The past decade has seen some major changes in industry in both Australia and New Zealand. Introduction of the CER (Closer Economic Relations) Agreement between the two countries, which has slowly been phased in since January 1983 and was fully implemented on July 1, 1990, has removed tariffs and quantity restrictions on trans-Tasman trade.
This agreement was instituted in an attempt to promote "free" trade between the two countries under conditions of fair and equal competition, in an attempt to make both countries more competitive internationally. For Australian business it has meant only a 20 percent increase in market size. It has thus been a relatively simple matter to add New Zealand market requirements onto the end of their own production runs.
For New Zealand manufacturers, however, the market has increased by 475%. While this provides tremendous opportunities for New Zealand business, it has also meant manufacturers are now faced with increased competition from across the Tasman. They have had to learn to become more market-driven, quality-conscious and cost-effective in order to compete, not only in the Australian market, but in their own as well.
For reasons of market size and economies of scale, most plant investment is actually going to Australia. Companies such as Avon, Johnson & Johnson and Warner Lambert have been closing their manufacturing operations in New Zealand and moving their production to Australia.
There has been considerable rationalization of product lines, especially amongst the multinationals. Companies such as Unilever, New Zealand manufacture toothpaste for both markets while importing antiperspirant aerosols' nail polish, handcreams etc. from Australia. S.C. johnson, New Zealand, imports shampoos and conditioners, liquid soap and carpet deodorizer from their Australian counterparts, while exporting metal polishes and aerosol carpet and all-purpose cleaners to them. Both S.C. Johnson and Colgate-Palmolive are having product packaging printed with both their New Zealand and Australian addresses, so that the products can readily be manufactured and sold in either country.
One problem faced by both countries is the cost of trans-Tasman shipping. For those readers unfamiliar with the geography of the two countries, New Zealand is separated from Australia by the Tasman Sea. The distance from Auckland, New Zealand to Sydney, Australia is about the same as from New York to Florida. It costs almost as much to ship a container to Auckland from Sydney as it does from Europe. Australia currently has a population of 17 million people while New Zealand's population is 3.3 million.
The economies of both New Zealand and Australia have been quite …