NZ looks attractive to Aussie industry

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New Zealand is becoming an increasingly attractive manufacturing destination for Australian companies, according to the head of an industry group.

Global food corporation Heinz announced on Friday that it would move the production of sauces, canned beetroot and meals from several plants across the Tasman to its Hastings subsidiary, Watties, which it acquired from Goodman Fielder in 1992.

Although the jobs of more than 300 Australian workers at the company face the axe, only a handful of new positions are expected to be created in New Zealand, as facilities in this country would absorb increased volumes.

But ManufacturingNZ executive director Catherine Beard said manufacturing was "like an ecosystem".

"If 300 staff aren't going to be employed directly as a result of this move you'll probably find that any manufacturer or food processor has a long list of suppliers."

Beard said New Zealand's company tax rate, and its lower valued currency and wage rates, made it attractive to Australian manufacturers.

More transtasman relocations may take place in the future, she said.

NZIER principal economist Shamubeel Eaqub said New Zealand had lost around 35,000 manufacturing jobs over the past three to four years, as firms shifted the positions to lower cost countries or went belly-up as a result of the recession.

"This [Heinz's move] is very encouraging in that some of the manufacturing is coming back," he said. "It shows that manufacturing is not necessarily dead."

Eaqub said Heinz's shift gave some weight to Bill English's comments on TVNZ's Q&A last month, when he said New Zealand should use its comparatively low wages to attract investment from Australia. The Finance Minister drew criticism for his comments from unions and the opposition, with Labour finance spokesman David Cunliffe saying National had back-tracked on its promise to close the wage gap between New Zealand and Australia.

"The comments did cause a bit of controversy but in the broader context of the discussion, what [English] was trying to say is we have to look at the glass half full," said Beard.

Eaqub said New Zealand's strict food safety standards, as well as its clean and green image, meant it was a sensible choice.

"For high quality, high value-added food products - it would be better to manufacture them here than in some Asian countries where they may not have the same standards."

Heinz said it expected to move production over the next 12 months.