Jon
Is it just coincidence that FP dump the news of huge layoffs on the same day as Bollard raises the OCR? I have posted many comments on previous forum regarding housing but all these things are related. The high dollar has pushed up housing, and made imports cheaper. These are superficial pleasures for the general hoi polloi. Do importers really generate wealth? or are they 'paperpushers'. I don't think productivity can be measured by consumption - but by real, stable, jobs, that allow you to afford housing. If the government caused the OCR and dollar to be where they are - clearly they caused exporters and manufacturers to make the decisions they have. I think it is time that someone actually asked them do they feel responsible for the loss of 350 jobs? or is the free market the god of our generation. Something omnipotent and mysterious that cannot be questioned?
Marti
In today's global market, any advantage must be seized in order to find a profit. By off shoring manufacturing to countries that have lower labour costs and overheads, profits can be increased. It is a shame when people loose their jobs because of this but the bottom line is a company has to be focused on surviving in a cutthroat market. People want a choice of which product they want to buy. They are not interested in brand loyalty or if a product is made in NZ. More often than not the price is the largest factor in choosing products. If you can but an LG fridge made in Thailand for $1000 or an F&F fridge made in NZ for $1500 which would you choose?
K Lim
Don't cry over it. Restructure the economy and concentrate what NZ is good at. For example: Use your 6 millions sheep for anti aging. Creativity in movie making. Sport tourisim like fishing, golf, mountain hiking, yachting etc. Spa. Too many rich people, NZ is not on the radar screen of terrorists, you can leverage on that. Education. Australia is more successful. Change the image that NZ is beautiful but dull.
Jim Kilgour
I think that the bosses of the large companies are expecting too much of the New Zealand public and workers. They seem to forget who got them to the position they are now sure exports dont bring in the same amount as before but doesn't it work the other way as well and imported items cost less possibly evening up the financial side of affairs. They seem to want it both ways but in the real world this does not happen,
Dean Eyre
NZ has the 'Dutch disease' where an appreciating currency destroys manufacturing.The only answer is to cut taxation and spending by government
Sarath
F&P's main competition appear to come from brands such as Westinghouse (Australia), Miele, AEG, Bosch(Germany), Asko (Sweden). Unless I am mistaken all these brands are made in the countries listed, which have higher wages compared to New Zealand. How can one then believe Mr Bongard's assertion that F&P manufacturing is shifting to Thailand to overcome unfair competion from lower wages?
San
Yes it is sad that manufacturing especially that with history is moving abroad. In reading this and other comments my thoughts are as follows. Stop blaming the government and the RB. Interest rates and the Kiwi are because NZers can't stop spending and don't save.Christopher J's comments are pretty spot on and his examples of the broadband experience in NZ and the famed but fictitious notion of 'kiwi ingenuity' are also not far off the mark. And when it comes to the very serious issue of global warming where NZ and it's perceived image should be leading on the world stage, in fact NZ leads the world in Climate Change deniers! Global Warming or Climate change may be a depressing topic but the solutions to it are real and achievable. The business of which makes the internet boom look like nothing! This failure to ride this wave is sadder than anything I can think of for New Zealand.
US Kiwi
Can you explain how the falling US dollar, which I agree is tanking, has caused housing appreciation around the world? The housing bubble in the US is over, as it is in the UK where prices are starting to decline, and now in Spain. The bubbles around the world were being created long before a falling US dollar. The low interest rates in the US, along with liar-loans and the US gov printing money like crazy drove up the housing prices and now everyone is about to suffer- upside down mortgages are becoming common, closely followed by foreclosure. If this pattern follows in NZ on the next down cycle, then all those that took money out of their houses to buy toys are really going to be in trouble.
Rachel
Andrew - MacPac is made in the Philippines, not China. And as for Sir Ed, the $100 tee-shirts that have a strand of his Everest climbing sock in them that are currently being sold in NZ proudly have a 'Made in China' label in them. Why are people so keen for NZ to compete in the manufacturing sector which has now moved largely to the developing countries such as China, India and the Philippines? NZ needs is a developed country and needs to compete as such! Send the low-cost manufacturing offshore and keep the head offices at home. Product design and running a business is where people earn a decent living and NZ can try and keep its standard of living on par with the rest of the developed world.
John
Why is everyone acting as if this is a bad thing? Low-margin manufacturing (like washing machines) are only going to get less and less profitable. In 10 years time, this will be Thailand's problem. Most of those 350 employees are going to get jobs pretty quickly, and I'm guessing better paid - because they'll be working for companies that can make a profit with less difficulty.
