Weaknesses within the Otago-Southland manufacturing industries have been identified by the latest BNZ-Business NZ performance in manufacturing index results.
The April index showed the region slipping to 47.2 points from 53.4 points in the same month last year. A reading below 50 indicates a decline in activity and above 50 shows an expansion.
The New Zealand index fell to 51.5 points from 57.1 in April last year.
Otago-Southland Employers Association chief executive John Scandrett acknowledged yesterday there was lower sentiment across the regions' manufacturing-sector activities than there was late last year.
Against the local index reading of 47.2 points, he had identified weaknesses in textile, clothing and machinery-based operations.
"However, it is not all bad news. Within the survey results there are encouraging signals indicative of stability in packaging, wood products and various food and beverage activities.
"It is positive to see evidence of continuing export-linked success in selected boat-building activity and Australian-destined food shipments."
Once again, there were niche operators who were maintaining solid momentum and continuing to track ahead of mainstream manufacturing results, Mr Scandrett said.
"I think we can adopt comfort around the fact that the mainstream sector operators are well positioned to benefit once national and international economic conditions improve."
Declining manufacturing in the Otago region should be a wake-up call to the Government to support the local rail manufacturing and associated engineering industries, Rail and Maritime Transport Union secretary Wayne Butson said.
The central region, where KiwiRail's Woburn workshop in Lower Hutt was based, also declined in manufacturing activity.
"How can we retain any form of rail manufacturing base in this country when government procurement settings do not support local industry?
"This is the time to be backing the Hillside and Woburn workshops, not walking away from them, as we saw from the Government's weak response to last year's business case to ensure the $500 million job to build Auckland's new Electric Multiple Units stayed in New Zealand," he said.
The expertise and equipment was in the rail workshops in Dunedin and Lower Hutt to carry out more rail manufacturing work.
All that was needed was a government willing to back local industry, and help keep good manufacturing jobs in New Zealand, Mr Butson said.
BNZ economist Doug Steel said influences on the manufacturing sector at present were about as varied as the sector itself.
Exerting pressures one way or another on domestic manufacturers were: the earthquake aftermath, a weak construction sector, high commodity prices, a high New Zealand dollar-US dollar exchange rate and a generally strong Australian economy.
Pulling all the threads together, the construction sector was one that, on average, posted its seventh consecutive month of expansion in April.
"Sure, the rate of progress is not fast and it is still coming from a relatively slow base. But given what has occurred over recent months, it is quite a remarkable performance."
Looking at the brightening outlook for the construction sector, it should not be long before the construction-related manufacturing sectors started to improve, he said.
That should see the index higher later in the year as those sectors added to the current strength in the food-processing and machinery and equipment sectors, Mr Steel said.
