Is the manufacturing crisis manufactured?

February 5th, 2013 at 4:29 pm by David Farrar

Labour, Greens, NZ First and Mana have their faux inquiry into the “ crisis”. It seems someone may have forgotten to tell the manufacturers.

Rob Hosking reports at NBR:

Manufacturing improvement dominates job market data

And in the story:

On an annual basis, average ordinary time hourly earnings rose 2.6% for the year, with the largest increase in manufacturing, up 2.9%, while retail trade rose 2.7%.

And:

On a weekly basis, the income improvement is even more pronounced. Average ordinary time weekly earnings rose 2.9% for the year, or about $29 a week.

Manufacturing ordinary time weekly earnings rose 4.1% for the year.

How inconvenient for the crisis.

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60 Responses to “Is the manufacturing crisis manufactured?”

  1. Dave Stringer (188 comments) says:

    ROTFPML

    :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-)

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  2. MikeG (425 comments) says:

    So that’s all about earnings, so what about the NUMBER of people employed?

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  3. scrubone (3,099 comments) says:

    Er, so?

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  4. Paulus (2,627 comments) says:

    It doesn’t matter the left wing media will pick it up as Gospel.

    For Labour and Greenpeace any publicity is good – even if it’s full of untruths – par for the course.

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  5. Jack5 (5,137 comments) says:

    Can you please clarify the relationship between the state of manufacturing and the average wage in manufacturing when the industry is under pressure from a sky-high NZ currency?

    For example, if the pressure is killing firms, those at the lower edge of profitability or in industries most vulnerable to import substitution will surely die first. These probably already have lower wages (example, the wool-processing mill in Oamaru). So their demise will arise average wages in that industry.

    Similarly, the firms that use least skilled labour will likely die or contract first. For example, pulp and paper processing and timber processing.

    That means a squeeze, such as from high currency, at least at first, will likely push up the industry’s average wage.

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  6. Weihana (4,537 comments) says:

    http://www.nbr.co.nz/article/manufacturing-improvement-dominates-job-market-data-rh-135396


    “The overall picture in the figures is of a slow recovery. Across all sectors, the number of filled jobs is still below the peak of December 2007.”

    I agree that the Greens, Labour, NZ 1st and Mana are engaging in political grandstanding. When does a political party do anything else? But I’m still not sure how anyone can deny there is an “issue” to think about.

    http://www.ft.com/intl/cms/s/0/f6f19228-6bbc-11e2-a17d-00144feab49a.html#axzz2Jx59xVJc

    …No longer the realm of science fiction, the rise of robots now poses the central economic dilemma of the Obama era.

    With each month, the US economy becomes steadily more automated. In January the US economy added just 4,000 manufacturing jobs, and the net increase since July is zero. Yet last month, manufacturing activity rose by its fastest rate since April, according to the Institute for Supply Management. The difference boils down to robots, which pose an increasingly nagging paradox: the more there are, the better for overall growth (since they boost productivity); yet the worse things become for the middle class. US median income has fallen in each of the last five years.

    But the spread of the robots will leave a large and growing chunk of the US labour force in the lurch. In their excellent primer, Race Against The Machine , Erik Brynjolfsson and Andrew McAfee point out that in the contest between changing technology and education, the former is winning. Too few Americans are prepared. Some, such as Mr Cowen, fear many never will be. He believes the federal government should pay a basic guaranteed income to all Americans – a despairing view that accepts there will be permanent losers.”

    A computer beat the world chess champion 16 years ago. It won Jeopardy 6 years ago. It will drive your car in a few years. It will be moderating Kiwiblog before too long. :)

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  7. toad (3,674 comments) says:

    What the fuck has the average earnings if workers employed in manufacturing got to do with the issue of the decline of jobs in manufacturing as manufacturers choose to either go offshore or close.

    Absolutely nothing. Haven’t read Rob Hosking’s full article, but the headline “Manufacturing improvement dominates job market data” seems disconnected with the bits you quote, DPF.

    The crisis is not about the wages in manufacturing (although that is an issue I am concerned about too, but not a “crisis” in the context of low wages in many other sectors); it is about the decline in jobs in the manufacturing sector.

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  8. Grendel (1,002 comments) says:

    Like the greens have ever created any jobs that were not by taking money from taxpayers.

    A more useless bunch of academics and career unemployable you could not hope to find.

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  9. Viking2 (11,471 comments) says:

    Have to agree with toad.
    Apart from training new builders what else is their going to employ people who don’t do IT , cleaning, maori war dances or sport?

