Renting turned out to be as dangerous for production engineers as for families.
The putting into financial play in the late 1980s of the nation’s castings, forgings and machining engineers had the effect of stripping out their ownership of their own sites and thus leaving them prey to the real estate sector and its exorbitant demands.
New Zealand’s short lease regime and even shorter rent review periods effectively threw the nation’s medium to heavy production engineers into the hands of the non-productive property sector.
This bitter harvest coincided with the disappearance from New Zealand of its merchant banking capability. There is no merchant finance capability now in the accepted risk participation-ownership sense.
The fact that the engineers had been stripped of their site ownership meant that they had to turn now to the Australian commercial banks with their reluctance to lend on anything that was not backed by clear land title.
This did not become immediately obvious, however, partly because the tariff protection abolition that accompanied this boom-bust era took time to dismantle.
There was some good news too from Europe.
The events surrounding the fall of the Berlin Wall meant that Eastern Europe was identified as an important new market. Backed by the government, notably in the form of assistance from the New Zealand embassy in Moscow several engineering bi lateral trade deals were exploited within the old iron curtain.
Immediately after this there began the intensive trade with China.
This now allowed production engineers to start abandoning their sites, which they now did not own anyway, and focus on their design and brand work in New Zealand while farming out their production to Asia.
It was now though as the end of import restrictions began to finally melt away under accelerating globalisation that the remaining production engineers on leases began to feel the chill winds of change.
For the long established production engineers, the ones that had gone through the 80s property and credit bubble, and in the process had lost title to their yards and premises what had once been asset now became a big liability
Heavy engineers were historically positioned near to rail and ports and thus their now leased sites became attractive to the premium residential and leisure sector.
Which is what the property rotators had gambled on in the first place.
Another problem was and is that the once-forecast inland container depots never materialised in sufficient bulk to take the pressure off port land, the land that the engineers now leased and which became increasingly prone to lease rent hikes.
The engineer now became the industrial version of a fashionable restaurant. If they did badly- then they did badly. Should they do well- then their landlord was in for their share of the bounty, knowing too that if the tenant quit that there would be plenty of service sector takers for the site.
The point being that the speculators apportioned no value to the gantries, rolling beds, and other such fixtures other than scrap value
It is in borrowing though that the leased land problem is most evident for engineers. They cannot borrow on improved value. Machine tools of any value will be leased anyway, probably from UDC which, incidentally this year was sold to Chinese interests.
The tenancy position is not so critical for assemblers and process engineers who sell finished goods into retail with its accelerated turnover and thus returns based on measurable cash flow from consumers.
But for the heavy project engineering sector with its ever-extending payment times and attendant payment uncertainties the failure to possess the title to their own premises increasingly proved fatal.
Some lease booby trap fuses were longer than others. But in the end the results were the same. The sites leased out on a service sector rent level could no longer sustain their original purpose of production.
A curious difference between the New World and the Old World is that leasing and renting has never been accepted as an economic proposition in the new world.
We can see now that this applies as much to the industrial sector as it does to the residential sector.
This systematic undercutting of the nation’s productive capacity was widely applauded at the time by management theoreticians whose slogan was that production engineers among others should “stick to their knitting.”
In the event, and as we can now see, the loss of title to their own works meant that the engineers now became involved instead in the complex world of leases.
Especially and willy-nilly they found themselves in the sphere of the property management company with its attendant contract that ensures that whichever side wins or loses the possessor of the contract always comes out the winner.
| From the This email address is being protected from spambots. You need JavaScript enabled to view it. || Wednesday 12 April 2017 |||
The Prime Minister's chief scientist, Sir Peter Gluckman, has highlighted harsh realities about the state of New Zealand's fresh water in a new report released today.
The report urges politicians to address freshwater issues, which he says are clearly linked to intensive farming and urbanisation.
It found clear evidence the freshwater estate was under pressure in terms of both water quality and quantity. There was a link between farming and declining water quality in pastoral areas, and contamination of urban waterways by expanding cities.
Professor Sir Peter Gluckman says farming intensification has contributed to water quality issues.
