4. Evidence of Injury
4.1 Introduction
115. Tasman has advised that its financial year is 1 July to 30 June. However, the financial information presented in the application is for calendar years and YTD June. Therefore, in assessing the evidence of material injury caused by the alleged dumped goods the Ministry has aligned the data from Statistics New Zealand according to calendar years as presented in the application.
116. The basis for considering material injury is set out in section 8(1) of the Act:
| 8. Material injury to industry-(1) In determining for the purposes of this Act whether or not any material injury to an industry has been or is being caused or is threatened or whether or not the establishment of an industry has been or is being materially retarded by means of the dumping or subsidisation of goods imported or intended to be imported into New Zealand from another country, the Chief Executive shall examine- |
| | (a) | The volume of imports of the dumped or subsidised goods; and |
| | (b) | The effect of the dumped or subsidised goods on prices in New Zealand for like goods; and |
| | (c) | The consequent impact of the dumped or subsidised goods on the relevant New Zealand industry. |
117. Tasman has presented its financial data separated out by Auckland region and national market. The national financial data includes the performance of the Auckland region. Tasman has based material injury predominantly on the effect on like goods' prices and the impact of the dumped goods in the Auckland region.
118. In accordance with Article 4.1 of the Anti-Dumping Agreement:
4.1 ... the term "domestic industry" shall be interpreted as referring to the domestic producers as a whole of the like products or to those of them whose collective output of the products constitutes a major proportion of the total domestic production of those products, except that:
(i)...
(ii) in exceptional circumstances the territory of a Member may, for the production in question, be divided into two or more competitive markets and the producers within each market may be regarded as a separate industry if (a) the producers within such market sell all or almost all of their production of the product in question in that market, and (b) the demand in that market is not to any substantial degree supplied by producers of the product in question located elsewhere in the territory. In such circumstances, injury may be found to exist even where a major portion of the total domestic industry is not injured, provided there is a concentration of dumped imports into such an isolated market and provided further that the dumped imports are causing injury to the producers of all or almost all of the production within such market.
119. The Anti-Dumping Agreement provides the international framework of rules and obligations, however, the provisions of 4.1(ii) are not reflected in the Act.
120. The Ministry therefore assesses material injury, caused by dumped imports, on the total New Zealand market. The Ministry has used the national financial data, which is applicable to the production and sale of the like goods, that is, R1.6 to R2.2 glass wool insulation, for which data was provided in the application.
4.2 Import Volumes
121. Section 8(2)(a) of the Act provides that the Chief Executive shall have regard to the extent to which there has been or is likely to be a significant increase in the volume of imports of dumped or subsidised goods either in absolute terms or in relation to production or consumption in New Zealand.
122. Tasman advised that due to imported product displacing sales of Tasman's like products it is being materially injured.
123. Tasman provided information compiled by Statistics New Zealand on overseas trade statistics on a monthly basis from 1 July 1999 to 31 May 2002.
124. Tasman determined, given the volume of material known to be in the New Zealand market, that in excess of 90 percent of material imported is comprised of the subject goods. Tasman advised that the volume of imports from Australia might include products other than the subject goods.
125. To determine a trend in the volume of imports the Ministry has estimated the imports up to December 2002 based on the 5 months of volume imported up to month ended May 2002.
126. Given that sales of glass wool insulation has a seasonal component it was considered reasonable to estimate the volume imported based on imports for the year ended December 2001. The imports from Chinese Taipei from January to month ended May 2001 were [Text deleted due to confidentiality] percent of the yearly total. For the same time period imports from Australia were [Text deleted due to confidentiality] percent and imports from other countries were [Text deleted due to confidentiality] percent. The imports up to May 2002 have been divided by the percentages established from imports in the year ended December 2001 to estimate the import volume for the remaining 7 months of the year. The result can be seen in table 4.1 below under the heading estimate for the year ended December 2002.
127. Tasman provided the New Zealand industry sales estimate for December 2002.
128. The following table shows the volume of imports in absolute terms and relative to production or consumption based on Statistics New Zealand and national financial data provided by Tasman.
