Nz Marine Cluster May 12 Ppt

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Brief presentation on the New Zealand Marine Industry

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Nz Marine Cluster May 12 Ppt

  1. 1. Adam Ireland Ani Satchcroft Ben Mayson (NZ) Malte Janzarik NEW ZEALAND‘S MARINE CLUSTER May 8, 2009
  2. 2. Contents New Zealand Marine Cluster
  3. 3. NZ… a small, isolated island where sheep outnumber people Located… nowhere (Fun) Facts… Population China • Human: 4.2m Auckland • Sheep: 40.1m (pop: 1.3m) Australia Prosperity • Think: S. Korea or Israel • GDP per capita: $29,220 Economic Drivers Distance (by air) from: • Dairy, Meat, Forestry, Fishing • Sydney – 3 hrs Wellington (capital, pop: 400k) • Singapore – 10 hrs National ‘icons’ • Los Angeles – 13 hrs Christchurch • London – 23 hrs (pop: 400k)
  4. 4. Moderate historical prosperity growth driven by increases in workforce participation and employment Economic Performance: Drivers of Real GDP per capita Participation Rate (%) 70% 68% 66% Average p.a. growth 64% Employment Growth (%) 62% • ‘86-96: 1.0% 1986 1992 1998 2004 4 • ‘97-07: 2.1% - 2 Real GDP (% chg) 0 -21986 1992 1998 2004 Unemployment Rate (%) 8% -4 6% 12% - 4% 10% Real GDP p/c (% chg) 2% x 8% 6% 0% 4% Labour Productivity (% chg) -2%1986 1992 1998 2004 2% 6 0% 4 1986 1992 1998 2004 2 % 4 0 2 -21986 1992 1998 2004 Population Growth (%) -4 0 1986 1992 1998 2004 3 -2 2 1 0 1986 1992 1998 2004 Employment gains are positive, however, little progress has been made on the more important driver of economic progress: labour productivity Source: OECD; EIU
  5. 5. Labour productivity low by international standards Low Labour Productivity… …With No Sign NZ Is Closing The Gap Labour Productivity Labour Productivity vs. GDP per capita (PPP): 2007 Growth: 1983-2007 (US$’000, PPP) GDP per capita 60 Period 83-87 88-92 93-97 98-02 03-07 Average 1.2% 1.8% 1.1% 1.8% 1.0% Norway 50 US Change in labour productivity (% p.a.) 4.0% Ireland Canada 40 Average Australia 3.0% (83-07) UK Germany Japan France G7 OECD average 2.0% NZ 30 Australia ($32,664) Greece Korea NZ 1.0% 20 Poland 0.0% Turkey Mexico 10 -1.0% 0 -2.0% 10 30 50 70 90 1983 1987 1991 1995 1999 2003 2007 $40.30/hour GDP per hour worked (US$/hour) NZ is lagging its OECD peers in terms of prosperity due its low labour productivity Source: OECD
  6. 6. NZ has a number of unique and valuable endowments… isolation coupled with a tiny population are the major negatives New Zealand: National Endowments x Favorable… Not so Favorable… • Huge distance to markets, particularly • ‘Clean and green’ image the most attractive (Europe, US) (perception and reality) • Tiny population, low density • Good climate for agriculture • Unlike Australia, for example, NZ has • Southern Hemisphere location few significant natural resource provides off-season growing deposits (minerals, oil etc) opportunities in serving Northern Hemisphere markets • High rainfall, and Southern Alps snowmelt provide good conditions for inexpensive Hydro-power (70% of electricity supply) • Large ocean territory: 7th largest exclusive economic zone (EEZ) in the world Note: Marine specific endowments addressed elsewhere
  7. 7. A mixed macroeconomic report card Macroeconomic Performance Overview CPI (% change p.a.) Current Account (% of GDP) x 15% 1983 1987 1991 1995 1999 2003 2007 0% Low inflation since mid 1980s 10% -5% 5% -10% 0% Persistent current account deficits 1983 1987 1991 1995 1999 2003 2007 -15% x x Long-Term Bond Yield (%) Exchange rate (NZD/USD, mthly avg) 25% 2.5 High versus OECD peers 20% Volatile Currency 2.0 15% 10% 1.5 5% 1.0 0% 1983 1988 1993 1998 2003 2008 1987 1991 1995 1999 2003 2007 Imports and Exports (% GDP) FDI (% of GDP) x 40% 8% Decreasing over time Exports 6% Imports 30% 4% Internationalisation of economy 2% 20% 0% 1983 1987 1991 1995 1999 2003 2007 1983 1987 1991 1995 1999 2003 2007 Source: OECD; EIU
