Confusion Abounds

26-Aug-02

Available for immediate use

Confusion Abounds

Confidence improved a little; a few more optimists and fewer pessimists showed up in our survey of Canterbury manufacturers completed in AUGUST. On a net basis -19 is better than the -36 last month. "Confidence has oozed back a little," said John Walley, CEO of the Canterbury Manufacturers' Association, "perhaps this is breaking the trend of the previous quarter, or a transient blip in the post election hiatus. Looking forward there is little relief on the horizon for international trading terms, particularly for those focused on the Australian market. More generally the performance numbers show a weakening trend across both domestic and export market and this has to be a worry.

Year on year to the end of JULY overall sales on last year fell around 16%, domestic sales by around 10% with exports down some 20%.

Staff numbers have also decreased by around 3.5% on the same period last year. In the survey completed in AUGUST all our leading indicators - staff, investment, profitability and sales - continued the slight improvement indicated last month moving into the slightly positive trend territory. "We have slightly positive expectations and slowly improving confidence off a low base and at best the situation seems fragile. It is hard to pick what the next quarter might bring." said John Walley.

From the constraint standpoint, market conditions improved a little to around 75% with staff and capacity limits at 13%. Capital is not reported as a constraint by our sample.

"The strength of the NZ Dollar, particularly on the Australian dollar cross, concerns around the future of Port Lyttleton and key staff availability are cited as difficulties," commented John Walley.

With the election over, the economic dream run over and public sector pay pressure growing, New Zealand's policy settings to must encourage transformational behaviour sooner not later. These include:

Make more stuff people want:
- Tax incentives to drive more research and development
More investment in productive processes:
- Accelerated depreciation on capital plant, tooling and patents
More funds for investment:
- No tax on retained earnings for small and medium sized enterprises
Upgrade human capital on the job:
- Incentives to increase training and staff develop in small and medium enterprises
Clear the way to focus on the opportunity:
- Clear the red tape from small to medium enterprises.

For further information, contact: John Walley, Chief Executive,
Phone: Mobile: 021 809 631

Survey of Business Conditions - JULY 2001 compared with JULY 2002

SAMPLE SIZE:
As the Survey respondents represent approximately 17 percent of manufacturing employment and a similar percentage of local production, this indicates trends in Manufacturing in Canterbury

CHANGE OVER 12 MONTH PERIOD (The table below represents the above returns expressed as percentages)

July June
TOTAL TURNOVER:
Export /Domestic ratio
51/49
63/37

% Change in Total Turnover DECREASED
-15.54
-18.92

DOMESTIC TURNOVER:
% of respondents reporting a rise
46
41

% of respondents reporting a fall
46
50

% of respondents reporting no change
7
8

% Change in Ave Domestic Turnover DECREASED
-9.19
-24.2

EXPORT TURNOVER:
% of exporters reporting a rise
22
22

% of exporters reporting a fall
66
77

% of exporters reporting no change
11
0

% Change in Average Export Turnover DECREASED
-20.9
-15.4

STAFF NUMBERS:
% of respondents reporting a rise
46
54

% of respondents reporting a fall
26
36

% of respondents reporting no change
26
9

% Change in Average Staff Numbers DECREASED
-3.54
-0.22

CHANGE OVER 12 MONTH PERIOD (The table below represents the above returns expressed as percentages. Last month in brackets.)

Large Fall
(Over 15%)
Modest Fall
(2.5%-15%)
No Change
(Within 2.5%)
Modest Rise
(2.5%-15%)
Large Rise
(Over 15%)

Profitability
19 (42)
13 (17)
13 (17)
31 (17)
25 (8)

Cashflow
19 (17)
13 (33)
19 (33)
38 (17)
13 (0)

Exchange Rate
0 (8)
44 (42)
31 (33)
25 (17)
0 (0)

Investment Plans
19 (33)
25 (25)
13 (8)
25 (17)
19 (17)

Sales Forecast
0 (8)
25 (25)
19 (17)
31 (42)
25 (8)

Profit Forecast
6 (8)
19 (42)
38 (0)
6 (50)
31 (0)

Staffing Levels
0 (8)
25 (33)
44 (25)
25 (25)
6 (8)

Confidence
Very
Negative
0 (0)
Negative

38 (42)
Neutral

44 (50)
Positive

6 (8)
Very Positive
13 (0)

Constraint Production
13 (0)
Skilled Staff
13 (8)
Capital
0 (0)
Market
75 (92)

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