Table 4.1: Volume of Imports for Year Ended December (Kilograms)
| | 2000 | 2001 | Estimate
December 2002 |
|---|
| Chinese Taipei | 188,497 | 404,412 | 279,076 |
| Australia | 2,749,289 | 2,862,275 | 3,016,368 |
| Other Imports | 6,866 | 31,235 | 35,875 |
| Total Imports | 2,944,652 | 3,297,922 | 3,331,319 |
| NZ Industry Sales | xxxxx | xxxxx | xxxxx |
| NZ Market | xxxxx | xxxxx | xxxxx |
| Change on previous year: | | | |
| - Chinese Taipei | | 215,915 | -125,336 |
| - Australia | | 112,986 | 154,093 |
| - Other Imports | | 24,369 | 4,640 |
| - Total Imports | | 353,270 | 33,397 |
| - NZ Industry Sales | | xxxxx | xxxxx |
| - NZ Market | | xxxxx | xxxxx |
| % change: | | | |
| - Chinese Taipei | | 115 | -31 |
| - Australia | | 4 | 5 |
| - Other Imports | | 355 | 15 |
| - Total Imports | | 12 | 1 |
| - NZ Industry Sales | | xxxxx | xxxxx |
| - NZ Market | | xxxxx | xxxxx |
| Chinese Taipei Imports as a % of: | | | |
| - NZ Industry Sales | xxxxx | xxxxx | xxxxx |
| - NZ Market | xxxxx | xxxxx | xxxxx |
129. Table 4.1 above shows that the volume of imports from Chinese Taipei increased by 215,915 kilograms for year ended December 2001 and is estimated to decline by 125,336 kilograms for year ended December 2002. The import volume of the subject goods from Chinese Taipei in absolute terms has significantly increased for the year ended December 2001 and is estimated to decrease from 2001 level for year ended December 2002. This will still be greater than the base imports of the year ended December 2000.
130. The import volume of the subject goods relative to production and consumption in New Zealand peaked in year ended December 2001 and is estimated to decrease by year ended December 2002. This is higher than the base figure for the year ended December 2000.
131. If an investigation is initiated, consideration should be given to investigating the import volume of like goods from Australia and other countries to ensure that those goods are in fact the like goods.
Conclusion on Import Volumes
132. There is sufficient evidence that the volume of imports from Chinese Taipei significantly increased in absolute terms and relative to production and consumption in the year ended December 2001. The volume of imports from Chinese Taipei is estimated to decline by the year ended December 2002 but the volume of imports will still be greater than the base year ended December 2000.
4.3 Price Effects
Price Undercutting
133. Section 8(2)(b) of the Act provides that the Chief Executive shall have regard to the extent to which the prices of the dumped or subsidised goods represent significant price undercutting in relation to prices in New Zealand (at the relevant level of trade) for like goods of New Zealand producers.
134. In considering price undercutting the Ministry will normally seek to compare prices at the ex-factory and ex-importer's store levels, to ensure that differences in distributions costs and margins do not confuse the impact of dumping. To assess the extent of price undercutting the Ministry must consider the level of trade at which the subject goods first compete with the like goods of the New Zealand producer.
135. Tasman claims that in the Auckland region the dumped goods are undercutting the local price, requiring an average margin reduction of [Text deleted due to confidentiality] percent in like products.
136. Tasman submitted that Premier is an importer, wholesaler and installer of glass wool insulation and its products and services are also supplied directly to the end user in the Auckland region.
137. Tasman advised that it supplies only distributors with glass wool insulation that on sell to end-users. A related company to Tasman, Pink Fit™ provides an installation service if requested by the end user.
138. Based on the applicant's information it appears that the point at which the price of the subject goods first compete with the ex-factory price of the New Zealand producer is at the ex-store level.
139. The Ministry is of the view that Tasman's average ex-factory net price (revenue per kilogram) for year to date June 2002 should be compared to the importer's ex-store price (determined by Tasman in the construction of the export price) to avoid distortions created by installation costs. The importer's ex-store price (material charge) constructed by Tasman is compared with Tasman's net ex-factory price per kilogram which has been converted to square metres using the conversion factor suggested by Tasman of 0.75.
140. The following table gives details of price undercutting as at year to date June 2002.
Table 4.2: Price Undercutting per (NZD per m²)
| | YTD
June 2002 |
|---|
| Tasman's average ex-factory price | xxxxx |
| Premier's ex-store price | xxxxx |
| Price undercutting | xxxxx |
| % undercutting | xxxxx% |
141. Table 4.2 shows imported product from Chinese Taipei undercutting the New Zealand industry's like product.
Conclusion
142. There is sufficient evidence that the prices of the allegedly dumped imports are undercutting the prices of the New Zealand industry.
