We don’t need another portfolio!

July 22nd, 2016 at 10:00 am by David Farrar

The Greens announced:

Greens will establish a Minister for Manufacturing in Government

The Green Party announced today that it will establish a Minister for Manufacturing in Cabinet, to better represent the interests of manufacturers and ensure they thrive.

The Minister will be inside Cabinet and have responsibility for the long-term interests of the manufacturing sector.

The last thing we need is another portfolio created.

This is almost as bad as having a Minister for Racing.

Shall we also have a Minister for Retailers? A Minister for Wholesalers? A Minister for Importers? A Minister for Service Industries?

My view is we need fewer portfolios, not more. In April 2011 I blogged:

My future would be:

  1. Ministry of Internal Security – Crown Law, Corrections, SIS, Justice, SFO, Police
  2. Ministry for Environment – Environment, EPA, Conservation, Biosecurity
  3. Dept of Administrative Affairs – DIA, LINZ, Building & Housing, Customs, Stats
  4. Ministry for Economic Development – Labour, MAF, MED, Fisheries, MORST, Transport
  6. Education – Education, ERO, TEC
  7. Ministry of External Relations & Security – GCSB, Defence, MFAT,  NZDF
  8. Treasury – Treasury
  9. Incomes – IRD, WINZ
  10. Culture – Culture & Heritage, Nat Lib, Archives, NZ on Air
  11. Health – Health
  12. Social Policy – Pacific Island Affairs, MSD, CYF, Youth Development, Community Sector, Senior Citizens, Families, Women’s Affairs, TPK
  13. Parliament – Parl Serv, Min Serv, Office of Clerk, PCO

This means you could have a cabinet of 12. The Speaker looks after Parliament, and one Minister per major agency.

Left politicians seem to think having a new ministerial portfolio is necessary to actually do stuff. Hence they think a Minister for Children will reduce child abuse etc.

The Government doesn’t (for example) have a Minister for Open Data, yet it has done some great things in opening up Government data, led by Bill English. Rather than create a portfolio, he’s just got on and done it.

The manufactured manufacturing crisis worsens

January 23rd, 2015 at 3:00 pm by David Farrar

Business NZ reports:

Expansion in the manufacturing sector lifted during the last month of 2014, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).

The seasonally adjusted PMI for December was 57.7(a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining).  This was 2.1 points higher than November, and a positive end to the year for the sector. 

When will Labour declare the crisis to be ended?

Remember the manufactured manufacturing crisis?

October 24th, 2014 at 1:00 pm by David Farrar

I’m sure readers recall the inquiry by Labour, Greens, NZ First and Mana into what they called the crisis in manufacturing. They traveled up and down the country trying to dredge up stories of doom and gloom.

Well today the Herald reports:

Whatever the attractions of the virtual economy, manufacturing is the star in New Zealand’s high-tech sector this year.

The annual Technology Investment Network TIN100 report was launched on Wednesday, and TIN managing director Greg Shanahan says one of the strongest trends has been the resurgence of the manufacturing sector, with strong growth seen this year as well as a number of manufacturers making it into the two Top 10 lists.

In perhaps the most positive year seen since the TIN100 report began in 2005, manufacturing, ICT and biotech are all on the rise.

The success of manufacturing is a strong indicator that the tech sector in general is recovering from the effects of the global financial crisis, as manufacturing has been an area of concern over the past few years, with the sale or closure of companies such as Navman, Provenco and VTL resulting in significant job losses, and major companies including Fisher & Paykel Appliances moving manufacturing overseas.

This year, however, manufacturing is the success story of the three sectors with revenue of $5.1 billion, helped by larger companies including Fisher & Paykel Healthcare with revenue growth of 12 per cent, BCS Group (revenue up 68 per cent) and NDA Group (32 per cent). The smaller TIN100+ manufacturing companies have also been helping boost this trend, with growth of 7 per cent overall, and companies such as Metalform, RML Engineering and Escea all feature in the Hot Emerging Companies list.

This has all happened, without the Government having to try and waste billions of dollars in forcing the level of the NZ dollar down.

The manufactured crisis gets worse

June 11th, 2014 at 10:00 am by David Farrar

Stats NZ had the latest manufacturing data yesterday.

Seasonally adjusted manufacturing value for the 1st quarter of 2014 was $25.3 billion. A year ago in the same quarter it was $22.8 billion. That’s an 11% increase in the last year.

This of course is what Labour, Mana, Greens and NZ First call a manufacturing crisis.


