Analysis

The value of materials and manufacturing in a circular economy

Part 1 of 2 of thinkstep-anz’s circular economy series By Dr. Jim Goddin Circular products are built to last. The materials that make them up stay in use for as long as possible. When they can no longer be used in their original form, they contribute to other products. A circular economy is based on three principles: designing out waste, keeping products and materials in use, and regenerating natural systems. Circular economy thinking is gaining traction in New Zealand and Australia but focuses predominantly on avoiding or minimising waste through recycling. In New Zealand, waste — especially single-use packaging and plastic waste — has enjoyed the spotlight as a high-priority environmental issue for quite some time. In the latest Better Futures report by Colmar Brunton, two of the top ten concerns for New Zealanders were not enough waste being recycled and, overpackaging, non-recyclable packaging and the amount of waste going to landfill. Yet, waste remains a stubborn issue to tackle. Waste avoidance through recycling is a prominent component of the circular economy and is, from a practical perspective, where most products will need to end up. Recycling is, however, the outermost ‘loop’ in the circular economy model, with materials typically representing a tiny portion of the economic value of products. Recovering the more substantial value added to materials through manufacturing is a more significant portion of the prize at stake. The inner loops of the circular economy model Dig a little deeper into the circular economy model and you get to the inner ‘loops’ where the systems-level change happens. Strategies in the inner loops of the circular economy include product life extension, enhanced product utilisation (through leasing models for example), reuse, repair and remanufacturing. The inner loops address the root causes of waste: overproduction and overconsumption. A key economic advantage […]

Unlikely alliance formed to combat supermarket power

It’s an unlikely pairing, but Consumer NZ and The NZ Food & Grocery Council have published a joint open letter to parliament today calling for a shake-up of the supermarket industry. “We are not always allies, but we both agree the concentration of market power in our supermarket sector is producing poor outcomes and putting strain on New Zealand households. Both consumers and suppliers are being held to ransom by the duopoly of Foodstuffs and Woolworths NZ,” Consumer NZ chief executive Jon Duffy said. Analysis of Stats NZ data show the cost of an average shop for a typical household equates to 15-20% of income for median or lower income earners. “The general consensus is that grocery expenditure should sit between 5-15% of total household income. What we’re hearing from many New Zealanders is that they’re having to spend too much of their weekly pay packet to keep themselves fed. Whatever way you slice it, the cost of groceries keeps going up and the duopoly’s profits are persistently high. Each year households are getting squeezed further,” Duffy said. Consumer NZ’s Sentiment Tracker found concerns about the cost of food and groceries have climbed in the past few months with grocery cost concerns ahead of those about fuel, healthcare, energy, insurance and phone bills. Concerns about food prices come in second to rent and mortgage costs. “Supermarkets are crucial to our communities and economy – but the duopoly are bullying suppliers, even large ones, and consumers are worse off in terms of price paid at the checkout, choice and innovation. With the lack of any real competition between the two supermarket chains, they’ve been able to maintain staggering profit margins which are not enjoyed anywhere else in the world,” New Zealand Food & Grocery Council chief executive Katherine Rich said. […]

Reimagining manufacturing in New Zealand: turning adversity into opportunity

As the world grappled with supply chain disruptions and delays as a result of Covid-19 lockdowns and restrictions, manufacturers found themselves dealing with long delays and shortages of critical goods and products. Peter Jones, Managing Director and Founder at Prological says this revealed a vulnerability in just in time principles, which has presented an opportunity to re-imagine manufacturing in New Zealand. Manufacturers around the world have been following a just in time principle for their operations. Simply speaking, just in time is an inventory management method in which goods are received only as they are needed. This method gained significant traction during Global Financial Crisis (GFC). Out of necessity, businesses learned how to run on a much leaner inventory as budgets were tightened and expenses cut. After the GFC, many organisations throughout the world continued to follow the principles of just in time – largely because it worked. However, just in time only works on the assumption that everything is working perfectly all the time. As soon as Covid-19 started to rip through China, Europe and the US – many manufacturers in New Zealand were faced with long delays and significant shortages of critical goods. As the global aviation industry reached a near standstill, there was no air freight capacity into the country. With 60 to 65 per cent of air cargo usually carried on passenger aircraft – the price of air freight started to rise exponentially. At the same time, the global shipping industry was also facing significant delays alongside freight costs growing exponentially. These delays and disruptions not only impacted manufacturers in New Zealand, but also retailers – as New Zealand is an importer of finished goods. There are many stories across the industry of major manufacturing companies’ entire global operation coming to a standstill because of […]