Price Depression
143. Section 8(2)(c) of the Act provides that the Chief Executive shall have regard to the extent to which the effect of the dumped or subsidised goods is or is likely significantly to depress prices for like goods of New Zealand producers.
144. Price depression occurs when prices are lower than those in a market unaffected by dumping, usually in a previous period.
145. Tasman claims the dumped goods are causing price depression in its Auckland market. Tasman states the sales revenue has increased but not in proportion to the increased costs. Tasman claims that in order for it to compete with the imported product, the price undercutting will cause price depression in the remaining sales of like product.
146. The Ministry is of the view that price depression must be demonstrated taking into account national sales of like product. The following table shows the revenue per kilogram taken from the national financial data provided in the application.
Table 4.3: Price Depression: Average Selling Price for Year Ended December (NZD per Kilogram)
| | 2000
(base) | 2001 | YTD
June 2002 |
|---|
| R1.8 Glass Wool Insulation | xxxxx | xxxxx | xxxxx |
| Difference from previous year | | xxxxx | xxxxx |
| % difference from YE 2000 | | xxxxx | xxxxx |
147. As demonstrated in the Table above for the year ended December 2001 the net price per kilogram has increased from the previous financial year by NZD [Text deleted due to confidentiality] For the year to date June 2002 the net price per kilogram has increased from previous financial year by a further NZD [Text deleted due to confidentiality].
Conclusion
148. Based on the above data the New Zealand industry does not demonstrate it has suffered any price depression.
Price Suppression
149. Section 8(2)(c) of the Act also provides that the Chief Executive shall have regard to the extent to which the effect of the dumped or subsidised goods is or is likely significantly to prevent price increases for those goods that otherwise would have been likely to have occurred.
150. The Ministry has generally based its assessment of price suppression on positive evidence, in particular the extent to which cost increases have not been recovered in prices. Cost increases not recovered in prices will be reflected in declines in gross profit and EBIT expressed as a percentage of sales. Where cost savings have been made, the lack of any price increase will not normally be regarded as price suppression. While the inability to recover cost increases in prices is the main indicator of price suppression, the Ministry will consider any other factors raised as positive evidence of price suppression.
151. Tasman claims cost increases are unable to be recovered due to price suppression. Tasman advised that in the Auckland region the cost of production has increased by [Text deleted due to confidentiality] percent for the year ended December 2001 however "the price increase has not been able to take all the increase of cost into the sales price". Tasman advises its gross margin for the Auckland region has decreased from [Text deleted due to confidentiality] percent to [Text deleted due to confidentiality] percent.
152. The Ministry is of the view that price suppression must be demonstrated taking into account national sales of like product. In ascertaining the adequacy and accuracy of the information provided by Tasman the Ministry has used the national financial data which is represented in the Table below.
Table 4.4: Price Suppression per Kilogram for Year Ended 31 December
| | 2000
(base) | 2001 | YTD
June 2002 |
|---|
| Average ex-factory sales price | xxxxx | xxxxx | xxxxx |
| Cost of production | xxxxx | xxxxx | xxxxx |
| Gross profit | xxxxx | xxxxx | xxxxx |
| Selling and administration | xxxxx | xxxxx | xxxxx |
| EBIT | xxxxx | xxxxx | xxxxx |
| Total costs | xxxxx | xxxxx | xxxxx |
| Difference from previous year: | | | |
| Average ex-factory sale price | | xxxxx | xxxxx |
| Cost of production | | xxxxx | xxxxx |
| Gross profit | | xxxxx | xxxxx |
| Selling and administration | | xxxxx | xxxxx |
| EBIT | | xxxxx | xxxxx |
| Total costs | | xxxxx | xxxxx |
| As a % of sales: | | | |
| Cost of production | xxxxx | xxxxx | xxxxx |
| Gross profit | xxxxx | xxxxx | xxxxx |
| Selling and admin | xxxxx | xxxxx | xxxxx |
| EBIT | xxxxx | xxxxx | xxxxx |
153. As demonstrated above in Table 4.4 the cost of production for the year ended December 2001 increased by NZD [Text deleted due to confidentiality] a kilogram. For the year to date June 2002 the cost of production when compared with previous year decreased by NZD [Text deleted due to confidentiality] a kilogram.
