NZ Manufacturer October 2011 October 2011
Business News China and manufacturing
Sports cars for export
Export Comment The key to export success Page 31
Technopak has wind at its back Kiwi imagination and innovation shines through ‘The Cloud’ T echnopak Limited typifies the value-added proposition our commercial and political leaders dream about – and some. You could describe the company as a by-product of our milk industry, but there’s much more to that. Mateship, hard graft, lots of travel and calling on customers and prospects all over the world, brilliant design engineering and today being up there with the best in the world.If you need proof: they recently doubled their floor space, and have already reached bursting point again. Nearly all – certainly most – of the customers for their powderbagging lines and equipment or their upgrade consulting services are abroad in just about every country where there is significant milk production and major industry giants such as the legendary Land O’Lakes giant in Minnesota, USA. Founding partner, Shane Reckin, director, R&D was – inevitably –
away when NZ Manufacturer met with co-founder, Henri Hermans, director design & projects, at their East Tamaki operation on the day of yet another significant milestone for the 2002-established company. He flies all-around the world frequently advising clients and securing business. A project manager was en route to the Auckland International Airport to fly to Colorado, USA to meet-up with the recently shipped state-ofthe-art milk-powder bulk baggingline, which he will take charge of installing for the US$420-million plant for the biggest mozzarella cheese producer in the world, Leprino Foods, which provides Domino’s Pizza and Pizza Hut with product. And Henri had just confirmed the appointment in the USA of that country’s top powder-packing industry broker, to represent them, primarily in North America initially. Continues page 19
Technopak director, Henri Hermans with a part of the latest innovative machine.
e reported last month on the huge impact the NZTE coordinated display of Kiwi ingenuity and innovation, under the theme ‘We do things differently here’ was having on visitors and locals alike. Their choice was unashamedly subjective – it had to be across such a diverse range of products – so we’ve chosen to highlight four which attracted a lot of attention and give a hint of life in the future. Perhaps it was just ‘the lad’s choice’, but there is a lot more to the WilliamsWarn than might superficially be the first impression. Their ambition is bold to say the least: to create a global consumer appliance business. The current product is targeted at high end, high income consumers and the long term strategy is to launch a mass market appliance so that the WilliamsWarn brand can serve beer to millions of consumer’s each year. The WilliamsWarn Personal Brewery(clearly the massmarket name is yet to come) makes commercial quality beer in seven days, for one third the price of beer from the supermarket -- cold, clear and perfectly carbonated. No bottling, no ‘kegging’, an all-in-one appliance that removes the hassle, hard work, extensive waiting times and errors of traditional homebrewing. So why are they likely to succeed where many have gone before? Ian Williams, New Zealand’s first qualified brewmaster, won the best lager beer in the world award in 1998 with the Tiger Beer he
‘The Cloud’ imagination on show.
made in China; has worked as an international brewing consultant out of Denmark in over 60 breweries; and is a professional beer taster. In 2006 he returned with his Danish wife and family and along with Anders Warn, set about developing a personal homebrew kit. After five years of development and several rounds of investment they have finally launched a product to a ‘phenomenal world-wide reaction’. And, you have to think, it’s the boldness of the vision: to take it out of the garage and to demand comparable quality to the best. Rather than a cheap way to drink a Continues page 16
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NZ Manufacturer October 2011
Manufacturing is picking up in these challenging economic times and by keeping your eye on the ball you will find opportunities not far away. Contract manufacturing sees companies doing well closer to home, just as our exporters continue to enjoy success overseas. The mood is changing; optimism is there, conservatively, but enough of it is shining through to show the upward manufacturing trend has no reason to abate. Many fine products are coming out of Christchurch and as the region recovers, the innovators are at it looking after their markets. Even though relocation has been an issue it doesnâ€™t stop these companies moving forward. Tell us your story. Get in touch. Are you a Manufacturing Hero? Do you have a story or opinion to share? Has your company overcome enormous challenges lately? Where is your new market? NZ Manufacturer is for you, itâ€™s your publication both online and in the printed version. Email the editor, Doug Green email@example.com to share your story and keep your company moving forward in its search for new markets.
NZ Manufacturer October 2011
7 9 11 12 13 15 21 22 24 26 29 31
China to top 30% of world manufacturing. • New chief executive at EMA. • Steel industry opposes height restrictions in Christchurch.
Chinese steel miller commercialising LanzaTech’s clean energy technology.
Stephen Drain is Director at Centre for Innovative Leadership at AUT University, Auckland.
Page 7 – EXPORT SUCCESS – Manufacturers providing inspiration
• Waikato manufacturers serve global demand. • Gallagher becomes one brand.
• Attaching value to what NZ manufacturers do well. • Record export growth due to customer focus. • Manufacturers providing inspiration.
• Attaching value to what NZ manufacturers do well. • Record export growth due to customer focus.
Is Executive Director of Export NZ and Manufacturing, divisions of Business NZ, New Zealand’s largest business advocacy group, representing businesses of all sizes.
Page 11 – EXPORT SUCCESS – Marque Magnetics pulls in variances.
• Taiwan offers insights for NZ manufacturers. • Consumers want and expect the details.
An advocate for NZ manufacturing for 40 years, he was Chief Executive of the Auckland Manufacturers Association for seven years He has been Manager of EMA’s Advocacy and Manufacturing Services, and lately manager for Export New Zealand in the north.
• The Interview: Kevin Whitehead. • White Knights ready to deliver. • Temperzone’s foundation for its reputation.
FROM WHERE I SIT
Sir Paul Callaghan: Reflections from Cambridge.
• Almost 30 years service from Hi-Q. • Main Welding – Tim Fastnedge.
Page 15 – AUCKLAND MANUFACTURERS – Compliance for manufacturers who export.
Is the Chief Executive of the New Zealand Manufacturers and Exporters Association. John consults to a number of overseas companies and is a Chartered Engineer, a Fellow of the Institute of Professional Engineers NZ, a Fellow of the Institute of Management NZ and a Member of the Institute of Electrical Engineers UK.
• Government procurement. • The Toyota Philosophy – learning and improving.
MANUFACTURING TECHNOLOGY Better inventory management.
Sir Paul Callaghan ➡ Page 23 – PRODUCT NEWS – Contactor Select App now available.
Is the Alan MacDiarmid Professor of Physical Sciences School of Chemical and Physical Sciences Victoria University of Wellington. He is the Kiwibank New Zealander of the year 2011.
Why NZ manufacturing has a great future
EXPORT COMMENT The key to export success.
Page 28 – BUSINESS NEWS – Ecentre celebrates successful ten years.
Is managing director of Connection Technologies Ltd, Wellington and is passionate about industry supporting NZ based companies, which in turn builds local expertise and knowledge, and provides education and employment for future generations.
NZ Manufacturer October 2011
The formula for success is really quite simple. Unleash the entrepreneurs. Get out of their way. Give them dollar for dollar tax credits for every unemployed person they hire. Let them dream and risk and build.
