      But it is all the same to me if it is close to hardware or insulated by intermediate libraries. c/c++ is flexible and highly portable and has a very long lifetime – and is my preferred tool because of it. I’d hate to think how many languages and libraries I’ve learnt and had to discard (or written for that matter)

                    • Draco T Bastard …
                      9 November 2012 at 11:15 am

                      So it’s easy to design hardware here – but expensive to manufacture – we really don’t have the infrastructure…

                      I think there is a place for the government in this sort of economic development, if only because the VCs really don’t do it here, but we need 1000 little companies rather than one big one.

                      Actually, the whole point of having the government build the fab plant (infrastructure) is so that we can have those thousand start ups. Building the fab plant isn’t risky as there will be demand for it one way or another.

                      BTW, our researchers in Canterbury Uni are world leaders in atomic level matter manipulation, i.e, the basis for atomic level 3d printing and Intel have proved that 3d transistors are better than the flat ones on the typical IC. But as things stand when our researchers develop that technology it’ll just get sold to some multi-national conglomerate and NZ will get to import the expensive chips rather than export them.

                    • Paul Campbell …
                      9 November 2012 at 1:27 pm

                      I was think more that we don’t have the infrastructure for manufacturing that say China has now – suppose I’m a small company – I have a great idea and I can afford to build say a container full of my bright idea for the US market – that’s not enough to build a factory – what you do now in China is rent space in a complex where you build a small temporary factory for a few weeks, you rent the gear you need, it’s there on site, put it in a space with other companies on either side, you hire experienced people to run it, you have the efficiencies of having a full production line in one place producing a finished tested packaged product, and tear it down when the container is full. Eventually as you grow you reach the point where your building enough stuff that the factory becomes permanent and your costs go down some more.

                      This is what you are competing against – temporary bespoke factories that pop into existence for a month or so. It’s also what any startup hardware companies in NZ need to be able to leverage.

                      I have high hopes for 3D printing – I’ve built a bunch of repraps – but I think there are real issues about leaving the world of photo lithography – you can expose an entire wafer through a mask – every atom gets dealt with in parallel – doing things with an electron beam (or atomic force stuff) where something is wandering over the surface is essentially a sequential process – as a process it doesn’t scale and is likely to cost more, or at least to take a long time to reach cost competitiveness with traditional processes.

                      BTW – stepping ahead – I see a future that’s post peak oil – where shipping bulky stuff around the world becomes too expensive for stuff to be made in China – this is why we have to keep our manufacturing base – we’ll stop shipping our forests overseas and see them coming back as furniture – instead we’ll have something like an online Ikea – where you order what you want customise it to fit your room, make the book case with shelves that fit your books, choose what colour you want it, and press the “Pay” button, a few days later a flat-pack kit arrives at your door – somewhere locally there’s a robot factory that makes stuff to spec, maybe even 3d prints in chipboard, paints it, packages it up and ships it – there wont be the jobs we had back when we made all this stuff ourselves but there will be more jobs here in NZ making stiff than there is now – and there’s a great opportunity making those factories, for export – right now.

        • xtasy 1.1.1.2
          7 November 2012 at 8:57 pm

          CV: It is a bit risky for NZ to get into high tech stuff like IT product development and production, and while there has been sound developments in the software sector, to cater for specific demands, I feel that NZ could and should start with developing food processing more.

          Look at Fonterra and others in the dairy sector. OK, there have been improvements, and they produce some good products now. I can now find some camemberts and brie cheeses here that are great, but others are total crap. There are niche market opportunities there.

          I see too little in development and production of high quality dairly products that cater for various Asian, Middle Eastern, the Russian and even European or Latin American markets.

          Maybe I do not see what goes on, but from my observation, there is too little happening. Much of what gets exported to China is baby formula and mere milk powder, out of which they make more there.

          There are hundreds of very interesting dairy products that are consumed in different cultures all over the world, but when I go to the supermarket, it is mainly the usual 4 types of blocks of cheese, two or three types of butter, yoghurt for Anglo Saxon tastes, but not much else.

