Page 66 - Print 21 Magazine Sep-Oct 2018

Association news News updates from the printing industry
Question of Confidence
While we in
New Zealand have a stable Government, and have had solid economy over the last
few months, we have seen a slump in business confidence, and it is starting to impact on our industry. Print is a good barometer of what is happening in business, as reactions to a change in mood are felt quite quickly in the order books. The print tap can be either turned on or turned off fairly quickly.
While the NZ Performance
of Manufacturing Index (PMI) has remained above 50 for
the last three months (a PMI reading above 50.0 indicates
that manufacturing is generally expanding; below 50.0 that it
is declining) it has continued a downward trend from its peak in April at 59.1, dropping 8.9 points over the last three months to end up at 51.2 in July.
Within this it is concerning to see that both Auckland and Christchurch are in decline with scores of 47, with Wellington propping up the overall result with a score of 54.6.
Production output at 49 is also below the 50 neutral mark, and the lowest it has been since May 2015.
So what is the reason for the lack of business confidence – when in essence our economy has not changed to any significant degree?
Ruth Cobb
Ruth Cobb, CEO of PrintNZ, looks at business confidence and asks if it is improving, or is there further decline to come?
A decline in confidence is often seen following the election of a Labour-led Government, but this one is continuing far longer than normal, and will be the result of a number of things which include:
A) Employment - with low unemployment figures we are getting increasing numbers of reports of companies having difficulty recruiting good skilled staff. This will only get more difficult if the 90 day trial
period is removed for bigger businesses, as they will have to become a lot more thorough in their recruitment processes and will be less prepared to take a chance on someone. This makes businesses nervous about where they will find the staff they need, and it has the potential to spiral wages as proven employees are headhunted at a cost.
B) Changes to immigration laws - these are also hindering the recruitment of skilled
staff, with penalties now
being imposed on individual companies that breach employment standards, making them unable to
recruit immigrants for 6-12 months. Other proposed changes to employment legislation, particularly the re-empowerment of unions, will also be making businesses nervous as they wait to see how far the Government will go.
C) Rising Costs - businesses have been hit by increasing
“Production output at 49 is also below the 50 neutral mark, and the lowest it has been since May 2015”
costs over the last six months, not the last of which was the increase in the minimum wage to $16.50 an hour. For
a business of five employees
on the minimum wage this meant an increase of $7900 per annum – which does not sound excessive. But if the minimum wage goes up to $20 per hour as Labour has promised,
that represents a whopping additional $44,800 per annum for the same five staff business.
In addition our industry
has been faced with paper and consumables price increases across the board, and in Auckland we have the privilege of paying 11.5 cents per litre more for our petrol.
So a business needs to decide if it can absorb these increases (almost certainly not), pass them on, sell more (not the answer if you aren’t covering your costs) or make savings elsewhere to compensate for it.
With 152 Government Working Parties in place we are not likely to see any changes happen quickly that will alter any of this, which leads to businesses holding off an investment/ expansion/hiring plans, further adding to the lack of confidence, so we might be treading water for a while longer yet.
To end on an up-note – while overall business confidence is low, most people are confident their own business will do well – it
is others that will fail. This has always been the same with our PrintNZ surveys too – with the last survey showing that only
30 per cent of respondents expected the industry to grow, but 78 per cent expected their own business to grow. So we need to bottle that individual confidence and spread it through our industry. 21
66 Print21 SEPTEMBER/OCTOBER 2018