154. Cost increases not recovered in prices can be reflected in declines in profit as a percentage of sales and EBIT as a percentage of sales.
155. For the year ended December 2000 the gross profit as a percentage of sales was [Text deleted due to confidentiality] percent and for the year ended December 2001 it was [Text deleted due to confidentiality] percent which equates to an increase of [Text deleted due to confidentiality] percent. The gross profit as a percentage of sales for the year to date June 2002 was [Text deleted due to confidentiality] percent which equates to an increase of [Text deleted due to confidentiality] percent.
156. For year ended December 2000 the EBIT as a percentage of sales was [Text deleted due to confidentiality] percent and for the year ended December 2001 it was [Text deleted due to confidentiality] percent which equates to an increase of [Text deleted due to confidentiality] percent. The EBIT as a percentage of sales for year to date June 2002 was [Text deleted due to confidentiality] percent which equates to an increase of [Text deleted due to confidentiality] percent, therefore, based on the national financial data Tasman has been able to recover cost increases.
Conclusion
157. Based on the above data Tasman does not demonstrate it has suffered any price suppression.
Conclusion on Price Effects
158. In its application Tasman has provided information on price effects in the Auckland region and aggregated national sales. The Ministry is of the view that price effects must be demonstrated taking into account national sales of like product. Based on the national financial data there is sufficient evidence of price undercutting but there is no evidence of price depression or price suppression.
4.4 Economic Impact
159. Section 8(2)(d) of the Act provides that the Chief Executive shall have regard to the economic impact of the dumped or subsidised goods on the industry, including-
- Actual and potential decline in output, sales, market share, profits, productivity, return on investments, and utilisation of production capacity; and
- Factors affecting domestic prices; and
- The magnitude of the margin of dumping; and
- Actual and potential effects on cash flow, inventories, employment, wages, growth, ability to raise capital, and investments.
Output and Sales
160. Movements in sales revenue reflect changes in volumes and prices of goods sold. Dumped imports can affect both of these factors through increased supply of goods to the market and through price competition.
Sales Output
161. Tasman advised that its output for the Auckland region has declined by [Text deleted due to confidentiality] kilograms between 2000 and 2001 while the market for its product significantly increased in 2001. Tasman claims the number of building permits increased over the previous year and consumer confidence and spending had increased. Tasman advised that other comparable companies in the building industry have reported significant improvements in sales into housing and in its own market segment. Tasman has seen good growth in other regions but not in Auckland. Based on the information Tasman considers it should have seen an increase in output of [Text deleted due to confidentiality] kilograms instead of a decline.
162. In assessing actual and potential decline in sales output the Ministry has based its findings on the national financial data which is shown in the table below.
Table 4.5: Industry Output for Year Ended December (Kilograms)
| | 2000
(base) | 2001 | 2002
(estimate) |
|---|
| NZ industry sales volume | xxxxx | xxxxx | xxxxx |
| Difference from previous year | | xxxxx | xxxxx |
| % difference from 2000 | | xxxxx | xxxxx |
163. As demonstrated in Table 4.5 above the sales output has declined for the year ended December 2001 by [Text deleted due to confidentiality] kilograms and is estimated to increase by [Text deleted due to confidentiality] kilograms for the year ended December 2002 when compared with the year ended December 2001. However, it is estimated that the sales output for December 2002 will be less than sales output for the base year ended December 2000.
164. There is sufficient evidence that actual national sales output has declined.
Sales Revenue
165. Tasman advised that its national sales have declined by NZD [Text deleted due to confidentiality] between 2000 and 2001 with estimated lost sales of NZD [Text deleted due to confidentiality] resulting from direct competition of the dumped goods. Tasman claims the market for like goods significantly increased in 2001 therefore it considers that industry sales should have remained static instead of declining.
166. Tasman states that the reason for the market increase was due in part to promotion of higher insulation levels in all types of buildings. Tasman notes that Premier insulation has not advertised or promoted its product therefore Tasman claims that the dumped goods took up sales in the increased market instead of Tasman gaining those sales.
167. In assessing the actual and potential decline in sales revenue the Ministry has based its findings on the national financial data which is shown in the Table below.
