Business News

-Catherine Beard, BusinessNZ Looking back at the various measurements of manufacturing activity over 2014, the overall picture is one that Kiwi manufacturers can be proud of. Despite challenges, the BNZ – BusinessNZ Performance of Manufacturing Index (PMI) has continued to expand throughout the year. It was rising steadily in the first quarter, and while it did flatten out in the second quarter, it still remained in expansion territory (above a 50.0) and has been steadily increasing since. According to Statistics New Zealand’s Economic Survey of Manufacturing June 2014 quarter, that flattening out can mainly be attributed to meat and dairy manufacturing. The survey reported that “After adjusting for seasonal effects, the volume of total manufacturing sales fell by 0.7 percent. This was led by a 1.4 percent fall in meat and dairy product manufacturing. “The sales volume for total manufacturing, excluding meat and dairy, was up 0.1 percent in the June 2014 quarter. Sales fell for seven of the 12 manufacturing industries in this group. When the effect of price changes is included, the total value of manufacturing sales fell 1.9 percent ($481 million). This decrease was driven by a 5.7 percent ($485 million) fall in meat and dairy product manufacturing sales.” By October, the BNZ-BusinessNZ PMI (the most recent one at the time of writing this article) stood at a healthy 59.3, and the survey results showed employment at its highest ever level since the survey began in 2002. As the October report’s title “Staff Wanted” suggests, this provided another boost in the arm for the sector and sends a signal of confidence. In addition, the proportion of positive comments from manufacturers (68.7%) was well up on results from previous months. This all bodes well for a healthy end to 2014. As the Bank of New Zealand reported on […]

Jane Tongatule, General Manager, Greater East Tamaki Business Association Inc. (GETBA) East Tamaki is Auckland’s largest industrial precinct. This significant manufacturing and distribution hub continues to grow at a rate higher than the regional average and provides 30,000 jobs. Business NZ’s Performance Manufacturing Index has shown continued growth since mid-2014, and industry-leading local manufacturers such as Fisher and Paykel Healthcare and GMP Pharmaceuticals are evidence of this. GMP Dairy, a division of GMP Pharmaceuticals, opened a second canning line at GMP Dairy’s plant in East Tamaki in September. Fisher & Paykel Healthcare have had another strong year and also feature in the TIN 100 (Technology Investment Network) leading technology businesses. Companies such as Bobux International and Alpha Laboratories have grown their exports, despite the challenge of the high NZ dollar. It is heartening to see the 2014 Exporters Survey undertaken by Export NZ shows exporters planning for growth, which bodes well for 2015. It’s clear that manufacturing is changing and that there is more emphasis on technology and innovation. Investment in new plant and capital equipment, which has historically lagged is moving in the right direction, up 9% on an annual basis. We have seen several local companies increase their focus on R&D. East Tamaki businesses including SIKA Technology Ltd, Tandarra Engineering and Technopak Limited have been recipients of R&D funding this year. SIKA Technology is an example of the change in manufacturing, moving from a traditional foundry business to a company that specialises in the design and manufacture of high quality, innovative cast aluminium solutions. In August Fisher and Paykel Appliances, acquired by China’s Haier in 2012, sought some 40 workers for research and development after opening a new design centre at its East Tamaki headquarters. It is now one of Haier’s five global centres of excellence for product […]

Manufacturing is about people.   -Roger Usmar, Sector Development Manager, Competenz A manufacturing career that spans ‘shop floor to senior management’ in operations, competitive (‘lean’) manufacturing and human resources has helped Roger Usmar understand the challenges manufacturers face. It’s also convinced him that investing strategically in training to build a skilled and adaptable workforce is one of the keys to managing these challenges. Now Sector Development Manager at manufacturing industry training organisation Competenz, Roger shares his thoughts on how to build training into an effective workforce development strategy. “Attracting good people, then building the skills they need in a competitive manufacturing environment, is a challenge – and it’s one New Zealand manufacturers need to take seriously,” says Roger who joined Competenz in October. “In my thirty-plus years in manufacturing with Fonterra, Kiwi Dairy and Woolworths, I’ve seen the difference a good workforce development strategy makes – and the vital part training plays in supporting the company strategy. “Manufacturing is about people. You can have the best technology, but without engaged employees with strong technical and commercial skills, who can solve problems, adapt and look for continuous opportunities to improve, you won’t get the best from this technology.” Roger recommends manufacturing companies take a structured approach to training, whatever their size. He shares his recommendations: 1. Put training on your board agenda. “Your people’s skills and competencies can be a critical risk or major asset in executing your strategy. So I’d like to see people development discussed around every board table in the country, every month. Directors should scrutinise training plans and budgets the way they do investments in new plant.” 2. Look ahead. “Skills take time to build, so companies need to be constantly looking ahead. When you produce your strategic business plan, map out the skills you need to […]