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f we all had the ability to look forward like Henry in the Time Travellers Wife business would be in great shape. But we don’t and on a day by base we do the best we can creating some extremely good products for export in the time zone we live in. Which leads me to one of the key parts of October issue, our focus on Export Success. Many people have been part of the energy which has brought this section together and their views, observations and experiences have been invaluable. The chief executive of Opportunity Hamilton, Sandra Perry, tells us about the Waikato’s specialist manufacturing sector which is making a global impression. This includes companies such as Gallagher and NDA, Micro Aviation and ASR. On the north shore of Auckland is Fraser Cars handcrafters of Lotus 7 replicas since 1988 with up to 65 percent exported overseas. Marque Magnetics, another Auckland company, which designs and manufactures transformers, chokes and a wide range of specialty electronic wound components, has companies from Asia and the USA utilising their services. Adam Bennett, NZTE’S director of specialised manufacturing sees his organisation’s focus as being on marine, aviation, geothermal, advanced materials and building solutions companies. Those who are good at Modularity and can slip into the global supply chain can succeed on international markets. Peter Chrisp, chief executive, NZTE makes it abundantly clear that government expects greater development of export markets with one focus being on the growing middle class in Asia. And there’s more. We also look at innovations on show at ‘The Cloud’ and Technopak’s brilliant design engineering which puts them up there with the best in the world. And I can’t finish without mentioning Sean O’Sullivan, managing director of Empower Marketing Ltd who has the concerns of all of us at heart when he talks about manufacturing in China (Page 5). Sean had the tenacity to put down on paper what –I suspect – a lot of you know or are thinking. Your next move Mr/Ms reader... send in your thoughts.
Vol. 2 No. 8 October 2011 Copyright: NZ Manufacturer is copyright and may not be reproduced in whole or in part without the written permission of the publisher. Neither editorial opinions expressed, nor facts stated in the advertisements, are necessarily agreed to by the editor or publisher of NZ Manufacturer and, whilst all efforts are made to ensure accuracy, no responsibility will be taken by the publishers for inaccurate information, or for any consequences of reliance on this information. NZ Manufacturer welcomes your contributions which may not necessarily be used because of the philosophy of the publication.
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NZ Manufacturer October 2011
Making the simple complicated is commonplace; making the complicated simple, awesomely simple...That’s creativity. – Charles Mingus
China to top 30% of world manufacturing by 2021
n 1994 China manufactured only 6% of the world’s manufactured goods. Within 15 years China has trebled their output to achieve 18% of the world’s manufactured goods by 2009. At this unrestrained rate China will achieve 30% of world manufacturing by 2021 – and 40% of world manufacturing by 2031. It is widely recognised and reported that China will continue to achieve substantial growth in manufacturing over the next two decades through a multi-prong strategy and substantial financial commitment to: • Technology investment. • Universities and education. • Promoting and supporting the purchasing of businesses, intellectual property and know how from developing countries. • Controlling their dollar (pegged to the US$) and controlling their labour market.
• Substantial national and regional subsidies and support to manufacturers. It is also widely recognised that China’s economic success in the last two decades has been derived from manufacturing and export earnings. Conversely then can politicians and economists in the US, European Union and Australia and New Zealand not see that our economic woes result almost entirely from our significant on going reduction of local manufacturing? As at 2011, whilst China currently manufactures only 18% of world manufacturing, the economic woes of most of the Developed World is outlined in summary below: • The US is technically bankrupt – recently almost defaulting on its loans for the first time in history. • The European Union is almost bankrupt, propped up by decades of hard earned savings of Germany, France and the United Kingdom.
• The base ill-health of Australia’s economy is being heavily camouflaged by its continual sale of mineral resources on a huge scale. Australia will certainly face economic difficulties as World consumption of manufactured goods from China continues to drop substantially causing China purchasing of mineral resources from Australia to drop substantially. New Zealand’s current debt, • trade balance and borrowings are at extremely high levels with little prospect of halting. Furthermore, there appears to be no sound strategy for manufacturing growth and no sound strategy for constraining the ballooning social welfare system, on going hand outs and other spending. Before finances in the US, European Union, Australia and New Zealand get even worse politicians in each country need to do two things with urgency: 1 Carry out economic modelling to predict the impact China’s manufacturing will have over the next two decades on our local economies: • Manufacturing business numbers • Value of goods manufactured • Unemployment • Trade • Balance of Payments • Overseas Borrowings (likely to be largely from China)
Within 15 years China has trebled its output
Sean O’Sullivan, managing director, Empower Marketing Ltd has put on paper issues which he believes affect manufacturing in New Zealand. It doesn’t take a ‘think tank’ or a ‘conference’ to see the picture. How about you – anything on your mind you want to share? Speak up, let us know. –Doug Green 2 Stop paying “lip service” to local manufacturing. China’s national and regional government have had a clear and well implemented strategy over the last two decades and likely next two decades to drive manufacturing growth and success. Politicians in the US, European Union, Australia and New Zealand need an effective ‘Manufacturing Strategy’. Remember Doug Green’s call for a Minister of Manufacturing? Continues page 21
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NZ Manufacturer October 2011
BUSINESS NEWS New chief executive appointed to EMA T
The inventors will invent , for that is what inventors do. The technology will come first., the products second and then the needs will slowly appear.
he Employers and Manufacturers Association (EMA) has a new chief executive. Mr Kim Campbell, who has been appointed the association’s new chief, took up the position on October 3rd. EMA president Graham Mountfort said “the EMA Board is very pleased that someone of Mr Campbell’s professional, business and international calibre has made himself available. “Mr Campbell is extremely well qualified to lead EMA. It’s a coup for us and New Zealand business to have someone of his international experience head up our organization.” Mr Campbell said his focus was to assist New Zealand reach its potential over the longer term.“I believe business can deliver a great outlook for all New Zealanders. “There are a number of major areas we need to improve, particularly the prospects for young people with training and education; providing world class infrastructure; and sustainability, which offers the greatest business opportunity in a generation. New Zealand can lead in this area. “To deliver first world living standards to the next generation of young people we must build an economy that requires busy minds rather than busy hands,” Mr Campbell said. “Investment in infrastructure is vital to provide employment opportunities as well as to improve communications within New Zealand and to the outside world. “It’s essential to improve our competitiveness to where isolation is no longer a limit to growth. “With good communications we are in the middle of the world right here.” Mr Campbell has had a distinguished career in New Zealand and overseas working in manufacturing and exporting businesses in a variety of industries and geographies including ICI,
Trigon Plastics, Masport and New Image in New Zealand, and the Hong Kong based Zuellig Group for the past 13 years. For five years he was chief executive of PSM in Auckland (later to become API Manufacturing), a major consumer health care company then part of the Zuellig Group which is a large, privately held, global investment company. He then moved to Sydney to become CEO of Soul Pattinson Manufacturing also part of the API group (at the time associated with Zuellig). He was then appointed CEO of Zuellig Equipment Distribution Incorporated which includes CB Norwood in New Zealand. Mr Campbell has recently returned from the Philippines where, among other duties, he was executive chairman of Pharma Industries Incorporated, a pharmaceuticals manufacturing group employing over 1,700 staff in the Philippines and Thailand. Before heading overseas Mr Campbell was a director of EMA, and has been a President of the Export Institute (now Export New Zealand), a councilor of Business New Zealand, and a founding director of the (now disbanded) Auckland Regional Economic Development Strategy Board (AREDS), He has served on numerous private and public boards over a career spanning 35 years, and remains an Honorary Life member of the Philippines New Zealand Business Association.”
– Don Norman
Steel industry opposes building height restrictions in Christchurch
ew Zealand’s structural steel industry has joined others in expressing concerns about building height restrictions proposed in inner city Christchurch. In its submission to the draft Central City Plan, Steel Construction New Zealand (SCNZ) notes that of the 181 tragic fatalities caused by the February earthquake, none occurred in buildings over seven storeys high. Alistair Fussell, a structural engineer and Manager of industry group SCNZ, says that despite the good performance of modern steelframed buildings in the earthquakes, such as the now-reoccupied 12-storey HSBC Tower, there appears to have been a loss of confidence in multilevel construction. “While concerns about building heights are understandable given the terrible loss of life and devastation caused to the city, restricting building heights certainly won’t encourage building owners to invest and rebuild in Christchurch. “Christchurch should allow higher buildings, but build them using appropriate materials and technology. New lowdamage, seismic-resisting steel systems developed here in New Zealand will make multi-level buildings economically feasible for Christchurch developers and building owners – and safe for their tenants.” Mr Fussell also says the challenging soil conditions in the CBD mean that expensive foundations will be required to help minimise building damage during a severe earthquake. These foundation costs will be relatively more expensive when spread over a limited number of floors. The other key issue SCNZ highlighted in its response to the draft Plan is the use of local suppliers and content in the rebuild.
