WPMA Regional Meetings in Nelson and Northland - Protectionism on the Rise

Tuesday, 27 Jun 2017
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Thanks to all the members who have turned out for the first two WPMA Regional Meetings of the winter - in Nelson and Northland.  The theme of our meetings this time around is the domestic and international trading environment.  You'll recall, back in 2016, Woodco put out a report outlining the international trade barriers that NZ wood manufacturers are up against.  Whilst we could see that the major tariff barriers had largely been brought down for wood products in most markets (but not all!) a vast wall of non-tariff barriers have been put up in their place.  By non-tariff barriers I mean those irritating and costly procedures you have to go through to get products into market. These can include customs delays, licence fees, quarantine requirements, certification fees, labelling costs, domestic taxes etc etc.  According to the WTO this list just keeps growing....and don't we know it!  We told the Government this back in 2016 and they have responded with a new trade policy called Trade Agenda 2030.  This promises to knock down those non-tariff barriers that are holding business back.  Job done? - Partly.
What WPMA is doing now (and the focus of our regional meetings) is to draw attention to the massive subsidies paid overseas to manufacturers who compete against us.  When NZ rightly did away with its manufacturing subsidies back in the 1980s the rest of the world was to follow suit.  Guess what: they didn't! The result is that manufacturing subsidies are still rife across the world.   
As NZ wood manufacturers we have battled on for 30 years against unfair competition in overseas markets for our products and onshore in competition for logs.  That said, Minister Nick Smith told us in Nelson that the strategy here is that we just need to toughen up, get out there and compete harder.
If toughening up means what I think it does then we need to continue to become ever more efficient by the day, cut costs further and innovate to deliver new products and services.  Sure.  That seems to be the standard NZ remedy. However, this is where MBIE's latest statistics on the wood sector make interesting reading.  What we showed on the night in Nelson and Northland is that the NZ wood and paper sector already displays the highest labour productivity in the land - 17.9% higher than total industry. We are one of the fastest adopters of new technologies.  In other words we are running fast and we're smart.  But are we keeping up?  The same MBIE figures suggest not, with other vital statistics for the sector looking pretty flat over the past few years. 
Our argument is that we are, in fact, a shining example of a NZ manufacturing industry that has/is/continues to "toughen up".  The problem is that our competition keeps reaching for the "protection-enhancing" subsidies.  By the way, many of these subsidies are likely to be illegal in the eyes of the WTO.  WPMA is currently testing this and will be talking further to the Trade Minister about our findings.  
World wood trade is not operating in a free market.  We are not asking for subsidies to match our competitors but we are asking for fairer trading conditions. Given that; what should our next steps be?  Keep coming to the WPMA Regional Meetings to find out how this unfolds.
Many thanks to Philip Woolf and Shayne Heape from ITM for giving us great insights on the regional timber markets in both regions and to Steve MacMillan from Northpower on the - very worrying for local manufacturers - electricity Transmission Pricing Mechanism proposals for Northland. Also to Hon Nick Smith and Nelson Mayor Rachel Reese for national and local governments' perspectives on the sector. Mark Hansen from Rosvall kept us briefed on the vital issue of competition for log supply in Northland and its impact on local business confidence and Gary Caulfield, representing PreFab NZ, who presented Logs4Jobs - highlighting what NZ communities lose when logs are exported in raw form.  Worth watching.  Worth watching.  Here's the link: www.prefabnz.com/News/logs4jobs
We appreciate the sponsorship from Competenz, Jacks and Henkel.
See you in Wellington later in July for what promises to be a humdinger of an event - date still TBC but keep watching!

Best regards,
Jon Tanner 
Chief Executive