After 40 years HRS enters new chapter

By Matt Hale, International Sales & Marketing Director The recent acquisition of HRS Heat Exchangers by Canada-based Exchanger Industries Limited (EIL) is just the latest development for a UK company with worldwide reach, which is celebrating its 40th anniversary this year. We look back at the last 40 years of the business that was founded by Steven Pither (picture) in his spare bedroom and speculate on what the future might look like. Early years Back in the early 1980s the world was still feeling the aftershocks of the oil crises of the 1970s and energy efficiency was becoming a key concept across various industries. As part of this agenda, heat recovery technology was gaining in popularity, and Steven recognised that these trends were only going to become more important as time went on. “I was working for a company called Marine & Industrial Heat,” explains Steven, who until the acquisition was CEO of the HRS Group. “This included selling heat exchangers produced by a Swedish company. “When it was decided to stop selling them, I thought it represented a good business opportunity, so I set up Heat Recovery Systems (HRS) and offered 15 per cent of the business to Marine & Industrial Heat. I started working from home and things progressed from there.” Over time HRS took on more control over the selection and design of the heat exchangers it was selling, initially to allow quotes to be delivered in a timelier manner. The next step was to subcontract some of the manufacturing in the UK, including the production of skid-mounted heat exchanger packages. Corrugated tubes After ten years HRS was so successful that Steven was able to purchase Marine & Industrial Heat, the company he had originally worked for. This provided HRS with its own manufacturing facility where it […]

Life cycle thinking and product design: Don’t leave LCA to the last minute!

By Barbara Nebel, CEO , thinkstep-anz There is no such thing as a green product, only greener or more sustainable options. However, the differences in impact between products can be significant. This is an important distinction to make as it recognises that all products have some impact on the environment. Some common-sense knowledge and an overall understanding of how something is made and what it is made of can help you form ideas around how sustainable your product is. However, unless these ideas are tested and backed by credible data, they will remain as vague claims. This is where sustainability tool Life Cycle Assessment (LCA) comes into the picture to quantify a wide range of environmental impacts across a product’s whole life. In this article, we explore the principles behind LCA, the many uses and benefits of LCA, and how to optimise LCA to create the most sustainable products and services. Life cycle thinking and LCA Every product has a life cycle. It starts when the raw materials are harvested or extracted and finishes when the final product is disposed or used at the end of its functional life. Life cycle thinking — the concept around which LCA is built — understands that each stage of a product’s life cycle contributes to its overall environmental impact. Life cycle thinking also understands that sustainability is about more than just carbon. An LCA takes a broad definition of environmental sustainability with a wide range of indicators including carbon footprint, energy use, water consumption. Finally, life cycle thinking as a principle and LCA as quantitative tool understand that decisions around one area of a product’s sustainability can also affect others. Part of an LCA’s objective is to consider these trade-offs that can occur to ensure a positive impact in one area does not […]

Productivity: The way forward

-Ian Walsh, Managing Director, Intent Group. Over the last few weeks, I have been reflecting on the current situation we find ourselves in New Zealand. Many suppliers and manufacturers are struggling with unprecedented demand, growth, and expansion, in a scale of activity that I have not seen for over 20 years. It is a confluence of many factors: global demand for NZ produce with growth in many markets, internal demand perhaps fueled through lack of travel options, and people diverting their cash into their houses, lounge suites and other home living quality improvements, along with a construction boom trying to meet the increasing infrastructure and house demand of kiwis returning from overseas and the omnipresent housing crisis faced here. This is happening in a disrupted world with fragile supply chains, while managing Covid-19 and limited labour supply, through MIQ limitations and access to RSE (Recognised Seasonal Employer) and other labour sources constrained. Given this environment how can we adapt to these challenges? Whilst government policy, covid response and other macro events may take some time to change, there are some things you can do in the meantime to improve your business. The current Covid outbreak and subsequent lockdown provide a further opportunity to review your business and key drivers. On the supply chain front, you should ensure to have your inventory policies, demand and forecasts reviewed and adjusted based on the nature of the good, the lead time, the safety stock, and the fragility of the supply chain. This is especially important for importers – you can’t sell what you don’t have. For exporters, there is no better time to collaborate, aggregate volume to secure shipping or charter, to assure delivery. If you haven’t looked at some of these options, now is the time. There are several large players adopting […]

Blank conveyors on a blurred factory background. 3d illustration

Automation rises due to worker shortage

Faced with a growing shortage of workers, many business owners in New Zealand are looking towards automation, something of an irony after years of concern about the risks of structural unemployment. The national labour shortage looms as the most significant risk to our booming manufacturing sector. The latest Bank of New Zealand Performance Manufacturing Index (PMI) for July increased to 62.6, the second highest recorded, but also cited labour issues as the primary concern to industry players. Caleb Nicolson, General Manager of TMX New Zealand – Asia-Pacific’s leading business transformation consultancy – says the combination of a local worker shortage, an inability to bring in seasonal migrants during peak season, and increasing labour costs in New Zealand were making the business case for supply chain automation more attractive to a broader group of businesses. “These types of facilities are common-place overseas, in the US for example approximately 70% of new major warehouses are automated. New Zealand has been relatively slow to take up these smart technologies, until now. The labour shortages are challenging businesses to look differently at their supply chains and we’re now seeing even smaller companies starting to investigate automation, despite the relatively high upfront investment cost.” Many local businesses are looking at automating operations to create high speed, low-cost and higher capacity operations. COVID has undoubtably amplified the requirement to deliver operations with less human contact, automation provides a logical way to reduce this risk to your business model says Nicolson. To ensure businesses move with the times, Nicolson urges them to consider getting independent advice in relation to automation and make it a priority to consider the different software solutions and automation options that are available. Similarly, seeking advice on the procurement and implementation process can make a huge difference to business productivity. TMX has been […]

