Business News

Can we be more productive?

By Ian Walsh, Managing Director, Intent Group Over the past 50 years, New Zealand has been on a negative GDP trajectory versus the OECD, sliding from 5th place to 22nd! The top 10 countries average 60% more productivity per person per capita in US$ than we do, and this gap has been widening since the mid 1980’s.* The general consensus is that we work hard, and the statistics say we work more hours than most. Clearly this is the harder not smarter argument. Perhaps Sir Paul Callaghan captured it best when he said, “In New Zealand we sense, somehow we are not as prosperous as we would like.” Without highly productive businesses we will not be able to generate the income to invest in human and physical capital, to create the society and country we aspire to. So why are we less productive? There has been a lot of research over the years, with the traditional arguments being that our costs are higher as we are further away from market. The research, however, shows that we should be 20% above the average** and playing in the top 10, but we are not. This is due to: Weak international connections. New Zealand firms face reduced access to large markets and limited participation in global value chains, where the transfer of advanced technologies now often occurs. Underinvestment in “knowledge-based capital”. In particular, R&D undertaken by the business sector is among the lowest in the OECD, reducing the capacity for “frontier innovation” and the ability of firms to absorb new ideas developed elsewhere (“technological catch-up”). The quality of management in New Zealand is low, which decreases the productivity gains from new technology. I find these outcomes interesting, but not surprising. 90% of NZ businesses are SME’s who can’t afford HR or a training manager, let alone an innovation manager! Most investment is managed by the entrepreneur who started the […]

NZ set for rapid increase in large scale manufacturing Post-Covid – 19

New Zealand is set to see a rapid increase in large scale manufacturing in the coming months according to new figures from the country’s largest industrial and residential development. More than a fifth of the 170 hectares of commercial land available at Drury South Crossing in South Auckland has been sold to a wide range of manufacturing, logistics, fabrication, construction and industrial businesses. The development is expected to contribute $2.3bn to the economy, employ 6,000 in the manufacturing, distribution, food processing, tech and logistics sectors and provide affordable housing for 2,000 Kiwis when it is completed in 2027. According to developers, Drury South Crossing will be one of the first large scale manufacturing hubs to be designed and completed in a post-COVID-19 environment. Design and planning for a number of the new plants are already well underway with construction on the first of the new facilities expected to come on stream in 2021. Stephen Hughes, CEO of Drury South Crossing says interest from local and international manufacturers has been strong, particularly from the agricultural sector with several food suppliers looking to establish high volume processing capability locally. He says New Zealand’s success in controlling the virus has meant the country is well-positioned for an expected uplift in post-COVID demand for New Zealand made goods. “The agricultural sector is seeing significant growth potential for New Zealand branded products as the pandemic stretches supplies around the world and consumers focus their attention on where their food is sourced from,” he says. He says increasingly a new generation of businesses operating at a high volume throughput need sizable footage and heights of 25m in order to accommodate robotic automation. “What we are seeing is a need from local food producers to store large volumes of export-ready product where it can be accessed using […]

Profile: Tendai Masamba, Fonterra

What is your role at Fonterra? Logistics Planning Manager. What do you do? My team is responsible for supply chain resource forecasting and distribution planning across our 80 plus warehousing network in NZ. Where did you start your working life? Zimbabwe, I completed an Electrical Engineering degree in Canada. After graduating I went back to Zimbabwe ready to contribute to my country. Doing What? My first job was in Electrical Wiring for new commercial buildings, I did that for three months and decided I needed something more exciting, so I moved into Supply Chain Consulting. What projects do you enjoy doing? I enjoy strategic and business improvement projects that strongly leverage IT and automation. I think I enjoy these sorts of investments because they create opportunities and purpose for our people and free them up to be able to focus on value added tasks. How do you find current business conditions? At the back Covid 19 or before. Challenging as many others are, but as part of the food supply chain Fonterra’s operations were considered an essential service. Our farmers, our factories and our supply chain continued to work and ensured that we provided access to dairy nutrition across all our markets. Has the Covid-19 had much of an impact on your company’s activities? One of the strengths of our Co-op is our ability to adapt to change in the global market. We have learnt a lot over the last few years and build resilience and BCP capability. Like many businesses we had to respond to changing business requirements, for example redirecting milk meant for “out of home” (cafes and restaurants) consumption to ingredients and retail categories Looking back, I am very proud of our leadership at Fonterra through Covid. We were all focused on doing the right thing for our […]

