Dollar will push manufacturers overseas

19:30, Sep 11 2012

New Zealand manufacturers would likely look to moving off shore if the kiwi dollar reaches a predicted US90c.

Local currency trader Nick McDonald has reportedly predicted the kiwi dollar would beat its post-float record of US88.43c in the next year to 18 months.

John Cook, managing director of Stainless Design in Hamilton, said a hike from today's 81.03c would be bad news for the New Zealand economy.

''Manufacturing businesses will look off shore for cheaper solutions,'' Mr Cook said. ''The good news from our perspective is that China is not the super low cost base that it was and distance and time to market is still an issue.''

Mr Cook said his company, 80 per cent of whose stainless steel products were exported, was committed to remaining in Hamilton but he knew of overseas businesses who were constantly chasing the lowest manufacturing cost and were now manufacturing in Vietnam and India.

Owen Embling, managing director of Hamilton packaging maker Convex Plastics, was expecting the rise to US90c and was worried about what such a hike would do to the export sector.

''It will mess up our export sector most definitely,'' Mr Embling said. ''It will make it impossible. I have got customers now who find it hard. If it is going to US90c they are definitely going to be making alternative arrangements.''

Sam Lewis, chairman of Hamilton based Affco meat exporter, said there was only one word to describe the kiwi reaching US90c.

''Disastrous,'' he said. ''For farmers its disastrous and it's disastrous for the economy. We can't do much about it.''

Such a climb would have a considerable impact on the meat schedule and dairy payout.

Fonterra refused to comment, but such a rise could shave about 50 cents of the payout.