You can read the full report here | April 12, 2017 |||
The European Commission has cleared under the EU Merger Regulation the proposed acquisition of container liner shipping company Hamburg Südamerikanische Dampfschifffahrts-Gesellschaft KG (HSDG) of Germany by Maersk Line A/S of Denmark, subject to conditions.
Both Maersk Line and HSDG are active worldwide in container liner shipping. The clearance is conditional upon the withdrawal of HSDG from five consortia on trade routes connecting (i) Northern Europe and Central America/Caribbean, (ii) Northern Europe and West Coast South America, (iii) Northern Europe and Middle East, (iv) the Mediterranean and West Coast South America and (v) the Mediterranean and East Coast South America. On these routes, the merged entity would have faced insufficient competition after the transaction.
Commissioner Margrethe Vestager, in charge of competition policy, said: “Competitive shipping services are essential for European companies and for the EU’s economy as a whole. The commitments offered by Maersk Line and HSDG will maintain a healthy level of competition to the benefit of the very many EU companies that depend on these container shipping services.”
The Commission’s competition concerns
The proposed transaction would lead to the combination of two leading container liner shipping companies. Maersk Line is the largest container shipping company, while HSDG is number nine worldwide. Like several other carriers, Maersk Line and HSDG offer their services on trade routes through cooperation agreements with other shipping companies. These are known as “consortia” or “alliances” and are based on vessel sharing agreements where members decide jointly on capacity setting, scheduling and ports of call, which are all important parameters of competition.
The Commission examined the effects of the merger on competition in this specific market for container liner shipping on seventeen trade routes connecting Europe with the Americas, Asia, the Middle-East, Africa and Australia/New Zealand.
The Commission found that the merger, as initially notified, would have created new links between the previously unconnected entities Maersk Line and five of the consortia HSDG belongs to (Eurosal 1/SAWC, Eurosal 2/SAWC, EPIC 2, CCWM/MEDANDES and MESA).
According to the Commission’s analysis, this would have resulted in anti-competitive effects on the corresponding five trade routes (Northern Europe and Central America/Caribbean; Northern Europe and West Coast South America; Northern Europe and Middle East; Mediterranean and West Coast South America; Mediterranean and East Coast South America). In particular, these links could have enabled the merged entity to influence key parameters of competition, such as capacity, for a very large proportion of those markets, to the detriment of their commercial customers and, ultimately, of consumers.
The proposed transaction would also create (a) limited links between Maersk Line and HSDG in the markets for short-sea shipping and “tramp services” (unscheduled, on demand shipping), as well as (b) limited links between the two companies’ activities in container liner shipping and the container terminals, harbour towage, freight forwarding, container manufacturing and inland transportation sectors where Maersk Line or other companies belonging to the Maersk Group are active.
However, in both areas, the Commission found no competition concerns, in particular because several other service providers are active in these markets.
The proposed commitments
In order to address the Commission’s competition concerns, Maersk offered to terminate the participation of HSDG in the five consortia (Eurosal 1/SAWC, Eurosal 2/SAWC, EPIC 2, CCWM/MEDANDES and MESA). This will entirely remove the problematic links between Maersk Line and HSDG’s consortia that would have been created by the transaction.
HSDG will continue to operate as part of the five consortia during the notice period to guarantee an orderly exit. However, a monitoring trustee will ensure that no anti-competitive information is shared between these five consortia and the merged entity during that notice period.
In view of the proposed remedies, the Commission concluded that the proposed transaction, as modified, would no longer raise competition concerns. The decision is conditional upon full compliance with the commitments.
Companies and products
HSDG operates 130 container vessels. HSDG markets its services through its global Hamburg Süd brand and its CCNI (Chile) and Aliança (Brazil) brands. HSDG is a member of several consortia and in particular:Trade route ConsortiumNorthern Europe to Central America / Caribbean Eurosal 1/SAWCNorthern Europe to West Coast South America Eurosal 2/SAWCNorthern Europe to Middle East EPIC 2Mediterranean to West Coast South America CCWM/MEDANDESMediterranean-East Coast South America MESA
Maersk Line operates 611 container vessels, 324 of which are chartered, and sells its container liner shipping services worldwide. It markets its services through the Maersk Line, Safmarine, SeaLand (Intra-Americas), MCC Transport (Intra-Asia) and SeaGo Line (Intra-Europe) brands. In addition, the Maersk Group also provides container terminal services, freight forwarding services, inland transportation, container manufacturing, and harbour towage services.
