Manufacturing continues to be critical to NZ economy, but changes needed if we are to unlock the sector’s potential
From NZ Manufacturer magazine, November 2023
By Brett O’Riley, EMA Chief Executive and Co-Chair of the Advanced Manufacturing Industry Transformation Plan Steering Group
Last month, the Technology Investment Network (TIN) released its inaugural Advanced Manufacturing Report 2023.
Commissioned by MBIE, the report compares national data with the results of a survey of the top 400 manufacturing companies by revenue and employment, providing a comprehensive picture of New Zealand’s manufacturing sector.
Importantly, it includes benchmarks that will be used in future years to measure the health of manufacturing in New Zealand. This makes the report an important read for anyone with even a passing interest in manufacturing.
The key takeaway is that manufacturing remains critically important to the New Zealand economy. It contributes more than $23 billion to our economy, or about 10% of GDP.
It also accounts for 60% of the country’s exports and employs 12% of our workforce. In fact, the number of New Zealanders employed in manufacturing increased by more than 4% last year, reaching over 222,000.
Manufacturing isn’t just concentrated in one part of the country. It plays a critical role in almost every one of our regions – accounting for than 10% of jobs in most regions. It is a large employer in Northland, Southland and everywhere in between.
The report outlines some real positives that we need to be celebrate. Between 2018 and 2022, the sector increased research and development from $728m to $886m and reduced carbon emissions by more than 2000 kilotons. By 2024, it is projected the manufacturing will drop behind households to become the country’s third largest emitter.
Despite this, there are some worrying trends identified in the report that we need to address if we want manufacturing to continue to be a cornerstone of our economy and drive our future economic growth.
Labour productivity in manufacturing remains sluggish, growing at just 0.92% last year. This compares to the 1.17% increase in labour productivity that was achieved across the wider economy. More concerning, manufacturing has been the lowest performing sector for productivity growth over the last 20 years.
And while manufacturing exports grew in dollar terms by nearly 15% last year, most of this growth was the result of inflationary pressures and favourable exchange rates. In real terms, the total value of exported products was either stagnant or fell.
That is why the work of the Advanced Manufacturing Industry Transformation Plan (AMITP) is so important. The AMITP brings together business, unions and government to co-create and co-own a plan to accelerate the growth and transformation of advanced manufacturing in New Zealand.
Advanced manufacturing has the potential to transform our economy, improve our competitive and lift our living standards.
Around the world, manufacturing is undergoing a rapid transformation. Known as the fourth industrial revolution, or Industry 4.0, new digital technologies such as augmented reality, AI and robotics are all combining to fundamentally change manufacturing processes.
The Advanced Manufacturing Industry Transformation Plan goal is to ensure that we are providing manufacturers with the right support, incentives and tools so they can take advantage of the change that is happening globally.
But to do this, we need to make sure we are supporting our manufacturers by having the right policy and incentives in place that support investment. This could include improving the R&D Tax Credit system to invest in innovative technology. This is something we will be talking to the new government about.
At the EMA, we have been also helping manufacturers take this journey, including by partnering with Callaghan Innovations and BECA to deliver the Industry 4.0 Demonstration Network, which showcases how the latest technology can be used to support manufacturing processes.
If you haven’t had a chance to attend a Smart Factory Showcase, I would strongly encourage you do so. The Showcase will allow you to see firsthand how you can you Industry 4.0 technologies can support your business. If you are interested, you can find details of upcoming showcases here.
I believe the future of manufacturing in New Zealand is bright. It can be a driver of our economy, delivering well paid jobs around the country and supporting the economic revival in many of our regions.
But to do this, we need to embrace the technologies of tomorrow today. That is exactly what the Advanced Manufacturing Industry Transformation is working to achieve.