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 The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during May 2016, shows total sales in April 2016 decreased 2.97% (year on year export sales decreased by 5.36% with domestic sales increasing by 2.72%) on April 2015. In the three months to April, export sales increased an average of 24.8%, and domestic sales increased 2.2%. The NZMEA survey sample this month covered NZ$311m in annualised sales, with an export content of 69%. Net confidence rose to 40, up from 33 in March. The current performance index (a combination of profitability and cash flow) is at 99, down from 103.33 last month, the change index (capacity utilisation, staff levels, orders and inventories) was at 101, down from 103 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 102, down on the last result of 107. Anything over 100 indicates expansion. Constraints reported were 53% markets, 20% skilled staff, 20% production capacity, and 7% capital. A net 46.67% of respondents reported productivity increases for April. Staff numbers for April increased 2.68% year on year. Operators/labourers, tradespersons and, managers, professional/scientists reported a moderate shortage and supervisors reported a minor shortage. “April showed a decrease in year on year export sales, following a great start to 2016. Even with this fall, the three month average of export sales remains high at 24.8%. Domestic sales increased year on year by 2.7% in April, which is positive after the decrease seen in March. The three month average for domestic sales stayed positive at 2.2%.” says Dieter Adam, Chief Executive of the NZMEA. “Sentiment measures were mixed this month, with confidence improving, but the index measures of performance, forecast and change, all falling on March results. Skilled staff has also increased significantly as a reported constraint […]

by HERA Executive Board member Dr Troy Coyle, Manager of Innovation & Product Development at NZ Steel “Disruptive technologies bring to a market a very different value proposition than had been available previously. Generally, disruptive technologies underperform established products in mainstream markets. But they have other features that a few fringe (and generally new) customers value. Products based on disruptive technologies are typically cheaper, simpler, smaller, and, frequently, more convenient to use”. Clayton Christensen, The Innovators Dilemma. We work in an industry based on well-established and traditional materials. Metals have been fabricated for millennia. Applications have historically ranged from warfare, tooling, building and construction and are now evolving into emerging applications such as geothermal energy extraction and biomedical technologies. Metals, such as steel, are known for their high strength, ductility, and formability. They are widely accepted as being reliable materials. However, new materials, such as graphene and other polymers are being developed and refined that may have comparable or different value propositions to metals. New fabrication processes, such as additive manufacturing (or 3D printing), are also rapidly being refined and finding more mainstream acceptance. Combined, these have real potential to disrupt our markets and more particularly our business models. How many of us are reliant upon a single high margin product or service for profitability? The rules for disruption (see below) mean that often-times we are complacent to new products that we initially don’t see as a threat to us. They might come in at low cost but low quality and grab a small part of the market that we are happy to forfeit. But then, their performance may be improved and then they start to expand their market acceptance and increasingly compete with traditional products. The classic case study is the camera, which has continuously been disrupted and with […]

Some manufacturing firms that survived the global financial crisis have one unusual secret to their success: stop manufacturing. Though just one of the strategies that helped keep some New Zealand manufacturing firms economically buoyant, it was among the most surprising results of Simon Collins’ PhD thesis. Simon dedicated his PhD to investigating the factors that increased resilience in New Zealand manufacturing firms to help them withstand the worst of the global financial crisis nearly ten years ago. After conducting in-depth interviews with seventeen manufacturing firms, he identified four resilience-building strategies that separated those that continued to perform well during the recession, and those that did not. “One of the biggest surprises was that some of the resilient firms stopped being manufacturers. They outsourced manufacturing, instead focussing on developing and designing great products, and then taking ownership of distributing and retailing those products themselves. “By delivering their products straight to their customers they captured some of the margin that would usually go to a third party,” Simon says. Simon says this tactic was part of a wider survival strategy to maximise efficiencies, which saw resilient manufacturing firms aiming to be more efficient at every stage of the manufacturing process. This improved margins, and as a result, muted the negative effects of lower sales and the unfavourable exchange rate. Simon’s research identified three other resilience-building strategies: • Innovating platforms – developing the next generation of products to stimulate new sales • Actively collaborating – working closely and consistently with other firms and individuals to help develop technology and products • Cataloguing specialist knowledge and skills – building libraries, creating databases of skills and lodging patents to identify, protect and then capitalise on areas of expertise. “