Manufacturing future looks bleak

Press, 20 July 1987, Page 7

Manufacturing future looks bleak

By

OLIVER RIDDELL

in Wellington A bleak future for manufacturing in New Zealand has been pictured by the president of the Manufacturers’ Federation, Mr Don Rowlands. He has launched a manufacturing manifesto. Manufacturing was withering and the woeful downturn in manufacturing investment had implications for New Zealand’s economic and social future. Government policies were to blame for the decline in manufacturing exports, Mr Rowlands said. The competitive rate the New Zealand manufacturer had encountered ■ in various markets included a 25 per cent fall - in the main Australian market. Rather than foster stability, the policy of deregulation had created one of the most unstable climates for manufacturing in recent times.

The manifesto said that central to this had been a monetary climate which had provoked bewildering’ swings in interest rates. The high price of money had attracted big inflows of foreign funds, which had in turn distorted and inflated the value of the New Zealand dollar, divorcing it from the underlying terms of trade. Exporting had become less competitive and severe inroads had been made into the effective levels of tariff protection, Mr Rowlands said. Pressure from the generally inhospitable environment had resulted in the retrenchment and the closedown of dozens of manufacturing units, including export-targeted enterprises. He said investment was. now at an all-time low. To, ensure their survival, many leading progressive companies had either al-, ready set up manufactur-

ing units abroad or were seeking to do so. Manufacturing was the direct provider of 20 per cent of jobs, the manifesto said. One job in manufacturing supported three in servicing. There were six requirements for manufacturing to be healthy:— A general level of border tariffs, recognising the economic environment in which industry existed. Tariffs for specific industries. Use of appropriate forms of quota, consistent with international obligations. Retention of the worldwide practice of using contracts of State-owned agencies to foster domestic industry. Deferral of any further tariff reductions until there was a stable trading climate. A quasi-judicial review body to advise the Government on appropriate tariff levels.