Good economic growth

March 20th, 2014 at 3:00 pm by David Farrar

Stats NZ reports:

Strong growth in manufacturing saw gross domestic product (GDP) rise 0.9 percent in the December 2013 quarter, Statistics New Zealand said today.

Manufacturing activity grew 2.1 percent, driven by increases in food, beverage, and tobacco, and machinery and equipment manufacturing. Manufacturing activity is now at its highest level since March 2006.

And Labour/Greens/NZ First/Mana’s manufactured manufacturing crisis receives another death blow.

Dairy farming and dairy product manufacturing both fell this quarter, after strong increases last quarter, when production rebounded from the drought earlier in 2013.

So those who claim the economic growth is all about dairy, are wrong.

Also Labour have been saying forestry is in such dire straits that it needs all sorts of tax breaks and incentives, plus 1,000 long-term unemployed to be working in it (surely a nomination for a Darwin Award for policy, considering the already far too high accident rate). So what has happened to forestry primary product exports in the GDP? They’re at $552 million, up from $495 million a year ago – an 11.5% increase!

Also if you look at the long-term series in constant prices for forestry and logging, the GDP in 1995/96$ was $1.604b for 2013. In 2008 it was $1.199b so that’s 33.8% higher!

Also the MPI series on log exports shows they were only $711 million in 2008 and today are $2.35 billion.

I guess Labour will claim that we should be making more products here, rather than exporting logs, but you know what – you sell to match demand. If the demand is for logs, then you sell logs. If the demand is for wooden tables – you sell wooden tables.

The manufactured manufacturing crisis hits crisis point

March 10th, 2014 at 3:00 pm by David Farrar

It was less than 12 months ago that combined forces of Labour, Greens, NZ First and Mana declared manufacturing in New Zealand to be in crisis. The day before they announced this, manufacturing confidence hit a then record high and things have only got better since.

The latest news is a disaster for their manufactured crisis. Stats NZ reports:

The total manufacturing sales volume had a record rise in the December 2013 quarter, Statistics New Zealand said today. This was largely due to a strong rise in meat and dairy product manufacturing.

After adjusting for seasonal effects, the volume of total manufacturing sales rose 5.7 percent, with meat and dairy product manufacturing sales up 15 percent.

Up 5.7% in one quarter – that’s incredible growth.

They make the point it isn’t just dairy and meat, even though they are the largest. Other quarterly increases are:

  • Seafood +2.7%
  • Fruit, oil, cereal and food +5.0%
  • Wood and paper +1.6%
  • Printing +8.5%
  • Non-metallic minerals +5.5%
  • Transport +5.9%
  • Furniture +6.2%

They also report the total spending on salaries and wages in the manufacturing sector increased 4.5% in the quarter.

Talking of manufacturing

February 28th, 2014 at 9:00 am by David Farrar

The Press reports:

A new report released by ManufacturingNZ says contrary to popular belief, the New Zealand economy is actually manufacturing heavy compared with other OECD nations.


Manufacturing contributed 14.6 per cent to the country’s gross domestic product in 2012.

This makes New Zealand one of the more manufacturing- heavy economies of the OECD.

By mid-2013 there were 191,000 jobs in the manufacturing sector.

Average wages are greater than those in the retail, accommodation and food service sectors

Also one manufacturer notes:

Skope managing director Guy Stewart said the company, which manufactured chillers and freezers for the hospitality and restaurant sectors with clients including Coca Cola Amatil, felt support had increased from the National Government compared with the previous Helen Clark-led Labour government.

“Helen saw manufacturing as a twilight industry, and boring and to be ignored. [Manufacturing] survived despite that position.”

I wonder what a living wage of $22.89 will do to manufacturers, as they compete with off shore manufacturers?

The report has some ideas:

Compiled by researcher Castalia, the report notes the Government has support initiatives under way, but says more can be done.

The Government needs to tailor export promotion, increase the supply of skilled workers, and help smaller New Zealand companies during government tendering processes.

They sound good ideas.

New Zealand Manufacturers and Exporters Association chief executive John Walley said he agreed with the conclusion that the Government needed to develop an overarching manufacturing policy particularly for “added value” manufacturing.

Firms like Skope needed to be able to compete from a New Zealand base rather than move overseas, Walley said. A high kiwi versus other currencies was the biggest issue the sector faced, he added.

The Government does not set the exchange rate. We don’t have tens of billions of dollars to spare to try and manipulate the exchange rate to whatever level a lobby group says it should be

More bad news for the manufactured crisis

January 24th, 2014 at 3:00 pm by David Farrar

James Weir at Stuff reports:

Manufacturing kept up its head of steam at the end of 2013, and it may do even better in future and hire more staff, with an industry survey showing continued expansion.

