News today that up to 100 jobs might be lost at the Skellerup Christchurch plant.
A seeming response to tariff reduction and the soaring NZ dollar.
It’s hard to see it and there will be some people hurting but what the %$%^$@ do people expect. We were sold globalisation on the promise of cheap cars and stereos and this has occurred – the flip side of tariff reduction is that it becomes increasingly impossible to compete making gumboots in this country given our labour and environmental costs.
Two options – go back to the protectionist model of old – a la Muldoon or alternatively adapt. Unfortunately a return to protectionism is probably a bad option – given our geographical isolation and the fundamentals of the modern economy. So the only true option is to adapt. A case in point is Pacific Helmets – they realise that it is impossible to compete making low value generic products in NZ so they invest heavily in R&D and make world class products that are differentiated on every level OTHER than price.
The only valid differentiator is VALUE – be it environmental, design, social or whatever – we need to add value to our products.
I mean is anyone really surprised that a low margin, low cost, high(ish) volume manufacturer is finding it impossible to compete making in NZ? Anyone who does needs to take a long hard look at the economics 101 textbook.
I would also add that businesses can hedge against currency movements. It was only a year ago that the NZ$ dipped below $0.60. So there’s no real excuse for people to be screaming about the exchange rate.