          Different markets want their particular expectations met. So more can be done and produced, and if NZ would uphold environmental and other standards, not just produce quantities of the same of what we know, then there are quite a lot of opportunities for top quality products being made here, getting a NZ label and sticker on them, and selling well to many countries.

          Naturally some of that is done in viticulture, but there is also more that can be done with fruit, fish and logs. It must be quality of a higher types, not just bulk stuff, and that will pay incomes and justify jobs here too.

          But otherwise, more diversification in all directions is needed, and the home market can also be developed, so less imports and more locally made furniture and so forth are ideas too.

          • mike e 1.1.1.2.1
            7 November 2012 at 9:11 pm

            our speciality cheeses taste so bland fonterra need to spend a lot more on product development even the smaller producers aren,t going to attract foreign consumers!

            • xtasy 1.1.1.2.1.1
              8 November 2012 at 12:16 am

              You sem to know what I am talking about. Good start, but much, much work to do, for Fonterra and all the others in the business. It would help to get some overseas experts hired, but they do not want to pay for it, do they? Dumb, really, dumb, dumb, dumb, sadly what I come across so much in NZ. This is a country condemned to blossom, if it were not for the ignorant, like most that presently run the show!

          • Draco T Bastard 1.1.1.2.2
            7 November 2012 at 9:30 pm

            It is a bit risky for NZ to get into high tech stuff like IT product development and production, and while there has been sound developments in the software sector, to cater for specific demands, I feel that NZ could and should start with developing food processing more.

            It isn’t and do both.

            To be more precise, it’s not risky if the government funds the IT development through the printing of money. It becomes risky if we leave it to the private sector and allowing the private banks to continue printing the money.

            • xtasy 1.1.1.2.2.1
              8 November 2012 at 12:06 am

              INTERESTING, but must study more!

              • Draco T Bastard …
                8 November 2012 at 8:43 am

                Chicago Plan Revisited
                That’s an IMF paper into the idea of the country printing the money and banks having to work on 100% reserve. The plan was first suggested in the 1930s but no government took it up which is one of the reasons why the global economy is presently scraping along rock bottom.

            • xtasy 1.1.1.2.2.2
              8 November 2012 at 12:12 am

              I tend to combine a ‘conservative” approach with a “revolutionary” mindset, which may sound bizarre, but I am always cautious, analytical, careful and take it from there. I come across a bit “shoot from the hip” at times, and on some topics that is intentional, to stir up and “wake up”.

              But otherwise, I am a carefully thinking, planning and thorough person, fond of what Scandinavians, Dutch and Germans do. Their cultures and societies speak for themselves. I also value highly the Chinese and Japanese and others. It is smartness, while staying open, fair and reasonable, that is the only way to progress.

              But our government wants more dumbness, ignorance and easy ruling.

              So they are an affront to me, I am sure to you also.

              Let us take it further from here, it can only “progress”. Einstein is one human being I will always hold in highest regards.

              Xtasy

              • Colonial Viper …
                8 November 2012 at 6:21 pm

                CV: It is a bit risky for NZ to get into high tech stuff like IT product development and production, and while there has been sound developments in the software sector, to cater for specific demands, I feel that NZ could and should start with developing food processing more.

                I agree that we are still stuck in a low value, commodity mindset re: our primary production. That needs to change.

                However, I also agree with DTB – we can do both. High tech innovators can start small and fail small, reducing the risk. However, $100,000 of seed funding can also be all that is needed to create what eventually becomes a $100M industry. Well worth taking a few risks and even if companies go under on the way you are learning a lot and developing a lot of new tech as you do it.

  2. AwakeWhileSleeping 2
    7 November 2012 at 8:34 am

    It’s really a question of how many more jobs THIS month? Only going to get worse with no end in sight.

  3. One Tāne Huna 3
    7 November 2012 at 8:55 am

    and don’t the facts nicely puncture the myth that manufacturing has been in long-term decline in New Zealand? – in fact, the number of manufacturing jobs was within 20,000 either side of 225,000 for two decades until four years ago when it began to collapse and the collapse is continuing still

    Sorry, that just looks like spin to me. My immediate reaction to the graph was that the underlying (23 year) trend is down. Each peak is lower than the last, and population increased in the meantime.

