OPINION: In the wake of the Covid-19 pandemic, our politicians are finally starting to wake up to the importance of local manufacturing businesses to New Zealand’s economy and wellbeing.
We’ve seen National establish a first-ever spokesperson for manufacturing and small business and the Government announce plans to work on an industry transformation plan for advanced manufacturing.
These are hopeful signs of change – and it’s about time.
New Zealand’s manufacturing sector makes a huge contribution to our economy and wellbeing, yet this value has been underestimated by various governments for too long.
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For years we have seen great government support for agriculture and the primary sector, but minimal backing for manufacturers. New Zealand has ministers for agriculture and racing, which make up 4.5 per cent and 0.9 per cent of the economy respectively.
But we don’t have a minister for manufacturing despite the sector making up 11 per cent of the economy, generating 50 per cent of exports and employing 10 per cent of the workforce with wages 15 per cent above the average.
Likewise, primary industries, which makes up 7.6 per cent of the economy, has the support of an entire Ministry, whereas manufacturing has the focus of a couple of people within the Ministry for Business Innovation & Employment.
The fact is that manufacturing underpins our economy. But most people don’t realise it. Every person, every single day, is interacting with goods manufactured in New Zealand. While it’s easy to draw links between things you can see like cows giving us milk and rockets shooting into space from Mahia, it’s much harder to see the value in complex systems – and that’s where our manufacturing sector is rooted.
The hundreds, if not thousands, of parts used in rockets and satellites require the involvement of many different manufacturers – small, medium, and large businesses across the country.
Likewise, milk is supported by local manufacturers every step of the way from the fences, milking machines, and veterinary supplies, right through to the milk tankers, bottling plant and packaging.
Essentially, manufacturing is not only a high-value sector in its own right, it is a critical part of the supply chains of nearly every other sector. As Covid-19 has shown us, building strong local supply chains is critical to keeping our economy moving when international supply chains break down.
It’s exciting to think that attention is now turning to the sector. The Manufacturing Alliance is looking forward to working with government to co-develop and implement the industry transformation plan.
This aligns with the recommendation in our Manufacturing Matters report, released in March this year, for industry and government to set out a vision of how the sector will contribute to New Zealand’s future and jointly commit to a set of actions that will enable the sector to achieve this vision.
Investment in advanced manufacturing is essential for achieving the Government’s move from volume to value. We have inspirational companies that are producing high-tech and innovative products. We also have small businesses making specialised parts and packaging using advanced manufacturing techniques like robotics, automation and specialised systems now common in our local manufacturing.
With the right government support this can be taken to the next level in terms of smart and green factories, big data and productivity growth. That support includes introducing new incentives for businesses to increase investment, such as accelerated depreciation specifically focused on encouraging businesses to adopt Industry 4.0 technologies and develop cleaner production and products.
Alongside New Zealand manufacturers’ reputation for innovation and integrity, this increased support can only improve our competitiveness, and presence in the global market
We also need to see a level playing field for our businesses in the trade environment where competitiveness is undermined by unfair trade practices like dumping and subsidisation. The Government is serious about addressing these issues in trade negotiations, but they need to be more pragmatic and act faster to respond to industry concerns
Ideally we would also see the Government using its significant buying power to solve environmental and technological challenges and, at the same time, supporting domestic manufacturing opportunities. The existing procurement rules support these outcomes but need to be properly adopted.
There are a few other priorities we want to work through with the Government, as outlined in our Manufacturing Matters report including future skill requirements, addressing substandard product imports and regulatory reform.
Ultimately, support for the sector will have significant positive ramifications not only for New Zealand’s economy, but for environmental and social outcomes too.
Nick Collins is a spokesperson for the New Zealand Manufacturing Alliance and CEO of Metals New Zealand, a member of the Alliance.
The Manufacturing Alliance is the voice of all manufacturers, represented by The Manufacturers Network, Metals New Zealand, Wood Processors & Manufacturers Association, Plastics NZ, and the NZ Maintenance Engineers Society.
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