Exporters Moving Manufacturing Overseas Not Necessarily All Bad News

Job losses due to North Shore exporters moving the high volume manufacturing portion of their operations overseas are not necessarily all negative and can often save the life of the businesses involved, Enterprise North Shore says.

With many exporters around New Zealand – including those based on the North Shore - choosing to move manufacturing overseas to take advantage of cheaper labour, access to basic materials and overseas customers, Enterprise North Shore says the overall negative public reaction to such news is often unnecessary.

“In instances where businesses move some production offshore, the news media make much of the immediate loss of jobs, but can fail to comment on the companies’ likely sustainability had they not acted,” Enterprise North Shore’s chief executive Terry Hoskins says.

“Forced redundancy is bad news but exporters must make use of the considerable benefits offered by the ‘BRIC’ countries – Brazil, Russia, India and China - and if North Shore businesses do not look to employ the most efficient large-scale manufacturing production facilities, then competitors certainly will.

“It’s commonsense that North Shore residents who retain their employment are far more secure with a profitable company to support them.”

Five months ago, a dismayed public saw Morgan Furniture become the third North Shore company in as many months to announce it would cease manufacturing locally, with the loss of 70 jobs.

In the face of a high New Zealand dollar and low domestic productivity, the benefits to exporters of manufacturing in Asia can be considerable.  BRIC countries, in particular, offer the chance to break into massive and increasingly affluent markets, Mr Hoskins says.

North Shore industry is rich and diverse, with strengths in finance and business services, information and communications technology, small-scale and high-tec, low volume manufacturing, education, health, retail, sport and leisure.

Industry is thriving, Mr Hoskins says, with GDP set to exceed the national estimate by approximately 5% and lower than average unemployment, but the local and national economies are changing and moving part of their operation overseas is a consequence for some enterprises.

“The sun is setting on some types of industrial activity industries,” he says, “but is rising for more knowledge-based industries.

“The local economy is poised for sustainable growth.  Some of the challenges we can expect include the continuing high New Zealand dollar, the global banking credit crisis, creeping inflation and the full employment situation.”

Whether North Shore companies choose to manufacture locally or overseas, Enterprise North Shore is geared to support them, where appropriate, in its role as the city’s economic development agency.