5 Mar 2017

Economy at mercy of Auckland housing - manufacturer

2:17 pm on 5 March 2017

The economy is being held at the mercy of the Auckland housing market, a manufacturer says.

View from above of residential streets and houses   housing in Auckland.

Photo: 123RF

Last month, Cadbury announced it would be closing its Dunedin factory and moving production to Australia.

Air-conditioning company Temperzone Group's chief executive Les Kendell said that for manufacturers to survive there must be more discussion about keeping them competitive by lowering the exchange rate.

He said the Reserve Bank was too focused on cooling the housing market in Auckland.

"Well, on the last cycle they said they needed to keep the rate up, because of the imbalances there.

"And so the rest of the economy, the real economy, is sort of at the mercy of some tool being used to manage housing supply."

Mr Kendell said research and development and freeing up immigration to make it easier to employ skilled foreign workers were also important to manufacturers.

Call more political leadership

There needs to be more political leadership to push a conversation about how New Zealand can lower its exchange rate, so companies can become more competitive, says the Manufacturers and Exporters Association.

Its chief executive Dieter Adam said for companies to survive, they needed to be price-competitive.

He said when the Swiss reserve bank floated the franc, manufacturers there struggled because they could no longer compete.

Mr Dieter said that in 2003 New Zealand's exchange rate was 20 percent lower than it is now.

"In the long term it's something we need to fix in the lack of leadership in the government and even acknowledging it's a problem they need to address, it's a bit frustrating."

Mr Adam said the government needed to encourage and help smaller companies to engage in more research and development.

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