Table 4.6: Industry Sales Revenue for Year Ended December (NZD)
| | 2000
(base) | 2001 | 2002
(estimate) |
|---|
| NZ industry sales revenue | xxxxx | xxxxx | xxxxx |
| Difference from previous year | | xxxxx | xxxxx |
| % difference from 2000 | | xxxxx | xxxxx |
168. As demonstrated in Table 4.6 sales revenue has declined by NZD [Text deleted due to confidentiality] for the year ended December 2001 and is estimated to increase by NZD [Text deleted due to confidentiality] for the year ended December 2002. However, the sales revenue amount for the year ended December 2002 is estimated to decline below the level of revenue for the year ended December 2000.
169. The overall level of building activity in the economy drives demand for insulation. To confirm that the level of building activity has increased the Ministry obtained data from Statistics New Zealand that reveals that the number of building consents issued increased for the six months ended December 2001 when compared with the same time period in 2000. For six months ended June 2002 the number of consents issued has also increased when compared with the same time period in 2001.
Conclusion
170. The national financial data shows sufficient evidence that the New Zealand industry's sales output and revenue have declined significantly in the year ended December 2001 and is estimated for year ended December 2002 to be below the base level for the year ended December 2000.
Market Share
171. The analysis of market share must take account of changes in the growth of the market as a whole. A decline in the share of the market held by the domestic industry in a situation where the market as a whole is growing will not necessarily indicate that injury is being caused to the domestic industry, particularly if the domestic industry's sales are also growing.
172. Tasman estimated in its application that its national share of like products is:
| Market share | 1999 | 2000 | 2001 | 2002
(6 mths) |
|---|
| Tasman | xxxxx% | xxxxx% | xxxxx% | xxxxx% |
| Imported (Premier) | | | xxxxx% | xxxxx% |
| Other imports | xxxxx% | xxxxx% | xxxxx% | xxxxx% |
173. In the following Table the Ministry has combined the data supplied by Tasman for imports and financial data. For the purposes of market share Statistics New Zealand import data is considered to be representative of sales volume. This is shown in the table below:
Table 4.7: New Zealand Market for Year Ended December (Kilograms)
| | 2000 | 2001 | Estimated to December 2002 |
|---|
| NZ Industry Sales | xxxxx | xxxxx | xxxxx |
| Imports from Chinese Taipei | 188,497 | 404,412 | 279,076 |
| Imports from Australia | 2,749,289 | 2,862,275 | 3,016,368 |
| Other Imports | 6,866 | 31,235 | 35,875 |
| Total Market | xxxxx | xxxxx | xxxxx |
| As a % of Total Market: | | | |
| - NZ Industry Sales | xxxxx | xxxxx | xxxxx |
| - Imports from Chinese Taipei | xxxxx | xxxxx | xxxxx |
| - Imports from Australia | xxxxx | xxxxx | xxxxx |
| - Other Imports | xxxxx | xxxxx | xxxxx |
174. Table 4.7 above shows that the New Zealand industry's market share differs from the estimate of market share provided in the application (see paragraph 172). In 2000 Tasman held [Text deleted due to confidentiality] percent market share. Tasman's market share declined in the year ended December 2001 by [Text deleted due to confidentiality] percent and remains static for the estimated year ended December 2002.
175. The market share for imports from Australia has increased for the year ended December 2001 by 3.1 percentage points and is estimated to increase for the year ended December 2002 by 2.5 percentage points.
176. The market share for imports from Chinese Taipei significantly increased for the year ended December 2001 by 4.3 percentage points and is estimated to decrease by the year ended December 2002 by 2.5 percentage points but Chinese Taipei's market share is greater than that established for the year ended December 2000.
177. There does not appear to be a substantial change in the total market size, which may indicate that the decline in market share for Tasman is as a consequence of increased imports from Australia, Chinese Taipei and other countries.
178. There is sufficient evidence that the New Zealand industry has experienced a significant decline in market share for year ended December 2001 as a result of increased imports from Australia, Chinese Taipei and other countries. However, the New Zealand industry's market share is estimated to remain constant for the year ended December 2002. For the year ended December 2002 it is estimated that market share for imports from Australia and other countries is likely to continue to increase. The market share for imports from Chinese Taipei, however, is estimated to decline but it is higher than the base figure for year ended December 2000. Based on the figures over the three year period the New Zealand industry's market share has declined.
Profits
179. Changes in net profit reflect changes in prices, sales volumes or costs. Dumped imports can impact on any or all of these. Normally, the extent of any decline in profit will be measured against the level achieved in the period immediately preceding the commencement of dumping.