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  10. dog_eat_dog (780 comments) says:

    How many years of the dollar being at 80 cents will we have to endure with people calling it ‘high’? This is the norm, the structural weaknesses are in the economies of our trading partners and not ours.

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  11. Jack5 (5,137 comments) says:

    Hi dog-eat-dog:

    How do you account for this view from the IMF in June (as reported in the NZ Herald):

    The New Zealand dollar needs to be 15 per cent lower to bring the nation’s current account deficit to a more sustainable level, according to the International Monetary Fund.

    And from the Marlborough Express eight months ago when the NZ dollar was at US76.2c:

    Marlborough wine industry representatives say the high New Zealand dollar is more of a threat to the industry than economic turmoil in European markets.

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  12. AG (1,827 comments) says:

    The figures the NBR quotes (and DPF copies) are from the Statistics NZ Quarterly Employment Survey (QES). Here’s what they say about their figures:

    “The QES measures average earnings based on aggregated payroll data received from economically significant businesses. Average earnings in the QES show changes in salary and wage rates as well as compositional changes within and between businesses. For example, if a large number of low-wage jobs are lost in a quarter, average earnings will rise because the low- wage jobs are no longer contributing to the calculation of average earnings.

    So, I guess these figures might show there is no crisis in manufacturing in the same way as a meteorite hitting Mission Bay would show there is no housing crisis in Auckland, as the average house price in that region has declined.

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  13. dime (9,972 comments) says:

    wah wah wah the dollar is high.

    exporters – “it makes it tough wah wah wah”

    Dime the importer didnt get a lot of sympathy when it was .48, ya didnt hear me crying to anyone that would listen. we just became better at what we did.

    Same as when the recession started in 2007, we just got better at what we did.

    adapt or die.

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  14. Weihana (4,537 comments) says:

    Viking2 (8,707) Says:
    February 5th, 2013 at 7:44 pm

    Apart from training new builders what else is their going to employ people who don’t do IT , cleaning, maori war dances or sport?

    An interesting statistic quoted from the FT article I mentioned before:


    The bulk of US jobs growth since mid-2009 has been in low-skilled areas, such as food preparation and domestic aides. In the second place is jobs growth in high-end services. Middle income jobs have cratered. According to the National Employment Law Project, low wage jobs (that pay between $7.69 and $13.83 an hour) formed 22 per cent of job losses in the recession but 58 per cent of recovery jobs since then – a mirror image of the picture for middle income jobs ($13.84 to $21.18).

    Maybe this is just coincidental, but perhaps it’s the beginning of a fundamental shift in how the economy works. Consider “Baxter”, a robot that can be programmed to do simple tasks without any programming knowledge at all.

    http://www.youtube.com/watch?v=rjPFqkFyrOY

    The robot costs $22,000 USD. That’s the equivalent of a $10 per hour full-time employee’s annual salary. And robots don’t expect a salary the following year. Even people in the third world are eventually going to find it difficult to compete with these machines.

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  15. JC (956 comments) says:

    Lets get some facts on the table..

    Since about 1950 manufacturing has fallen from around 30% of GDP to 10% in the US and NZ, ie, its a sunset industry in terms of employment and importance to GDP. Automation, robots, improved processes and stuff made in lower cost countries etc mean that your widgets cost way less. Manufacturing is thus going the same way as agriculture in the previous century.. still essential but far less important in comparison to IT, innovation and services.

    As in the Western world in general, customers are not loyal to local manufacture if the stuff from China, Korea, India and Vietnam is cheaper and sufficient in quality.. for us, the old social model of a middle class built around making widgets is dead and gone.

    The other day John Key mentioned that in any 90 day period about 100-200,000 jobs are destroyed in NZ and about 100-200,000 jobs are created. Its this “creative destruction” of the old and tired replaced by the new and better that makes our economies work, not hand wringing and political BS.

    Now, about the history of manufacturing.. all my adult life of over 50 years I have been subjected to publicity campaigns from manufacturers seeking tax payer support for every little or big downturn. Initially they wanted direct subsidies and when that palled they have sought indirect subsidies by way of a low exchange rate.. these people are not your friends and increasingly not your employers.. they are those rent seekers who use their waning clout to avoid modernising their factories to produce cheaper and better goods.

