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Archive for the 'Manufacturing' Category
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I’d been avoiding posting about the recently signed free trade agreement between New Zealand and China. Every time I talk about trade, some readers see it as a last ditch attempt to save New Zealand manufacturing, bolster my own business and keep New Zealand isolationist a la Muldoon and the 70’s.
So a disclaimer… this is written from a macro economic perspective and, I hope, with a degree of neutrality. So here goes….
Reports this morning write that New Zealand Trade Minister Phil Goff was on a mission to Hangzhou today, looking for business opportunities presented by the Free Trade Agreement with China. Goff is reported as saying;
We have a number of promising trade prospects in this region, including for our dairy and wood exporters
So this is what commerce in New Zealand has come to? Selling unprocessed milk and timber to offshore interests who will then process and add significant value to it, and reap the economic returns from that value add. How about a visit to New Zealand designers Phil, encourage them to form partnerships (or better still open their own factories) in China to take advantage of the slave labour and polluting processes smiley happy Chinese workers enjoying the clean air and green surroundings and the proximity to other markets.
Sorry - but the lack of vision really makes my blood boil. And yes I know that the computer I’m writing this on and the cellphone in my pocket are made in China - it’s not about where something is made, its about New Zealand potentially losing it’s ability to add value to raw commodity products.
’nuff said
There’s been a fair amount of hyperbole this week over the closure of two carpet making plants in the North Island. To give a synopsis of the situation, a few years ago Feltex carpets went bust. After a length liquidation the assets were purchased by an Australian carpet manufacturer wo undertook to “maintain the production status quo”. Lo and behold, a year or so later comes news that the plants will close.
The thing that surprises me is that anyone was actually surprised by this move - we’ve seen it happen dozens of times in recent years in New Zealad, be it in the high-tec, manufacturing or other industies. The process goes like this;
- Offshore company buys domestic company that was founded, manufactures ad runs operations from here
- Acquirer swears they have no intention of tinkering with the business model and the status quo will remain
- Acquirer waits 6 months or so til the media forgets about the story
- As quietly as possible the acquirer announces that trading conditions have changed substantially since acquisition
- Trading changes force closure of New Zealand part of the operation
Net result - profits, jobs and IP are nicely moved offshore.
It’s not a surprise people - it’s a direct result of NZ being primarily a commodity player not having an ambitious global view, and inviting foreighn acquisition in return for cheap consumer goods.
Welcome to the global village….
I wrote a few days ago about Humanware closing down its New Zealand operations. Interesting to read this morning then that three Christchurch manufacturers look set to approach Humanware to seek a continuation of some manufacturing in this country.
Does anyone else find this somewhat amusing? For years we’ve been told that when business move manufacturing offshore (think Humanware, Macpac, Icebreaker, Fairydown, F&P etc etc etc), New Zealand would be the ultimate winner through the continuation of knowledge work in this country. According to the politicians the progression goes something like this;
- Business starts in New Zealand. Builds both R&D and manufacturing base here
- Business scales such that offshore manufacturing is required - guarantees given that IP and profits are retained here
In the event that the business is sold to offshore interests, the politicians methodology is changed slightly to go like this;
- Business starts in New Zealand. Builds both R&D and manufacturing base here
- Business scales such that offshore manufacturing is required - guarantees given that IP and profits are retained here
- Business is sold offshore, but funds introduced are re-spent in this country and the purchaser commits to keeping R&D (read knowledge jobs) here
Instead (and in this instance) it seems we’ve lost the IP offshore, the high value R&D has gone off shore and we’ve been forced to go to the new owners, cap-in-hand to try and rescue some of the low value manufacturing work for New Zealand.
Has it really come to this?
A friend sent me a link to this site which headlines an animated movie looking at our collective mass consumerism model.
While a diatribe against consumption is somewhat outside of the usual subject matter of this blog, and arguably somewhat opposed to things I write about (yep - that sexy new MacBookAir is another example of perceived obsolescence that is one of the energy sources for the consumer society), I’d like to think the life I lead is at least a little balanced in terms of total foot print.
It’s tempting to turn this post around and say that in fact SaaS is a more environmentally friendly way of delivering software (and it is - more energy efficient, less hardware demands at the user end yada yada yada), but that would be somewhat opportunistic.
So what do the readers think - is our focus on things tech yet another addition to consumer society or are there ways that tech can help”cure the disease” (if indeed the contention is correct that consumer-itis is an affliction)
There endeth my shade-of-green post for the day.
Papers inadvertently released today tell the complex and inefficient story behind ICT-NZ the government set up industry group tasked to further the aims of the ICT industry here in New Zealand. ICT-NZ is funded via a complex chain of sources and is a perfect example of complex governmental organisations proving an ineffective model.
One only needs to look at the vibrant organically formed communities around the ICT industries to see that the most effective way to get industry group to form and perform is to facilitate their own creation.
I’m involved in an apparel industry group down here in Christchurch and, despite the best intentions of the central and local government organisations that fund and facilitate the group - at the end of the day its efficacy or otherwise is dependent on whether or not the industry players see it as a valuable, valid and worthwhile organisation to join.
Of course there definitely is a place for central facilitation of business groupings, I just think in this modern world there are better ways to do it.
And an Apple tablet would be uber cool.
Reports here that Asus is prototyping a tablet for Apple.
Imagine coverflow and touchscreen goodness on a 15inch and in a full size OS.
I’m excited…….
I’ve just been interviewed by a researcher from the University of Otago. Otago has undertaken a long-term research programme looking at how New Zealand firms derive world class competitive advantage from their geographical location, the networks they utilise, industry clusters they are involved in and from local sources of world-class science and technology.
Their focus at the moment is on fashion/apparel firms but the lessons they learn should be industry non-specific.
It was interesting doing what was, in essence, an industry wide SWOT analysis. Especially so given that this industry is particularly challenged on a number of levels; external competition,labour market conditions, distance from markets etc etc.
I await with interest the results of the research which will, hopefully, identify some ways to gain and maintain world class competitiveness for or businesses.
Surveylab was founded by Leon Toorenberg, a Wellingtonian and some-time Cactus acquaintance.
Cactus is now a supplier to Surveylab and it’s great to read how they’re starting to cross the chasm.
On a personal level it’s really nice to see a NZ startup that combines software and hardware products. While it’s not entirely rational, it’s great to see some hard kiwi products doing as well as our soft ones.
Go get ‘em Surveylab!
David and I had a lengthy dialogue over the weekend regarding the appropriateness or otherwise of actually making things in New Zealand. Those interested can read it here.
Basically (and to paraphrase David’s comments) he felt that manufacturing in NZ is dead and that we should be finding new ways to keep our workers busy - he mentioned film and software as two examples.
I replied thusly;
Xero actually supports my contention - it would be vastly cheaper to cut the code in Mumbai but Rod et al have made the decision to do it here - cutting code is not dissimilar as a role to working in a sewing factory - why is Xero applauded for doing it here while sewers are berated?
To which David said;
Code is core business for a software company. I wouldn’t expect a company that was innovating with code to sub it out - if only to protect IP
I then opened my RSS reader this morning to read that the strong dollar is pushing tech companies off shore in a bid to retain their margins. A number of examples were given about companies that were in this boat.
So… my question remains. If we’re no longer to have manufacturing in New Zealand, and the dollar is pushing our tech companies overseas (and a number are be brought out by offshore interests and shifted anyway thus the IP is lost) what are my two boys going to do for a living once they hit the workforce??????
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