For the first time since 2007, manufacturing expanded every month in the year in 2013, according to latest BNZ-BusinessNZ Performance of Manufacturing Index (PMI).

The index was 56.4 in December, similar to November’s 57.0 and puts the quarter average at 56.5.

A figure above 50 shows the sector is expanding and below 50 that it is contracting.

BNZ economist Doug Steel said the firm PMI and robust details suggest that the strong rise in manufacturing GDP in the latest national accounts “was no fluke”. More manufacturing GDP growth is expected over coming quarters.”

Manufacturing GDP posted a hefty 1.5 per cent increase in the September quarter.

The latest PMI survey fits with estimates that manufacturing GDP posted another quarter of growth of more than 1 per cent in the December quarter, and looks on track for the same in the first quarter of 2014.

One of the positive signs in the latest PMI was the high level of new orders at 61.4. New orders have topped 60 points in five of the last six months. …

 Overall, BusinessNZ’s executive director for manufacturing Catherine Beard said that New Zealand’s manufacturing scene was a standout performer, compared with other countries during 2013.

It was only six months ago that Labour, Greens, NZ First and Mana reported back on their manufactured manufacturing crisis. I think they’re so embarrassed by their Chicken Little routine, that the website is no longer operative.

More manufacturing crisis

December 9th, 2013 at 3:00 pm by David Farrar

StatsNZ reports:

Total manufacturing sales volume rose for the September 2013 quarter, despite a fall in meat and dairy product manufacturing, Statistics New Zealand said today.

After adjusting for seasonal effects, the volume of total manufacturing sales rose 0.5 percent, while meat and dairy product manufacturing sales volume fell 2.7 percent.

“Although meat and dairy volumes fell, stock levels are very high for the end of a September quarter,” industry and labour statistics manager Blair Cardno said.

“Outside meat and dairy, we saw a broad-based increase across the manufacturing sector in the quarter.”

Sales volume for total manufacturing excluding meat and dairy was up 2.8 percent in the September quarter, the largest increase since June 2002.

That manufactured crisis in manufacturing just keeps getting worse for the opposition.

The main industry movements were:

  • metal product manufacturing, up 6.6 percent

  • petroleum and coal product manufacturing, up 8.0 percent.

I’d say the way to get a real crisis in manufacturing would be to get a Government that is trying to kill off the petroleum and coal sectors!

More bad news for the manufacturing crisis

August 16th, 2013 at 11:00 am by David Farrar

Labour, Greens, NZ First and Mana recently concluded their inquiry into the “manufacturing crisis”. Sadly for them the manufacturing sector is at near record confidence levels with the July PMI Index at the highest level since is started in 2002, for the month of July.



The BNZ states:

The BNZ-BusinessNZ seasonally adjusted PMI for July stood at 59.5, which was 4.3 points higher than June and a return to strong levels of expansion seen in May. Compared with previous July results, the 2013 value was the highest since the survey began in 2002, and the third highest monthly result on record.

And this part was fascinating:

The very robust level of the PMI overall goes to show the strength of the positives (domestic and possibly elsewhere offshore) outweighing the slowdown in Australia and associated NZD/AUD strength. This is not a complete surprise. After all, domestic manufacturing sales are about a quarter bigger than manufacturing export sales.

This is not to say some are hurting from the stronger NZD/AUD, but rather on balance economic positives are outweighing the negatives and increasingly so. Indeed, it is the economic positives in NZ’s favour that are behind the currency’s strength in the first place.

PMI’s illustrate the relative story. In comparison to NZ’s stunning 59.5 July PMI reading, the equivalent Australian series sits at a miserable 42.0. In fact, NZ continues to sit atop the PMI leaderboard of usual comparator countries.

This is what David, Russell, Winston and Hone call a crisis.

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 manufacturing 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 manufacturing 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 manufacturing 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!

The manufactured inquiry report

June 17th, 2013 at 3:00 pm by David Farrar

The report of the Labour/Greens/NZ First/Mana inquiry into manufacturing is here.

The best comment in the report was on page 24:

Manufacturing Strategy: submitters made it plain that there was little interest on their part in further “talkfests” about the future of manufacturing in New Zealand, or about the need for a “Manufacturing Strategy”, requiring further extended discussion

Which is ironic, as that is what the entire inquiry has been – a massive talkfest.

What is most hilarious is the major recommendations for macro-economic policy:

  • a fairer and less volatile exchange rate through reforms to monetary policy
  • refocusing capital investment into the productive economy, rather than housing speculation;
  • and lowering structural costs in the economy, such as electricity prices

How amazing. By total coincidence the major macro-economic recommendations happen to be the pre-existing policy of Labour et al. They didn’t even have to think up any new policies.

