There’s been a fair amount of hyperbole this week over the closure of two carpet making plants in the North Island. To give a synopsis of the situation, a few years ago Feltex carpets went bust. After a length liquidation the assets were purchased by an Australian carpet manufacturer wo undertook to “maintain the production status quo”. Lo and behold, a year or so later comes news that the plants will close.

The thing that surprises me is that anyone was actually  surprised by this move – we’ve seen it happen dozens of times in recent years in New Zealad, be it in the high-tec, manufacturing or other industies. The process goes like this;

  • Offshore company buys domestic company that was founded, manufactures ad runs operations from here
  • Acquirer swears they have no intention of tinkering with the business model and the status quo will remain
  • Acquirer waits 6 months or so til the media forgets about the story
  • As quietly as possible the acquirer announces that trading conditions have changed substantially since acquisition
  • Trading changes force closure of New Zealand part of the operation

Net result – profits, jobs and IP are nicely moved offshore.

It’s not a surprise people – it’s a direct result of NZ being primarily a commodity player not having an ambitious global view, and inviting foreighn acquisition in return for cheap consumer goods.

Welcome to the global village….

Ben Kepes

Ben Kepes is a technology evangelist, an investor, a commentator and a business adviser. Ben covers the convergence of technology, mobile, ubiquity and agility, all enabled by the Cloud. His areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users.

2 Comments
  • Not too surprising, given out lack of savings, our willingness to buy homes not investments, our focus on primary products rather than services…

    Love this from RWW http://www.readwriteweb.com/archives/relocalization_opportunities_l.php

    The key to all of it tho is a connected reality. Moving from growing and shipping raw products to IP based services.

    What i don’t quite get is how you retain that. We have a few examples now of successful businesses that get sold off. Mail marshall, aftermail, trademe … in the end how do they help??

  • It seems then, as a geographically distant producer of commodities, NZ is about to get triple shafted by the carbon crisis, the localisation fad and the absorption of our industries by globalised competitors.

    Now there’s a cheery thought. On the other hand, the world is hungrier than ever for food and oil, both of which we seem to enjoy an abundance of at present. I can’t see that demand abating any time soon. The question is then, how to use this window of opportunity to create a sustainable future.

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