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A rising dollar and the printing industry–exclusive comment from Joan Grace, Chief Executive, PrintNZ

Thursday, 26 April 2007
By Print 21 Online Article

Well, as any economist says … it depends … there will be different impacts for different sectors and businesses in the industry.

The most widely reported impact of the exchange rate hike is about the impact on NZ’s exporters who are seeing their hard won market returns fall as a result of something they have no control over. For printing businesses with exporters as their major customers the impact of the rising dollar is immediate. These customers are highly likely to decrease what they spend on print.

A second scenario to consider is that of a business in our industry that is mostly focused on producing for domestic customers with little debt. The immediate impact is not all that bad – the high dollar is keeping the price of petrol and other imported inputs down, the economy is still buoyant with NZ consumers still pretty keen to spend beyond their means. But what will happen in 3-6 months’ time when the domestic customers also see a decrease in business confidence and consumer spending in light of higher interest rates?

Higher interest rates will have a dual impact for consumers of raising mortgage payments and slowing the housing market making people more uneasy about increasing personal debt.

So what can businesses do? The volatility of the NZ dollar is something none of us can control. A poor performing US economy is simply beyond the sphere of influence for our very small economy.

The conditions today are a time to look closely again at the markets we operate in and how we run our businesses. We need to:

  • Ensure we get the productivity gains that make our products and services more viable on world markets;
  • Look carefully at the return on investment we can get on our businesses;
  • Borrow wisely understanding the impacts of higher interest rates; and
  • Ensure we are able to provide our exporting customers with the best possible chance to succeed.

    It is also a time for the industry to consider again why we set selling prices based on a cost-plus mentality and not on the basis of the value we add to the businesses of our customers.

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