    Drawing long-term conclusions from such a short term data set (where economic cycles are around about the same order of magnitude as the time scale) is a mistake, as Climatology surely teaches us.

    It would be useful to see manufacturing jobs per capita, too 🙂

    • Lightly 3.1
      7 November 2012 at 10:53 am

      you can get the numbers yourself here – stats.govt.nz/infoshare. Run a model and you’ll see that the trend from 1989 to 2008 was flat. Yep, the peaks are slightly lower, but the troughs are higher.

      But, yes, obviously the share of the workforce in manufacturing has been declining – which isn’t the same thing as saying that manufacturing is inevitably dying.

  4. muzza 4
    7 November 2012 at 9:01 am

    With Rakon moving the jobs out, does that signal the end of NZ’s involvement in producing WMD components, nuclear detonators and so on?

    I think its safe to say that unless Cunliffe fancies a shortish existence, he will not be rocking too many boats with policy. Its not like he wasn’t part of the Clarke govt, thus sitting on a pile of crud which would most likely be used against him, which is of course why we see those we get, promoted to the positions they are!

  5. xtasy 5
    7 November 2012 at 9:38 am

    Who gives a damn about jobs in NZ? Not the government, and many NZers also just “adjust” and move on, even if that means leaving this place.

    There is not much of a future here anyway, that is the view of very, very many, increasing in numbers day by day.

    It is all perfectly geared and ideally designed for: The perfect, great EXIT STRATEGY.

    High real estate and house prices, a high value NZ dollar, at the same time comparatively low wages, remaining manufacturing increasingly moving off-shore, high living costs for basic goods and utility costs, and no end to this in sight.

    The winners are: Importers, housing speculators, landlords, banks continuing to lend to prospective home owners, much of “business” generally, as they will always find ways to “adjust” somehow.

    As a high dollar makes imports cheaper, Kiwis used to very high prices generally will be “happy” when prices are just a tiny fraction lower, this allowing nice margins and profits for the very importers and retailers working with them.

    A salesperson will not be affected too much, as she or he can sell anything, whether imported or made here. While Fonterra and other manufacturers focus on low value added products, the standard, limited, simple set of products they make otherwise for consumption here and in Australia, I also see a growing trend of special food imports to cater for the growing various Asian and other migrant communities.

    But well, all this described above is just ideal for the prospective external migrant as well. High house prices mean a good prospect to sell the family home, to get the cash needed to set up new in Australia or elsewhere. The high NZ dollar is ideal for taking overseas, so more purchasing power to set up across the ditch or elsewhere, I suppose. Unemployed and low paid workers that cannot afford to leave, will be facing stiff new welfare rules, will be forced to compete for low paid jobs (see new youth rates to be re-introduced), will be housed in cheap scate little boxes or to share over-crowded, too expensive existing housing, just to ensure the ones in the “middle ground” to continue affording their life-style.

    The break up of NZ society is taking pace, great prospects for more op shops, salvation army food banks, budget advisors, advocates having to help people unable to cope.

    What a wonderful place to come to: Godzone, was that not the name it was given?

    • mike e 5.1
      7 November 2012 at 9:51 am

      Now we have a new reserve bank governor who is a conservative operator!
      A National government with its head in the sand!
      173,000 Jobs where the fuck are they.
      Nationals solution bene bash wow!

  6. Wayne 6
    7 November 2012 at 10:00 am

    Actually, your graph does not show a crisis, but rather a gradual decline over a long period of time. There is a bit more of a reduction in the last 2 quarters, after an increase in the 2011Q4. The major decline in the last 15 years was the sharp decline from 2007Q4 to 2009Q1, which was the full storm of the global crisis.

    Even during the period 2004 to 2007 when the global economy was doing well and New Zealand Govt was racking up surpluses there was a decline in manufacturing jobs, but there was growth from 1999 to 2003 and the Govt boasted of low unemployment.

