Herald on manufacturing inquiry

June 18th, 2013 at 9:55 am by David Farrar

The Herald editorial:

In politics, as in all spheres of life, timing is everything. Take the report into released yesterday by the Labour, Greens, New Zealand First and Mana parties. When their inquiry began last October, times were uncommonly tough in the sector. Just last Friday, however, the latest BNZ-Business NZ performance of index indicated that it was expanding at its fastest rate since 2003, and at one of the world’s highest rates. Equally, a tumbling exchange rate has eased many of the sector’s woes. In that context, the report’s talk of the killing of seemed lame at best.

I’m surprised they scheduled to release it the next working day after the PMI index came out. The index is on a regular release schedule and better political management would have seen them make sure they avoid being too close to the release of any major manufacturing data in case it undermined their claims of a crisis.

Yet even if current conditions had mimicked those of eight months ago, the report would have been counted a barren exercise. Its three core recommendations are as flawed as they are predictable. The first wants monetary policy to be aimed at achieving a lower and more stable exchange rate, as well as a lowering of structural costs in the economy, such as electricity prices, and a refocusing of capital investment into the productive economy, rather than housing speculation.

Normally one can use an inquiry to at least come up with some new ideas or policies – but they have failed to do even that.

The report’s recommendation for a lowering of structural costs in the economy refers specifically to electricity prices. This is a clear nod to the Labour-Green proposal for a single buyer to purchase all electricity generation at what it deems a fair price. Presumably, this is seen as the forerunner of a greater emphasis on central planning. Manufacturers would, of course, applaud lower power costs. But what they would also get would be inefficiencies, unintended consequences and, if history is a guide, blackouts.

And I may be wrong, but I think most manufacturers need electricity to actually operate!

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12 Responses to “Herald on manufacturing inquiry”

  1. Right of way is Way of Right (1,129 comments) says:

    Well, finally, is it actually possible that the MSM is waking up and smelling the coffee! It’s becoming obvious that any reasonable inspection of many of the Green/Labour policies, especially in relation to the economy will quickly reveal all manner of shortcomings and unintended consequences! The policy planners in the opposition had better understand that the great unwashed actually have a few brain cells to rub together!

    Add to the fact that under the stewardship of a National lead government, we have actually weathered the GFC in pretty good shape! Things are looking pretty good at the moment.

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  2. Plue (5 comments) says:

    So if I have it right the idea is that the state will “control” the manufacture of electricity but presumably will be ok to let other manufacturers do what they want.
    What about the “manufacture” of milk (or cheese etc) if they don’t like the price of that at some point in the future. We seem to be overlooking the fact that one persons input is another persons output.

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  3. Pete George (22,866 comments) says:

    …better political management would have seen them make sure they avoid being too close to the release of any major manufacturing data in case it undermined their claims of a crisis.

    I think this reflects their conviction from the start that they had a good issue to beat the Government up on so set about a mini political campaign, and they are too dumb or blind to adjust to changes.

    They’ve done similar on asset sales, they are still claiming the final petition signatures will somehow stop asset sales. An email from Russel Norman a few days ago:

    We only have a couple of weeks left to get the last 16,000 valid signatures to make the Keep Our Assets petition count and stop asset sales.

    Everyone knows a referendum won’t stop anything.

    This term Greens in particular have been intent on medium term strategies, Labour have been dragged along with them. And they are backfiring.

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  4. In Vino Veritas (136 comments) says:

    And they managed to get 120 submissions to their “Manufacturing Crisis” Summit. Given there are, according to Stats NZ, 22,600 manufacturing businesses in NZ, that would make around half of 1% of manufacturers were concerned enough to make a submission. Guess that tells a story in itself.

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  5. JC (909 comments) says:

    I couldn’t be bothered looking up all the industries which have a manufacturing component but I did pull the specific “Manufacturing” membership from the 2008 and 2012 Dept of Labour union returns.

    These show membership went down from 64,000 union members in 2008 to just 50,000 in 2012.

    If that drop is replicated across the other industries with a manufacturing component then its a pretty stunning loss of power, influence, money and boots on the ground come election time and well worth fighting for with a “manufacturing crisis”.

    JC

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  6. tvb (4,210 comments) says:

    The Greens oppose just about all forms of electricity generation including incredibly hydro, coal of course. They like expensive wind generation and I am unclear where they stand on geothermal. What this means is that under price control generators will rely on the cheapest form of generation and that means there will be brownouts and blackouts. They have already got their devaluation and we are now paying for that through higher fuel prices. They go on about distortions caused by the market but what about distortion caused by greater Government control.

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  7. PTM (43 comments) says:

    Perhaps Greens and Labour are working on the premise that if they drop the value of the NZ dollar sufficiently, the price of imported manufactured goods will reach the threshold point where it becomes economic to manufacture most things here.
    Mind you, only the rich will be able to afford the consumer goods that we all currently take for granted. Unless of course, the taxpayers subsidise the cost of locally manufactured products.
    That would do it, just like the car industry in Australia.
    Na, too crazy to contemplate!

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  8. Raphael (73 comments) says:

    DPF: “And I may be wrong, but I think most manufacturers need electricity to actually operate.”

    Ahhh but you see, if we are going back 900 years then we don’t need no pesky electricity.

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  9. ross69 (3,652 comments) says:

    And I may be wrong, but I think most manufacturers need electricity to actually operate!

    I may be wrong, but generators have been around for donkeys years. It seems you haven’t heard of them. That might explain why so many businesses own them, as electricity supply isn’t guaranteed at the moment and hasn’t been in the past.

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  10. alloytoo (434 comments) says:

    Generators may provide interim solutions for some types of business’s, but are typical not practical for manufacturing industry.

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  11. sbk (308 comments) says:

    “brownouts and blackouts”…to be replaced with a more politically correct term under a Green?Red govt…Greenout(no means of generating)

    As someone has mentioned faux experts on another thread…yep…from the Academic ivory towers to the Green party,they have had no real experience of actually earning or competing for a wage in the commercial sector(a doctorate on long dead political party does not a finance minister make)…their experience basically amounts to debating and banning everyone else’s source of income.

    hence they have nothing in common with the rest of us mortals.

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  12. OneTrack (2,619 comments) says:

    ross69 “I may be wrong, but generators have been around for donkeys years”

    Is that your coded way of saying diesel generators will become big business when the Reds get in and the brown outs and blackouts start? Thanks for the tip.

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