  8. 8. Strong, business-friendly national institutions Internationally Ranked(1) Institutional Highlights Stable Politics Universities Sensible Trade • Multi-party, • 5 universities in • Low Tariffs (2.7%) moderate top 500 (global) • FTA: China, Singapore, Thailand, Chile, Independent Central Health Care Australia, ASEAN Bank (coming) • Cost-effective • Pure Inflation mandate • Ban on litigation for personal injury Non-distortive Export Support Efficient Legal System • NZTE Weak Spots(?) Robust Anti-Trust Low Corruption • High Taxes, Big Govt • Com Commission • Ranked #1 • 30% corporate, 39% top income bracket • Govt: 40% of GDP Labour Policy • Underdeveloped/shallow capital • Weak unions, markets good flexibility • Prevalence of SOEs • Restrictions on Foreign Capital (land, telco, airline) Free Capital Flows (1) Heritage Foundation, 2009 Index of Economic Freedom; this is another source in addition to the GCR, which tells a similar story (highlights can be found in the backup section of the presentation)
  9. 9. High quality human capital, but not enough of it …Partial Offset Strong HDI But People Leave… From Immigration % of College Educated • 87,000 permanent Population Living O/Seas migrants in 2007 • 10,100 in net migration (Select Countries, Rank) • 24% on work permits 1. US 0.7 2. Japan 1.0 • Government Policy • Focus on certain 9. Spain 2.5 categories - skilled 16. Australia 3.7 Migrant Policy and Active Investor 27. Italy 5.7 Migrant category 42. Singapore 8.0 • Source countries: 55. UK 12.2 • UK (26%) • NZ is 19th in the world in … … • China (12%) human development • India (9%) 65. NZ 17.0 • Citizens enjoy long • South Africa (8%) healthy lives, excellent 78. Ireland 26.7 education access, and high standards of living Human capital is a strength, although retention seems to be an issue Source: Human Development Index (UNDP), OECD
  10. 10. Poor prosperity, given relatively strong competitiveness metrics Overall: GCI vs GDP p/c Macro (MP) vs … GDP p/c, GDP p/c, log scale log scale US US Ireland S. Korea NZ NZ Estonia Low GCI High GCI Low MP High MP Institutions (SIPI) vs … Micro (MICRO) vs … GDP p/c, GDP p/c, US US log scale log scale NZ NZ Estonia Low SIPI High SIPI Low MICRO High MICRO NZ’s prosperity lags peers with comparable GCIs. Is NZ’s microeconomic environment the reason for this disparity? GCI Ranking Note: GCI = (Overall) Global Competitiveness Index; SIPI = Social and Political Infrastructure; MP = Competitiveness of Macroeconomic Policy; MICRO = Microeconomic competitiveness; Source: Institute for Strategy and Competitiveness
  11. 11. NZ’s national diamond characterised by extremes… some areas world-class, while others are more… emerging economy New Zealand: National Diamond + Low trade barriers + Brand NZ: clean and green + Flexible labour policies + Low levels of bureaucracy + Strong antitrust + Strong prim/sec education + Good investor protection + Easy to start a business - Lack of rivalry/intensity - Brain drain - “Kiwi” lifestyle = leisure-focused - Low foreign language skills Context for Firm x x - Job security/safety net valued - Lack of scientists/engineers Strategy and - Low foreign ownership and - Weak R&D/innovation Rivalry international tech transfer - Infra gaps (roads, rail, telco) - Weak capital markets Factor (Input) Demand Conditions Conditions + Awareness of the need for + National passions have driven key Related and cluster development international successes e.g. sport + Efforts to push cluster policy Supporting - Historic trade relationship with UK to a regional level Industries x led to a focus on primary products - Weak clusters - Demand seldom drives innovation x - Few specialized input or anticipates trends suppliers, high reliance on - Govt procurement not advanced imported inputs
  12. 12. Relatively undiversified economy… dominated by agriculture NZ, Exports Portfolio By Cluster: 1997-2007 Share Of World 2.5 Exports, 2007 (%) Processed Food (Dairy) 2.0 1.5 Agri Product (Meat) Fishing Marine(1) Tourism Forestry Furniture 0.5 Communications -0.5 -0.3 -0.1 0.1 0.3 Change in Nation’s Share Of Exports (%, 1997-2007) Two of NZ’s key clusters, dairy and tourism, are doing well, however, majority of other clusters are losing ground (1) Relative position of the marine cluster estimated based on data we have collected and interviews conducted; the International Cluster Analysis definition includes commercial shipbuilding, which distorts the true position of NZ’s marine cluster, which focuses on boats for private use.
