ConnectMe - July 2017

12 July 2017

The full version of ConnectMe can be read by clicking on the Download PDF button to the right.

Commentary:

Prime Minister talks Manufacturing to the NZMEA in Auckland 

The NZMEA was pleased to host the Prime Minister, Bill English, to speak to our manufacturing members in Auckland. It was great to hear the Prime Minster acknowledge the contribution manufacturing makes to our economy, recognising in particular its role as a stabilising factor in times of low returns from commodity exports. He also acknowledged that the success factors in manufacturing “aren’t always obvious from the outside” and referred to a thriving furniture manufacturer in the North Island that made agile responses to customer demands a critical success factor – a deviation from common government practice that recognises excellence in manufacturing only when it comes in the guise of ‘sexy’ high-tech products.

Another welcome acknowledgement from the PM was his assessment that current methods to measure business R&D expenditure in manufacturing are falling well short of the real picture, as companies have no incentives to separately account for R&D expenditure, and consequently don’t do so.

During the ensuing Q&A session, NZMEA members raised the issue of skill shortages, particularly the difficulty in finding suitably qualified and skilled trades workers.  These skill shortages are often the single biggest barrier to expansion of Kiwi manufacturers.

We are seeing an increasing number of graduate engineers coming through the education system, but those with trade’s skills and practical skills are not coming through the system in the quantities needed.

There are examples around the world, particularly Germany, of Government effectively working alongside industry to provide relevant training and experience that manufacturing needs to grow and thrive into the future. 

After a defensive response initially, saying that “it’s business’ job to train the people it wants”, the PM conceded that the government did have a role to play as the major funder of tertiary education and suggested to take this up with the minister in question, Paul Goldsmith – a suggestion we are certain to follow.

The NZMEA event also highlighted and discussed the use of new technology in manufacturing, reporting back on a recent NZMEA and Callaghan Innovation study tour to Germany. This highlighted examples of using automation and networked manufacturing overseas, and work being done in this field in New Zealand by Assa Abloy NZ.

Helping manufactures leverage future technology to improve their processes and productivity, and understand what their competitors are doing, is key for the future success of the manufacturing industry.  We want to see the Government continue and expand their work in supporting productivity improvements and innovation through R&D in manufacturing.

A number of the manufacturers present reminded the Prime Minister that the current government support for innovation simply doesn’t work for most of them. “The system works for the big companies eligible for Callaghan Innovation’s Growth Grants, but the majority of manufacturers who only have access to Project Grants have simply given up trying, as the current system is far too complicated and cumbersome”, as one remarked, adding “what we need is for the R&D tax credits to come back!”. 

Also highlighted was the issue in how Callaghan defines R&D investment as a barrier to some manufacturing companies gaining any support. Many manufacturers struggle to get the development side of their innovation work recognised -  creating new and more efficient processes that allow them to stay competitive is just as critical as product development. 

By Dr Dieter Adam, CE of the NZMEA