Parity is parlous, say processors

10 April 2015

The Government's vision of doubling the value of exports from the primary sector has become a lot hazier in the last few days as the Kiwi dollar moves into parity with its Australian counterpart, say wood processors.

"New Zealand's wood manufacturing sector is still riding the storm of inflated log prices, depressed housing starts across the country, in particular, Auckland, and working against heavily subsidised international competitors. So the news that our products have just become a lot more expensive in our biggest market is a hammer blow," said Jon Tanner, CEO, Wood Processors and Manufacturers Association of New Zealand (WPMA).

"Australia is our No 1 overseas market. The trade is valued at near NZ$ 1 billion annually and this is around 25% of the value of NZ's total overseas exports of both logs and processed wood products."

He says the WPMA represents most wood processors and manufacturers in NZ. Its members add value to logs, turning them into a huge range of construction components including solid and engineered wood components, panels and mouldings. Trans-Tasman sales make up over 60% of their revenues.

"This is a massive market for us and we agree with Bill English on this one: losing competitive edge in Australia because of extreme currency movements will risk jobs being lost," said Tanner. "This is made even more significant when these jobs are in regions where the employment market is already tight and incomes are low.

"It is also particularly galling when it impacts the wood industry: NZ's main example of a large sector that is contributing to regional economic growth, fixing carbon and protecting the environment simultaneously.

"Exchange rate extremes and high volatility have shortened the time horizon of firms' business plans, undermining investor confidence with the knock-on effect that innovation is being seriously stifled.

"Mr English reckons that the manufacturing sector is already under terrific pressure. We concur and therefore 'Export Double' is in trouble. The 'Export Double' relies massively on value-adding to commodities by the manufacturing sector and then selling those products competitively in overseas markets.

"What's Plan B? Wood manufacturers need to know."

Source: NZWPMA media release (edited). Contact: Dr Jon Tanner Tel 021 890 624