    Modern manufacturing is about using capital intensive machines, automation and robots with fewer humans to produce competitively priced and quality widgets.. or products of flair and innovation that can only be produced by highly trained and well paid humans.. for the moment.

    JC

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  16. big bruv (13,893 comments) says:

    Oh dear Toad!

    The Greens have been caught telling lies again.

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  17. Johnboy (16,554 comments) says:

    Oh for the good old days. Black and white TV sets in faux mahogany veneer cabinets from Phillips in Naenae. Austin A60’s from Petone. Overseas funds of 30% to buy a new Morrie 1100.

    Fintan Patrick Walsh in command on the waterfront and Con Devitt on the land!

    Ah the glory days! :)

    Vote Labour/Greenie/Mana/Winston……..it can all be restored to how it once was you know! :)

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  18. dime (9,972 comments) says:

    johnboy – didnt ya once need a permit from the post office to get a cordless phone? fun!

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  19. Johnboy (16,554 comments) says:

    You needed a relly in the Post Office to get an ordinary phone under 3 months dime! :)

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  20. Weihana (4,537 comments) says:

    JC (693) Says:
    February 5th, 2013 at 8:08 pm

    …or products of flair and innovation that can only be produced by highly trained and well paid humans..

    Only humans? Isn’t the issue that there are an increasing number of jobs that were once thought to be doable by humans only? Is it reasonable to believe that humans will outrace machines in being able to do creative activities that machines can’t do? And even if they couldn’t do such innovative things on their own, how many people are actually working right now in jobs that are truly innovative rather than derivative or repetitive?

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  21. nasska (11,504 comments) says:

    What about the miserable few bob people heading out of the country on business or pleasure could take with them in overseas currency?

    The daily allowance would barely keep a man in smokes & grog never mind a trip to King’s Cross. :)

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  22. big bruv (13,893 comments) says:

    Dime,

    The horror stories are all true. Business had major problems setting up in a new town or city because they were at the total mercy of the Post Office. You rang (on somebody else’s phone) and asked when it might be possible to have some phone lines installed.
    A snivel servant would then say you were “booked in” and they would get back to you with a time when their men (always a gang, they needed at least two men to make the tea) were going to be in the area. Older readers will remember that this could take as long as two months.

    Getting a phone hooked up to a private residence was even worse, the post office would not be able to tell you what day they would be in your area just the week, so (as happened to me when I moved into a flat) the “customer” would be forced to take that week off work and wait for the Post Office gang to turn up. If you rang and moaned the bastards simply put you further down the list. Often they would not even arrive that week.

    Other area’s of the bureaucracy were no better, I well remember waiting in line for over an hour to get a urgent passport, when I got to the window the bearded, shorts, roman sandals (with socks) wearing wanker looked at me, said “Lunch” and pulled down the shutter and fucked off. This was the norm and you simply did not dare make a fuss or they would take great delight in fucking you about all day.

    Remember this is the type of work environment that the hard left and the Greens want to bring back, the days when unions ruled and service was non existent.

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  23. Johnboy (16,554 comments) says:

    And if you knew a mate in the Ministry it wasn’t to hard to go to the head of the queue for an import license for those hard to get luxury items nasska.

    Ah the good old days, when we had good, honest, full employment and corruption never existed!! :)

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  24. Johnboy (16,554 comments) says:

    BB!!!! :)

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  25. Simon Arnold (109 comments) says:

    The way things get made is changing, as is what we are good at making. Fortunately we are reallocating resources within NZ to where we do best, unlike under an earlier socialist regime under Muldoon when we protected the peasant classes and made them rich at the expense of the rest of us.

    Modern day Muldoonists want to do the same by increasing inflation to support marginal exporters and those with the bargaining power to keep their wages up with inflation. The same deal that Muldoon did with the old guard amongst exporters and his old mate Tom Skinner.

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  26. nasska (11,504 comments) says:

    Them were the days JB. Officious little jobsworths at every turn…..just like the modern Masterton District Council. :)

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  27. Johnboy (16,554 comments) says:

    Wait till you fellers get “The Greater Wairarapa Glorious Council” nasska. Everything will cost twice as much.

    It’s after Lower Hutt/Upper Hutt amalgamate and Wellington/Porirua/Kapiti form “The Greater Celia Co-Prosperity Sphere”.

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  28. nasska (11,504 comments) says:

    Buggered if we stay with Wellington….buggered if we don’t JB. We don’t have the rating base to give us any clout on a united council but Wellington does at present, subsidise us heavily, eg river protection work.