  13. 13. Four main recommendations to address NZ’s key challenges Issues Being Addressed Recommendations More Detail On Actions 1 • Lack of successful clusters • New cluster policy Institute a • Lack of strategy at a cluster level • More $$, more focused New Cluster • Lack of collaboration • Private sector driven Programme • Lack of effective cluster policy • Collaborative, Decentralized • Low labour productivity • Kiwisaver compulsory 2 Encourage • Lack of capital intensity • Tax reform: property Investment • Lack of investment (domestic/FDI) • FDI policy reform • Low savings rates 3 • Barriers to ‘easy’ trade • Privatize all ports Mitigate • Inefficiencies at NZ’s ports • Streamline customs Distance • Inability of NZ firms to • Open skies internationalize • Focused help from NZTE 4 • Weak infrastructure: electricity, • Infrastructure spend Alleviate roads, rail, telco • Skilled immigration Factor • Human capital gaps • Graduate retention Bottlenecks • Tertiary education reform For a more comprehensive understanding of all the major issues and recommendations please see the full written report
  14. 14. Contents New Zealand Marine Cluster
  15. 15. NZ’s marine cluster generates NZ$1.9B(1) in sales annually… Major Segments In The Cluster Recent Cluster Performance CAGR (03-08) Superyachts Racing Yachts Total Sales (NZ$m) Total 7 1,905 • >25m • Sail Other 15 1,641 1,548 • Sail or • For Racing 5 1,366 Inflatables Motor competition 2 Refit 10 Trailer Boats (3) Launches 17 Launches Trailer Boats Superyachts 4 • 8-25m • 3-8m Equipment 6 • Sail or • Motor Motor 2003 2005 2006 2008 Exports Imp/Exp (% of Sales) (%) Inflatables/RHIBs Equipment 100% Superyachts • Sails, masts, Most internationally • Inflatable Racing winches, competitive segments Yachts • Motor electronics, interiors… Equipment Refit/Maintenance Other Services 50% Inflatables • Repair • Fuel, marinas, Refit Launches facilities insurance, Trailer Boats charters, Other retailing… Imports (%) 50% (1) Segmentation and data as per the New Zealand Marine Industry Association; NZ$1.9B equivalent to US$1.1B Size: total sales (NZ$m) at current exchange rate of 0.567US$ per NZ$
  16. 16. 75% of marine activity is located in Auckland or nearby regions NZ Marine Industry Activity Auckland Cluster (examples) Northland 4% Gulf Harbour Bay of Plenty 58% Marina Auckland 6% (#2 in Auckland) 5% Waikato Hobsonville 3% Taranaki West Park Marina 4% (#3 in Auckland) Wellington Westhaven Marina Wynyard Point (#1 in Auckland) Alloy Yachts 9% Christchurch 3% Otago SuperYacht Mfg Evidence of other Marine Activity Marinas x% % of NZ Marine Industry Activity (2005)(1) Evidence of agglomeration even within parts of Auckland (1) Remaining 8% of activity not marked occurs across a variety of smaller regions Source: New Zealand Marine Industry Survey, 2005; Googlemaps
  17. 17. The cluster competes in a global market that has recorded solid growth… strongest gains at the top-end Global Market: Size and Growth Global Market: Key Features • The global pleasure craft market = • US and Europe are largest end-markets US$18B (an estimated 90% of end-market demand), US market more penetrated and lower growth • Growth of around 5% per annum on a value basis between 1997 and 2007 • Market is fragmented, largest player – Superyachts fastest growing (Brunswick, US) has 14% global share in boat building • Volume growth has been steady since • Bifurcated market: cost / price 1970 with some cyclicality. Real value increasingly important for lower/mid growth driven by increasing average boat segment (increased standardization), but size less so for higher end (custom yachts) Long-term outlook looks good… although current economic conditions obviously taking a toll (‘09 forecast to be down 50%)