WHERE ARE YOUR MARKETS? WHERE ARE YOU EXPORTING TO?
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“Local companies should be given a fair opportunity to compete for rebuild work through appropriate procurement practices that consider whole-of-life costing. New Zealand’s vibrant structural steel industry is well-placed to provide high-quality materials which meet stringent Building Code requirements.” Mr Fussell says decision-makers should be doing everything they can to encourage developers and owners to stay and invest in Christchurch, and embracing the latest low-damage seismic-resisting technology will help. Mr Fussell says his industry is in the early stages of developing a rating system for steel-framed buildings which will allow the seismic performance of different earthquake load-resisting systems to be assessed and compared. The rating system will allow developers and owners to make informed building decisions, leading to lower insurance premiums and higher rental incomes – not to mention a smaller carbon footprint as a result of increased longevity – for their buildings.
NZ Manufacturer October 2011
There’s no chance that the iPhone is going to get any significant market share. No chance. – Steve Ballmer, USA Today ,CEO Forum, April 29, 2007
Manufacturers providing inspiration
ince I joined NZTE last September, I’ve been inspired by the business people who are NZTE’s customers. Napier firm, New Zealand Frost Fans, is one company that really captured my imagination. It has developed a four-bladed fan for keeping frost off orchards and vineyards, which is quieter and uses less fuel than its competitors. Driving these competitive advantages, the company is growing fast. It is now exporting 80 percent of its output to markets as far afield as Turkey and Italy - and is gaining good market share. The really interesting part of this is the source of its innovation - an America’s Cup aerodynamics expert based in Napier who, combined with the outstanding engineering ingenuity and trade skills of Frost Fans, was able to design and build a world first. American industry experts had said, “It can’t be done”… except it was, in New Zealand! It is great to see a primary industry base (horticulture) using innovation from other industries (the marine industry, via the America’s Cup), supported by great New Zealand engineering and trade skills. Stories like this, and many others, make me optimistic about New Zealand’s future despite the challenges we face as a small country located far from the world’s major markets. NZTE has had a clear message from the Government that more is needed to grow exports, which provide the tradable income this
country needs. To help deliver on this, during the past year we have undergone a review that has taken into account customers, leadership, culture and costs. This involved reviews by both the private sector and the Government’s Performance Improvement Framework. Based on this information we worked with our public and private sector partners to develop a strategy to boost performance and target our efforts in support of the Government’s economic growth agenda (or EGA). NZTE is here to make a difference for New Zealand, by helping businesses grow bigger, better, faster in international markets. We are, however, an organisation that has been spread a mile wide and an inch deep. We are now aiming for greater impact by targeting our efforts more tightly. At the heart of our new structure are our customers, New Zealand’s internationalising businesses. We work with approximately 1500 - 2000 businesses and will focus intensively on an active portfolio of 500 that have the scale and ambition
Napier firm, New Zealand Frost Fans, is one company that really captured my imagination.
to succeed internationally. We have set ourselves a challenge to double the growth rate of these businesses. There is also a new strategic focus on areas of competitive advantage for New Zealand, in line with the EGA. These are the high value food sector, and (of particular interest to readers of NZ Manufacturer) knowledge-intensive manufacturing and services industries. Aligning with international megatrends – such as the massive middle class developing in Asia – is also providing regional areas to target. In the next 50 years, the Indian middle class will be close to the population of the US and Germany combined. This growth is in our backyard – and there is growing demand for products we can supply that tie into our strengths: safe food, niche services, agility and responsiveness. When asked why a global conglomerate like IBM is interested in Health IT products from New Zealand, the head of the Life Sciences division answered: “It takes 18 kilometres to stop the Queen Mary… we are interested in speedboats.” I thought this was a really interesting insight. Our compact size works in our favour, making us quick to adopt new ideas and adapt to change – which can be very attractive internationally. Niche markets are key for New Zealand – and operating in and owning particular niches will be
By Peter Chrisp, chief executive, NZTE critical. We think one of these is aviation, which is a sector predicted to show strong demand across Asia. Altitude creates bespoke interior fit-outs for airlines around the world and CEO Mike Pervan has described their unique selling proposition as ‘design rich engineering competence’. I think this company is great example of the way forward for New Zealand: it is knowledge intensive, feeding a growing international aviation market, and based on brand and differentiation. Inspirational and imaginative stuff indeed. Successfully partnering with industry and other NZ Inc Agencies is vital so that we can help companies like Altitude deliver the goods for New Zealand.
Chinese steel miller commercialising LanzaTech’s clean energy technology
ne of China’s oldest enterprises Shougang Group and its partner in New Zealand Shougang TangMing have signed a joint venture agreement with LanzaTech to construct a demonstration plant at one of Shougang’s steel mills in China. The partners say the intention is to quickly scale the JV demonstration plant to a fully commercial facility at a Shougang steel mill. Beijing headquartered Shougang is one of the largest steel producers in China. The Group is looking globally for technology that will help reduce the environmental impact of steel making. LanzaTech’s clean energy technology ferments a variety of gas resources, including those emitted through steel making, to produce low carbon fuels. Its technology is particularly attractive because it has no impact on food security or land use. Shougang President Wang
Qinghai says the JV symbolizes Shougang’s desire to break the paradigm of heavy industry being a key contributor to carbon emissions. “We see this JV as playing a key role in China’s low carbon future,” he says. Wang Qinghai, Shougang TangMing President Nancy Dong and LanzaTech Chief Executive Dr Jennifer Holmgren signed the JV at Premier House in Wellington, witnessed by the Chinese VicePremier Hui Liangyu and New Zealand Deputy Prime Minister Bill English. Nancy Dong says Shougang TangMing wishes to play an important role in the
Shougang is one of the largest steel producers in China
commercialization of clean energy technologies in China. “We will work with our partners, LanzaTech and Shougang Group, to help create a sustainable manufacturing future,” she says. Dr Holmgren says the JV is representative of China’s continued commitment to reducing carbon emissions while maintaining economic growth. “China is a global leader in the commercialization of low carbon energy technology,” she says. “As an industry leader in clean steel technologies, the Shougang Group actively supports sustainable operating strategies for the production of environmentally friendly steel products.” Founded in New Zealand in 2005, LanzaTech has developed a novel gas-liquid fermentation process that produces fuels and chemicals from gas resources. Backed by global investment, LanzaTech employs
a strong technical team based in the USA, China and New Zealand and has a rapidly growing patent portfolio. LanzaTech’s technology enables energy partnerships between multiple industries. With agreements now in place across a variety of sectors internationally, including steel, coal, refining and chemicals, LanzaTech’s technology is being scaled to commercial production. One of China’s oldest stateowned companies, Shougang built its reputation with construction steel. The Beijing based steelmaker ranks among China’s largest and also specializes in industrial controls and the computer industry. Shougang TangMing represents Shougang Group in the New Zealand market, mainly dealing with importing construction steel products produced by Shougang Group, including reinforced bars and wire rods. www.nzmanufacturer.co.nz
NZ Manufacturer October 2011
The most important thing about communication is to hear what isn’t being said. – Peter Drucker
Virtual portal has billion-dollar potential for Waikato innovators
aikato Innovation Park has become the first Asia Pacific member of the UK Science Park Association (UKSPA), opening the door to new markets and global alliances potentially worth billions of dollars for regional innovators. The 12-month pilot puts Waikato and Bay of Plenty innovators in the spotlight before a membership of 1000 UK technology companies, including pharmaceutical giants Unilever and Boots. Plans by UKSPA to develop similar relationships with science parks in the United States, China, Norway, Denmark and Australia are underway, creating a virtual global technology corridor with Waikato and Bay of Plenty at the fore. The UKSPA initiative, a partnership between Waikato Innovation Park and economic development organisations Opportunity Hamilton and Priority One, allows Waikato and Bay of Plenty technology innovators to register on UKSPA’s virtual database, innovation-search.com. Innovation Park’s Peter Maxwell said the website database is used to
create global business relationships, discover joint research, development and innovation interests, establish strategic alliances and open paths to new markets. Waikato and Bay of Plenty companies are the first to be invited to register on the database, with Innovation Park to approach other New Zealand companies for involvement over the pilot period. “It’s about getting visibility for our companies. They’re getting themselves out there globally so that when people are looking for technology solutions they are there.
