Thursday, November 01, 2007

Firms may go offshore


More Canterbury manufacturers are looking at shifting parts of their production offshore, according to the Canterbury Manufacturers Association.

Manufacturers were being forced to change business models to cope with the pressures of a high kiwi dollar, the Canterbury Manufacturers' Association chief executive John Walley said.

Walley said the CMA September survey of manufacturers, released yesterday, showed "anyone with a substantial sales volume in US dollars is still suffering".

The pressure on "bigger player" exporters to switch manufacturing activity was high.

"For example there's the process (high-tech electronics firm) Dynamic Controls are going through – that is moving their production offshore and we (predict) it's not long before marketing and development follows it.

"Others (companies) which I can't really name are seriously now shifting or planning to shift activity away."

There was also a negative knock-on impact to domestic suppliers to these exporters.

When too many firms shifted offshore the result would be a one dimensional export sector in Christchurch without critical mass, Walley said.

"Once the capability evaporates, we collectively lose our ability to respond to future opportunities and, over time, the sophistication of our exports will be eroded, along with our living standards," he said.

The survey indicates those exporting to Australia have more favourable conditions than those exporting in US dollars.

The sentiment surrounding the latest survey was that manufacturers were getting on with the job despite difficulties presented by the kiwi dollar's continued strength against the greenback.