180. In an investigation, the Ministry's assessment of the impact of dumped imports is based on an examination of trends in actual profits in order to establish whether or not there is an actual or potential decline in profits. In some circumstances, it may be possible to determine that injury is being caused where profits are not declining, but that would depend on the circumstances of the case and would need to be based on positive evidence. Such an impact would also need to be attributable to the dumping of imports.
181. Tasman advised its gross profit for the Auckland region has decreased as a result of the additional sales the importer has received from the dumped goods. Tasman advised its gross margin decreased by NZD [Text deleted due to confidentiality] per kilogram and the net profit decreased by NZD [Text deleted due to confidentiality] per kilogram for year ended December 2001.
182. The Ministry has used the national financial data to indicate actual decline in profit, which is shown in the Table below:
Table 4.8: Earnings before Interest and Tax for Year Ended December (NZD)
| | 2000 | 2001 | YTD
June 2002 |
|---|
| Revenue | xxxxx | xxxxx | xxxxx |
| EBIT | xxxxx | xxxxx | xxxxx |
| Change from 2000 | | xxxxx | - |
| % change from 2000 | | xxxxx | - |
| EBIT as % of Revenue | xxxxx | xxxxx | xxxxx |
| EBIT (kilogram) | xxxxx | xxxxx | xxxxx |
| Change from 2000 | | xxxxx | xxxxx |
183. As demonstrated in the Table above, for 2001 the revenue has declined and the EBIT has significantly declined which reflects the decline in output and sales.
184. The EBIT as a percentage of revenue has increased for the year ended December 2001 and YTD June 2002. However, this trend is consistent with the lack of price depression and price suppression.
185. The national financial data shows sufficient evidence of actual decline in profit for the year ended December 2001.
Productivity
186. Productivity is the relationship between the output of goods and the inputs of resources used to produce them. Changes in productivity are affected by output levels and by the level of capacity utilisation.
187. Tasman advised that productivity decreased from 2000 to 2001 which has increased the manufacturing overhead costs due to the lower volumes through the plant. Tasman has advised that it has [Text deleted due to confidentiality]. Tasman estimated the productivity for 2001 would have been greater if the goods had not been dumped.
188. Tasman did not provide the number of staff specifically employed to produce the like goods therefore any investigation will need to give consideration to the input and output of resources used to produce like goods.
189. There is, however, some evidence of actual decline in productivity.
Return on Investments
190. A decline in return on investments will result from a decline in returns with or without a relative increase in the investment factor being used. Movements in the return on investments affect the ability of the industry to retain and attract investment.
191. Tasman advised that the return on shareholders funds decreased from [Text deleted due to confidentiality] percent in 2000 to [Text deleted due to confidentiality] percent in 2001. Tasman advised that this information could be sighted in the company's statement of financial position, which was not provided in the application.
192. Any investigation whereby a verification visit to the New Zealand industry is undertaken will verify this information.
Utilisation of Production Capacity
193. The utilisation of production capacity reflects changes in the level of production, although in some cases it will arise from an increase or decrease in production capacity. In either case, a decline in the utilisation of production capacity will lead to an increase in the unit cost of production, and a consequent loss of profit.
194. Tasman has two manufacturing plants, one in Christchurch and the other in Auckland. Tasman advised the company's total capacity is [Text deleted due to confidentiality] tonnes that was under utilised in both 2000 and 2001 by [Text deleted due to confidentiality] and [Text deleted due to confidentiality] tonnes respectively. Tasman claims the utilisation rate is [Text deleted due to confidentiality] percent for the year ended 2000 and [Text deleted due to confidentiality] percent for the year ended 2001.
195. Tasman has not provided financial information for the most recent three years for the Ministry to sight the normal level of production that is unaffected by alleged dumped imports therefore a comparison of utilisation of production capacity affected by dumped imports is unable to be completed.
196. There is, however, some evidence to support the claim that there is actual decline in the utilisation of production capacity.
Factors Affecting Domestic Prices
197. Tasman knows of no factors other than the dumped goods that will affect its domestic prices.
The Magnitude of the Margin of Dumping
There is a significant dumping margin as established earlier in this report. This margin is impacting on some of the economic indices, which must be considered when establishing the materiality of any injury.
Other Adverse Effects
198. In considering other adverse effects, the Ministry considers actual and potential effects on cash flow, inventory, employment, wages, growth, ability to raise capital, and investments.