The big advantage is that this will help New Zealand companies get a leg up internationally,” Peter Maxwell said. Global corporate UKSPA sponsors such as Unilever and Boots trawl the website for technological advancements being made by small innovators. The website grants licenses to such large corporations, noting their specific technological requirements. “Large companies like these don’t typically have big research and development divisions. They wait for the smaller companies to develop the technology and when the time is right they buy,” Peter said. “Smaller companies are more agile and they typically put in more effort. They are more innovative and creative than large corporates, especially at the early stages of development.” Registering on the site is free for businesses during the 12 month pilot phase, with plans to look at implementing a fee structure the following year. Technology companies with an innovation focus are eligible to
Quake inspires shift to Hamilton
he LEAN GEMBA ACADEMY provides a unique opportunity to combine expert training from New Zealand’s leading Lean training organisations and the chance to see how Lean Thinking has been applied within a real business. Participants can experience the culture of Continuous Improvement, witness the results and hear how employees at a New Zealand company make the most of Lean Thinking in everything they do. We have added another 5s course due to popular demand:
2nd November – 5s Workplace Management
one of the key Lean tools and see it utilised in a real environment.
to employees who have seen the benefits of 5s workplace organisation.
the five steps to a successful rollout via a simulation.
• Develop the capability to implement 5s.
• Understand how 5s empowers and engages employees.
The trainer for the course Ian Lines has been helping organisations on their Lean journey for over ten years. In the UK he worked in the automotive industry implementing Lean and taking Leadership Teams on the journey of Lean transformation. Since moving to New Zealand seven years ago he has worked with over 30 organisations, in the service and manufacturing sectors, developing Lean processes and strategies. For more details visit www.leangembaacademy.co.nz
register. They must be trading and GST registered. “We’re looking for innovators rather than re-sellers or service providers. We’re looking for people who are creating something new and leading edge.” Opportunity Hamilton chief executive Sandra Perry said the UKSPA relationship gives regional businesses a unique advantage on the international stage. “This is a fantastic opportunity for the hundreds of innovative technology companies in our region to be seen and be connected to global technology players. We are delighted to be involved.” Priority One chief executive Andrew Coker said while New Zealand has a reputation as a country of innovators there was some difficulty in getting products to market. “Ideas are the only resource of which we have an infinite supply. The UKSPA initiative will provide companies in the Bay of Plenty and Waikato with a way to fast track their ideas and products onto the global stage and enhance our international competitiveness,” Andrew said.
usiness-friendly Hamilton is the new home of a former Christchurch couple whose house was badly damaged in February’s earthquake. Stefan Doll and Dr Adrienna Ember moved to Hamilton with their three children recently to escape the shaky city and to start their new business. Stefan resigned from his job as a Christchurch City Council human resource manager to make the move after deciding Hamilton offered what his family wanted for a fresh start. Waikato’s ranking as the second fastest growing economy in New Zealand, its size and proximity to Auckland and Tauranga were factors in their choice, but the region’s geological stability was the ultimate decider. “Hamilton is growing fast, which is important. But first we looked at safety. Hamilton is the safest place in New Zealand when it comes to natural disasters,” Adrienna said. Adrienna was set to launch a life coaching business when the February quake stuck, ultimately inspiring the couple’s shift north to establish their business, the New Zealand Institute for Diversity and Wellbeing. The pair contacted economic development agency Opportunity Hamilton, who used networking links to connect them with the Waikato business community. “We’ve made good contacts in a very short time with all types of people. Opportunity Hamilton,
and everybody, has been very welcoming,” Stefan said. Starting afresh is nothing new for the couple, who previously lived in Adrienna’s native Hungary and Stefan’s homeland Germany before immigrating to New Zealand. “We would like to use the skills and knowledge that we’ve gained in our many years working in human resources, research, education and life-coaching to help business people and society. The topic of diversity is so important for businesses,” Stefan said. They spent the last five months in Europe holidaying and researching diversity in the workplace before embarking on their latest venture. “We want to show people here how they can work in a diverse workspace more efficiently and reap the many benefits of cultural and ethnic differences. This is the way things are heading in Europe and we can show New Zealand how to benefit too,” Stefan said. Maximising the benefits of cultural diversity can improve access to new markets, staff relations and can enhance communication with different customer groups, they said. “If businesses can find a way to extract the benefits of diversity the results are often astoundingly positive. However, ignoring the challenges of diversity can be disastrous.” The pair also hopes to attract international researchers to study New Zealand as an example of cultural diversity.
NZ Manufacturer October 2011
Opportunity is missed by most because it comes in overally and looks like work. – Thomas Edison
Waikato manufacturers serve global demand W
aikato is a backbone of New Zealand’s economy and, as the second fastest growing region in New Zealand, the country’s leading exporter. Manufacturing in Waikato has progressed during more than a century, growing from dairy farming roots and today there are more than 2000 businesses throughout the region. Specialist manufacturing sectors in Waikato employ more than 20,000 people, and, from food processing and packing to stainless steel and agbio, they make a global impression.
Specialist manufacturing sectors make a global impression.
Niche regional industries such as plastics, electronics and automation and the burgeoning aviation sector have typically flown under the radar with inventors, owners and business people keen to get on with the job. Now is the time to tell the stories of our manufacturing success, using them to foster global business opportunities and to attract new business to the country’s agricultural products capital. Export success stories include the high profile Gallagher and NDA groups, with the former specialising in innovative animal management and business security systems and the latter leading the world in the fabrication of stainless steel process vessels and heat exchangers. Just as interesting, though, are the smaller companies like Micro Aviation, the most successful micro
light aircraft manufacturer in the Southern Hemisphere, and ASR, a unique business designing and building multi-purpose reefs. Collaboration is crucial for Waikato businesses, with the Agbio New Zealand, Waikato Aviation Industry Cluster and Innovation Waikato all fantastic examples of businesses joining forces to share knowledge and resources. It’s not all sunshine, though, with the talent to drive these businesses often hard to come by. Many Waikato manufacturers report their growth is stunted by a lack of skilled staff but the good news is they could do much more with the right people. Despite this, business is bright in Waikato and a good portion of the projected $2 billion economic bonanza from Fonterra’s 2010-2011 $7.90 payout goes to the region. The Waikato produces more than $6 billion in food products, it is the country’s agricultural products
By Sandra Perry, Opportunity Hamilton chief executive capital, the home to 1000 PhD scientists and is close to 1.5 million people.
