The Daily News

The recession is taking a bite out of New Zealand manufacturers’ sales revenue, according to new data from inventory management software brand, Unleashed. Unleashed’s first Manufacturing Health Index since New Zealand officially entered a recession found sales revenue dropped by 7% in the first quarter of this year, but is still up 18% year-on-year, aided by superb growth in the Energy, Medical Supplies, and Personal Care subsectors. The report looks behind the curtains of SME manufacturers in New Zealand, Australia, and the UK, across 12 subsectors. Unleashed head of product Jarrod Adam says high interest rates will continue to put downward pressure on firms, but the data shows the sector is able to respond positively to these headwinds. “The beginning of the year has been a speed bump for Kiwi manufacturers, but we need to keep in mind that overall revenue is actually up on the same period as last year. These companies are nothing if not dynamic, and in this current environment it is crucial to react to the cards you are dealt,” said Adam. “One really positive sign in the data is the much lower lead times, which will help these businesses be as productive as possible when conditions change for the better.” The report notes that firms have drastically improved their lead days to just 14 to begin the year, from 30 days in the final quarter of 2023, and 37 in the same quarter of last year. Lead time improvements are both a sign of normalising supply chains globally and the knock-on effect of New Zealand business’ laser focus on logistics over the past three years. Tough times continue for Food and Beverage  At the pointy end of the disposable income problem, local Kiwi Food and Beverage producers have been confronted with difficult times with little reprieve on […]

-Adam Sharman, Senior Partner, Dsifer For many New Zealand organisations, 2023 has been a year of navigating multiple headwinds, including increased cost of materials driven by exchange rate pressure and high levels of inflation, weakening demand from China as their domestic economy slows, and weakening consumer demand in some sectors. All of which has seen the NZ manufacturing sector contract across 2023. These challenges appear to have been particularly acute across the food processing sectors. Staffing continues to be a challenge for New Zealand manufacturers, particularly in the operational workforce. However, we are starting to see an easing in the market and, as the number of jobs being advertised drops and the number of applicants per job advert increase organisations are finding it easier to attract talent. There is a paradox to this however, as our clients frequently report that staff absenteeism is one of their biggest challenges and has a major impact on their ability to achieve potential performance. It is not all doom and gloom, however, and 2023 has been another standout year for New Zealand organisations in terms of innovation, creativity, and growth. In particular, developments in aerospace, agritech and health tech have seen Kiwi companies make significant impacts on the world stage as New Zealand continues to be recognised for its innovation in these areas. Increasingly, we are working with organisations who have recognised that security is a strategic asset for New Zealand and our organisation, and we have seen multiple examples of New Zealand based organisations winning work away from Asia, due to their ability to provide products that are trusted as secure. This is particularly true in the electrical component manufacturing sector, as for example, European car producers are willing to pay a premium for data security in the manufacture of their components. New […]

-Ian Walsh, Partner, Argon & Co  I was reflecting, as you do at this time of year, on what were the highlights and key achievements of 2023. The key highlight is primarily that supply chains are starting to settle down, business is starting to return to normal, and we are starting to see some positivity. This has been a slow hard grind, and the job is not done. The recovery has been slower than expected, exacerbated by extreme weather events, a cost-of-living crisis, a labour shortfall as we ramped up and the gates were not open, and Kiwis leaving on their OE. Net a myriad of never-ending obstacles to overcome. In addition, many businesses learned in 2022 and 2023 just how fragile their supply chains were and how dependent NZ is on shipping lines.  Many have and are investing in additional warehousing to buffer their supply chains and many products that have been offshored are suddenly viable, in this new light, to be manufactured locally. The research continues to reflect our slide down the OECD with the grim reality that we are 30-40% less productive than our nearest neighbours and key trading partners and significantly worse versus the Irish and Scandinavian countries. While this may seem remote, it is a key indicator of our future economic prosperity and ability to keep pace, retain talent, and provide the lifestyles and outcomes we desire for our children and future generations. So, given all this, here are my top 5 drivers for 2024: The labour crunch will continue, and many businesses are leveraged so capital options may not be as attractive or possible. This will drive a few key initiatives. Supply chain fragility will continue to drive boards to look at business continuity planning and risk mitigation strategies. Procurement and strategic sourcing will […]