Transport boost impactful for Auckland and Upper North Island

The four-lane highway from Whangarei to Tauranga may be the eye-catching part of National’s new infrastructure plan but it is arguably the significant rail upgrades and busway projects that could have the biggest impact on Aucklanders says the Employers and Manufacturers Association (EMA). National Party leader the Hon Judith Collins announced a comprehensive and far reaching infrastructure plan with an emphasis on Auckland but highlighted by a four-lane highway from Whangarei to Tauranga with new tunnels through the Brynderwyn Hills and the Kaimai Ranges. “That road plan north would be very welcome by our members in Whangarei and the Far North as it opens a true gateway for significant expansion in the north, particularly in the horticultural and manufacturing sectors,” says EMA Chief Executive Brett O’Riley (pictured). “But we are most excited about the announced plans for public transport. It is the rail links in Auckland, the third and fourth main lines, rail to the airport, completing links from the airport to Onehunga -supported by rapid buses to the CBD – and electrification to Pokeno and other proposed new rail links that are game changers. ‘These initiatives could take significant freight volumes off the motorway networks, enhance commuter options and provide a genuine fast-rail link from the city to the airport and Hamilton, driving productivity gains across the regional economy. “Electrification to Pokeno and new services to West Auckland would service rapid residential growth. Completing the Eastern Busway and building a North-Western busway should have similar impacts for commuters as the highly successful Northern Busway. A second Waitemata crossing has long been identified as a priority and planned ferry upgrades take advantage of the harbour as a key transport link.” National’s plan also includes funding changes that would allow the Transport Agency to borrow more and carry more debt on […]

Critical workers needed for economic recovery

BusinessNZ has welcomed changes to immigration settings announced today. More occupations have been added to the skill level exception test and criteria for Essential Skills work visas have been changed. BusinessNZ Chief Executive Kirk Hope (pictured) welcomed the plan for phasing in remuneration tests as criteria for entry, reducing reliance on ANZSCO, an outdated occupational classification system which is not fit for purpose in a modern, changing labour market. But he said Immigration NZ needed to urgently provide clarity to companies on bringing in critical workers. “Right now we need a range of high-skilled workers to support the economic recovery efforts. They are needed for company operations that will save and create jobs, e.g. specialist engineers for commissioning and installing new plant and equipment. “Immigration NZ needs to be able to approve the entry of highly specialised skills that cannot be found in New Zealand. There is no cost to the taxpayer for allowing these specialist workers in, and the businesses applying for the critical worker exemptions will need to put up an economic case for exemption. “From the cases we have heard of, there are hundreds of jobs on the line if Immigration NZ is not able to approve entry for such critical skills,” Mr Hope said.

40 million to support NZ businesses a welcome relief

Minister for Economic Development Phil Twyford and Minister for Small Business Stuart announced a further $40 million will be invested in the Regional Business Partner programme (RBP) today. This is a welcome relief for businesses trying to plot a path back to a thriving business after the Covid-19 pandemic says the EMA Chief Executive Brett O’Riley. “Financial support via the wage subsidy and small loan scheme helped businesses stay afloat, but what is going to get them back to profitability long term is good advice and mentoring around changing the way they operate,” said Brett. The RBP offers eligible businesses help with HR, health and wellbeing, business continuity, cashflow and finance management, strategy and digital capability. In the announcement today a further $10 million of funding for tourism businesses will also be channeled through the RBP. “One of the sectors that was hit as far back as January by COVID-19 was tourism. They were feeling the effects of dwindling tourist numbers, the China tourist ban and accommodation, hospitality, tourism, and tourism related retail were all on the decline. “Six months later and with border closures still in place they are in desperate need of the type of support the RBP offers.” Brett said. The fund is open to registered New Zealand businesses with fewer than 100 full time equivalent employees and provides access to up to $5000 of expert advice and support. The RBP is a partnership between NZTE and Callaghan Innovation. Businesses looking to register should call the Business Helpline on 0800 500 362 in the North Island or 0800 505 096 in the South Island.

Where are we going, how are we getting there?

-Doug Green, Publisher, NZ Manufacturer Business people have been thinking it, they have done it. The statement released today by Sir Peter Gluckman, former Prime Minister Helen Clark and former Air New Zealand chief Rob Fyfe is long overdue. Not necessarily by just them, but by New Zealanders concerned about the economy…and our going forward. Or by the 94% of SME’s who wonder what tomorrow is going to bring. They are saying – what many businesspeople are thinking – that Government does not have a plan for the difficult journey we all face. Maybe because its an election year Government is not sharing its plans for the economy until closer to September? In the meantime, however, business owners are looking for the way ahead. One example, Fletcher’s laid off 1,000 workers in New Zealand as the economy closed down. They abided by the decisionmaking process of ‘the Team of 5m’ to play their part in making the country safer through the time of the virus. What we need is a Business Council – bringing together representatives from key business sectors like EMA, the chambers of commerce, BusinessNZ to make the financial decisions to move the economy forward. Soon we will learn National’s and the coalition’s plans. Pity its an election year, the parties will put forward ideas that will not necessarily start immediately, but make them look good. Think the ‘Shovels Ready’ projects. The shovels are not ready yet.