City leaders encouraged to step up Gallagher becomes one brand
iving Hamilton a voice in Central Government is a priority for a pair of city business leaders working to encourage the appointment of Waikato people to governance roles. Waikato Institute of Directors chair Margaret Devlin and economic development leader Sandra Perry, of Opportunity Hamilton, have joined forces to encourage more Waikato representation on government boards. Sandra and Institute of Directors deputy chair Paul Bennett recently met with Waikato MPs to outline the Leadership for Hamilton project. The project aims to ensure the city is represented at a national, decisionmaking level, sell Hamilton as a young, vibrant and agile city and develop a new generation of leaders. “This is about forging links so we
are not out of the loop as a region. We have plenty of suitable candidates so it’s a matter of staying informed of what positions are coming up,” Sandra said. Ensuring Waikato candidates are considered for government board roles and encouraged to apply was also discussed at the meeting. IOD chair Margaret Devlin said fostering more Waikato representation at national level came down to process, people and planning. “We have many good leaders in Hamilton who would serve well at government board level but we need to be aware of such vacancies when they arise. Representation at the moment is not as good as it could be,” she said Waikato business people need to be encouraged, trained and equipped for such roles, she said.
ne of Waikato’s most successful businesses for over 70 years, Gallagher has maintained a strong foothold in the agricultural sector. But increasing opportunities in the global security market with major technology developments has driven a repositioning of its future business strategy and brand identity. The company is to be advanced as a global technology brand under one brand: Gallagher. With initial research and funding assistance from New Zealand Trade and Enterprise, the Hamilton based company with over 1000 staff worldwide has aligned all business units and market products under one name, Gallagher. Deputy CEO, Steve Tucker says for market consistency Gallagher had to move away from the many brands in its stable. “We were divisionally structured
with Security Management Systems, Animal Management and PEC Fuel Pumps and each division owned various product brands. It encouraged individuality between divisions and sub-cultures within our organisation. Most importantly our customers were confused about who we are and what we stand for. “We’re moving to a clear and simple brand structure which shows we all work for the same company. We’re enhancing each other’s message instead of diluting it. We have transitioned our global website and our emails to reflect the single brand. “We are a family owned business the colour orange is in our DNA. It’s the ‘Why’ and ‘How’ we do what we do each day. Our staff play a huge role in the success of the company’s growth and they are key to our future success. They show everyone How we do it the Gallagher Way.”
NZ Manufacturer October 2011
EXPORT SUCCESS Asia major focus for replica sports cars
IT is not comparable to a fully sequential engineering system in which deliverables result from planning, designing, building, testing, reworking, retesting and finalising.
– Mark D Lutchen, former global CIO of PWC
uality New Zealand manufacturing is right at the heart of Fraser Cars. “Many people don’t instantly grasp what handcrafted really means,” explains Ida Tristran. “Basically we employ hugely talented craftsmen who put their heart and soul into the cars.” In the workshop you’ll see the pattern pieces lining the walls ready for hand-machining by a man who has worked on everything from specialist sonar buoys for the British Navy through to revolutionary motorbikes built to race the infamous Isle of Man TT course. An ex-marine fabricator who forged his career on luxury yachts uses painstakingly accurate welding methods to take the collection of hand-machined tubes and create the robust chassis. And the hugely experienced sheet metal engineer hand-forms the aluminium body around that chassis using many traditional hammer forming, shrinking and stretching techniques.
Fraser replicas at home and abroad
Worldwide there are 325 Lotus 7 replicas built by Fraser with around 35% of those still in New Zealand. Because the business now has a reputation for quality that rivals the company most associated with the replica, UK-based Caterham, they export regularly. Australia and Japan are the main export markets but the company is keen to expand into the US. Scott and Ida are confident that overseas clients aren’t just excited by the car; they are also excited by the standard of workmanship on offer. Fraser Cars has been handcrafting
Lotus 7 replica sports cars in New Zealand since 1988. The founder, Neil Fraser, had taken his own handbuilt replica to New Zealand’s 1988 National Car Show and admiration for his car produced three orders on the spot. And so Fraser Cars was born. Neil ran the business until 2006 when he sold it to his chassis maker, Scott Tristram, who now runs Fraser Cars with his wife, Ida. Based in Beach Haven, Auckland, New Zealand, there are now five people working full-time at the workshop where they build two models, the Clubman and the sportier Clubman S. The cars are available in kit form or as a finished vehicle. However, pretty much every car is unique because owners get choice over a range of components and attributes, from suspension setup to upholstery, engine model to paintwork.
Fraser Cars are born.
Exporting into Japan has been a long-term project for Fraser Cars. In 1991 the business was introduced to Gold Autos in Osaka, Japan. They were keen to link with Fraser to fill a gap in the market. Although classic cars were popular, the original Lotus 7, as well as the Lotus 7 replicas available at that time, were suffering from reliability issues. The two businesses set about changing all this with the Fraser replica championing high-quality engineering and New Zealand manufacturing. Over the next 15 years Gold Autos and Fraser introduced an average of two Fraser Clubmans per month into Japan. Popularity was very much down to the markets’ love of classic cars combined with the Fraser manufacturing skills which boosted reliability and improved the driving experience. But as world markets suffered in recession, the export volumes have dropped. Fraser now supplies parts and upgrades to Japan with an occasional car being shipped. But the relationship with Gold Autos remains very strong and Asia remains a key market.
Managing the build today and tomorrow
As well as selling cars in Japan, Fraser also buys from Asian manufacturers although only for specific products, particularly the engines which usually come from Japan. Scott continues “We could source more components from overseas but we enjoy tapping into the creativity of our brilliant craftsmen in the Fraser workshop. Our customers choose Fraser specifically because of the handcrafted New Zealand manufacturing that goes into each car.” For the future, Ida and Scott are keen to push sales at home and abroad with Asia being a major focus. Ida concludes “Fraser Cars has created a great reputation for quality in Japan through its partnership with Gold Autos. And we are really keen to reconnect with Asian markets over the next few years as the global economy returns to stability.” nextSTEP Visit: www.fraser.co.nz
NZ Manufacturer October 2011
EXPORT SUCCESS Marque Magnetics pulls in variances
It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently. – Warren Buffett
arque Magnetics designs and manufacture transformers, chokes and a wide range of specialty electronic wound components. They also import and sell switch mode power supplies. Their highly specialised products are locally manufactured in their Auckland factory and the high volume commercial product is made in their plant in China. They started business in 1986 and now have 49 employees and are experiencing steady growth both locally and internationally. A quick, efficient no charge design service, coupled with fast prototyping and competitive pricing proved so successful at Marque Magnetics, that companies from Asia, Europe and the US are utilising their services. This expansion phase started in early 2001 with Marque Magnetics setting up a joint venture company, Huigao Magnetics Ltd in Tianjin, China. The manufacturing plant employs over 300 people and is tailored to manufacture medium to long runs of wound components. Marque Magnetics’ client base includes Fisher & Paykel, TruTest, Gallagher Group, Navman and Tait Electronics. Recently they won the contract to supply Cabco (a Kiwi company that manufactures high tech shopping trolleys integrated with TVs for the US supermarket giant Walmart). The transformer industry is a competitive market space with a low barrier to entry and many suppliers. Marque Magnetics have differentiated themselves by providing a personalised design service rather than endeavouring to manufacture stock transformers. This ‘design to order’ philosophy allows Marque Magnetics to craft a device that fits their client’s needs exactly.
The key business issue Marque
Magnetics faced with their existing system was the control of the quotation process and associated product costing that underpins quotation development. The lack of control over production costings and quotations meant that Marque Magnetics were accepting work with no clear idea of the profitability.