    However, unemployment is not getting worse – in fact total employment is increasing. So there must be a realingment of jobs, presumably to the service sector, non manufacturing tech and Christchurch reconstruction. For instance all the tech work done in the data, film and video sector would not count as manufacturing in the traditional sense.

    • Tracey 6.1
      7 November 2012 at 10:01 am

      Thanks Wayne, that’s a relief.

      • Colonial Viper 6.1.1
        7 November 2012 at 10:07 am

        Not too much of a relief. Comparable stats in the US show that yes employment is increasing there again – but $20/hr part time full time manufacturing jobs are effectively being replaced by casual $8/hr fast food service jobs.

        So even when it looks like job creation is going on…not all jobs are created equal, far from it.

    • Lightly 6.2
      7 November 2012 at 10:59 am

      again, run the numbers yourself.

      the trend from 1989 to 2008 is flat the trendline at -2 jobs per quarter. Since the middle of 2008, the trend has been -1814 jobs per quarter. The past year, it’s been -780 jobs per quarter.

    • mike e 6.3
      7 November 2012 at 9:49 pm

      Wayne if you look at the value of the New Zealand dollar against the US dollar over those years you will find a direct correlation albeit a 6 month delay!
      The Reserve bank Act needs to be changed along with a wide ranging capital gains tax including the family home off set by income tax reductions for the productive sector!
      As well as a small FTT on currency trades which woulds discourage speculation on our currency!

  7. Tracey 7
    7 November 2012 at 10:00 am

    dismantled democratic boards to ensure water to farmers who chose to run dairy herds on arid lands but nothing to support hi-tech companies. Didn’t they abloish the R & D tax deduction as one of the first things they changed in 2008/2009.

    Maybe we need another job summit. To “do” not “talk” again?

    • Colonial Viper 7.1
      7 November 2012 at 10:10 am

      No jobs submit, we know what the problems are, just get to it. And be willing to spend $5B-$6B per year on it over the next 10 years.

  8. tsmithfield 8
    7 November 2012 at 10:18 am

    The big problem is that we have no chance of competing against low cost labour in the likes of China. China is perfectly set up for mass production, and we can’t compete against that. A cursory look on the labels of appliances in most homes that indicate “made in China” would prove my point.

    Where we can compete is in shorter run, specialised products, and in products where the cost of freighting them here would be prohibitive.

    • Colonial Viper 8.1
      7 November 2012 at 10:24 am

      I agree with TS here. 😯

      Creative product design, software, firmware and prototyping we can also do. We’d have to focus on niche, customisable, very high quality products. There is no reason why we cant pull off an Apple – have thousands of locally based well paid R&D, design and creative jobs, but have a manufacturing centre like China do the bulk of the production.

      • Jim Nald 8.1.1
        7 November 2012 at 10:39 am

        Quite frankly, it is difficult to see the current lot in government pull off real changes. It would be easier to see another one of their press releases denying there is a crisis and to see them trying to pull off another accommodation allowance claim (and changing the family trust deed).

        • Tracey 8.1.1.1
          7 November 2012 at 4:33 pm

          Unless labour decides to become something more than a Nat government in different clothes their election to government gives me no comfort at all

          • Colonial Viper 8.1.1.1.1
            7 November 2012 at 9:35 pm

            Unless labour decides to become something much more than a Nat government in different clothes

            😉

    • mike e 8.2
      7 November 2012 at 10:49 am

      China is playing a smarter game than us we are giving in to easily we are not shifting fast enough to creative jobs because National have undermined funding for research and development where funding needs to be consistent over a log period of time to succeed.
      Looking after existing jobs is a start this keeps tax revenue up as well as allowing those companies a longer transformation period.
      The Chinese know this and run their currency and their companies to maximise their countries future by sacrificing profit in manufacturing as well as cheap govt loans and lower exchange rates something we could learn from but this govt wants to play by the rules when no one else does!

    • Draco T Bastard 8.3
      7 November 2012 at 10:50 am

      The big problem is that we have no chance of competing against low cost labour in the likes of China.