Revolution Fibres skincare product sells out in South Korea

A natural New Zealand skincare product has sold out in online sales after just two hours on South Korea’s most influential home shopping network. The manufacturer of the skincare product, Auckland-based nanofibre producer Revolution Fibres, has now switched its production capacity to face masks to meet COVID-19 demand and to increase the local supply of critical Personal Protective Equipment (PPE). Ray Connor, Revolution Fibres CEO, says while the South Korea campaign was successful, following the COVID-19 announcements Revolution Fibres priority switched to manufacturing filter media for N95 face masks. “Filtration for respiratory protection from pollution and viruses is what Revolution Fibres made its name on 10 years ago. We have the expertise and we are increasing our capacity to fulfil large scale orders for face masks which are increasingly in demand.” With AcitvLayr now sold out in South Korea, Revolution Fibres will ramp up production of the skincare product once the lockdown is finished in New Zealand alongside the continued manufacture of filter media for face masks. ActivLayr is made from premium marine collagen and was developed through an intensive research and development programme over several years, with funding support from the Seafood Innovations Ltd and in collaboration with Sanford and Plant & Food Research. ActivLayr was advertised on influential South Korean home shopping channels GS and Lotte across two hour-long segments showcasing the skincare product to tens of millions of consumers. The advertising campaigns for ActivLayr focussed on the premium Tier 1 marine collagen combined with hyaluronic acid (an ingredient to help the skin retain moisture) to deliver an advanced cosmetic application. The ActivLayr technology is a versatile platform and has been shown to effectively and efficiently deliver a broad range of active ingredients directly into the intradermal and subdermal regions of the skin. Iain Hosie, Revolution Fibres […]

Soul Machines and Florence to assist tobacco users quit during Covid-19

Soul Machines has joined the World Health Organisation’s (WHO) Access Initiative (AI) for Quitting Tobacco to help share WHO’s life-saving information during the Covid-19 pandemic, combat misinformation, reduce the risk of Covid-19 and help over one billion tobacco users quit. Florence, the WHO’s first digital health worker, was created using Soul Machines technology and WHO technical guidance, with support from Amazon Web Services and Google Cloud. Florence will help provide clarity and expel damaging myths around Covid-19 and will specifically address smoking and its consequences – heart disease, cancer, diabetes, and respiratory diseases – all of which are comorbidities with Covid-19. With Florence, smokers can engage with a digital health worker to develop a quit plan and rely on a trusted source anytime and anyplace, to help them feel confident to reach their quit goals. Initially available in English, Florence will, over time, be available in all six official UN languages. Smokers are more exposed to the Covid-19 virus and are at greater risk of having severe disease complications. Although around 60% of the 1.3 billion tobacco users globally want to quit, only 30% of them have access to tools that can help them quit. As a digital health worker for WHO, Florence will help give the increasing numbers of people globally who have a desire to quit smoking during the Covid-19 pandemic a new, safe, easily accessible and engaging channel. Florence can scale seamlessly and to talk to many individual people around the world and is available 24/7 with no wait times, as a simple video stream from the cloud to any device. This frees up critical people resources and provides a user-friendly solution to an overwhelming demand for clear, concise information that can be relied on. Florence will always be available when needed and ready to engage to […]

NZAS terminates electricity contract, to wind-down operations following strategic review

Melbourne: Rio Tinto will start planning for the wind-down of operations and the eventual closure of New Zealand Aluminium Smelters (NZAS) following the conclusion of its strategic review which has shown the business is no longer viable given high energy costs and a challenging outlook for the Aluminum industry. As a result, NZAS has given Meridian Energy notice to terminate the power contract, which will end in August 2021, when the wind-down of operations is expected to complete. The strategic review concluded that the smelter, which has made Rio Tinto an underlying loss of NZ$46m in 2019, is not economically viable due to energy costs that are some of the highest in the industry globally, coupled with a challenging short to medium term aluminum outlook. Extensive discussions with a wide range of interested parties have failed to secure a power contract that will enable the operation to become both competitive and profitable. During the next 14 months, NZAS and Rio Tinto will work closely with partners as detailed planning is undertaken to wind-down operations, and eventually close the smelter. Rio Tinto Aluminium chief executive Alf Barrios said “We recognise the decision to wind-down operations at NZAS will have a significant impact on employees, the community and our customers. “It is not a decision we have made lightly and without significant careful consideration. It is very unfortunate we could not find a solution with our partners to secure a power price reduction aimed at making NZAS a financially viable business. We will therefore terminate the power contract and move to close the operation. “We are committed to working with our partners as we progress through detailed planning towards closure and we will do all we can together with the government to find ways to support the Southland community.” NZAS is a […]

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