What bad timing

June 15th, 2013 at 1:00 pm by David Farrar

Fran O’Sullivan writes at NZ Herald:

David Shearer, Russel Norman and Winston Peters will have an opportunity to present themselves as the “government-in-waiting” when they turn up to HamiltonJet’s premises on Monday to release the results of their parliamentary inquiry into the future of manufacturing.

What awful timing for them. On Friday the Performance of Manufacturing Index hit a ten year high, and on Monday the three parties will have to proclaim how manufacturing is in crisis and dying.

Mechanisms to deal with an “overvalued and volatile dollar” – which include making the dollar and jobs additional priorities for the Reserve Bank,

Again, what bad timing for them as the dollar has dropped by around 10% in the last few weeks.

Over a four-year period manufacturing jobs have fallen by nearly 40,000 (16.7 per cent); the number of manufacturing businesses has dropped by more than 1300 (6.1 per cent); the annual value of manufactured exports was down by 12.4 per cent; and manufacturing profits fell by 17.4 per cent.

Fran doesn’t say which four year period though. In the last four years the Household Labour Force Survey shows 255,600 manufacturing jobs in March 2009 and 246,200 jobs in March 2013 which is a decline of 9,400 – not 40,000.

Now any decline is not good, but 9,400 is one quarter the size of the 40,000 the Greens stick around.

How inconvenient

June 14th, 2013 at 3:38 pm by David Farrar

Oh dear. The oppositions manufactured crisis in manufacturing has been dealt another blow. Today saw the release of the latest BNZ/Business NZ Performance of Manufacturing Index. And what does it say:

The manufacturing sector recorded its highest level of activity for almost nine years, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).

The seasonally adjusted PMI for May was 59.2 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This is the highest level of overall expansion since June 2004. Compared with previous May results, the 2013 value was the highest since the survey began in 2002.

That’s a strange definition of crisis.

BNZ Economist Doug Steel said that PMI results do not get much bigger than this, even globally. 

“The pick-up is material. It puts upside risk to our manufacturing and overall economic growth forecasts over coming quarters. The strong result essentially gives us more confidence that the recent and forecast upswing in construction activity will flow through to manufacturing activity, with the usual lag.”

Russel Norman will be very upset.



That’s a pretty impressive crisis.

Hosking vs Norman Round 2

June 13th, 2013 at 6:30 pm by David Farrar

Rob Hosking responds to Russel Norman’s claims his figures were accurate:

Well, it seems we have an explanation for where Green Party co-leader got his “40,000 jobs lost in manufacturing” claim.

It is not a good explanation, but at least it is one.

The claim, made in a press release after the release of the latest manufacturing data on Monday, caused no little head scratching.

It came in a press released headed “Manufacturing languishes for four years under National” and went on to claim, “there’s no signs of clawing back any of the 40,000 jobs lost in the manufacturing sector since 2008”.

It did not seem an unreasonable inference that Dr Norman was talking of 40,000 jobs lost since the change of government. Indeed, that was clearly the inference he wanted people to draw.

The trouble is, none of the three measures of employment back this up, and NBR ONLINE took the time to explain why.

The NBR ONLINE story  prompted something of an online debate, especially on Twitter, where Dr Norman demanded an apology and then conceded he was taking his figures from March-June 2008.

As his earlier statement had carefully avoided saying this, NBR ONLINE does not really feel any apology is owed.

It’s pretty easy. Since 2008 doesn’t include half of 2008. Dr Norman could have said since June 2008 but chose not to. The reason is he wanted to deceive people that the 40,000 jobs lost had happened under National, rather than it being 20,000.

99 people out of 100 would take “Since 2008” to be since December 2008, not since June 2008.

Hosking also makes another useful point:

In principle, politicians really should stop talking New Zealand down. It is shallow, cheap and easy, and it is immensely destructive.

This also applies to politicians’ staff, and to economic and political commentators. New Zealand public discourse was dominated for much of the 1970s to 1990s by an all-encompassing and corrosively negative commentary about this country’s economic prospects.

It did a huge amount of damage to the nation’s morale and skills base. At least it was, at the time, based on a real economic crisis.

When such corrosive negativity is based, as this is, on claims of a bogus “crisis” it is particularly despicable.

It is one thing to point out that the manufacturing industry has had job losses. But for a couple of years now the opposition have been trying to literally manufacture a “crisis” in manufacturing.

As an aside, jobs have grown in manufacturing over the past six months by around 5000 – which means even Dr Norman’s claim of “no signs of any clawing back” of jobs lost is just not true. 

