KEY POINTS:
Union leader Andrew Little is worried the move by Fisher & Paykel in seeking cheap labour overseas could result in copycat action by other manufacturers.
"They might say we'll do it now because the debate is running and the Government is copping it," he said.
Mr Little, national secretary of the Engineers, Printers and Manufacturing Union, said companies tended to get away with blaming shareholders wanting to maximise profits, which could be done by sending work overseas without much heed to what happened to the local communities.
"You have to wonder how worthwhile the cost savings to Fisher & Paykel of $10 million to $15 million will be ... given the disruption it is likely to cause not just to 350 workers and their families but the communities they come from."
Mr Little said the manufacturing sector was being squeezed, with jobs increasingly being shed. The workers would not necessarily be easily reabsorbed into similar work, he warned.
Mr Little challenged the manufacturing sector to "move up the value chain" and increase margins to better withstand volatile exchange and interest rates.
National Bank chief economist Cameron Bagrie said structural aspects of the economy made it more expensive to do business in New Zealand. From 1990 to 2000 there was productivity growth of 2.6 per cent per year in the business sector but from 2001 to 2006 that fell to 1.1 per cent.
"So that's been a massive deterioration ... You've got to start asking why. It suggests businesses are finding it a lot harder and, to me, there's a certain policy element to it."
Mr Bagrie said the regulatory environment saw compliance costs imposed on the business sector, which could legitimately have a few gripes.
Deutsche Bank chief economist Darren Gibbs said there was more to Fisher & Paykel's decision than currency values. To some extent globalisation had prompted matters.
"Clearly it's possible to produce some of these things cheaper offshore. While currency may have accelerated the moves, there is an argument it may well have happened in any case."
Alasdair Thompson, chief executive of the Employers and Manufacturers Association, said cheaper labour had been available overseas for a long time.
Asian Governments had also offered big incentives such as lower tax environments.
"You have to ask what finally triggers companies to go."
Mr Thompson said the local business environment had to be a major factor.
He criticised poor-quality and "out-of-control" Government spending which fuelled inflation, high interest rates and the dollar.
Mr Thompson said the Government needed to relax regulations and introduce lower and flatter taxes, reform local government and help organise assistance to exporters in overseas markets.