Merger control rules and procedures
The transaction was notified to the Commission on 20 February 2017.
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede competition in the EEA or any substantial part of it.
The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).
| A Marine Insight release || April 11, 2017 |||
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A visit to Auckland’s Contract Warehousing and Logistics Limited (CWL) in East Tamaki sparked a buzz of interest for the Pacific Trade Invest (PTI) Pacific Path to Market delegation.Rod Giles talks about the warehouse process to the visiting delegates of the PTI Pacific Path to Market Programme in Auckland.
Rod Giles, Founder owner of CWL Limited welcomed the 25-member delegation from eight Pacific Island countries to his business. The delegates were on the final day of the PTI Pacific Path to Market four-day programme that included the Pasifika Festival, a Gap Analysis work shop, site visits and Business to Business Speed Dating meetings. The programme provides a structured approach to understanding the New Zealand market.
The group visited CWL to learn more about warehousing and logistics. Mr Giles said demand for his warehousing had ramped up over the past 3-4 years with the rapid growth of online sales and New Zealand’s vibrant economy.
Mr Giles founded Contract Warehousing in 1978. He had a history in both warehousing which followed into freight before starting Contract Warehousing Ltd some 40 years ago. During this time he has been involved in training for industry and also operating in Australia with his company for a number of years and further developing his company to meet the ever increasing demands of online sales, both nationally and internationally.The beauty of third party warehousing is that businesses don’t necessarily require a shopfront or the capital commitment normally required to commence a business.
Prior to Christmas last year the business was processing 40 containers monthly, up from their usual 15 containers monthly at the same time last year. The success of the business comes from the driving passion of the sprightly 70-year old who starts his day at 6:30am and ends about 13 hours later at 7:30pm. It has seen him start a business in warehousing before others and create custom computer programmes after visits to Australia and England failed to find what he wanted. Facing the challenge however put him ahead of the curve and the competition.
And it’s not just about processing the orders and distributing the goods. Mr Giles says he cares about the success of his customers that translates to his own success.
The beauty of third party warehousing is that businesses don’t necessarily require a shopfront or the capital commitment normally required to commence a business. Instead it allows clients the benefits of experienced trained staff and systems in servicing their needs from day one in what Mr Giles described as “an effortless and seamless manner.”
In a nutshell, Contract Warehousing hires out the space for the goods, the orders are picked and packed by warehouse staff and delivered to the customer by courier.
The delegation’s company tour started with an introduction to the frontline team of about 6-8 office staff. They receive the orders, generate the invoices and forward the order to the warehouse where the goods are picked, checked, packed to meet the products requirement and then delivered by courier. The delegation then visited the very large busy warehouse located in a long building behind the office. The warehouse featured rows of floor to ceiling racking designed to accommodate the wide variety of products which total over 10,000 different items of boxed goods from kitchen equipment from the USA, to food from India, to wine bottles from small South American and books sold to the USA.
Throughout the visit Mr Giles repeatedly stressed the importance of keeping a very efficient electronic system and maintaining the traceability of products. From the receipt of the order through to the picking and packing in the warehouse to the date and time of delivery by courier. The operation relied on accurate units of measure, correct product codes and shipping details, a great team of dedicated staff and an in-depth knowledge of freight, insurances and the associated shipping laws. The traceability meant a stock report could be generated and emailed to clients daily.
It’s a straight-forward process Mr Giles suggests, “What’s required in warehousing is you deliver the right product, in the right condition to the right customer at the right time. For this to happen day in and day out the systems must be in place and the staff fully understand and follow the requirements to make this happen,” he said.
However, he also related a sobering story of client’s failed business after they switched to a DIY Warehouse and Distribution option rather than using the specialist warehousing and logistics company. Mr Giles added “It has to be understood that the best marketing in the world fails if the service to deliver every day does not back up the marketing and this is too often taken for granted.”
For the delegates on the Pacific Path to Market programme, third party warehousing was a revelation and provided a clearer understanding of some of the options available when exporting into the New Zealand market.