But the timing of that 2004 drop in employment is highly significant. It is also when New Zealand firms started picking up their capital investment, particularly in plant and machinery.

In short, a shift began towards more capital intensive and less labour intensive work.

Let’s burn all the machines, and we’ll have full employment!

NBR calls Russel out on his porky

June 11th, 2013 at 3:00 pm by David Farrar

Russel Norman proclaimed:

“There’s no signs of clawing back any of the 40,000 jobs lost in the manufacturing sector since 2008.

Rob Hoksing at NBR fisks this claim:

Manufacturing has lost 40,000 jobs, Green co-leader Russel Norman proclaimed yesterday when the latest manufacturing data came out.

He might be right – if you go back to the late 1990s.

However, Dr Norman claimed the sector had lost 40,000 jobs since the current government took office at the end of 2008.

We’ll call that bogus and leave readers to use shorter or pithier epithets if they so wish.

So who is right? Russel Norman or Rob Hoksing?

The full-time equivalent employee numbers, which are included in Statistics New Zealand’s quarterly employment survey, show 18,000 fewer working in the industry over the past 17 quarters since National took office. 

The previous 17 quarters show a 16,700 drop. Remember this was also, mostly, prior to the global financial crisis, in a much more different – not to say optimistic – environment.

The filled job figures, also contained in the quarterly employment survey, show a 20,400 fall in jobs in the most recent 17 quarters, and 18,300 in the equivalent previous period.

So if you go by the QES, Norman is out by over 100%.

The official unemployment measure, the household labour force, shows a much larger difference.

 The number of people employed in manufacturing fell 9400 since the change of government. The previous 17 quarters shows a loss of more than double that number of jobs, by 19,900.

And from the HLFS stats, Norman is out by 300%.

All these figures paint the same picture with a slightly different emphasis: the sector has been employing fewer people for a long time. 

They also show Dr Norman is just making numbers up. 

Making a lot of things up lately to manufacture a crisis in manufacturing.

The manufactured crisis is failing

March 16th, 2013 at 12:00 pm by David Farrar

How inconvenient for Labour, Greens, NZ First and Mana who have been holding their faux inquiry into the manufacturing crisis.

Stuff reports:

The manufacturing sector is expanding at its best rate for a year, as it gets get a boost from the Canterbury rebuild and wider construction work, according to a survey.

The latest BNZ-Business New Zealand Performance of Manufacturing Index was up 1.1 points  to 56.3 points in February.

A figure above 50 indicates that the sector is generally expanding and under 50 that it is going backwards.

The latest figure was the highest reading since February 2012.

BNZ senior economist Craig Ebert said the result reinforced the bank’s view that manufacturing was not “in crisis”.

 “The figures speak for themselves. The way some people are talking, we should be witnessing a very weak, to plunging, PMI. In fact, it’s improved to a more positive level,” he said.

A funny sort of crisis.

Grant on Manufacturing

February 10th, 2013 at 10:00 am by David Farrar

Damien Grant writes in the HoS:

David Shearer and his cohort of prospective coalition partners, the Greens, Mana and NZ First, are holding a show-trial into who killed the manufacturing industry.

Forty thousand manufacturing jobs have disappeared, Shearer declares.

What he does not say is those 40,000 jobs have gone since a peak right before the 2008 recession and almost half of that loss occurred in the final year of the last Labour government.

But if Shearer and his band of the grumpy and frumpy were to take the time to read the Department of Statistics September 2012 Economic Survey on Manufacturing, they would learn that total sales in the sector have been static.

Falling from a high of $24 billion in 2008, it is now sitting at $23 billion, measured in 2010 dollars.

The industry has become more productive; jobs have gone, but sales have not.

A good point.

Shearer is known to enjoy the surf, so he will understand it is best to ride the waves – not try to turn them back.

Manufacturing jobs that have gone are not coming back and there is nothing he, Graeme Wheeler or King Canute can do about it.

As well as his plan to build slums for the urban poor in areas where there will never be any employment – manufacturing or otherwise – he is granting a platform for the vested interests of the likes of the Manufacturers Association to cry about the exchange rate.

It is worth noting that the MEA represents relatively few manufacturers. Business NZ has a far higher proportion of manufacturers in their membership.

Manufacturing jobs have been killed because the economic tide has moved.

Shearer knows it, or should know it.

He may be king one day and if he is telling us he can control the tides of economic change, then he is going to look pretty silly on the beach after the next election.

Grant points out we also have fewer typists and lighthouse keepers than we used to!

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 “manufacturing 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%.


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.