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Manufacturing sector in good shape - report

Published 27 February 2014, from 3 News

Far from being a basket case, the manufacturing sector is still a huge contributor to the economy and output is increasing, a new report says. 

There is, however, significant variance across the sector and many companies are still struggling to recover from the global financial crisis (GFC). 

The report by independent strategic advisers Castalia was commissioned by ManufacturingNZ, a division of BusinessNZ, and released on Wednesday. 

Opposition parties last year held their own inquiry and concluded the sector was in crisis, blaming the government for failing to support it. 

The report contradicts that, saying the sector has maintained a strong position in the economy and between 2000 and 2012 output increased from $17.3 billion to just over $19b. 

By mid-2013 there were 191,000 manufacturing jobs, making it New Zealand's fourth largest employer. 

The report says meat and dairy quickly recovered from the GFC, and by early 2009 had exceeded their 2008 sales levels. 

Chemical, polymer, rubber, petroleum and coal are recovering, or have recovered. 

Printing, textile, leather, clothing and footwear have not recovered and some have steadily declined. 

Castalia analysed 15 successful, high-growth businesses to find out "what was going on" and they all said talent-driven innovation and having skilled staff were the most important factors. 

None of the businesses - which ranged from a bakery to a company producing software systems - thought government policies made a critical difference. 

Asked what they would most like to raise with the government, common themes were the need to address skills shortages, an increase in research and development grants, and the importance of a stable exchange rate and business tax rate. 

The report says New Zealand is a relatively "manufacturing heavy" country although people don't see it that way, and the government should do more to explain its importance. 

By Peter Wilson, Political Writer