Chippers cheaper made in NZ
As costs rise overseas, some Waikato companies are seeing the benefit of bringing manufacturing operations home.
Hansa Chippers produces wood chippers for the export and home markets. This year it ended a 15-year arrangement where Australian manufacturers produced two of its models under licence.
Now all Hansa products will be produced in New Zealand, doubling the Hamilton company's output.
Managing director Martin Vogel said the change means he can keep a close eye on quality. It also allows the company to stay competitive by quickly implementing design changes into production.
He said the technology changes very quickly, and the quicker it is implemented, the better for the customer and the supplier.
The company outsources some aspects of manufacture to other local companies.
Hansa has invested in a robot welder, and has increased its headcount as a result of bringing manufacturing home.
The company, which only had around three employees five years ago, now has 10, and is hiring three more.
Vogel said the company never considered manufacturing in China. There are Chinese-manufactured chippers on the market, but Vogel said the low quality and price meant they did not compete with Hansa Chippers or other machinery manufactured in America or Europe.
He said the only way he could make Chinese manufacturing work would be owning a stake in the factory and closely monitoring production.
He's going to stick to Hamilton for now.
"There's a lot of benefits that far outweigh the cost savings."
Cambridge animal equipment company Shoof outsources more than half its production to Chinese factories, and the rest to companies in New Zealand.
Business development manager Ron Woolerton said he makes it work by spending a lot of time in China visiting companies that are doing work for him.
The company regularly reviews every product made in China, and if the costs make sense, it moves production back to New Zealand.
A recent review of a product found that two of its components were cheaper to make in New Zealand, but a third component was much cheaper to make in China. So the components will be manufactured separately and assembled in Cambridge.
There will be regular reviews and re-shuffles, but Woolerton said he thinks the ratio of Chinese production will remain steady over the next few years.
Fonterra, which traditionally exports ingredients to be made into consumer products and packaged in China, will soon start producing high-end consumer products at its Waitoa plant.
Fonterra UHT operations manager Donald Lumsden said: "Instead of us selling powders to a third party, which is then using the powder to produce a consumer product, we are producing it ourselves which is getting more value back to New Zealand farmers."
Doing everything at the plant in New Zealand also helped generate trust in the Anchor brand.