Importantly, the price of oil has collapsed by 30 per cent with more to follow. -Kim Campbell, chief executive of the Employers and Manufacturers Association kim.campbell@ema.co.nz Last century we used to say anything good for the Australian economy was good for New Zealand. When their economy went well they bought more of what we had to sell, and Australia remains today the major market for our manufactured goods and services. But the past two years have not been kind to Australia, at least not to their manufacturers. Hard on the heels of a ‘Dutch disease’ epidemic whereby the Australian dollar explored new heights on the back of high mineral prices – hard going for the competitiveness of their manufacturing exporters – came the announcement of vehicle plant closures. Reflecting this, Australia’s Performance of Manufacturing Index (PMI) has registered a steadily shrinking industrial base every month since August 2012. On this side of the Tasman over the same two years New Zealand’s PMI has in contrast recorded a steady, robust expansion, as high as 63 in November 2013 and 60.6 in October this year. Its been a remarkable run. Even more so because over the same period we have seen a large number of businesses laying off staff. Yet the unemployment rate has kept falling. This year the job losses have included 200 from Summit Wool Spinners, 120 at Fitzroy Yachts, 100 at Contact Energy, 84 at SafeAir, 120 to go at Holcim Cement, 100 at Croxley, 20 at ITL in Taranaki, 40 at Wellpack in Upper Hutt, 120 at Alloy Yachts, and several hundreds from various sawmills. Many of these well publicised losses were blamed on the high exchange rate, though there have been other contributing factors. But despite the jobs lost the official unemployment rate went from 6.4 per […]

They (the primary industries)will need a higher proportion of well-qualified staff – with post-school education and training. Andy Somerville, CEO Primary Industry Capability Alliance. A recent investigation into the future capability needs of the primary industries has clearly spelt out the significant challenge that exists. The primary industries – including pastoral farming, horticulture, fishing, forestry and the associated enterprises such as manufacturers and marketers – accounted for 350,000 or 16% of the national workforce in 2012. A report commissioned by the Ministry for Primary Industries and industry groups that was released in April 2014, shows that in order to meet their growth targets these industries will need to maintain this proportion of the workforce, taking their total worker numbers up to 403,500 by 2025. But more significantly, they will need a higher proportion of well-qualified staff – with post-school education and training. In particular, more specialist skills will be required in science, marketing, engineering, IT, robotics, automatic processing and technical and management support. Leaders of these industries are confident they can offer interesting careers for young people. Their challenge is to communicate this to young New Zealanders. With this in mind, several organisations are backing the new Primary Industry Capability Alliance – known as PICA. MPI is a partner in PICA, along with DairyNZ, Beef+Lamb, Young Farmers, Primary ITO, Lincoln University and Taratahi. A number of other organisations are looking to join to assist in this collaborative approach. PICA has started by developing a strategy to support schools in providing clear career options for students. This will be a major focus for PICA over 2015. The PICA alliance members will join forces at the Careers Expo to provide an industry wide message about the breadth of exciting and rewarding jobs available. The PICA stand will provide collateral to educate the […]

