From NZ Manufacturer magazine February 2025

By EMA Head of Advanced Manufacturing Jane Finlayson

Economic growth appears to be the focus for 2025 following a tough year of recession and rising unemployment.

One of the key drivers of national growth, our manufacturing sector, has been struggling due to high operational costs, increasing global competition, outdated technology, skills shortages and a lack of R&D to drive innovation.

The BNZ-Business New Zealand Performance of Manufacturing Index (PMI), a monthly survey providing insight into levels of activity in the sector, has been in contraction for 22 consecutive months. This signals declining production, low new orders, and falling profits across the manufacturing landscape.

Recent government efforts to fast-track infrastructure development, stop wasteful spending, push through RMA reforms, sign new trade deals, and make foreign investment easier have laid the foundation for a more competitive future, but that’s peripheral to the direct challenge facing manufacturers.

A key task facing incoming Manufacturing Minister Chris Penk is to assess how the government can help the sector stay competitive with our global peers and drive productivity.

For many New Zealand manufacturers, the path forward is clear: investment in technology, particularly software and hardware, is essential.

As we progress deeper into the Fourth Industrial Revolution (Industry 4.0), the convergence of artificial intelligence, cloud connectivity, and real-time data analytics will prove crucial in shifting New Zealand’s manufacturing sector from lagging to leading in the global market.

Yet, many manufacturers are struggling to keep up with international standards and this particularly, but not exclusively, affects our smaller companies.

New Zealand’s manufacturing sector includes some very advanced manufacturers, but many small and medium-sized businesses have fallen behind our Asian and European counterparts.

As a result, despite the government’s aspiration to double the value of exports in the next decade, manufacturers are at risk of losing ground without investment in automation and productivity improvements.

There was little in Budget 2024 for the manufacturing sector, and the government’s grim Half-Year Economic and Fiscal Update late last year suggests there is little in the coffers for new spending.

Meanwhile, countries similar in size to New Zealand, such as Singapore, Ireland and Denmark, have offered substantial funding to help their manufacturers with technology uptake.

For New Zealand to stay competitive, the government will need to follow suit, providing targeted funding and mechanisms to support manufacturers who must embrace technology/Industry 4.0 but currently lack the knowledge and financial means to make the leap.

We hope that, despite the fiscal constraints, the government will find ways to continue to support productivity growth, if not through direct funding, then via mechanisms such as accelerated depreciation.

Practical and financial assistance will be crucial. The EMA, through the Industry 4.0 Demonstration Network (a partnership with Callaghan Innovation, BECA, and LMAC) and now through the ASB Manufacturers Workshops, is committed to educating and inspiring manufacturers to adopt technology and boost productivity.

ASB is focused on enabling higher productivity, and this new partnership will help manufacturers invest in upgrading their factories more easily.

We’ve seen how readily available software and hardware can help manufacturers move ahead. Software such as Manufacturing Execution Systems (MES) and Enterprise Resource Planning (ERP) are having a profound impact on efficiency and productivity.

MES helps track and manage production in real time, providing real-time insights into operational inefficiencies and helping optimise processes.

ERP systems integrate data from all parts of the business, giving manufacturers a comprehensive view of operations and enabling more informed decision-making. With these tools, manufacturers can scale more easily, manage growth more effectively, and improve decision-making by tapping into data-driven insights.

The ability to leverage artificial intelligence (AI) will further boost productivity, allowing manufacturers to predict maintenance needs, optimise supply chains, and even design more efficient products.

Right now, many New Zealand businesses have yet to digitise their processes sufficiently to take advantage of AI, so many will continue to miss out on these game-changing opportunities.

On the hardware side, technologies such as vision systems, robotics, and smart products offer even more opportunities for growth. Vision systems, powered by machine learning, enable faster, more reliable quality control, ensuring high quality standards are met across the board.

These systems are invaluable in industries like electronics and consumer goods, where precision is paramount.

In addition, smart PPE such as wearable exoskeletons, fall detection suits and safety glasses with integrated sensors can keep your skilled workforce safe from harm.

Robotics and automation solutions, particularly collaborative robots (cobots), are helping to improve productivity by working alongside human workers and digitising manual processes.

Cobots can be redeployed across multiple tasks, offering flexibility and cost-effectiveness to small manufacturers that may have previously been unable to justify large-scale automation.

Smart products are another exciting area of growth. These products capture and analyse data in real time, giving manufacturers valuable insights into how their products are performing and how they can better serve customer needs.

Companies like Tesla and Apple are already benefiting from this trend, as they use data collected from their smart products to inform everything from design to after-market services. New Zealand manufacturers who adopt similar technologies will be able to unlock new opportunities for growth and improve their product offerings.

Governments and manufacturers across the globe are investing, and if New Zealand is to succeed in doubling its export value, it must do the same.

To achieve a globally competitive manufacturing sector, New Zealand must embrace advanced manufacturing technologies to enhance and support our skilled workforce.

Despite the current struggles with limited resources and low digital maturity, it’s clear that collaboration between business and government remains vital to lifting our capacity and capability to keep producing amazing products.

For the future of the industry, and the jobs and wealth it contributes to society, the convergence of smart people, smart government support, and smart factories is essential.

Only then can New Zealand truly turbocharge its manufacturing growth and compete on the global stage.

NZ Manufacturer February 25 by Media Hawkes Bay Limited – Issuu