    Personally I reckon the geographic isolation of the Wairarapa suggests that we’d be better off to bite the bullet & go it alone. If we have to amalgamate with anyone we should look North to the Horizons RC area.

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  29. Johnboy (16,554 comments) says:

    Good plan nasska. The hill is a natural barrier. All your little Mayors and their CEO’s will fight you till the death on that one! :)

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  30. Rodders (1,755 comments) says:

    What “manufacturers” do the Greens actually support?
    Environmentally friendly light bulbs, composting toilets and industrial hemp?

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  31. Johnboy (16,554 comments) says:

    Here is a really successful one they support Rodders! :)

    http://www.windflow.co.nz/

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  32. Rodders (1,755 comments) says:

    JB, the Green parliamentary caucus could generate twice as much energy with their own hot air :)

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  33. Johnboy (16,554 comments) says:

    Further reading.

    http://www.sharechat.co.nz/article/e5248997/windflow-losses-ease-but-windfarms-exposure-blurs-outloook.html

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  34. Johnboy (16,554 comments) says:

    Printing NZ dollars should make it easier for them to sell their stuff overseas……hang on a minute!!!! :)

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  35. Rodders (1,755 comments) says:

    Printing NZ dollars

    Perhaps the Greens are emulating the “green & gold” Social Credit (minus the gold) :)

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  36. Bogusnews (474 comments) says:

    Toad,

    its very simple:

    If the manufacturing sector is on its very last legs and about to collapse, then they will not be give significant pay rises. The only time you give pay rises is when you are doing well and can afford it. The industry would not be giving pay rises unless there was significant work in the pipeline and they had confidence in how well they were going to be doing in the future.

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  37. Jack5 (5,137 comments) says:

    THe high kiwi dollar is hurting far more than manufacturers and their employees.

    Ask farmers. Ask the fishing industry. Ask the tourist industry.

    The National Party I knew and backed for so long represented New Zealand outside Auckland and Wellington, the regions that depend on export industries and provide the means by which the country survives, albeit with a continuing balance of payments deficit.

    National is increasingly shrinking to be a party run by and for real estate agents, property developers, fund managers, bankers and sharebrokers — all in reality members of the service sector for our exporters. Oh yes, and the China commission agents, too.

    Unlike Britain and to an extent America, we have no booming international finance sector to step in and earn exchange for the country as manufacturing and other export industries shrink or hit a ceiling (as dairy farming appears to be doing).

    Can I vote National without voting for its Houdini high kiwi dollar strategy?

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  38. Jack5 (5,137 comments) says:

    Johnboy: re you 9.27 link.

    I’m no fan of wind power or Windflow, but the article you point to is three and a half years old!

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  39. Nick K (1,244 comments) says:

    Jack5: what is National’s high kiwi dollar strategy?

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  40. Johnboy (16,554 comments) says:

    True Jack5 but things are hardly getting better for them.

    http://www.stuff.co.nz/business/industries/8197417/Prototype-starts-cash-turning-over-for-Windflow

    One turbine sold and 23c/share! :)

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  41. Jack5 (5,137 comments) says:

    Nick K (10.03):

    I guess it’s a refusal to look at any other way of controlling inflation than the present narrow tools targeting short-term inflation rates. It’s a high currency policy by default. “We don’t see how anything can be done about the high kiwi, so live with it.”

    It’s a strategy that facilitates the continuing national borrowing abroad (in capital and interest), and makes politicians and bureaucrats look less incompetent than they are.

    It’s an intellectual arrogance that we have the world’s best economic brains and a disdain to look at the success the Swiss are having with their cap, and how Singapore and Hong Kong, both bustling, thriving economies leaving us in the dust, perform well with their pegged currencies.

    It’s a smug belief that somehow new age technology industries will spring up and make us as comparatively rich as we were in the late 40s and early 50s. Yet our tech start-ups repeatedly wither. Most, as soon as they are looking internationally promising, are flogged off to overseas firms. Those that survive squirm under the high kiwi along with other exporters.

    IMHO, National’s high kiwi dollar strategy comes down to a believe that there is no other way, that nothing can be done, that the market will sort it all out, that any national collapse from debt and piling current-account balance deficits will come long after all the current MP mob have gone out to grass with a decent super and air travel concessions.

