The manufacturing industry is struggling to make headway as consumers buy fewer goods.
Our latest Performance of Manufacturing Index or PMI that measured levels of new orders, production, employment, finished stock and deliveries for December 2008, is at its second lowest score ever (42.5), and records the eighth consecutive month of decline. A score below 50 means activity is contracting.
The good news is this means the PMI is better than the previous monthly measure for November 2008, which really was the lowest ever at 35.4.
While these figures are for New Zealand, they reflect the global PMI. So it’s not just us slipping behind. The worldwide recession is a major factor.
Midyear the New Zealand dollar (NZD) started to decline, US markets slowed and then went into meltdown and its affects spread across the world. Most of our established export markets have been affected.
While the New Zealand exchange rate has dropped to below its long term (10-year) average, our exporters are facing diminished demand and are not able to take full advantage of the more competitive dollar.
At home most manufacturers are currently looking at survival, rather than growth and increased profitability.
Reduced interest rates, the lower dollar, lower petrol prices and some tax cuts are among changes that are happening, which should help.
The new Government’s first 100 days “urgent package” is also contributing though probably more in the medium to longer term.
The Government’s Employment Summit planned for February 27 is something we will take part in and expect to offer immediate relief to manufacturers.
If business wants to contribute to our understanding of helpful employment measures, please let us know (please email me).
So what can/should you be doing now?
Here are some suggestions:
• Cash is “king”: Invoice every seven days, accept cash only from new/other customers.
• Work with your best, most loyal customers as a priority.
• Review every expense, inventory levels, supply chain, etc. If it’s not making money, it makes no sense!
• Do everything possible to retain your key staff: involve them in your strategic planning and your cost containment exercises; use the recessionary “slow time” to upskill them; offer flexible working conditions.
• Talk to your bank manager about what you are doing, about your strategic plan and your new/future proposals.
• Be positive, take the initiative in talking to your customers, clients, suppliers and the bank - be honest and gain their trust; and explore new opportunities with targeted advertising.
• Seek operational excellence and whatever you do, retain your customers and their loyalty.
