Catherine Beard

There is no denying that manufacturing in New Zealand has suffered as a result of the global financial crisis, just like many other countries. But, it’s imperative to realise that we have come off better than most, recognise what we can do to improve New Zealand’s situation and leverage our advantages in the global marketplace.

What happens in manufacturing matters to New Zealand because manufacturing is still a big employer – the biggest in the Auckland region, and second largest in the country. It accounts for nearly 50 per cent of New Zealand’s exports.

Manufacturing as an employer has been fairly static over the last three years – bumping along in very slight expansion mode, but the key message is that the backward slide (over the whole sector) has stabilised somewhat.

So, the questions to be asked are, “What can New Zealand do to grow its manufacturing sector?” and “What can we do to get more people off welfare and into more manufacturing jobs?”

We need to tackle the problem from both ends – demand and supply. Growing the manufacturing sector and creating more jobs will pull more people into manufacturing, but we also need to make sure there is a good supply of qualified manufacturing workers.

The challenge of getting people off welfare comes down to ensuring those people are work-ready and jobs are available for them.

When the economy is growing slowly and there are not so many new jobs being created, the people most affected are the unskilled and school and university leavers who are looking for their first job. Also in tough economic times, people are more inclined to hang onto to their jobs, so there is less movement amongst jobs.

While things might seem tough in NZ, they have been tougher in other countries. The US and EU have had higher unemployment rates to deal with than NZ, and in some countries like Spain it reached an historical high of 22.85 per cent in the last quarter of 2011.

Having said that, the NZ youth unemployment rates are unacceptably high and need to be addressed urgently.

A recent survey1 showed that only 7 per cent of employers believe school leavers are well prepared to be effective in the workplace, and only 33 per cent of employers believe university and polytechnic graduates are well prepared to be effective in the workplace.

Schools need to do a much better job of preparing young people for further education, training and employment.

Feedback we’ve had from a couple of large employers in the BusinessNZ Major Company CEO Group is that they are struggling to find enough Information, Communication and Technology graduates and engineers. NZ is still producing lots of accountants and lawyers, but not enough of the graduates that are needed in manufacturing.

If NZ is going to raise its international competitiveness, particularly in manufacturing, we’ve got to get our training and education right.

A new initiative called Vocational Pathways is aimed at making learning for young people real and relevant to the job opportunities in the NZ economy. There is a manufacturing sector pathway currently being developed as part of this. You can find out more by contacting Josh Williams, Josh.Williams@minedu.govt.nz.

One way we are making headway in our manufacturing sector is in carving out a significant competitive advantage over Australia, in terms of our wages, overheads and exchange rates and the ease of doing business in NZ.

The mineral and mining boom that is making manufacturing less economic in Australia does not look to end any time soon, so we need to be thinking about how we attract manufacturing investment in NZ and promote ourselves as a good entry point into the Asian markets with our FTA with China.

*Catherine Beard is Executive Director Manufacturing at BusinessNZ www.manufacturingnz.org.nz

 

1 Deloitte-BusinessNZ Election Survey 2011