Problems existed with the legacy system:
• Purchasing Costs. Marque Magnetics did not have ready access to the costs of the Raw Materials which impeded the development of new quotations. (Raw material costs are a significant proposition of the end product cost). • Retail - not an Engineer to Order system. The existing system was primarily a Retail package. Its job costing functions did not manage the capture and reporting of labour. Labour costs are a significant portion of the product costs and this lack of control and understanding of actual costs meant that new quotations could be based on incorrect data. • Quotation Functionality. Marque had a quotation function that failed to provide quotation history, any flexibility and no visibility. The key business driver for Chris Patterson (MD) is to manage their production within a tight band (Chris refers to it as ‘the snake’). The size of this band was called the ‘slop’, defined as the variation from standard to actual cost for a job. Historically, this slop, or the width of the snake was between plus or minus 30%. Since implementing Epicor ERP, Marque’s hugely variable slop has disappeared reducing to a slim 10% ‘snake’. Chris has an aim to move down to a 5% snake. The current process is to review the actual to standard cost of 80% of all jobs with a tolerance of 10%.
Chris Patterson, managing director, Marque Magnetics with Wendy Haughie, finance manager.
The Engineering and Production teams meet weekly and examine key jobs at both ends of the spectrum i.e. those with actuals outside the snake with costs too high or too low. This review determines if the variance should be addressed by production or engineering or whether the standard cost needs to change. The intention of the ‘Snake’ process is to ensure efficiency throughout the total manufacturing process. This efficiency makes Marque Magnetics very competitive. Marque needed to address these issues and went to market to identify an ERP solution. They identified Cogita and their Epicor ERP solution as a strong contender in their engineer to order market place. A significant side benefit is the more predictable performance of the manufacturing plant and its subsequent positive effect on profitability.
Benefits of Epicor include:
• The ability to manage labour cost on quotation down to each operation, allowing the engineering department to receive accurate labour times.
• Having visibility of all cost elements pertaining to a quotation. Historically Marque only had control and visibility of material costs and because of the high cost of labour in New Zealand, visibility is critical. • Access to historical quotations. Many quotes are for repeat or similar work and it is important that Marque have access to and visibility of the details of former quotation to a client. Consistency is an important part of credibility and reliability. Epicor ERP has provided quotation consistency. • Epicor ERP has allowed clients expectations for fast quote turnaround and enquiries as an efficient tool for assembling and managing quotations. The manufacturing facility now has a tool to manage and compare their performance to standard. A range of KPI’s (Key Performance Indicators) allows the management team to check and monitor performance and help ensure that plant profitability is maintained at desired levels. nextSTEP Visit:www.cogita.com
NZ Manufacturer October 2011
Champions aren’t made in the gym. Champions are made from something they have deep inside them – a desire, a dream, a vision. – Muhammed Ali
Attaching value to what NZ manufacturers do well
o remain competitive in international markets, New Zealand’s focus needs to be not just on primary production, but end-to-end manufacturing solutions. For this reason support and development for specialised, knowledge-intensive manufacturing and services is a priority for New Zealand Trade and Enterprise (NZTE). Although we work with companies across a range of manufacturing sectors, our focus is on our Big Five; marine, aviation, geothermal, advanced materials, and building solutions. Working directly with companies to help find what makes them different and to attach the right value to what they do is an area where I believe we can really assist. Modularity continues to be the buzzword across manufacturing – demand for speed of design, lightweight and flexibility combine to provide some unique opportunities for us. Companies that have developed or adapted products to meet this demand and slot into global supply chains are the ones finding success in international niche markets. Successful companies also share certain characteristics such as high levels of technical expertise, market
insight, significant investment in research, design and product development and excellent customer service. Generally New Zealand’s manufacturing exporters have a reputation for quality, design and performance – and this is paying dividends in various areas. In yacht design, for example, world-class yacht designer Ed Dubois now specifies products and designs using New Zealand companies. He will be a major influencer in almost $500m of global marine buying, so you can see it is worth New Zealand staying close to him. Sharing the stories of our companies with the world is part of the process of winning over these key decision makers. A recent seminar for the aviation industry held at The Cloud in Auckland encouraged companies to share stories with their peers, and to work together. This
New Zealand’s manufacturing exporters have a reputation for quality, design and performance.
was well reported internationally and built on the innovation story New Zealand has to tell. Collaboration and sharing ideas across different industries is also an important way of alerting businesses to new opportunities. A great example of this is a company that specialises in interior fit outs for superyachts now looking at using their materials expertise for the aviation and automotive industry. One of the main aims of our aviation project, meanwhile, is promoting certification and regulatory approvals so we can bring more companies into the aviation supply chain, and open up new markets. The aviation sector requires stringent certification for each part in each market that the part will be supplied to. Getting certified can be a complex process with rich rewards so we use our contacts with the large multinationals like Boeing and Airbus to set up practical ways to get New Zealand to the front of the queue. Already, during Rugby World Cup sessions, we have seen progress on this front with Airbus keen to ease the process for us. More generally, it’s great to see some companies taking the lead in changing certification requirements in markets. For example Napier-
By Adam Bennett, NZTE’s Director Specialised Manufacturing. He is based in Auckland.
based company Pultron developed a high performance, corrosion resistant composite bar to reinforce concrete. However, regulations in the Middle East required steel bars to be used for reinforcing concrete. Undeterred, Pultron went to Dubai and convinced them to change building codes to allow for the use of their product. Regulations can be an opportunity. It is a superb example of a company understanding their competitive edge, communicating it and tilting the game table in their favour to open up a new market.
Record export growth due to customer focus
ait Radio Communications is continuing to score export success despite the Canterbury earthquake and the challenging economic environment. Frank Owen, managing director of Tait Radio Communications, says recent export growth owes much to the company’s increasing focus on the design and delivery of critical communication solutions for public safety, utility and transport organisations around the world. “Historically, Tait has certainly built its reputation as a manufacturer of radio communications products. However, the business has evolved to allow for the provision of managed services, delivering increased value to customers, internationally and domestically, on a long-term basis. “This includes the design, deployment and support services in often demanding and challenging environments as well as managing and operating the client’s system, allowing them to focus on their core outcomes. “Currently 95 per cent of Tait’s revenue, more than US$150m, comes from export and all our markets are experiencing growth.” Although the Tait global headquarters has its location in www.nzmanufacturer.co.nz
Christchurch, fortunately the company’s significant export growth and aspirations have been unaffected by the earthquakes. Tait is currently the largest private sector employer in Christchurch and employs more than 600 people as well as having offices across the globe including in Australia, China, the US and UK. “We are totally committed to Canterbury and see ourselves as employers here for generations to come. “As a Canterbury business, the earthquakes have been as confronting for us as anyone. But ironically, the performance of our communications solutions for clients such as NZ Police and the New Zealand Fire Service during and after both Christchurch earthquakes has created an awareness of our credibility and capabilities. “For the worst possible cir-
cumstances, Tait’s systems have proved they deliver during the moment of truth. It is a very strong endorsement for the technology and performance of what the company does. This has helped drive the 95 per cent of the business that is overseas.” Tait is currently providing communication solutions for customers in over 60 countries from Civil Air Patrol US, Queensland Rural Fire Service, London Bus, Fire Department of New York, Sonoma County in California, Pacific Gas and Electric Company in California, Puget Sound Energy, Washington state, a Uruguayan electricity utility and police forces in Grenada, South Africa and San Paulo. “We have seen strong growth in the last two years in the US, Brazil and Asia Pacific. “Approximately, 30 per cent of our export demand is from the
Currently 95 per cent of Tait’s revenue, more than US$150m, comes from export
Americas, 30% from Europe, the Middle East and Africa, and 30% from Asia Pacific. Importantly, our export markets include a balance of developed markets, such as the US and Europe, and developing markets including China and South America.” Most recently, the Christchurch company became the first additional P25 solutions provider to be officially approved to operate on the New South Wales Government Radio Network (GRN). Emergency services including the NSW State Emergency Service, Ambulance Service, Rural Fire Service, Energy Australia, Roads and Traffic Authority and Department of Corrective Services can now choose a land mobile radio solution designed and manufactured by Tait Radio Communications P25 is an international open standard for the manufacturing of interoperable digital two-way wireless communications. The standard, which is also used by New Zealand Police, allows for improved communications within and between agencies – especially emergency services. And Tait already has approval to operate on many of the US State Radio Networks.
