Lack of Confidence Means Sales Plummet

Media Statement
Thursday 26 February 2009

Lack of Confidence Means Sales Plummet

When The Economist has a cover page article – The collapse of manufacturing – we know we are living in extraordinary times, says Paul Winter, CEO of the Employers and Manufacturers Association Central.

Mr Winter said history shows that in times of uncertainty much of the demand for a wide range of consumer manufactured goods, and business to business manufactured content, falls much more rapidly than for processed or manufactured food and other necessities.

“It has been some time since manufacturers have seen such a wide spread lack of confidence world wide, so it is not surprising that manufacturers in New Zealand are suffering more than some other sectors of the economy from plummeting sales.”

He is also under no allusion that the prime responsibility for navigating the economic turmoil must rest with the stakeholders in the business.

 “Only they have the information necessary to make the most appropriate decisions for their enterprise.”

However, EMA Central has challenged the Government as to whether it might be appropriate to give a one off incentive to help overcome some of the lack of confidence to invest.

“We have discussed with the Minister of Finance the types of one off assistance other governments like Australia have put in place to encourage businesses to continue to make business investment decisions. Typically it is a short window of opportunity – say 6 months from 1 March to 31 August where an additional depreciation credit is granted.

“In fact Australia announced recently an increase in its ‘Temporary Investment Allowance’ from ten percent to 30 percent as further stimulus to encourage businesses to invest in Capital Machinery and Equipment. And it’s not only the company making the investment that benefits. More importantly it is providing suppliers an opportunity to help keep their staff in employment.

“EMA acknowledges that there is a short term loss of some tax revenue. However, the beauty of such an incentive is that over the life of the assets the total depreciation doesn’t change and the government will ultimately get back some return on its investment”, Mr Winter said.

ENDS

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