Feeling our way towards hydrogen

-Tina Schirr, Executive Director, BusinessNZ Energy Council Right now hydrogen is getting a lot of attention. Many countries are focusing on producing hydrogen for fuel, or procuring it, or planning for its future use. Hydrogen fuel is highly desirable – clean hydrogen produces none of the harmful emissions of other energy sources. So hydrogen is potentially a very good energy source for powering our post-carbon world. But there’s a catch – production of hydrogen is not economic at present and currently can’t be produced cost-effectively. As a result, countries are taking the initiative in different ways as they feel their way towards a hydrogen-powered future. Recently, the World Energy Council (WEC) released a report on hydrogen – Hydrogen on the Horizon: Ready, Almost Set, Go?: the BusinessNZ Energy Council, WEC’s representative in New Zealand, contributed to the report, along with 128 other countries. The report highlights the global activity that’s occurring in the development of hydrogen as a fuel source. A number of countries in the Middle East, North Africa and the Americas are focusing on producing hydrogen. Others, in Asia and Europe, are more focused on procuring it. Their reasons for looking to hydrogen are varied – including its potential to diversify energy sources, decarbonise economies, allow for repurposing infrastructure, and to grow green jobs and green economies. Some countries – notably Germany, Japan, South Korea and Singapore – are partnering with others to ensure they can achieve global hydrogen supply chains and adequate supply once hydrogen becomes cost-effective to produce in significant quantities. New Zealand is becoming integrated into such partnerships, signing bilateral partnership agreements with Japan and Singapore and partnering with Germany on green hydrogen research projects. New Zealand is also among the countries that are seeking ways to produce hydrogen cost-effectively. Last week Contact Energy and […]

Catalyse change in your supply chain with responsible procurement

By Barbara Nebel and Femi Perumbally https://www.thinkstep-anz.com/ Supply chains have become a focal point of conversations around a company’s performance. Organisations and their stakeholders now want assurances that their values are reflected throughout the supply chain. A responsible procurement framework helps companies to mobilise positive change through the different tiers of their supply chain. By prioritising suppliers that align with their environmental and social values, they can encourage a much wider range of companies to shift the dial on those issues. This means working with companies that have similar values and are willing to put in the work to comply with the preferred supplier requirements — not just companies that already meet the requirements. We look at the companies putting responsible procurement frameworks into action and the three core components required for success: stakeholder engagement, screening, and supplier code of conduct. Stakeholder engagement: Understand the priorities of your company and stakeholders The first step is to understand the areas that are most important to your organisation. A materiality assessment can help you identify and prioritise the issues that are most important to your organisation, based on feedback from a wide range of internal and external stakeholders. If you are not able to undertake a full materiality process right now, it doesn’t mean you have to miss out on the benefits of stakeholder engagement. You can still engage with your internal and external stakeholders on a smaller scale to understand the high priority areas and market expectations for your organisation. This can feed into your responsible procurement framework and the overall process for supplier selection. To determine priority areas related to their sustainability values, premium lighting solutions company, Eagle Lighting (formerly known locally as Fagerhult NZ) looked to the UN Sustainable Development Goals framework for inspiration. An SDG workshop run by […]

Inflation pressure triggers uncertainty and volatility for manufacturing sector

-Rebecca Reed Rapidly rising costs for businesses, a lack of skilled and unskilled workers, increasing inflation and shipping delays are putting huge pressure on New Zealand’s business environment and the consumer is about to feel it. The latest Hutt Valley Chamber of Commerce Business Confidence Survey found inflationary pressure is increasing and between a third and a half of all businesses are expecting to increase their prices in the next 3 to 12 months. It also found more than half of all businesses are expecting increased costs, yet less than 25% are expecting increasing profitability. Covid-19 economic impacts, growing concern around government policy and labour shortages are holding businesses back nationally. The survey shows labour shortages as the single biggest barrier to business for more than 60% of businesses. This is at unprecedented levels. “The business environment continues to be increasingly difficult – while the economy has rebounded strongly and demand continues to be strong, the ability for firms to deliver is fraught with a wide range of risks and cost increases. “These cost increases and risks are more widespread across business type and size as all companies try to adapt to the rapidly changing business environment,” said Helen Down, Chief Executive of Hutt Valley Chamber of Commerce. Down says she is hearing from businesses unable to commit to fixed prices or a delivery timeline due to the totally uncertain environment. “This time last year our survey found business owners were experiencing small increases in costs and holding prices but now costs are increasing rapidly, and the consumer is only just starting to feel it. The situation is set to deteriorate quickly when businesses are forced to not only increase prices but not even commit to a set price in the next six months,” said Down. The Wellington Electric Boat […]

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