NZ Manufacturer October 2011
Innovation is not about saying YES to everything. It’s about saying NO to all but the most crucial features. – Steve Jobs
Taiwan offers insights for NZ manufacturers
aiwanese are sometimes described as the foreigners that understand the Chinese best, and the Chinese that understand the foreigners best. So as countries and companies think about how they can adapt and cater to an increasingly influential cachet of Chinese consumers, it’s worthwhile understanding how Taiwan is approaching the opportunity. Taiwan has been a major investor in China during the past 20 years with an estimated US$150bn worth of accumulated direct investment. Taiwanese companies played a key role in the rise of China’s manufacturing base by bringing investment, technical and managerial expertise. Up until recently, this investment went into export-oriented manufacturing and most products were ultimately bound for Western consumers. Now, Taiwanese investors are shifting focus towards opportunities catering to China’s domestic market. This is due in part due to issues in the West, and in part because Chinese markets have matured to the extent that they are seen as more viable. A market the size of China will likely always demand resources
such as Australia’s minerals and our protein. Taiwan does not have resources like these, so its companies are charting a different course by securing positions in areas such as distribution and branding. Money is being invested in building supply chains, launching new brands and designing products that are China focused. In some ways it is a shift from high tech into low tech. Examples include Taiwanese investment in the RTMart hypermarket, China’s largest instant noodle manufacturer Master Kong, and the low cost mobile phone chipset manufacturer Mediatek. Additionally, Taiwanesemanaged private equity and venture capital funds have been successfully raising new funds (often with capital from other foreign investors) that have a mandate to invest in companies which are wellpositioned to benefit from growth in China’s domestic consumption. Taiwan’s reorientation should come as no surprise as it has obvious language and cultural advantages that allow it to understand the Chinese market. And more than one million Taiwanese live in China, with another half a million regularly visiting. But because they’re focusing on
different parts of the value chain, Taiwanese companies are building different skill sets to us. Their human and financial resources – and their perspective on operating in China – are different. We do however have products and capabilities that Taiwan doesn’t and so for some companies leveraging Taiwanese distribution and brands will make sense. Food, agritech, life sciences and natural products are just a few areas that spring to mind. And for more ambitious New Zealand companies, co-investing in China alongside Taiwanese-managed funds could be worth considering. Partnering with Taiwanese companies in China is something that the Japanese have been doing for many years. It is a well trodden path that seems to be working as Japanese companies continue to seek Taiwanese partners. For example, Mitsui has four joint ventures with different Taiwanese partners in China. Several New Zealand companies already work in China with Taiwanese partners, and increasingly we’re finding that when a New Zealand company offers Taiwan distribution rights to a Taiwanese company, the Taiwanese companies
are increasingly requesting China distribution rights as well. Taiwan’s economy has been enjoying solid growth rates and its GDP per capita is about US$21,000. Last year Taiwan was New Zealand’s 10th largest export market and with more than 23 million people living there, it is a market similar in size to Australia. This makes Taiwan worthy of attention in its own right, but its commercial intimacy with China and potential as a platform and partner for the region should make it deserving of even more attention in future.
total environmental impact of their goods.” Other Maersk Line initiatives, such as its ballast water management programmes and its increasing use of low-sulphur fuels – recently extended to all New Zealand ports – are at the leading edge of industry best practice, and demonstrate the importance the company places on sustainability. Bevis says the MIA conference was an excellent opportunity to catch up with key players from
across the industry. “Maintaining a service that meets the needs of our customers in a way that’s affordable for them and cost-effective for us requires a high level of mutual understanding. Talking face-to-face with individual processors and producers, listening to their issues and explaining our concerns, is the best way to achieve this, and events like the MIA conference help cement the very important relationships we have built up over the years.”
By Liam Corkery
Liam is the Director of the New Zealand Trade Development Centre in Taiwan which works with New Zealand companies to promote economic linkages in Taiwan.
Consumers want and expect the details
onsumers want and expect more information about what they’re eating than ever before – and New Zealand exporters must be able to supply that information, says Maersk Line New Zealand Managing Director Julian Bevis. “The two most common topics of conversation at the MIA conference were traceability and environmental sustainability,” says Bevis. “What those issues have in common is the increasing desire by consumers, particularly in Europe, to know what it is they are putting on their plates. “Consumers want the backstory: where and how the animal was raised, processed, transported, and so forth. Companies that can provide that information will have a definite edge: suppliers such as ourselves have an important part to play in ensuring they can do so effectively.” Bevis says Maersk Line’s focus on improving its environmental performance helps the line’s customers demonstrate their own environmental credentials, citing Maersk’s commitment to reducing CO2 levels as an example.
“Over the past few years, we have cut CO2 emissions per container moved by more than 15 percent – and we intend to achieve a further 20 percent reduction by 2020,” he says. “Maersk was the first line to have our fleets total CO2 emissions independently audited, providing our customers with reliable data they could use in assessing the
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NZ Manufacturer October 2011
– Ivan Turgenev
Turning it all upside down
iving at the bottom of the globe, we see ourselves as being right side up, while some other people might view us as being upside down. If we consider New Zealand’s metals engineering industry as a pyramid, it would certainly be right side up and be segmented into three parts. The base, the largest group, would be the contracting companies. These are typically very able and efficient, using contemporary processes and highly-skilled labour. Many of them export, particularly to Australia and the Pacific Region. They may offer design and build services, but are substantially engaged in tender-based activities where they fabricate to designs of others, and price is the main determinant of sales. Some of our largest and most successful companies are in this group.
If we wait for the moment when everything, absolutely everything is ready, we shall never begin.
The middle group in the pyramid is contracting companies that have some of their own products. Typically, they have produced a product to meet a particular customer’s needs, and then found that other people also wanted the product. Demand is usually from the domestic market but can also be from offshore. They may still be tendering to supply but the designs are their own. The top group in the pyramid is manufacturers; they have their own products that they develop and market. They are typically exportoriented, though some do have a local demand base that they built their original sales from. There are overlaps and some movement between the groups and there are some significant differences when it comes to their mode of operation. Just considering research and
development (R&D) and marketing activities, the level of each engaged in by the manufacturing group is significantly higher than in the other two groups. While there is nothing to stop any company from doing R&D, in the manufacturing group R&D usually focuses around products while in the contracting group, R&D typically is aimed at improving or developing processes, such as better ways to weld or handle materials. Marketing likewise differs, for the contracting group it is about marketing their capability and capacity, and sales support staff usually operate around sourcing and pricing tenders. In the manufacturing group, marketing is oriented around the product or solution they offer, and they will therefore present features and benefits. Marketing staff are oriented around creating a presence for their offerings in the market and feeding back market information to guide the development of future offerings. In other words, the market drives future R&D. There are two other differences between the groups; these are the ratio of trades staff to marketing, and R&D staff and the dollar sales value produced per staff member. Manufacturing companies tend to have more people dedicated to R&D and to marketing than contracting companies. They also generally produce higher sales per employee, due to the intellectual property (IP) component of sales and higher profits, earning them the title of ‘high-value manufacturers’. Competition in the metals engineering sector is increasing across the board from low cost
Commentary by Heavy Engineering Research Association Industry Development Manager Nick Inskip countries, regardless of whether the company is a contractor or manufacturer. The labour component per dollar of sales is a major factor in being competitive, so contractors are under more pressure than those who have IP as part of their offering. The good news is that many companies go from being contractors to being manufacturers and taking that path does not mean that they have to abandon what is working for them right now. To secure a solid future for the metals engineering industry, we need to turn the pyramid on its head and make it a much bigger pyramid. While this means engaging with markets that are often far away from New Zealand, and identifying niches where strong prospects exist, the potential payback is significant. Perhaps it’s time to turn it all upside down, bringing more IP to our offerings and move to a model where we compete on the value we offer, and not just the cost of our labour.