Cash Flow
199. In its application Tasman estimates that the cash flow for the year ended December 2001 reduced by NZD [Text deleted due to confidentiality] and there is a potential reduction in cash flow of NZD [Text deleted due to confidentiality] for the year ended December 2002.
Inventories
200. In 1998 Tasman advised that they introduced just-in-time manufacturing consequently nominal stock is held. The standard operation is to run [Text deleted due to confidentiality] shifts for [Text deleted due to confidentiality] days a week. However, as a result of reduced volumes over the past 2 years Tasman on a number of occasions has [Text deleted due to confidentiality] days to minimise any significant stock build up.
Employment and Wages
201. Tasman claims that wages are increasing in line with union agreements, cost of living increases and market rates. Tasman advised that due to the effect of the dumped product in Auckland (its biggest market) it has been unable to increase prices to the affected lines, which in turn affects its ability to recover costs. [Text deleted due to confidentiality]. Tasman advises that if it were earning more money there would be the potential for new jobs.
Growth
202. Tasman advises the dumped product has affected the growth of its business, particularly in the Auckland region.
Ability to Raise Capital
203. Tasman advised its ability to raise capital has not yet been affected.
Investments
204. Tasman has not provided any information on the impact of the dumped goods on investments.
4.5 Other Causes of Injury
205. Sections 8(2)(e) and (f) of the Act provide that the Chief Executive shall have regard to factors other than the dumped goods which have injured, or are injuring, the industry, including-
- The volume and prices of goods that are not sold at dumped prices; and
- Contraction in demand or changes in the patterns of consumption; and
- Restrictive trade practices of, and competition between, overseas and New Zealand producers; and
- Developments in technology; and
- Export performance and productivity of the New Zealand producers; and
- the nature and extent of importations of dumped or subsidised goods by New Zealand producers of like goods, including the value, quantity, frequency and purpose of any such importations.
Factors Other than Dumping
Non-Dumped Imports
206. Tasman advised that the volume and prices of other like goods that are not sold at dumped prices have been stable for the last 18 months.
207. According to the data from Statistics New Zealand provided in the application the volume of goods imported from Australia is increasing. The imported goods from Australia are, by virtue of the Australia New Zealand Closer Economic Relations Trade Agreement (ANZCERTA) considered to be undumped and therefore provide guidance as to an unsuppressed selling price that Tasman can achieve in the market place.
208. Any investigation will need to give consideration to the volume and price of imported goods from Australia.
Demand or Consumption Change
209. Tasman submitted that the demand for insulation has increased nationally but the Auckland region has not provided an increased return. Tasman advised that in the Auckland region the dumped goods are gaining the extra volume at its expense.
Restrictive Trade Practices
210. Tasman is not aware of any restrictive trade practices or competition between overseas and New Zealand producers.
Developments in Technology
211. Tasman considers that there has been no major development in technology over the last two and a half years.
Export Performance
212. Tasman advised their total export sales as follows:
| | 2000 | 2001 |
|---|
| kilograms sold | xxxxx | xxxxx |
| Sales (NZD 000s) | xxxxx | xxxxx |
213. Included in these figures is a major one-off project for the year ended 2001 of [Text deleted due to confidentiality] kilograms sold which generated NZD [Text deleted due to confidentiality].
214. Tasman advised that the export financial data is excluded from its national financial data.
Imports by the Industry
215. In their application, Tasman advised that it did not import any like goods in 2000 and 2001. It is not known whether Tasman imported any like goods in 2002.
4.6 Conclusions Relating to Injury
216. There is sufficient evidence that there has been a significant increase in the volume of imports in absolute terms and in relation to production or consumption in New Zealand for year ended December 2001. It is estimated that there will continue to be an increase in the volume of imports for the year ended December 2002.
217. There is sufficient evidence that the prices of the subject goods significantly undercut the prices of the New Zealand industry. Based on national market figures there is no evidence of price suppression and price depression.
218. Based on national market figures there is sufficient evidence that there has been a consequent economic impact in the form of significant decline in profit, and a decline in output, sales and market share. There is some evidence of actual decline in productivity, return on investments and utilisation of production capacity.
219. There is some evidence of effects on return on investments, cash flow, inventories, employment, wages and growth. There is no evidence on the effect on ability to raise capital and investments.
220. There is no evidence of factors other than the dumped goods that have caused material injury to the New Zealand industry.
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