  18. 18. Largest firms located in Italy, France and US Global Recreational Boat Building Firms –market shares France Beneteau 6% Sweden Rodriguez 3% Hallberg Rassy <1% Couach <1% Dufour <1% Denmark Danish Yacht <1% Netherlands Royal Huisman <1% Turkey Feadship <1% Aegean <1% Slovenia Germany Elan Marine <1% Bavaria 2% Hanse 1% Luerssen <1% China US Holland Custom UK Brunswick 14% Yachts <1% Sunseeker 3% Genmar 5% Taiwan Princess 2% Catalina 1% Horizon Yacht <1% Fairline 2% Hunter 1% Croatia Elan <1% New Zealand Lagoon <1% Italy Alloy Yachts <1% Ferretti 7% Cookson <1% Australia Azimt Benetti 6% Fitzroy Yachts <1% Azzura Yachts <1% Cantiere 1% Yachting Dev <1% Seawind <1% Aicon 1% Jarkan <1% FIPA <1% Perini Navi <1% NZ is very much a niche player on the global stage Source: ODDO Equity Research, June 2008; MoC team estimates
  19. 19. NZ highly ranked within lucrative superyacht segment The Global Superyacht Market Superyacht Market Data CAGR (03-08) 14 • Superyacht orders have grown each year for last # of Orders By Size 10 years – although for 2009, global order intake 916 76m+ 14 down about 50% 61-76m 16 777 • Largest categories (61m+) have seen the rapid 688 46-61m 9 652 growth (>US$1m per meter to build) 37-46m 16 507 480 • Italy dominates the sector 30-37m 12 • Growing share for Taiwan, Turkey, China 27-30m 26 24-27m 18 2003 2004 2005 2006 2007 2008 New Zealand’s Position % of Orders By Location(1) NZ is 10th largest superyacht builder • New Zealand (1.6%) 11 Other • #3 in sailing superyachts (estimate: 15% global UK 6 market share) Taiwan 9 Germany – Particularly strong in racing yachts 10 Netherlands • NZ focuses almost exclusively on custom-built 12 US yachts; very little activity in ‘production yachts’ • World-renowned for quality Italy 46 – NZ’s largest superyacht manufacturer, Alloy Yachts, has won 19 international awards since 1991 (1) Of orders made in top 10 manufacturing countries; Note: of the 916 superyachts ordered in 2008, 60 were sailing yachts Source: Showboats International
  20. 20. The NZ cluster centres on boat building Upstream Related Clusters The New Zealand Marine Cluster Other Services Tourism (e.g. Finance) • Industry Assoc (MIA) Institutions for Fishing/ • Export Group (NZ Marine) Commercial Other Equipment collaboration • Training Org (BITO) Boats Downstream Design Marine Events Launches Boat Building & Yachts Composites Boating Consumables & Racing Yachts Inflatables Other Services Electronics Marinas Super Yachts Trailer Boats Interiors Refit & Maintenance Masts & • Trade Promotion (NZTE) Winches Government • Local Government (ARC) Yacht Institutions • Universities (Auckland) Management • Industrial Research Ltd Sails & Rigging Limited Exports Significant Exports
  21. 21. Support provided by public and private institutions for collaboration Key Institutions : NZ Marine Cluster Institutions For Collaboration Government Institutions • 500+ members; 50% of industry • Support for NZ Exporters Marine • Fees: $400-$1200 per firm NZ Trade & • Global network of offices Industry • Data collection on industry Enterprise • Formerly responsible for Association • Newsletter on industry overseeing NZ cluster policy • Fosters collaboration at sub- cluster (e.g. CPC standards • Local government authority scheme for trailer boats) Auckland Closely • Regional development strategy • Provides ‘business’ workshops Regional linked(1) • Infrastructure/zoning issues Council Two cluster specific initiatives(2) • • Represents Exporters • 100 members; 85% of exports • Yacht Research Unit Runs “Yacht vision”: 1st int • • Centre for Advanced Composite conference for yacht designers Auckland NZ Marine Materials (CACM) • Assists at global boat shows, University other exporter opportunities (e.g. Millennium Cup) • Administers Marine • Government funded R&D entity Boating Industrial Apprenticeship scheme (600 • collaboration with Marine firms Industry Research currently, ~100 graduates p.a.) (e.g. in composites) Training Org Ltd • 75% government funded (1) BITO is a division of the Marine Industry Association; NZ Marine is a separate organization but shares facilities with the MIA (2) AucklandPlus, the economic development arm of the ARC is overseeing the Hobsonville marine precinct and the marine sector feasibility study