The Employers and Manufacturers Association has joined the call for an early cut to interest rates. According to the EMA the Reserve Bank should reduce the Official Cash Rate right away or risk deflation next year when the economy is predicted to slow. “A year ago we said interest rates did not have to be raised this year and that has proved correct,” said Kim Campbell, EMA’s chief executive. “We are concerned the Reserve Bank has paid too much attention to domestic house price rises in Auckland and Christchurch and not enough to the rapid changes in global markets. “Inflation during the year has scarcely tested the bottom end of the Bank’s 1 to 3 per cent inflation target. “Now inflation is falling further as the costs of producing the $50 billion worth of goods we import decline due to the collapse internationally of the price of oil, steel and other commodities. “The price of oil especially, which has reduced by at least 30 per cent, is slashing the costs of production and freight worldwide; this is not being adequately factored into domestic inflation forecasts. “The recovery from the GFC has not been accompanied by inflationary pressures driven by rising demand as has been the case in previous economic cycles. “This time our fortunes have depended on different vectors than hitherto. “New Zealand has to a large degree decoupled from the US and Europe where there has yet to be a sustained recovery. Asia and Australia are far more significant to us. “But helped by higher than necessary interest costs, the cross rates with the US and Australia have remained unduly high which has shredded margins, particularly on our $10 billion export trans Tasman trade. “In addition, the cost of borrowing internationally is at historically low levels while a global […]

Editorial– November issue NZ Manufacturer www.nzmanufacturer.co.nz Security and climate change overshadowed G20 talks on boosting global economic growth at the summit, although the leaders did sign off on a package of measures to add an extra 2.1 percentage points to global growth over five years. In this ever-changing world, New Zealand will benefit from the decisions reached, although to be fair, maybe not in the way the decisions have been arrived at. The benefits we need to focus on directly include manufacturing, thanks to global economic integration which has made possible the continuous re-orchestration and relocation of production into new forms of value reaction and innovation. Make no mistake; innovation in manufacturing will come from many corners of the world by emerging economies that are coming to grips with new manufacturing processes and technologies. And we better be ready! Globalisation shapes manufacturing and its technologies. The emerging economies – think Brazil,a BRIC member, think Myanmar – will be right up there and offering really competitive products at really competitive prices. So do more New Zealand companies set up shop in Asia, for example, to be as competitive as the locals? And think about this; it isn’t that many years ago that ‘The Circular Economy’, ’The Internet of Things (IoT)’, ‘The Future of Manufacturing’, ‘Manufacturing Technology’, ’Additive Manufacturing’ and ‘Bioengineering’ were part of some futuristic thinking, problematical to deal with and a little too far away to even consider. Cute little buzz words when all we wanted to talk about was 3 axis machining! It’s like the issue of climate change…it’ll never, ever happen; we’ll never see the ice melt or have the hottest year on earth as was recorded last year As a country we manufacture some terrific things. As long as our technologies, price structuring, equipment and skills are […]

New Zealand expects to benefit from commitments secured at the G20 Leaders’ Summit, from the world’s 20 biggest economies, to lift economic growth by an extra 2.1 percent by 2018. In a communique released at the end of the weekend summit in Brisbane, the G20 group, made up of countries which represent 85 percent of global economic activity and 75 percent of global trade, said it had commitments from member countries to deliver an extra 2.1 percent of GDP by 2018. “New Zealand, whilst a physical island isn’t an economic island. To the extent that that’s good for the global growth, it will be good for New Zealand” because it will enhance our ability to export to those markets, said Mark Adamson, who is chief executive of Fletcher Building, New Zealand’s largest listed company, and the nation’s representative on the B20 business group. “I see a lot of positive likely to come out of the communique.” The G20 commitments are slated to add US$2 trillion to the global economy and create millions of jobs as the countries focus on improving infrastructure and bolstering investment, trade and competition. New Zealand, which was invited to the G20 this year as a special guest of the Australian host, expects to benefit from a pick up in growth in the rest of the world. “We’ve submitted a plan which is consistent with existing government policy and with existing growth forecasts so our plan won’t be adding a lot to global growth, for a developed country we are already doing our bit,” Finance Minister Bill English told reporters on the sidelines of the meeting. “The New Zealand economy is travelling pretty well relative to most of these other economies and so there aren’t big obvious steps that New Zealand could take to add that much […]