      Then we don’t. We develop and build factories that don’t require as many people. I was surprised a month or two back with a video of electronics manufacture in China where the production line was a conveyor belt with people sitting to either side manually putting in place the components. One component per person. The type of work perfectly suited to robots who would be able to do it faster and better.

      • Colonial Viper 8.3.1
        7 November 2012 at 11:16 am

        Robots dont scale in production capacity like people do. Put 2x more on Aug-Jan no breaks no holidays, then fire most of them after the Christmas/back to school rush.

        Keep the assembly steps menial and simple so staff training is negligible, hire and fire as you wish. The Chinese have no concept of humane working conditions.

        • Draco T Bastard 8.3.1.1
          7 November 2012 at 12:19 pm

          Robots dont scale in production capacity like people do.

          Which is why factories are generally built over-spec. They already have the necessary slack capable of covering the occasional spike in demand.

          • Colonial Viper 8.3.1.1.1
            7 November 2012 at 6:42 pm

            You do realise that it is a Communist Party objective to maximise employment in China for social and political stability right? The Chinese are actually sensible about this shit.

            • Draco T Bastard 8.3.1.1.1.1
              7 November 2012 at 7:22 pm

              Yeah but it’s not something we need to do.

              • Colonial Viper …
                7 November 2012 at 7:37 pm

                Well, full employment (paid and unpaid) is something we definitely need to do.

                • Draco T Bastard …
                  7 November 2012 at 9:37 pm

                  We’re running pretty close that already thus having low tech factories that use lots of people at low wages isn’t what we need. We need the opposite, high tech factories that employ very few at reasonable wages. This will bring about the diversification that will make for a strong and resilient economy and society.

                  • Colonial Viper …
                    8 November 2012 at 8:43 pm

                    We’re running pretty close to full employment currently? Uh, that’s not what the figures say.

    • Tracey 8.4
      7 November 2012 at 4:32 pm

      Please stop making sense.

  9. tsmithfield 9
    7 November 2012 at 12:21 pm

    My company is heavily involved in the area of automation. Automating processes is a way to be more competitive with the likes of China. However, that necessarilly means less jobs. These days, even in factories, there aren’t that many “unskilled” jobs. Most machines are highly technical and require quite a lot of skill and nouse to operate them. So, automation means far fewer unskilled workers, and less, but more skilled people to operate the machines.

    In China, there probably isn’t the same drive towards automation because the cost of labour is so low.

    The other thing that is affecting manufacturing at the moment is the slow-down in China. They seem to have had enough of building ghost cities, so their need for commodities is reducing. Hence, the slow down of mining in Australia, and issues in NZ such as the Bluff smelter and the Spring Creek mine.

    At least in New Zealand we have a strong emphasis on producing food. With an increasing world population, and the basic need for people to eat, we are unlikely to be so affected by a drop in prices in hard commodities.

    • Draco T Bastard 9.1
      7 November 2012 at 12:44 pm

      My company is heavily involved in the area of automation. Automating processes is a way to be more competitive with the likes of China. However, that necessarilly means less jobs. These days, even in factories, there aren’t that many “unskilled” jobs. Most machines are highly technical and require quite a lot of skill and nouse to operate them. So, automation means far fewer unskilled workers, and less, but more skilled people to operate the machines.

      Yep. Which is one of the reasons why I think penal rates are needed and a plan to start driving the working week down from the 40+ hours that it is today to around about 20. The extra time can be taken up however the people want but with encouragement to arts, crafts and R&D.

      The other thing that is affecting manufacturing at the moment is the slow-down in China. They seem to have had enough of building ghost cities, so their need for commodities is reducing.

      /facepalm

      China’s slow-down is due to the fact that they’re not exporting as much to wealthy nations as they were due to the GFC and the fact that the average Chinese person can’t actually afford to buy what China makes.

      At least in New Zealand we have a strong emphasis on producing food.

      And thus remaining poor and uncultured.

      • Colonial Viper 9.1.1
        7 November 2012 at 6:40 pm

        DTB food is the new gold of the 21st century, and productive farmland the new gold mines of the 21st century.

        This will become very clear in the next 20 years.