Thilal
This news is too late! F&P should have gone there last decade! Nobody is responsible for this because this is a typical characteristic of free trade. Economies of scale and low wages are major factors in the bottom line of any company. What we must - at least now - understand is that there is no big time here for manufacturing average goods like fridges and washing machines for export. We must develop high tech and bio-tech products in NZ for which we have abundant human and other resources. Those are the products which yield over 300 per cent profits, even after paying first world salaries to employees. Pharmaceutical is another great & promising industry which we have not yet even thought of! Made in NZ is catchy and the world is ready to pay a premium for goods, if it is human health related.
Pub
Nothing is wrong with manufacturing. NZ dollar used to be 1.5 dollars, versus the current 73 cents. Life goes on.
Sunil
In fact nothing is wrong with the manufacturing industry. Its the government policy which one day will lead to closure of all manufacturing entities. The days are not far when Fonterra will follow the same route (Cows overseas will be more preferred because cheaper to extract milk and do trade):-)Time for the government to open their eyes and address the real issues and a complete revamp of Taxation/ financial policies is required. But everyone knows politicians.
Steve Milne
The government must look at the following areas. NZ dollar needs adjusting. FTAS NZ should withdraw from all FTAS as the economic models used to argue that bilateral trade agreements would deliver benefits to NZ are flawed. Current analysis in Australia based on actual experience shows a net flow of jobs out of Australia as a result of the FTA they have with China.In the vicinity of 150,000. FTAS in NZ would risk entire sectors of manufacturing. Manufactures could not compete with the Chinese as there manufactures receive billions of dollars by way of government support and a discriminatory tax system.
Justin
I live in Korea and visit NZ very often. I'm working for American company which makes semiconductor products for cell phones. Product designs are done in various locations in the world while manufacturing plants are all in Asia. Asian countries have very strong competency in manufacturing. So, it is not wise for NZ to compete mass production manufacturing with Asian countries. I know NZ has very good people resources, superb environment, and excellent education system. NZ has huge potential if national vision is well established. I always compare NZ with other countries in Europe like Finland and Swiss. They were not prosperous before. Nokia of Finland has manufacturing sites around the world, focusing designs in Finland. Swiss has strong manufacturing, not mass production but quality hand made products. So, I think NZ should focus on educating high value added work forces rather than just simple manufacturing works. I think NZ can do it. CEO minded leader is desperately needed.
Chris
Our problem is that we have no competitive advantage in most of our manufacturing. An employee in an industry where there is no competitive advantage will always have job security risks and should be aware of these. The investor's focus is on returns commensurate with the risks of the investment (not greed!), if sourcing manufacturing overseas is beneficial to the bottom line then it must be done. And as a result jobs get cut. It's nothing personal to the NZ employee who in most cases would have performed a fine job for the company. But alas, an employee is an expense like many other things and if this expense can be cut without any loss to productivity or quality then it will be done. One cannot operate under the false perception that the market won't change and economics plays its part in influencing decisions by business. But business has to respond to the changing economic circumstances in order to survive. And will always put its survival ahead of some employees jobs, because without the company there are no jobs at all. Only support kiwi made that has a competitive advantage over foreign made, why would you settle for less?
Jimmy Leadbeater
Jay Sinha, The minimum wage rise is not to blame. These workers were not even on minimum wage. If you read the company's statements they have blamed the high dollar and the removal of tariff protections in Australia.
Working class boy
I can't help but smile at the misplaced loyalty of the labour-voting electorate. How many average working people said they'd be voting for Helen because Labour 'looks after the people'. And what has the government done to invest in New Zealand's manufacturing infrastructure, or offer incentives to encourage businesses to start up or employ our people? Everyone says it's all about the high wages here (which is a joke in itself) It isn't. It is because the present administration is frightened of offending its Asian trade partners, willing to accept any number of shoddy foreign imports rather than make them here unwilling to do anything to protect the workers goods and businesses of New Zealand. Rather, they take their fat MP salaries and wring their hands about how some things are 'beyond their control' or even more insulting, remain deadly silent. In some countries a disaster like F&P would at least get some kind of acknowledgement from the government. Funny they are much more vocal at election when they queue up to take their share of the union cash to finance their next bid for power. So much for the party of the worker - Absolutely disgusting and shameful. On the bright side, when the unions are so decimated that the cash will run out they at least will go bankrupt Oh but they already have that one tagged, don't they?
