Employers want future government to step in to stop hollowing out of manufacturing businesses

One of the country's largest business groups wants the government to provide financial help to parts of the manufacturing sector deemed critical to the country's economic survival.

In recent years, a series of large manufacturing businesses, including mills and food processors, have closed in the face of rising cost pressures, particularly high energy costs.

The Employers and Manufacturers Association (EMA) on Monday released a list of policy goals and ideas its member businesses wanted to see from all political parties ahead of the election.

A key demand was that future governments helped prevent what the EMA called the "gradually increasing process" of deindustrialisation across several of New Zealand's historically strong manufacturing sectors.

It argued local manufacturing faced domestic difficulties caused by New Zealand's reliance on distant supply chains, the smallness of the market, high energy costs and a lack of investment in new technology by overseas head offices.

EMA head of advocacy Alan McDonald said New Zealand could follow Australia and set up a framework that identifies which industries are critical to the country.

He said this would help make New Zealand more resilient in the face of ongoing global energy and supply chain shocks.

"So, what do we want to keep here? Do we want to keep cement, do we want to keep fertiliser, do we want to keep steel, those sorts of things, so that if things go wrong in the world, which increasingly they seem to be doing, we have got our own sectors here that can get us through the gap?"

The report argued targeted incentives, including tax, grants or procurement preference, could be given to domestic production in sectors identified as critical.

McDonald said for example, some foreign owners of local manufacturing companies were not keen on putting in the investment required to transition businesses to electricity.

"There might be a case where it might be a government-backed loan, for example, to do a transition from, say, gas to geothermal, if we are doing geothermal. So, it's not giving away money, it's more judicious use of that money to encourage and keep those critical businesses here."

The EMA Policy Directives document also called for a change in tax settings to encourage new investment in existing manufacturing plants and for resilience planning to be required for essential imported inputs, including steel, chemicals and medical supplies.

It also outlined a range of other policy goals across employment legislation, infrastructure and superannuation, with a focus on encouraging stability and certainty.