No need to panic over job losses say experts

CLAIRE ROGERS
Last updated 05:00 25/09/2012

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Job losses in manufacturing are further evidence the sector is in distress but not cause for alarm bells, commentators say.

Economists are on alert for more signs of decline in manufacturing - which employs almost 250,000 New Zealanders and accounts for just over one-eighth of gross domestic product.

Nuplex and KiwiRail were the latest companies to add to the manufacturing jobs toll yesterday, with KiwiRail confirming 158 job cuts and chemical firm Nuplex signalling more than 60 job losses in New Zealand and Australia.

State coal firm Solid Energy also announced sweeping staff cuts , including the axing of some executive jobs and 222 staff and 130 contractors at the Spring Creek mine on the West Coast.

The cuts follow confirmed and looming job losses at several other manufacturers including Rio Tinto's aluminium smelter, and Norske Skog's paper mill.

Westpac chief economist Dominick Stephens said the manufacturing sector appeared to have taken a turn for the worse in recent months - on the back of the high dollar and slow demand globally.

The job losses were symptomatic of a long-run structural change in the economy, in response to the rise of Asian countries as manufacturing powerhouses.

"We've been focusing more and more on services and primary production, and manufacturing, other than food manufacturing, as a proportion of gross domestic product has been shrinking."

Brian Willoughby, president of the Manufacturers and Exporters Association, said there was no evidence the job losses were part of an overall sector decline.

But Kiwi manufacturers were struggling with a hostile trading environment, with the high kiwi dollar the main villain.

BNZ senior economist Craig Ebert said the redundancies could not be dismissed as one-offs.

"We're trying to keep it in perspective . . . but there are certainly some questions being asked about manufacturing, particularly around employment.

"There is always churn, but the question is, is this a little bit more than the usual churn?

"There are some signs that that is the case."

The BusinessNZ-BNZ manufacturing performance index indicated the sector had been contracting for the past two months - after bearing up well in the first half of the year.

Manufacturing, including food processing, accounted for about an eighth of the economy, he said.

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- BusinessDay.co.nz

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