Bill Moulder
Its quite simple. NZ cannot compete. Our labour and infrastructure costs as well as our fluctuating exchange rate make it an impossible task to keep the actual manufacturing base in NZ. What F&P are doing is what every sensible enterprise is doing. Keeping the design and intellectual rights here and making the goods elsewhere. Just a thought
Its funny how when companies like this decide to move offshore for cheaper manufacturing we don't see a corresponding reduction in the price of the product. If it costs a quarter of the price of what it costs to produce the product here (as mentioned by another poster) why does the price remain the same? It is a perfect example of yet another Western company taking advantage of the poor employment laws in other countries to further better their own profits in an increasingly greed driven world, of course the catalyst in all of this is the New Zealand Government, they don't exactly make it easy for those wanting to produce their product here in New Zealand......they need to pull their finger out and sort out what their priorities are. Bottom line is more money invested in overseas companies means less money here in New Zealand. Soon nothing is going to be produced in New Zealand and nothing in New Zealand is going to be owned by anyone in New Zealand and naturally, we are all going to pay for it through the nose.
Izzy
Alan W: Let's see: record high tax take, record high dollar, record high balance of payments deficit, record high local government expenditure and rates, record high regulatory controls and delays on land and building development, ludicrous difficulties in firing poor staff, record high numbers of government bureaucrats, mind-numbing delays and barriers for well-qualified enthusiastic young immigrants. No, nothing there to suggest why New Zealand isn't a great place to develop a business.
Shirish
The Govt and Industry must discuss and encourage manufacturing industry sector especially in non polluting industries viz: IT, Biotech and high value sector. There should be tax incentives/funding for NZ industry. NZ's share of global exports is dropping rapidly and this will ultimately lead to more job losses and closure of industry.
Peter
If New Zealanders invested in our local share market instead of domestic property then they could influence these corporate decisions as a wider reflection of our society instead of a narrow minority.
Paul
F&P are moving towards being a more global company. When less than 18 per cent of your sales are in NZ you have to ask "where's the best place to manufacture for global supply?" It's in Asia and they have made exactly the right decision. It's sad but exactly the right business decision. NZ should not protect or subsidise this type of business, but rather invest in what we are good at - and that is plenty
Tony
This is a symptom of the dilemma the government and the reserve bank are in. The talk about house price inflation is a red herring. While immigrants are coming over in quantity with cash to buy homes the prices will always go up. Immigrants are keeping the Kiwi dollar afloat.Demand for houses is exceeding supply, the first law of basic economics. The truth is that if and when the dollar falls, prices will rise, causing inflation. So people are buying now and will continue to do so while imports are cheap, expecting the dollar to fall and prices of imported goods to rise, not to mention petrol! Inflation leads to wage claims. This government does not want that with an election looming next year, it wants to preserve the myth that everything is under control as long as it can. How many more exporters are going to lay people off or go bust before the message gets through?
Bo
It sounds sad for all workers and for manufacturing industry in NZ, but there is a trend of global free trade, don't isolate New Zealand out of the world, don't complain the movement of business, and cheap labour in other country because NZ is incompetent in these areas. What we should think is to look forward to develop what New Zealand can offer to the rest of the world in its unique, like marine farming, tourism, and hi tech telecomuunication.
Lynda
The problem with the world is the share market where all businesses now gear themselves up for the dividends that CEO's can pay themselves as usually shares are part of their salary package.
Seaglen
20 years ago we decided that instead of converting our manufacturing from domestic to export focused, we would close it all down and import from overseas. The governments since then have employed a hands off approach to economic development. Faced with a decision between a technology park and a supermarket, they chose the supermarket.The government spending which is being criticised today is simply an attempt to make up for the neglect of the past 20 years, like tax cuts in isolation it is doomed to fail. Overseas it has been realised that central banks should take growth and social factors into account as well as inflation when setting interest rates. A more proactive approach to economic development rather then watching budding startups sold overseas and closed down would help as well. The knowledge wave never had a chance to break. The third way is really no way at all.
Joe
They should do something to devalue New Zealand dollar ,everyone know is NZD is overvalue and will drop back but the finance minister and RNZ they should act togther to speed up the dropping or our country will be the loser ,till this happen will be hard to gain back what we lost .
Adam
This is because of Alan Bollard raising the interest rates. Exporters need to cut their costs to be able to lower their prices to be competitive in the international market.
Christopher J.(Supply Chain Consultant)
In today's global economy no one's job is guaranteed no matter what employers or governments say. The fundamental purpose of any business is to make money; not employ people or contribute to someone's idea of social engineering. If a business is not providing an acceptable return to the board & shareholders they will inevitably take action to correct the situation; such as move jobs overseas. In New Zealand the fundamental problem is that labor productivity is not competitive with other industrialized and all the protectionist measures union officials & politicians can think of won't change it. (The decline of the American auto industry is the classic case) New Zealand industry and government seem unwilling or unable to take the action necessary to address the productivity problem. Two painfully obvious examples of this are: 1.The government's & Telecom's inability to fix the deplorable state of New Zealand broadband 2. Manufacturing business' reluctance to invest in state of the art Warehouse, Production & Inventory Management tools, and instead rely on the fictional 'Kiwi ingenuity.' (After all, if we're so ingenious, why is our productivity relatively low?)
