– Sarah Ramsay, Chief Executive Officer, United Machinists

The Prime Minister was so disappointed she couldn’t make United’s Hawaiian launch party, she dropped in for a visit a couple of weeks later with her own party of some 30 media, entourage and diplomatic police.

We can confirm it isn’t an act – Jacinda Ardern in person is the real-deal, a people person that puts you at ease immediately and is genuinely interested.

Thoughtful, curious and obviously read up before her visit, she was eager to discuss the operations of our workshop and our views on the contract manufacturing industry:

• How difficult is it to find skilled staff?
• What can be done to help push apprenticeships?
• What can schools be doing to draw attention to careers in engineering?
• Why is it important for NZ to retain manufacturing?
• What can the government do to help push this?

We told her our vision was to bring sexy back into manufacturing – she had a good laugh at that.

We told her that now is the time for a renaissance of hi-tech manufacturing in New Zealand. The time to redefine what manufacturing looks like. That it’s not a dirty old mill or lathe, with ‘you’ll get it when its good and ready’ service.

It’s the ‘Machine Shop of the Future’ – a state of the art, temperature-controlled facility making highly intricate parts for industries such as medical, cinematography, marine and aerospace. Utilising the very latest in CNC, robotic and software technology available.

But that investments into machine capacity will come to nought, if we don’t have the highly skilled people to run them.

Of the seven qualified CNC machinists we have hired in the past 18 months, six have been from overseas.

“Go hard & Go Early” – a motto often used by Prime Minister Jacinda Ardern can be applied here. We really need to look at developing interest in the trade at school. Let’s get kids excited about how stuff gets made.  

Our apprenticeship and university training simply isn’t fit for purpose for the trade’s careers of the future.

Apprentices lack experience with new technology, and University graduates aren’t designing to optimise for manufacturability – especially for NZ capabilities.

As technology becomes more integrated and the ‘digital factory twin’ evolves, workshop roles are becoming a hybrid – with our CNC machinists upskilling to mechatronics, automation design, LEAN management concepts, programming and software for scheduling and production planning.

Enough already with the obsession that to have a ‘real career’ you need to go to university. We’ve got guys in their mid to late 20s in management roles earning over $35 an hour…..  instead of paying off student loans, they’re buying their first homes already.

But building this workforce of the future is going to take at least a decade if we are starting from grass roots at school. And even with this future workforce, relying on labour alone is not going to lift production and improve our global competitiveness.

It is critical for businesses like United to invest in automation to lift productivity. Not to replace jobs, but to increase machine utilisation to 24/7 and optimise production from the labour and asset base that we have.

Let the robots do the midnight shift and the low value work that isn’t sufficient in volume or margin to hire for.

This will allow for staff to focus on higher value work like prototyping, R&D and process improvement.

Automation for us has never been a move to replace staff but rather to allow staff to flourish to their fullest potential while increasing productivity, team skills and ultimately profits that can be shared through better wages.

And if we lift our productivity, then we can absolutely compete internationally.

New Zealand is well positioned for niche hi-tech manufacturing on a global scale. With approximately 80% of United’s work destined for export markets, at a unit price ranging from $15k to $1m, we do not need to be high volume to create a high value and extremely productive industry.

We simply need to ensure we’re building a supply chain to suit the high mix, low volume, high value precision work that our industry requires.

Add to this the opportunity we’re presented with New Zealand’s global reputation post COVID, the “Made in New Zealand” brand value is only going to grow.

Take for example in med-tech industry, in the last few months we have secured several new production projects for prosthetics and pathology companies whom are actively on-shoring their production back to New Zealand.

On the flip side we’ve heard that low volume NZ products have very little negotiating power with a global supply chain – they may get a better price, but they’re going to have little wiggle room on batch sizes and lead times. And if something doesn’t go to plan, well that’s often catastrophic.

But for NZ to compete on a global scale we need to back up our technical expertise with business savvy to provide a reliable and comprehensive supply chain.

We often hear that the difference in offshore manufacturers like China and Malaysia isn’t only in pricing, but also because they simply provide a better all-around consistent service to their clients and customers.

They collaborate with other manufacturers to provide an end-to-end solution. Plus, they’re ISO9001 accredited, provide immediate responsiveness to enquiries, and while it may take longer and have minimum run sizes – they’re pretty good at sticking to a schedule.

Given the fragmented SME nature of our industry, these are often skills and philosophies that aren’t within our companies.

At United we’re on this path of continual improvement, putting our capital investment aside, most of the work has actually been behind the scenes on systems, processes and organisational design. It’s been into software that gives us the capability to feed live data to our customers, and team and culture development to systematically remove bottlenecks.

Not to mention a huge amount of time developing SOPs as we move towards ISO9001 compliance. We’re not there yet, but we’re pretty proud of how far we’ve come.

As for what Government can do. There is a step change that needs to take place for our contract manufacturing industry to raise the bar.

In the last decade we’ve had significant incentives to invest in R&D through Callaghan Innovation, and to de-risk developing export markets through NZTE and the NZ Export Office.

The strategy is to lift productivity (measured by average income per employee) through focusing on the development and export of IP.

We believe this could gut the workforce, and whilst you’ll have a few on higher more ‘productive’ salaries, you’re also sacrificing the manufacturing backbone that underpins our communities – especially our regions.  

Isn’t it time to support the C, CAPABILITY – in the form of Skills and Capital. We need incentives recognise the importance of contract manufacturing in NZ’s hi-tech eco-system. That:

• Make it easier to hire apprentices
• Provide education and support to manufacturers undergoing digital transformations
• Incentivise capital investment into productivity
• Incentivise government procurement locally

So just a few things, we don’t have the answers. But we did thank Jacinda for helping us buy our new Mazak Integrex through the Provincial Growth Fund Grant.

PGF was a pretty blunt instrument, however it was a step in the right direction for funding growth in the regions.

And is it so different to Callaghan providing companies a 40% grant of up to $15m in R&D funding? What does Labours PGF 2.0 look like?