INTOUCH: Thin Order Books A Big Constraint

A shortage of orders or reduced demand has rocketed up the scale as the main constraint that New Zealand’s privately owned businesses see against their ability to expand, according to the latest International Business Report survey by accounting and business advisory firm Grant Thornton.
The order book situation has replaced traditional concerns such as red tape and the availability of skilled workers as the chief worry. But surprisingly to some, these two topics continue to outrank the cost of finance and the shortage of working capital or long-term finance as barriers.
Internationally, New Zealand is in the top 10 when it comes to shortage of orders being identified as constraint against expansion of business.
“This result sets gloomy start to very challenging year and unfortunately looks like being the precursor to more redundancies and business closures,” said Grant Thornton New Zealand spokesman Peter Sherwin.
The international Grant Thornton survey shows that 53 percent of New Zealand businesses questioned rated shortage of orders or reduced demand at four or five on scale of one to five as constraint on their expansion. Top of the table in this respect were Japan (78 percent) and Italy (70 percent) and the global average was 49 percent.
New Zealand and Australia were out of step with each other in the survey, however – Australia’s top rating constraint was still seen to be availability of skilled workforce rather than shortage of orders.
Among New Zealand businesses, red tape and regulations still came in as serious constraint, with 41 percent putting it at the top end of the scale (against global average of 30 percent and Australia’s figure of just 20 percent). Concern over availability of skilled workers slipped to third as constraint in New Zealand, but still had 38 percent of businesses rating it serious barrier (compared with global average of 27 percent and Australia’s much higher ranking of 47 percent).