Philip
Whenever labour costs are high, manufacturers will always relocate to somewhere with a cheaper labour force...in this case, Thailand is the flavour of the month.
Hamish B
It is a fact that we cant compete with manufacturing in Asia, and the distance from NZ to major markets is a problem. As the company is NZ based the extra profits they make will put more money into the government coffers. With full employment, I am sure the workers wont have a problem re-skilling and getting new jobs. What the government needs to do is ensure more Head offices are based in akld and not in Sydney.
Catherine
This is just a local symptom of the world wide 'race to the bottom' by businesses. Whoever can give us the cheapest price and maximise our profits is where we will base our companies. This is called the capitalist economic system. This is the way it works. Unfortunately in this system humans are just a cog of production in the system. It does not matter to the system about their jobs, families or anything else vaguely human. The only people who can change this are the ones who are willing to face the financial pain and put their human ethics before the almightly bottom line. Maybe some paycuts at the top of F&P may help? Maybe some advertising towards 'buy kiwi made and keep jobs here'? I am willing to pay more if I know the product is made here in NZ.
Richard Z
I suspect Helen and Michael are secretly pleased about this news, as that's 350 more people to go onto the dole and become Labour voters. And let's face it, they need every vote they can get.
Andrew
This is a sad day indeed for all New Zealand manufacturing as yet another icon of New Zealand is forced to sell out its workers and heads off shore.The government really needs to heed the call and protect whats left of our manafacturing sector else it will be gone for good. We need to shut our doors to the flood of cheap low quality goods from Asia and work towards building our own manafacturing so that local products are both affordable and keep the people who produce them employed on a decent wage.New Zealand made is synonymous with quality, I doubt Hillary would have climbed Everest in Mac Pac gear made in China. I certainly wont be buying F&P products knowing they're made in Asia. You cant try and tell me a product made in Asia is of the same quality as a product made in New Zealand.
David Wyeth
I am stunned by the fact we allow all manner of garbage to be imported from China and Asia in general but they have tarrifs and duty on their own imports from us. The government should apply a 20 per cent import duty, keep the cheap rubbish out of our landfills and make local manufacture viable. But no we will keep spending pretend money from artificial property values on trinkets and baubles, then send any money we earn offshore as interest on all the money we borrowed.If an individual behaved financially as the country does they would soon see themselves in bankruptcy.
Sunil Dhall
It comes as no surprise to me since NZ never had any strong manufacturing base like say Singapore or any competitive advantage in any industry. Today low cost economies like China, India are able to produce high quality goods at competitive costs whereas economies like Japana and Germany are still competitive in high value added items. NZ will become a complete service and commodity economy in the future as manufacturing gone overseas one will never return back.
Tim Spooner
Talk about history repeating itself! Back in 1986, I was heavily involved in exporting, when the dollar was floated. After a few short weeks when it depreciated, it rose to high levels on the back of interest rates. There it remained since then, sustaining a high level of the NZ$ against major trading currencies. Make no mistake, it is not a case of slicing into margins, it is a case of destroying all gross profit, leaving nothing to pay the bills. Thus, many companies simply went under or moved off-shore (Fiji,China etc). Clearly only those companies with a strong domestic market were protected and other start-ups like the Warehouse have enjoyed bumper profits due to the high dollar. With the very recent highs in the NZ$,after a long period of "high" dollar, the time has come to either close the export business or move offshore to cheap labour countries, such as Thailand where we have a new FTA. F&P will just be the first of many remaining manufactuers to move their manufacturing offshore. The politicians have no clue because they and the bureaucrats have never worked at the coalface of exporting. Too many teachers and lawyers! Start packing now, because manufacturing jobs are going to be non-existent in the next 12 months. I now work in Thailand as well as NZ as a consultant. Best move I ever made!
Tane
Adrian, stop with the ridiculous union-bashing. Where else do you think the F&P workers got their great redundancy clauses from, but through the union? As I understand it from people I know who've worked at F&P, the company and the union actually had a pretty good relationship.