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  42. dog_eat_dog (780 comments) says:

    Jack5, can you explain why we should be paying $3/l for petrol, why food prices should be artifically bumped up and why almost every cost of living should be lifted? Lowering the dollar, if that’s even possible to do, would effectively be a poll tax for every New Zealander for the sake of (some) manufacturers. Tell us why we should pay above market rates for our consumer goods and essentials in an economy where most prices don’t reflect the dollar’s current level, and the fact that it’s been where it is for years now?

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  43. Lance (2,655 comments) says:

    Hell I would settle for a level playing field.

    Instead NZ manufacturers are slammed with a cascade of new taxes, regulations (taxes) and compliance costs (taxes). Not to mention ACC (taxes) and a plethora of other BS (taxes).

    Then some shitheads moan when you move production off shore. They’ll never buy your stuff again because you are a traitor blaa, blaa

    I think I know who is running the asylum

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  44. SPC (5,619 comments) says:

    Might I suggest that only a few days after data was posted here showing how our currency has fallen against the Oz one and risen against most others we could see why manufacturing could be in crisis while others are doing well.

    Those exporting to Oz are getting good returns finally. Others are not and some are closing production.

    Generally only those exporting to Oz or those who set prices, rather than take them, are doing OK.

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  45. SPC (5,619 comments) says:

    As Jack 5 has already noted, as price sensitive exporters shut down their production the average wage in the sector will increase.

    It is notable that retail wages had a solid increase – arising from the cheaper cost of imports or the shedding of lower waged staff because of consumer spending restraint?

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  46. SPC (5,619 comments) says:

    Given private sector wage rates rose 1.9 per cent last year, outpacing public sector wages which rose 1.5 per cent, the larger increases for manufacturing and retail can be explained by both sectors shedding low wage jobs.

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  47. Bogusnews (474 comments) says:

    My business is not involved in manufacturing so I can’t speak from experience. However I do note in the article that Rob says:

    “The number of filled jobs rose 0.4% while full-time jobs rose 0.7% in the last three months of 2012, Statistics New Zealand’s quarterly employment survey shows.

    The main increases in jobs are in construction, up 6.8%, wholesale trade, up 8.3%, and healthcare and social assistance, up 4.3%”

    So I’m not sure how clear it is that lots of low wage jobs are going. Can’t be if the overall number is up.

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  48. wreck1080 (3,917 comments) says:

    I don’t really get this. I’ve seen it reported that 40,000 jobs have been lost in manufacturing.

    Yet, you are saying there is no problem?

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  49. toad (3,674 comments) says:

    @Bogusnews 9:39 pm

    Read AG @ 8:03 pm and SPC @ 1:53 am

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  50. wat dabney (3,756 comments) says:

    The crisis is not about the wages in manufacturing…it is about the decline in jobs in the manufacturing sector.

    You can trust toad and the Greens to totally misunderstand any economic issue; just as you can also trust them to use state coercion to enforce disastrous “solutions.”

    According to toad, NZ agriculture must be in the worst shape its ever been, since the proportion of the population employed in it has been declining for the last 100 years.

    Yes, that really is their argument.

    And guess what! Fascism is the solution.

    Thanks, Greens.

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  51. wat dabney (3,756 comments) says:

    I don’t really get this. I’ve seen it reported that 40,000 jobs have been lost in manufacturing. Yet, you are saying there is no problem?

    Have you also seen it reported that there is a shortage of manufactured goods in New Zealand?

    No, neither have I.

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  52. wreck1080 (3,917 comments) says:

    “Have you also seen it reported that there is a shortage of manufactured goods in New Zealand?”

    No because we import more as the kiwi dollar strengthens.

    We as a country spend more than we earn. The consequences are in the future so most people simply don’t care.

    The way to address this imbalance is to increase exports or decrease imports.

    As it is, many jobs are being lost in the export manufacturing sector and it is easy to see why.

    In future the US/Europe economies will recover and they will regain their currency strength. The NZD will likely over correct to the negative and our exporting sector will have been hollowed out. Imported product prices wills sky rocket but our exports will be slow to recover due to the time it takes to replace plant.

    It will be a nasty time.

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  53. wat dabney (3,756 comments) says:

    wreck,

    We as a country spend more than we earn…The way to address this imbalance is to increase exports or decrease imports.

    No it isn’t.

    The way to address it is to stop borrowing.

    It’s that simple.

    You’re effectively arguing that ‘if my salary went up then I would borrow less.’ Well, maybe. But if you borrowed recklessly at one wage level then the chances are that you would use an increased salary to borrow even more.

