Confidence Not Universal

The happy news was Heralded on Friday – “New Zealand Business Confidence rose to its highest level in almost 20 years in February, indicating strong economic growth this year”. The highest hiring and investment intentions in over 20 years were trumpeted.

Maybe for most. But this tide does not lift all boats. That’s the trouble with averages. Some sectors have a harsher short-term position and perhaps gloomier outlook. The Statistics NZ volume trends for manufacturing show declines over the last year to September 2013 in five big categories:

  • Printing
  • Textiles, leather, clothing and footwear
  • Transport equipment, machinery and equipment manufacturing
  • Seafood
  • Fruit, oil, cereal and other food

Printing’s fall is dramatic, dropping by average 9% YOY for the last five quarters. Additionally both Metal Products and Furniture, while showing an uptick in September 2013, portray a steady decline.

So, seven out of fifteen manufacturing categories are showing downward trends.

In the service sector, statistics are less segmented. But it is common knowledge that industries such as Creative Product Retailing, Private Education and Racing are hurting.

Economies are dynamic. Buying preferences and fashions, supply economics and competitive positions change constantly. The sectors above may be on the wrong side of a shift in local buying behaviour, in geographic market recession (e.g. Australia, Southern Europe), in downstream industry retrenchment (e.g. mining exploration), in currency rates, or in input costs. Or maybe they are caught in a technology adjustment as I wrote about in June 2013. (See archived Pieces at left).

Driven by many new technologies coming together at accelerating speed, we need to grapple with a fundamental economic transformation that outdates old business models. You may recall the futurist Edie Weinstock’s message that old strategies, old assets, old qualifications and old jobs may need to be discarded, being probably irrelevant and restrictive for tomorrow. To illustrate, how does the toolmaker confront the scope and power of 3D printing?

These new technologies are massively disruptive. Weinstock argues that a new problem in economic and employment terms is the Accelerating Pace of Change. With transformational intervals halving, there is just not enough time! Everything must speed up – including the ability of enterprise to put in place the new businesses that will provide investment and work opportunity for those resources displaced from the highly efficient, mature sectors.

So, confident ones, spare a thought for your mates in today’s zero growth sectors.