  22. 22. History of cluster closely aligned with competitive sailing achievements and major yachting events Competitive Sailing Milestones 1987 1995 2000 1990, 1993 2003 1984 • NZ launches 1st • Team New • America’s Cup held in • Auckland again hosts • NZ wins • NZ wins 2 gold and Americas Cup bid Zealand win Auckland, Team New Whitbread Round America’s Cup. Team 1 bronze medal at when event is hosted America’s Cup Zealand successfully the World race New Zealand loses to Los Angeles in Australia after defend title (and wins again Alinghi, skippered by a Olympics – first Australia’s win in ‘83 in 1993) New Zealander medals for 20 years Industry Milestones 1992 1994 1996 1991 2003 1986 2000 1979 2006 1987 • Southern • Alloy Yachts • Inaugural ‘Yacht • MIA (est 1965) • Millennium • 8 out of 10 • Southern • High Modulus • Alloy • High wins New Vision’ run by NZ takes out office Cup launched America’s Spars instrumental in Modulus Spars merge Yachts Zealand’s first Marine space and founded produce in Auckland to Cup founded as developing with largest employs 1st Show Boats their first showcase New syndicates NZ composites for surfboard professional International carbon Zealand Super use New Zealand’s first mnfcturer competitor – officers Award for fiber spar Southern America’s Cup Yachts Marten Super Yachts Spars rigs challenge Spars
  23. 23. All parts of the diamond contributing to success… however, key fragilities also evident The New Zealand Marine Cluster + Many firms (>1,000) + Significant differentiation + IFCs present + Skilled workforce + Govt support for cluster - Brain drain - Small # of well-known firms Context for Firm x - Skills shortages - Highly fragmented, sub-scale Strategy and - Infrastructure/zoning issues x - Lack of ambition/risk-taking Rivalry - Reluctance to invest - Lack of business acumen Factor (Input) Demand Conditions Conditions + Skilled sailors + Commercial boats/fishing + Competitive sailing success Related and + Tourism + Highest boat ownership in world Supporting + Safety / quality standards - Weak capital markets Industries x - Cluster gaps (e.g. engines, - Tiny local market overall advanced raw materials) x - Negligible local mkt at high end - Loss of global marine events Endowments + High quality harbors - Distance from major European markets x + Friendly climate for boating + S. Hemisphere (counter cyclical for refit)
  24. 24. Four main recommendations to help upgrade the cluster Issues Being Addressed Recommendations More Detail On Actions 1 • Gains to be made by sharing • Govt support to upgrade demand existing expertise Expand on • Broader scope/mandate/ ambition for MIA Strengths • Success stories that can be • Increase MIA membership replicated • Focus expansion on high value:freight areas • Consolidate the industry (fewer, larger firms) • Extreme fragmentation 2 • ‘Step-change’ in collaboration championed Consolidate & • Sub-scale manufacturing by MIA and industry leaders Collaborate • Lack of business skills • Address availability of financing • Lack of investment, duplication • Actively seek out FDI • Leading firms encouraged to diversify 3 • Capabilities exist that could have activities (including offshore investments) Expand into applications outside of marine • Govt matching of investments that broaden New Areas cluster scope of cluster into ‘related’ industries • Actively seek out FDI / JVs • ‘Open minds’ to the possibility of production • Cluster is relatively narrow in scope 4 manufacturing out of NZ • Long-run potential of custom niche is Move Beyond • Leading firms to leverage custom capped (small market) Custom Boats capabilities into production manufacturing • Custom capabilities (e.g. brand) can translate into production market For a more comprehensive understanding of all the major issues and recommendations please see the full written report