        • Draco T Bastard 9.1.1.1
          7 November 2012 at 7:24 pm

          Most places have enough such productive farmland and once the population starts falling (as it will do once Peak Oil hits) they’ll be able to feed themselves.

          • Colonial Viper 9.1.1.1.1
            7 November 2012 at 7:35 pm

            Population crash won’t happen for 40-50 years. The golden time for NZ primary produce (and yes we do need to add maximum value to it as premium products) is going to lie just after that point – during the crisis.

            • Draco T Bastard 9.1.1.1.1.1
              7 November 2012 at 9:47 pm

              IMO, once oil production goes into terminal decline in the next few years and produced food starts getting very hard to deliver halfway around the world is when we’ll see the population start to decline. It won’t be a crash at that point but I don’t think it will reach the 9 billion forecast. I think the actual crash will start to happen in about 20 to 40 years – about 10 to 20 years after the start of the decline.

              Of course, this is all speculation anyway.

    • mike e 9.2
      7 November 2012 at 12:50 pm

      So Tsm we need to add value to our commodities!
      We have known this since time immemorial but we still haven’t learn’t when this govt lets our best researchers go to a third world country like South Africa just to balance the books is why we are always playing catch up all that knowledge can’t be bought back after its been gouged by a short sighted bean counting Govt.
      Change can be good but it must be done very carefully in research these days as their is no low hanging fruit left any more ,most developed countries are spending far more on research and development than us and for this govt to chop and our focus on research and development has been and will be a disaster for some time to come!
      Thank you Stephen Joyce and John Carter for being so short sighted for political expediency.

  10. PlanetOrphan 10
    7 November 2012 at 6:31 pm

    Idea …..

    We designate every blade of grass in Aoteoroa an “Asset” and a nominal value of 10 cents.

    Float our new commodity and print a “Trillion” dollars Underwritten by grass.

    Invest the trillion in State Housing, State Factories (High end tech of course) by employing people to build them.

    In the event of another GFC we just mow our lawns and post grass to the Bankers M8’s, don’t worry it’ll grow back M8!

    We could also buy back F&P and any other company we desire.

    Go on …. call me PlanetCrazy People!

    The Government does still own some land doesn’t it?

    If everyone demands that money be commodity backed …..

    • Colonial Viper 10.1
      7 November 2012 at 6:38 pm

      The Government owns about 40% of NZ’s land area.

      • PlanetOrphan 10.1.1
        7 November 2012 at 6:40 pm

        Freakin rich M8! 😈

        • Colonial Viper 10.1.1.1
          7 November 2012 at 6:46 pm

          Ahhhh yes…and simple wealth and corporate oriented taxes will raise a further $5B a year… 😈

          • PlanetOrphan 10.1.1.1.1
            7 November 2012 at 6:59 pm

            No point waistin it M8!
            Keep it NZ green M8!

            They’d have too make it illegal too sell though , aye M8! 😈

            Internationaly enforced no doubt, bloody “grassers” M8!

            Finally something “Mum and Dad” investors can invest in.

            Gauranteed Results M8!

            • Colonial Viper 10.1.1.1.1.1
              7 November 2012 at 7:33 pm

              Keep it NZ green M8!

              I hear that Colorado and Washington State have just legalised marijuana.

              It is quite possible that their state governments are going to reap a financial windfall from selling marijuana through official publicly owned dispensaries or licence outlets.

    • mike e 10.2
      7 November 2012 at 9:33 pm

      Sounds like planet key Golf courses no toilets plenty of batshit red tea shirts

      • PlanetOrphan 10.2.1
        8 November 2012 at 6:30 pm

        Got something against a commodity rich Aoteoroa M8?

        I like red and Batshit’s good for the skin M8!

        Like I’ve said before I aint no good a golf, the ball always ends up behind me M8!

        Apparently it’s because I hit the damn thing too hard M8!

  11. PlanetOrphan 11
    8 November 2012 at 6:34 pm

    See that wireless charger on TV? , cool.
    John Key should stick his head in one and charge up his “Brain PaceMaker”

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