Colin England
You can't blame government spending for inflation. The $6.5b surplus is money taken out of the economy and is deflationary. This isn't saying that government spending doesn't increase inflation - it does - but that it is only a minor part of it. The greater amount is created by demand for money which is supplied by the privately owned banks printing it. Their ability to print money is determined by how much they have in reserve and that amount keeps going up as the RBNZ increases interest rates because more foreign investors are willing to buy NZ dollars because of the higher return. The demand for money keeps increasing as house prices keep increasing. House prices will keep increasing as long as the banks are willing and able to print money. If the RBNZ wants to stop our inflationary spiral they need to drop interest rates down to about 1 per cent. This will reduce demand for NZ dollars reducing their value on the foreign exchange. This will boost our export sector as they become more competitive. The government needs to make speculation on houses impossible and the only way to do that is to set rates at a percentage of income per residence. Capital gains tax won't stop speculation in housing.
Alan Wilkinson
Let's see: record high tax take, record high dollar, record high balance of payments deficit, record high local government expenditure and rates, record high regulatory controls and delays on land and building development, ludicrous difficulties in firing poor staff, record high numbers of government bureaucrats, mind-numbing delays and barriers for well-qualified enthusiastic young immigrants. No, nothing there to suggest why New Zealand isn't a great place to develop a business.
Joseph Mascarenhas
Manufacturing suffers when the dollar appreciates.A county should be proud of a strong dollar. Bush's trillion dollar spending on his wars, has made the American dollar worthless and has led to currencies, house prices and stock markets, around the world appreciating.The NZ Govt. which makes a 10-12 billion dollar surplus every year can help manufacturing and exporting companies, and individuals, by reducing the tax rates. Year after year they make huge surpluses, but do not help companies survive and compete internationally. GST is 10 per cent in Australia, Petrol would have cost less than a dollar a litre without Govt. taxes but none of these taxes are reduced. I suppose labour needs the extra taxes, so that they can 'overspend' on the next elections. To grow the NZ economy which has 4 million people, we need migrants. However they need to be economically self sufficient and not rape the country by depending on handouts from taxpayers money.
Mary
This is indeed very bad news for the workers of Fisher & Paykel. Being located in East Tamaki, no doubt most of the workers come from the South Auckland area, which is already one of the less affluent areas in the region. Once again in the name of the almighty dollar it's the Kiwi workers who will be put on the scrapheap of life and the result will be the creation of more poverty. This government should give NZ manufacturers incentives to keep their industries in this country which in turn will create employment for the NZ workforce. The cost of the rising poverty situation in this country through the out sourcing of work to overseas sweatshops, must fall squarely on the shoulders of this government for allowing NZ workers to become prey to the evil which is globalisation.
Jay Sinha
This is result of increasing minimum wages too quickly. Minimum wage should be liked to other economic indicators than election promises.
Man
There is no surprise for me to see the F&P Appliance moving to overseas eventually, because that is not the type of manufacturer can survive in New Zealand. Government should encourage more high tech end of manufacturer stay and develop here. Unfortunately that's not the day for F&P Appliance.
John
It's all about the bottom line for the beanies. Using slave labour makes more sense then having to pay for workers whose rights and pay are protected.
Good on F&P
F&P is a profit making company, just like any other companies. If it's cheaper to manufacture/produce goods in Asia, then why stay here in NZ with higher costs? As a profit making company, you'd want to lower as much costs as possible and charging as high as possible. Take a look at NZ car assembly industry. They are all closed! It's cheaper to just direct import from Japan than to assemble them in NZ.
Stewart (Aust)
Wake up you whingers! Dont blame the Government - the same thing is happening over here in Australia. Its called globalisation! And we have had a Liberal/National Coalition for 12 years! How do you expect manufacturers to compete when labour is a quarter of the price in Asia?
G.O'Neill
What take home pay do the Board of Directors of F & P receive? Does it bear comparison to those workers they have made redundant, the wages they are now going to pay the off shore workforce or are they not prepared to take a cut themselves to keep the company in NZ? This is simply greed at its worst.
Adrian
I spent 10 years at F&P and gained a wealth of knowledege and experience that you can only get in a company like this. Small business can't offer the same opportunities. I left quite a few years ago but the writing was on the wall then. Poor government support, union interference and high trans tasman shipping costs. F&P fought against these things constantly. I'm suprised they didn't make the move sooner. Its a shame as needn't have happened. With foresight we could have created an environment that encouraged manufactures to set up here, not go else where. Its not 350 jobs; the knock on effect will be serious. The rest of the operation will soon follow. NZ manufacturing is now completely gutted. Well done NZ
Jimmy Leadbeater
The government needs to act now to abandon the failed doctrine of monetarism. It's madness to rely solely on the OCR to combat inflation. We need to be looking at alternative ways of tackling inflation that don't endanger the manufacturing sector