  25. 25. Main Conclusions • The New Zealand marine cluster has overcome geographic distance from key markets to become world-class within some niche, high value-add sectors • These successes need to be leveraged to build competitiveness across the entire cluster, and further develop supporting / supplier industries However…. • Key macro weaknesses, and major deficiencies within the national diamond, are inhibiting the growth of New Zealand’s marine cluster and the wider economy – many of these problems are too large for individual actors… strong leadership and collaboration will be necessary if they are to be overcome
  26. 26. Supporting Analysis 26
  27. 27. Extensive consultation with the industry Interviews Conducted Data Collected • Seventeen interviews • NZ Macro Data (‘85-’09) conducted • Marine Industry Data (‘03-’08) • To promote free and frank • Global Data (various) dialogue we opted to keep the identity of our interviewees • Other various… anonymous 27
  28. 28. Backup Issues we observed: New Zealand Potential Solutions Key Challenges Facing New Zealand • More aggressive, creative efforts to Geographic isolation 1 Endowment bridge the gap • Focus on diversifying economy Currency (NZ$) volatility Macro 2 • More vocational training; linked to 3 Lagging labour productivity cluster policies • Launch a new cluster policy, 4 Underdeveloped private sector; cluster policy correcting for previous failures • Bolster Kiwisaver scheme 5 Underdeveloped capital markets • Eliminate tax distortions: property • Remove tax disincentives Micro Attracting FDI; promoting outward investment 6 • Lift managerial talent • Link with cluster policy • Lift skilled immigration Brain drain 7 • Leverage skilled diaspora Weak basic infrastructure 8 • Upgrade roads, rail, telco
  29. 29. Backup Strengths we observed: Marine cluster Core Strengths Of The Cluster Opportunities Open economy, flexible labour policy 1 Macro • Resources focused on genuinely competitive niches, firms can more easily hire and fire as needed Competitive sailing expertise and success • Continued support for competitive 2 sailing; leverage this for the cluster • Brand champions for NZ • Actively seek out marine events • Lift competitiveness of sectors that 3 Local demand conditions serve local demand; step-change in • Boat ownership supports cluster’s critical mass even if consolidation or cooperation product is imported and high-end demand is absent • Best practice sharing A few world-class firms 4 • Encourage more foreign leaders in Micro • Alloy Yachts, Southern Spars and a few other the industry to relocate to NZ, and world-class firms (superyachts, equip/components) local firms to grow international connections • Coordinated effort to leverage 5 Pockets of real innovation these capabilities beyond marine e.g. wind farms, aerospace 6 • Bolster apprenticeship training Skilled (and relatively cheap) labour force schemes (#’s, quality, consistency)
  30. 30. Backup Issues we observed: Marine cluster Key Challenges Facing The Cluster Potential Solutions • Satellite sales offices; web tech Geographic isolation 1 Endowment • Offshore manufacturing • Links with tourism Industry fragmentation • More aggressive collaboration push 2 among smaller firms; expand scope • Sub-scale manufacturing, capital access, lack of • Consolidation business skills, R&D, vulnerability to business cycle • Supplement custom with production Limited to custom boats, low volume production 3 manufacturing; e.g. utilize superyacht capabilities to enter yachts/launches market Micro Skills shortages, skills retention 4 • Step-change in apprenticeship #’s • Management and commercial skills particularly lacking • ‘A call home’ to NZers overseas • Dialogue with local banks Underdeveloped/shallow supporting industries 5 • Seek FDI from foreign clusters • Capital markets Infrastructure uncertainties 6 • Develop plan beyond Hobsonville; strong leadership and clear vision • Debates about zoning and competing land use have delayed development in key industry locations Coordinated response required, led by industry and strongest firms, supported by government at all levels