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  54. wat dabney (3,756 comments) says:

    Let’s not forget that the US is anticipating a profound industrial and manufacturing renaissance entirely due to the cheap power prices resulting from fracking.

    Entire industries are expected to migrate back to the US simmply because of this fact.

    The Green Fascist Party’s crocodile tears over NZ manufacturing jobs are all the more sickening since they are largely responsible for preventing similar opportunities here.

    Fracking = Manufacturing Jobs. Everything else is self-serving politics.

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  55. Jack5 (5,137 comments) says:

    Watt Dobney says:

    …And guess what! Fascism is the solution. …

    Watt Dobney, are you saying that countries that aren’t as laissez faire in currency management are fascist?
    Switzerland, for goodness sake, Singapore, Hong Kong, Japan.

    dog-eat-dog says:

    Lowering the dollar, if that’s even possible to do, would effectively be a poll tax for every New Zealander for the sake of (some) manufacturers…

    How often does it have to be repeated, farmers, the tourism industry, the fishing industry, forestry – everyone who exports – is affected by our high currency, not just manufacturers.

    The present high dollar must lead to a blow-out in a few years, with a currency collapse as the balance of payments deficits continue to grow. What will the price of petrol be then?

    A moderate dollar now is best medium and long term for all consumers.

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  56. wreck1080 (3,917 comments) says:

    @wat:::

    While exports<imports there will always be net borrowing. Otherwise you cannot pay for those imports.

    Why do you you think borrowing and the trade imbalance are mutually exclusive?

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  57. wat dabney (3,756 comments) says:

    wreck,

    While exports<imports there will always be net borrowing. Otherwise you cannot pay for those imports.

    You are still putting the cart before the horse. In such a scenario net imports don’t drive people to borrow; it’s the borrowing which drives the imports. The solution is to just stop borrowing. If you can’t afford something then you can’t buy it. Then net importing would decline to a prudent level. Sure, if you export more then you can import correspondingly more. But that is a different argument. Increasing NZ exports will simply allow us to import correspondingly more. That’s the benefit. But there is absolutely no reason to imagine that it would lead to less borrowing.

    Secondly, it is entirely false to claim that ‘while exports<imports there will always be net borrowing.' You are only looking at half the picture and ignoring the capital account which makes up the other side of the balance of trade. Net foreign investment will contribute to a trade deficit, yet clearly that is a good thing and no debt is created. A dynamic, growing economy can expect to run consistent trade deficits, resulting in not one dollar of debt.
    I'm not saying that that's what's happening here, I'm just saying that your statement is incorrect: a trade deficit doesn't automatically imply debt.

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  58. krazykiwi (9,186 comments) says:

    The only “manufacturing crisis” we have is that the visionless continue to regard manufacturing as important for our future. Visionless is perhaps unfair. If the vision is for large pools of compliant union members bitching about ‘the company’ then a strong, Edwardian-era manufacturing sector would be ideal.

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  59. wreck1080 (3,917 comments) says:

    Borrowing is only the means to an end. So, stop buying imported goods and you will not need to borrow .

    And, generally NZ seems to run negative trade balances of which the export/import differential is a major contributor (not all as you say). This will be a constant drag on economic growth.

    The exchange rate will eventually balance things out but why does it have to be a boom/bust scenario? If the government could set monetary policy to try and smooth such spikes then things would be much easier for everyone.

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  60. Jack5 (5,137 comments) says:

    Watt Dabney posted at 12.28:

    ….A dynamic, growing economy can expect to run consistent trade deficits, resulting in not one dollar of debt.

    Where is the evidence, Watt Dabney?

    Booming China with consistent trade deficits. Of course not? Resurgent, growing Germany and Japan from the 1950s with consistent trade deficits?No. Taiwan?No. Singapore?No. Malaysia?No. South Korea?No. Brazil?No. Indonesia?No. Australia?No. Russia? No. All booming and with trade surpluses, rather than deficits.

    The United States has been running a deficit since 1975, which more or less parallels its relative decline as dominant economic power in the world. It’s debt has been rising. The Congressional Debt Office reported today (NZ time) that it will take another $2 trillion in belt-tightening over the next decade to begin to reduce the federal debt closer to historic levels.

    India, one of the economic leaders grouped as BRIC (Brazil,Russia, India, China) is growing roughly between 6% and 7% a year in GDP, but has had a series of deficits. It also has public debt at 70 per cent of GDP. So India doesn’t support Watt Dabney’s assertion.

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