Is why, when we face a huge economic downturn, and our trading partners moves towards more protectionist measures, here in New Zealand we go in entirely the opposite direction and farm more stuff overseas. From the DomPost this morning;

A small-town clothing manufacturer has been dealt a blow on the eve of the Government’s jobs summit after being told a $2 million contract to supply the army is shifting to China.

Levin’s Swazi Apparel has made wet-weather gear for troops for the past three years, but the Defence Force says his contact will be cut by 93 per cent – more than $1.9 million – this year.

Swazi owner Davey Hughes said he had been told the work was going to China. He was "saddened and deeply disillusioned".

"For a small town like Levin, that is a big chunk of work to lose. As a New Zealander, I feel deeply betrayed. As an employer, I am lost for words to deliver to my staff."

"I am aghast the Government can commit such an act with one hand, while on the other hold a job summit.

"Promising infrastructure spending is terrific, but the ladies who work here have long forgotten how to push wheelbarrows and pour hotmix."

News of the contract cut comes a day before the much-heralded summit called by Prime Minister John Key to find ways to protect jobs as the recession deepens.

Mr Key said, through a spokesman, Kiwi companies should always get a "full and fair opportunity" to compete for government contracts, but departments were also bound by longstanding procurement policies.

He employs 70 people and is hoping to avoid staff cuts by taking innovative measures, including selling directly to the public from his factory.

Mr Hughes said the Government should follow the lead of the United States, where Congress this week required the US Defence Department to buy 100 per cent US-made products deemed essential to military readiness.

Does anyone else sense something of an irony in all of this?

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.

  • Making it in New Zealand makes so much more sense. Quite a sad piece of news to read.

  • I detect a wee bit of media sensationalism with the this story, given the timing. But it does reflect poorly in procurement policy which obviously hasn’t been updated recently. We’ve been arguing to improve access for NZ I.T. companies to large government contracts, but this has largely fallen on deaf ears.

    Unfortunately, the problem is that the moment we (or America for that matter) starts giving peferential treatment to domestic suppliers over imported ones, that action itself counts as trade protectionism.

    Interesting to note that the agency that does the Army clothing procurement is actually based in Australia. What’s that all about?

  • Protectionism and artificial buying criteria are bad for trade, and government procurement is no exception, especially in the current environment. How about only British lamb and British apples for meals served in British hospitals,schools and prisons? That’s what you imply if you go down that road. Increased protectionism now will lead to a massive downward spiral in world trade, just as happened in the 1930s, and it was that which was the real driver of the great depression, not the stock market crash.

    BTW, government IT procurement bias towards overseas providers is primarily about risk aversion (eg. the financial robustness of prime contractors)- a very different issue.

  • @Jim – I understand that, but when you consider that our trading partners are putting in place protectionist measures it seems somewhat self-flagellate to pull stunts like this….

  • Along similar lines, s92a was largely going to benefit the 4 major international music labels, not artists and particularly not struggling Kiwi Artists, so why was it embraced by both Labour and National (both of whom are having belated second thoughts after #blackout)? Supporting free trade and intellectual property rights is all well and good, but we’re *already* the most open economy on the planet, or just about, and we’re far from the worst copyright offenders around, so you’ve got to ask whether we’re being a bit too self sacrificing here.

  • Ben – we have a free trade agreement with China, which is where the Swazi contract went.

  • There is a problem. If we say to China (or whom ever) “Hey sorry we want to buy NZ made, but thanks for the FTA.” China then might think, why are we buying milk from NZ again?

    NZ is a (really) small country, we often pull above our weight. However, sometimes to do that we have to discount ourselves relative to other places in order to get a deal. Luckily we have other aspects which make NZ a nice place to live.

    While I don’t disagree with a marketing policy to push NZ made – although maybe think that tax money can be used for better thing – I don’t think it should be used as an excuse for short-sightedness.

    I’m sorry for that guy’s business. But if he can’t innovate them it will be difficult.

  • I think we need to be very careful to avoid trade protectionism. Even though it seems intuitive that we will be better off by buying NZ made, all we are doing is supporting uncompetitive companies and industries in preference to more competitive export industries. It was this intuitive and simple logic that led the 1930’s into a deep depression. So when we see other countries following this logic, I think our best course of action is to advocate and promote free trade rather than following suit in a tit-for-tat protectionist cycle.

    In any capitalist competitive economy there will always be winners and losers, and it is always sad and difficult to hear of people who have lost their jobs and their livelihoods, as it is in this case. This is where the government does need to come in, to help provide retraining and transition people into other productive parts of our economy.

  • Perhaps rather than a jobs fair, your government should be looking at a skills and training fair?

    To me, free trade is the bed rock of creative destruction. Although painful right now, is subsidizing local business better in the short-term rather than accepting painful losses and re-training your workforce to adjust the economy for new opportunities in the long term?

    The money going abroad is not lost, it is merely transferred to different consumers. Some goes to the Chinese manufacturers, some goes to their workforce. I would guess that these people are also consumers and putting more money in their pocket drives their demand. If as someone else has already mentioned your government has a free trade agreement with China, surely a forward-looking, freshly trained New Zealand workforce is best placed to benefit from this?

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