Promapp partners with global giant
romapp Solutions Ltd has entered into a partnership with SAI Global, one of the world’s leading business assurance, publishing and compliance organisations, for global marketing and promotion of Promapp’s business improvement software. The focus of the marketing agreement will initially be on SAI Global’s own worldwide client base. With global headquarters in Australia, SAI Global has offices in 25 countries around the world that Promapp will be able to tap into. Promapp’s simple web based software delivers an ideal solution for organisations that have tried and failed with traditional approaches to improve their processes. The difference with Promapp is that www.nzmanufacturer.co.nz
it helps the teams that actually participate in processes - not the specialists that analyse them. The global nature of the SAI Global business means that prior to implementing Promapp, there was a great deal of variation in processes across SAI Global’s offices. The tool has benefited SAI Global for its international information services for managing risk, achieving compliance and business improvement advice,” he says. Promapp has now been successfully adopted across SAI Global’s international network, including Australia, United Kingdom, Canada, United States, and Mexico. Further implementations are scheduled for their Asian and European offices.
NZ Manufacturer October 2011
If I’d asked my customers what they wanted they’d have said a faster horse. – Henry Ford
Compliance for manufacturers who export
As our trading world gets more and more complex so does our need to understand compliance. We traditionally think of compliance as being for products we consume such as food, drink, and products that we come in direct contact with on a daily basis. In fact, compliance also applies to machinery and equipment manufacturing. The purpose of compliance is to ensure that safety in use and durability are maintained; in some instances it is also used in protecting local businesses from imports. Whatever the base reason is for the compliance standards, the issue is we have to comply with the conditions of our export markets. Always search your market expectations before exporting; the cost of having goods returned or dumped due to non compliance in the country of export is a very expensive mistake. One of the marks we see frequently on machinery and equipment from some of our very traditional Markets is the CE Mark. For further information contact Bessie.Nicholls@aucklandnz.com ED
any of us have noticed the letters ‘CE’ on the underside of our computer mouse, or electrical equipment. CE stands for Conformité Européenne (which, for us non-French speakers means ‘European Conformity’) and means the product conforms with the appropriate European Union (EU) Directives. Products that are to be sold in the EU that come under certain European Directives must bear the CE mark: it is a legal requirement. CE marking on a product is the manufacturer’s declaration that the product complies with the essential requirements of all the Directives that apply to it. It indicates to the appropriate bodies that the product may be legally offered for sale in their country. The requirements for CE marking differ across all the Directives and may also vary for different products within a Directive. Depending on the product, CE marking may be as simple as formulating a technical file, or as complex as having to submit your products to regular independent scrutiny. Third party testing, systems assessment and technical file assessments may be mandatory, but sometimes the manufacturer’s unverified claim is all that is required. A Directive is a policy statement detailing essential requirements for health, safety, consumer protection and the environment. However, it contains no technical content. The Directives must be adopted by every member state as national law and therefore becomes enforceable by the national legislative bodies.
Currently there are 35 Directives and 21 provide for CE marking. As a consequence of this, for New Zealand manufacturers that supply products or components for products to the EU, CE marking may be mandatory otherwise the product could be: restricted; prohibited from sale; and/or forced to be withdrawn from the EU marketplace. A selection of Directives that may affect New Zealand manufacturers are as follows: * Machinery Directive (MD) 98/37/ EC * Pressure Equipment (PED) 97/23/EC * Electromagnetic Compatibility (EMCD) 2004/108/EC * Medical Devices (MDD) 93/42/ EEC * Construction Products (CPD) 89/106/EEC * Noise (ND) - 2000/14/EC * Recreational Craft (RCD) – 2003/44/EC Where a Directive requires products or systems to be independently tested, certified or
The purpose of compliance is to ensure that safety in use and durability are maintained.
inspected a manufacturer will need to use the services of a “Notified”, “Competent” or “Approved” Body. This is an organisation that has been notified to the European Commission by a Member State. The typical process that a manufacturer should consider is as follows: 1. Identify the Directive(s) that are applicable to your product. 2. Identify the conformity assessment procedure for your product and Directive. 3. Determine the dates by which you must take action. 4. Identify if there are any harmonised European Standards (hEN’s) applicable to your product. 5. Ensure that the product complies with the essential requirements of the Directive(s). 6. Identify whether independent assessment of your conformity is required by a Notified Body. 7. Maintain Technical Documentation required by the Directive(s). 8. Prepare the Declaration of Conformity and the required supporting evidence. 9. Check that no other national requirements exist in the country where the product is to be sold. 10. Affix CE marking on your product and/or packaging. For the Construction Products Directive (CPD), the present author has assisted a number of European and NZ manufacturers in obtaining CE marking through a good relationship with a UK organisation who is also a member of the European Organisation for Technical Approvals (EOTA). The CPD is a special case in that,
By Dr Stephen Hicks, HERA Manager Structural Systems a European Technical Approval (ETA) can be developed when any of the following conditions apply: no relevant Harmonised Standards (hEN’s) for the product exist; no mandate for such a Standard has been given by the European Commission; the European Commission considers that a Standard cannot be developed (yet); a product deviates significantly from the relevant hEN’s. In such cases the ETA can effectively be considered as a ‘mini-harmonised Standard’, which can be used as a basis for CE marking the product. Assistance on CE marking for other Directives is available in NZ from the following list (which is by no means exhaustive): National Resources (such as IRL), EU web sites (e.g. http://ec.europa.eu/ enterprise/policies/single-marketgoods/cemarking/) and IANZ (http://www.ianz.govt.nz/).
NZ Manufacturer October 2011
AUCKLAND MANUFACTURERS Kiwi imagination and innovation shines through ‘The Cloud’
We are currently not planning on conquering the world. – Sergey Brin
From page 1
lot... taste and enjoy versus swallow and try not to gag. But more fundamentally, it is because in the 10,000-year history of brewing, no one has thought about combining the six aspects in the WilliamsWarn unit. They are the first (on the small scale) to self-carbonate the beer during the primary fermentation, with proper temperature control and a means to clarify the beer in situ. This means much less work, much better quality, and an all-inone appliance for the first time in the consumer market. So why the excitement? Beer consumption equates to 3-percent of all liquid consumed on the planet. The market size is estimated at $330- billion a year. Home-brewing is still a small niche within beer brewing, but WilliamsWarn believes that’s only because of the large number of problems associated with it, e.g. in this country alone, 32-percent of all male adults have tried homebrewing, with 31.9-percent quitting. Since launch it has had hundreds of offers for distribution and requests to purchase units in almost 50 countries and is now working towards exporting to these countries. WilliamsWarn expect to launch in many countries around the world in 2012. Cheers to innovation, vision and skills-plus-experience being combined so effectively. Which brings us to another Kiwi company close to another nirvana.
Are at the point of delivering a unique high-speed, valve-less, five cylinder, three injector Axial internalcombustion engine with zero first-order vibration, significantly reduced size and weight, very high power density and the ability to run on multiple fuels and biofuels. It is said to be ideally-suited for many uses, including marine, military, automobile, light aircraft, stationary and range-extender applications. Duke Engines Ltd is ