NZ dollar blamed for 'manufacturing crisis'

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NZ dollar blamed for 'manufacturing crisis'

3News NZ

The New Zealand dollar is once again being blamed for large scale job losses in the manufacturing sector.

Labour and the Greens say the Government has its head in the sand but one economist says the exchange rate isn't responsible.

Workers were back on site at Summit Wool spinners today, but not for long. More than 150 of its 200 staff are about to lose their jobs.

This just four days after the opposition MPs started their own inquiry into what they call a "manufacturing crisis". The Government dismissed the inquiry as "scaremongering."

“It shows the Government is completely out of touch with the real economy,” Green Party co-leader Russel Norman says.

“We believe the NZ dollar is over inflated and our manufacturers aren't able to compete against other countries,” Labour leader David Shearer says.

David Bennett sees that first hand, his company Pacific Helmets makes the biggest selection of helmets in Australasia. He's watched the climb 25 percent against the greenback since he started up.

“If the exchange rate gets worse, as it's projected to be, the crisis is going to get extremely serious.”

But Kirdan Lee from the New Zealand Institute of Economic Research says it's not the dollar, rather Asian economies, which are to blame.

In the past 20 years, he says Asia's taken over as a much cheaper manufacturing base.

“Can you blame the dollar? No, the declines you see in manufacturing [are] actually a continuation of a 20 year story. So it's not about the dollar.”

Mr Shearer says that's rubbish - and the dollar is overvalued.

“The Reserve Bank says that, Treasury says that, manufacturers say that - what do you have to do for the Government to be hands-on?”

Our biggest trading partner is actually Australia, and the exchange rate is currently good for business there.

“That's saving the bacon for a lot of us at the present time,” Mr Bennett from Pacific Helmets says.

But Mr Shearer points out that New Zealand exports to many other countries.

“It's good if you export just to Australia, but of course we export way beyond that.”

So the debate around the dollar continues to heat-up. Labour wants to give the Reserve Bank more power, the Greens want to print money.

And the Government thinks that's all crazy.

3 News

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Comments

5/02/2013 6:35:22 p.m.

Dave wrote:

MADNESS. At lease you agree on the fact the value of the NZ Dollar isn't a problem. However, to blame our current Govt for the impact on the NZ economy the international depression has made is stretching the bounds of acceptable imagination. Clearly the fact NZ is weathering the storm of the world-wide depression better than most other countries, is proof the Key Government is doing things right. We should also be grateful we are not run by the Greens or the Unions and Labour (their associate lackeys) or we would really be in deep doo doos.

5/02/2013 10:42:09 a.m.

madness wrote:

The dollar isn't our problem our government is. They have forgotten the people and are only there for the businesses because they are the ones who contribute big money to the government funding. The average Joe Bloggs doesn't exist in their eyes and if we don't like it we can leave like all the other thousands that already have. John Key encorouged it himself, which says he doesn't care. Never mind National should be out on their butt next election unless too many nutters who don't care vote them in, meaning the ones who have enough money not to have to care. Lucky the underdogs out number them considerably so it shouldn't be so. at the end of the day everything is too high!!!!!

4/02/2013 11:07:21 a.m.

Denise wrote:

KATHY. It's almost romantic to imagine people who loose their jobs in retail will simply move over to the export industry. The majority of successful exporters are fully mechanised, electronically high-tech and extremely efficient with few additional jobs available. It's the unsuccessful minority of exporters who need to work smarter, increase productivity and take advantage of low cost imported equipment (because of the realistic NZ$ value) to modernise and do the same rather than expect a falsely lowered NZ dollar to do their work for them at everyone else's expense. With current export surpluses running at the highest levels being sustained over the last 5 or so years, even during a world-wide recession, clearly the NZ dollars value is not too high and still has room to increase more which is the best insurance we could have to maintain our better standard of living compared to many other countries and keep price increases and inflation under control.

3/02/2013 10:25:44 p.m.

Paul wrote:

The last time we were silly enough to devalue the NZ dollar was under Muldoon and immediately there was an increase in petrol prices which flowed on to dearer everything else. Costs increased next for all essential imports like equipment for industry and local prices went up again. Then the unions demanded wage increases and all prices spiralled upwards once more. Many people lost their jobs through the ensuing inflation with beneficiaries and lower paid workers the big losers. Surely we should learn from history and realise that tampering with the NZ dollar is foolhardy. Currently exports are at a higher level now than they have been for the last 6 years so obviously the dollar is not too high. The few manufacturers who are complaining need to get their act together and work smarter like the rest of the export industry clearly is.

3/02/2013 8:21:07 p.m.

Kathy wrote:

@Mike at the risk of being called a whore by you again!! for disagreeing with what you say because you are a sexest pig.. but your statements are absolute twaddle. A lower dollar will benefit exporters, any jobs lost from the import industries will be absorbed into the export sector. Having a dollar that is valued lesser against our trading partners wont cause massive inflation or devalued returns. Fuel prices are so high because of National if we are being honest here, the number of levy increases under National.. well lets be honest the number of levy increases on everything including food, ACC, roading, perscriptions etc are a direct result of National trying to bleed everyday kiwis dry through massive forms of indirect taxation.

3/02/2013 9:14:59 a.m.

Jenny Hill wrote:

If you value cheap imports over jobs then keep a high kiwi dollar. Exactly how many cheap ipads, cars, flat screen tvs does an individual use these days anyway?

2/02/2013 11:37:50 p.m.

katubaldy wrote:

Nice theory Huang, that we should all be paying homage to our overvalued currency and setting our lives around buying cheap imports. But how about we base our nation around a currency that reflects its true value, so we don't keep losing those local jobs you seem to think are secondary to the equation. Then when we're producing at higher levels again, our workforce will have some disposable to go out and spend on goods. Otherwise we're creating problems unnecessarily and supporting currency speculators who have no interests in our general public bro....You've got the cart before the horse. How are we supposed to buy the goods if we didn't have the jobs first....? The bulk of jobs we seem to be getting offered from the situation as it is, is mainly part time and low paying ones...not good at all really. The world won't fall apart if we devalue the currency like the right are trying to scare people with,and times are already hard! Any transitional pains would be relatively temporary.

2/02/2013 1:57:20 p.m.

tom wrote:

Huang, you are so uninformed. Exports bring money into the country i.e make it richer. Imports make it poorer , as money flow out of the country.

2/02/2013 10:16:13 a.m.

jon wrote:

stop charging GST on locally made goods and products...sounds like good idea.

2/02/2013 9:47:59 a.m.

Huang wrote:

Do we really want a cheaper kiwi dollar, and pay more for imports, like cars and ipads? More expensive imports, and the same group of opportunistic brainless politicians will be calling for increases in minimum wages! Isn't that the same? Why is it that our manufacturers cannot bring their cost down, when overseas manufacturers seem to be able to lower cost? New PCS and laptops with higher memories and better capabilities are cheaper than ever before. A strong kiwi dollar is only a red herring. There are other causes as well.