For more information contact Joe Fuavao, PTI Trade Development Manager on This email address is being protected from spambots. You need JavaScript enabled to view it.
| A Pacific Trade Invest (PTI) release || April 11, 2017 |||
New Zealand contract manufacturer Alaron has undertaken a multi-million-dollar expansion and renovation project at its Nelson site, with the firm hopeful of growth for its customers in South East Asia after China sales began to go “off the boil” due to regulatory uncertainty.
Continue here to read full article | April 11, 2017 |||
A new Maori-owned new dairy factory is being planned for the Kawerau region, modelled on the first Maori dairy company Miraka, near Taupo.
The new plant, to make milk powder, will use geothermal power owned by Putauaki Trust, one of the Maori trusts in the project. Miraka has just such a deal with one of its geothermal power-owning partner trusts.
Maori leader Tiaki Hunia, a leader in the development, is chairman of the Putauaki Trust which has dairy farms around Te Teko and Kawerau. One of the farms, Himiona, named after his late father, was a finalist in the Ahuwhenua Trophy for the top Maori dairy farm in 2014.
Hunia is a solicitor and is the general manager, trusts, for Te Tumu Paeroa. He is also deputy Māori trustee and a director of trusts, companies and iwi authorities. He is a member of the Institute of Directors and the New Zealand Law Society and is highly regarded in Maoridom and the agribusiness sector.
Continue to full article on DairyNews \\\ April 11, 2017 |||
Inquirers back off one step short of the Supercat Issuers
The arrival of Erin Brokovich (pictured) in Christchurch and her call for those at the wrong end of insurance compensation to “speak up” about the injustice of it all is a further reminder of the obscure role in the earthquake aftermath of the global re-insurers.
Among the most powerful forces force in reinsurance is Berkshire Hathaway. It is considered within the industry to be the leader in supercats which is the category of reinsurance involved in major disasters such as the Christchurch earthquake.
Berkshire Hathaway sells sell policies that insurance and reinsurance companies purchase in order to limit their losses when mega-catastrophes strike.
The company is therefore the major reinsurer of reinsurers.
Though Mr Buffett in New Zealand is frequently the subject of admiring, some might say, adulatory, media coverage the matter of his involvement in these supercats is ignored out of either ignorance or out of fear. Or both.
The matter has similarly been too complex for politicians to contemplate at least openly.
Hurricanes and earthquakes are the two primary factors in the probabilities of supercats.
It is said that Mr Buffett’s supercat exposure can weather at any given time the eventuality of the calculable risk of up to four such eventualities.
Supercat insurance shares with the rest of the insurance sector one quite literally priceless advantage. Payments are received prior to the issue of the policy. In other words, cash up front.
This payment-in-advance gives the industry its cash float which in the case of the supercat sector is immense.
Therefore the following questions need to be asked:-
1. Who are the Christchurch reinsurers?
2. Who reinsures them?
3. Are the ultimate reinsurers solvent?
4. If so why are they not compensating the Christchurch home owners?
Instead the various debates have circled around the role of the primary insurers, the known insurers.
Erin Brokovich, formerly a California legal clerk, and the centrepiece of the eponymous film that starred Julia Roberts is roving ambassador for an Australian-based legal compensation practice.
As an environmental advocate she transcends the routine geomantic abstract preoccupation with global warming/carbon levels and by her presence fixes it upon the unpleasantness of ordinary people in the face of ambitions of big business.
Can Miss Brokovich now force into the light the identities of the entity or entities that hold the supercats over Christchurch and who decline to pay out on them?
| FRom The MSCNewsWire reporters' desk || Tuesday 11 April 2017 |||
Palace of the Alhambra, Spain
By: Charles Nathaniel Worsley (1862-1923)
From the collection of Sir Heaton Rhodes
Oil on canvas - 118cm x 162cm
Valued $12,000 - $18,000
Offers invited over $9,000
Contact: Henry Newrick – (+64 ) 27 471 2242
Mount Egmont with Lake
By: John Philemon Backhouse (1845-1908)
Oil on Sea Shell - 13cm x 14cm
Valued $2,000-$3,000
Offers invited over $1,500
Contact: Henry Newrick – (+64 ) 27 471 2242