  31. 31. Factor conditions not bad… some notable gaps in human capital, infrastructure and finance Overall Ranking = 19 Factor (Input) Conditions: NZ’s Position 2009 Competitive Disadvantages Competitive Advantages Relative to GDP per Capita Relative to GDP per Capita 1 66 (Low) Brain drain (Low) Number of procedures required to start a business 1 50 Availability of scientists and engineers Protection of minority shareholders’ interests 3 44 Quality of electricity supply Doing Business , Getting Credit Legal rights index (WB ) 4 39 Quality of domestic transport network: business Internet users per 100 population 6 39 Quality of telephone infrastructure Ease of starting a new business 7 35 Quality of railroad infrastructure (Low) Burden of customs procedures 7 33 Quality of roads Doing Business, Paying Taxes (Low) Payments number (WB) 7 31 Mobile telephone subscribers per 100 population Soundness of banks 8 27 Financial market sophistication Tertiary enrollment 13 26 Financing through local equity market Regulation of securities exchanges 13 Domestic credit to private sector 15 Quality of math and science education 17 (Low) Time required to start a business 18 Quality of air transport infrastructure 18 Personal computers per 100 population 19 Quality of port infrastructure 19 Internet access in schools 19 Ease of access to loans 19 Quality of the educational system 22 Change up/down of more Venture capital availability 23 (Low) Burden of government regulation than 5/10 ranks since 2001 23 Quality of scientific research institutions 31 Note: Rank versus 74 countries overall. New Zealand ranks 25th in 2008 PPP adjusted GDP per capita and 15th in Global Competitiveness Source: Institute For Strategy and Competitiveness, Harvard University (2009)
  32. 32. Some big problems when you look at industry… x shallow or non-existent clustering a particular issue Overall Ranking = 40,26 Supporting/Related & Demand Conditions NZ’s Position 2009 Competitive Disadvantages Competitive Advantages Relative to GDP per Capita Relative to GDP per Capita Supporting and Related Industry Conditions Supporting and Related Industry Conditions 65 Local supplier quantity 21 Local supplier quality 56 Extent of cluster policy Local availability of specialized research and training services 22 51 State of cluster development 44 Local availability of process machinery 42 Extent of collaboration in clusters 28 Availability of latest technologies Demand Conditions Demand Conditions 45 7 Government procurement of advanced Stringency of environmental regulations 20 technology products Laws relating to ICT 55 20 Government success in ICT promotion Presence of demanding regulatory standards 27 Buyer sophistication Change up/down of more than 5/10 ranks since 2001 32 Note: Rank versus 74 countries overall. New Zealand ranks 25th in 2008 PPP adjusted GDP per capita and 15th in Global Competitiveness Source: Institute For Strategy and Competitiveness, Harvard University (2009)
  33. 33. Overall, good context for rivalry… things to work on: competitive intensity, FDI, investment incentives Overall Ranking = 13 Context for Strategy and Rivalry Conditions NZ’s Position 2009 Competitive Disadvantages Competitive Advantages Relative to GDP per Capita Relative to GDP per Capita 64 Quality of competition in the ISP sector 1 Strength of investor protection 56 (Low) Impact of taxation on incentives to work and invest 3 Prevalence of trade barriers 53 Business impact of rules on FDI 5 Strength of auditing and reporting standards 50 Intensity of local competition 6 (Low) Distortive effect of taxes and subsidies on competition 43 FDI and technology transfer 7 (Low) Rigidity of employment 34 (Low) Extent of market dominance (by business groups) 7 Regulatory quality 34 (Low) Tariff rate 8 Effectiveness of antitrust policy 32 Prevalence of foreign ownership 8 Efficacy of corporate boards 26 Pay and productivity 12 Low market disruption from state-owned enterprises 13 Intellectual property protection 13 Restrictions on capital flows 22 Cooperation in labour-employer relations Change up/down of more than 5/10 ranks since 2001 33 Note: Rank versus 74 countries overall. New Zealand ranks 25th in 2008 PPP adjusted GDP per capita and 15th in Global Competitiveness Source: Institute For Strategy and Competitiveness, Harvard University (2009)
  34. 34. Context for rivalry may be fine… - NZ firms coming up short in practice, however Overall Ranking = 25 Company Operations and Strategy Conditions NZs Position 2009 Competitive Disadvantages Competitive Advantages Relative to GDP per Capita Relative to GDP per Capita 4 61 Value chain breadth Reliance on professional management 11 49 Extent of incentive compensation Willingness to delegate authority 16 41 Nature of competitive advantage Prevalence of foreign technology licensing 24 33 Company spending on R&D Extent of marketing 32 Control of international distribution 29 Firm-level technology absorption 29 Breadth of international markets 27 Capacity for innovation 27 Production process sophistication 26 Extent of staff training 26 Extent of regional sales Change up/down of more than 5/10 ranks since 2001 34 Note: Rank versus 74 countries overall. New Zealand ranks 25th in 2008 PPP adjusted GDP per capita and 15th in Global Competitiveness Source: Institute For Strategy and Competitiveness, Harvard University (2009)
  35. 35. Impressive macroeconomic policy… spoilt by worsening interest rate spread Overall Ranking = 8 Macroeconomic Policy (MP) NZs Position 2009 Competitive Disadvantages Competitive Advantages Relative to GDP per Capita Relative to GDP per Capita 1 45 Interest rate spread Government surplus/deficit 1 Inflation 9 Government debt Change up/down of more than 5/10 ranks since 2001 35 Note: Rank versus 74 countries overall. New Zealand ranks 25th in 2008 PPP adjusted GDP per capita and 15th in Global Competitiveness Source: Institute For Strategy and Competitiveness, Harvard University (2009)
  36. 36. Majority of SIPI world-class… centralization of Overall economic policymaking has to be addressed Ranking = 11 Social Infrastructure and Political Institutions NZs Position 2009 Competitive Advantages Competitive Disadvantages Relative to GDP per Capita Relative to GDP per Capita (Low) Malaria incidence Decentralization of economic policymaking 1 56 Secondary enrollment (Low) Wastefulness of government spending 1 30 Judicial independence 2 2 (Low occurrence of) Diversion of public funds 2 (Low occurrence of) Irregular payments by firms 2 Ethical behavior of firms 4 (Low impact of) Organized crime 4 (Low) Business costs of corruption Control of Corruption (WB) 5 Rule of Law (WB) 5 Voice and Accountability (WB) 6 Primary enrollment 8 Freedom of the press 9 (Low) Favoritism in decisions of government officials 10 Public trust of politicians 11 Life expectancy 12 Transparency of government policymaking 12 Efficiency of legal framework 13 Property rights 13 Effectiveness of law-making bodies 14 15 Quality of primary education 16 Health expenditure 17 (Low) Tuberculosis incidence Change up/down of more 18 Government effectiveness in reducing poverty and inequality than 5/10 ranks since 2001 20 Reliability of police services 21 Accessibility of healthcare services 21 (Low) Business costs of crime and violence 22 Quality of healthcare services 22 (Low) Infant mortality 36 Note: Rank versus 74 countries overall. New Zealand ranks 25th in 2008 PPP adjusted GDP per capita and 15th in Global Competitiveness Source: Institute For Strategy and Competitiveness, Harvard University (2009)

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