New Zealand Inc needs to diversify

MARIA SLADE
Last updated 05:00 17/01/2014

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OPINION: Over the holidays there occurred a lengthy, chardonnay-infused discussion about whether Aston Martin is a woman's car and Lamborghini is more of a man's marque.

Following a highly scientific straw poll of the two females and two males at the dinner table, we concluded that chicks do indeed prefer the smooth, classic lines of the Aston, while blokes are attracted to Lamborghini's angular sexiness.

Not that the assembled had any prospect of affording such modes of transport anytime soon.

However, clearly increasing numbers of Kiwis can. Luxury car sales rose nearly 19 per cent last year compared with 2012, and Maserati has just opened its first dedicated Auckland showroom. (FYI there were 25 Aston Martins and eight Lamborghinis sold in New Zealand last year, up from 16 and seven respectively).

Rising sales of luxury vehicles are often cited as a barometer of economic wellbeing. It's a blunt measure, but it is yet another number to add to the pile of indicators pointing towards an economy in rude health.

New Zealanders are so pleased to finally hear a continuous stream of good news that it's easy to tune out the warning bells in the background.

This country's newfound status as the prospective rock star economy of 2014 is broadly based on the three Cs - cows, Christchurch, and central city property prices.

Long term this is not a comfortable position to be in. We have to rebuild Canterbury, and the fact the resulting activity fuels economic growth is not something we can do much about.

The Government and the Reserve Bank are doing their level best to take the air out of the housing bubble with measures to encourage house building, higher loan-to-value ratios, and ultimately interest rate rises.

But New Zealanders' enduring love affair with property is a national characteristic and not easily beaten out of us.

The third driver, the economy's heavy reliance on large ruminating animals, is arguably even harder to counter. This makes the latest Fonterra food security dramas all the more scary.

The sector needed the news like a hole in the head that the giant dairy co-operative had recalled 9000 bottles of cream after testing turned up signs of  E coli - particularly as it followed hard on the heels of French food company Danone's announcement that it had withdrawn its supply contract and is seeking multi-millions of dollars in compensation as a result of last year's non-botulism saga.

Other New Zealand exporters of dairy products are still reeling from the impact of the botulism scare.

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One, who would not be identified for fear of further damage to their brand, said the issue was definitely not a need for tighter food safety regulations, nor of creating an independent Food Safety Authority as called for by the Labour Party.

The issue is Fonterra's behemoth status.

The co-operative's own report into the botulism false alarm says senior managers were informed too late and crisis management planning was inadequate.

It says it's trying to address a 'Fortress Fonterra' perception held by many stakeholders.

The cream recall may have been a domestic incident, and food testing systems may have worked. But it's all about perception, and the Kiwi dairy industry can ill-afford any more black marks against it at the moment.

Federated Farmers dairy leader Willy Lefferink this week referred to eyes not being on the ball, and a need to focus on adding more value to the milk we so expertly produce.

Certainly small food producers say the development of high-value, specialty products is left to them because the large operators seem incapable of innovating beyond churning out two-litre tubs of ice cream.

If the country is to be kept in Aston Martin DB9s and Lamborghini Aventators, our largest exporter needs to learn to manoeuvre more adroitly than a logging truck.

* Maria Slade is editor of Fairfax Media's Unlimited magazine. maria.slade@fairfaxmedia.co.nz

- © Fairfax NZ News

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