Level playing field sought

ALAN WOOD AND MICHAEL FOREMAN
Last updated 05:00 27/02/2014

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Some Christchurch manufacturers say there is much more the Government can do to support the sector, such as giving them a fair opportunity to participate in large tenders and New Zealand projects.

A new report released by ManufacturingNZ says contrary to popular belief, the New Zealand economy is actually manufacturing heavy compared with other OECD nations.

Compiled by researcher Castalia, the report notes the Government has support initiatives under way, but says more can be done.

The Government needs to tailor export promotion, increase the supply of skilled workers, and help smaller New Zealand companies during government tendering processes.

There is a variety of views as to how strongly the sector is being underpinned by the Government.

Tom Thomson, part-owner of eastern suburbs manufacturer Elastomer Products, says EPL is about to celebrate its 40th anniversary tomorrow but the firm was lucky to survive the difficult 2011 Canterbury earthquakes that rocked its Bromley factory. The company will eventually relocate to a Portlink industrial site in Heathcote.

He had been a long proponent of certain types of government support including the need to give smaller companies a chance to get in among large tenders.

"Nobody wants to go back to the days of subsidies and all that sort of stuff, but the [manufacturing] game is changing dramatically at an exponential rate and we're up against the best investment places like China," Thomson said.

A fair go at winning government work was needed, alongside better recognition of Kiwi manufacturers in this country to even out the playing field given the high proportion of imports, he added.

EPL manufactured a number of products including injection mouldings for appliances. Because Fisher & Paykel Appliances had set up a factory in Thailand, the Bromley firm had needed to also move a team there to set up a supply operation for F&P's washing machines.

The Castalia report includes case studies of significant manufacturers, such as Christchurch family firm Skope Industries and Westland Milk Products.

Skope managing director Guy Stewart said the company, which manufactured chillers and freezers for the hospitality and restaurant sectors with clients including Coca Cola Amatil, felt support had increased from the National Government compared with the previous Helen Clark-led Labour government.

"Helen saw manufacturing as a twilight industry, and boring and to be ignored. [Manufacturing] survived despite that position."

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The sector needed to be recognised not only for the goods it directly produced but also the amount of work it generated in service sectors, for example among lawyers.

He agreed that specifications for locally produced goods should include requirements that components were "sourced in New Zealand" where possible.

New Zealand Manufacturers and Exporters Association chief executive John Walley said he agreed with the conclusion that the Government needed to develop an overarching manufacturing policy particularly for "added value" manufacturing.

Firms like Skope needed to be able to compete from a New Zealand base rather than move overseas, Walley said. A high kiwi versus other currencies was the biggest issue the sector faced, he added.

The report found manufacturing contributed 14.6 per cent to the country's gross domestic product in 2012, making it the largest sector.

Castalia chief executive Alex Sundakov said that made the sector more important to the New Zealand economy than it was to Australia's, and on par with Western Europe and the United States.

"This is important, since New Zealanders do not typically think of themselves as living in a manufacturing economy," Sundakov said. "This misperception can lead to people taking training and career paths, and entrepreneurs to making business decisions, which could undermine the potential for growth."

Catherine Beard, executive director of ManufacturingNZ, said addressing the skills shortage was one of the top public policy issues manufacturers wanted to raise with the Government.

Manufacturers also wanted the Government to do more to maintain a stable exchange rate and corporate tax regime, increase research and development grants and improve business relations in key export markets.

Economic Development Minister Steven Joyce told BusinessDay the report highlighted the sector had "been going much better than some people have advertised".

"It's been coping well in some pretty challenging headwinds," he said.

AT A GLANCE

Manufacturing contributed 14.6 per cent to the country's gross domestic product in 2012.

This makes New Zealand one of the more manufacturing-heavy economies of the OECD.

By mid-2013 there were 191,000 jobs in the manufacturing sector.

Average wages are greater than those in the retail, accommodation and food service sectors.

- BusinessDay

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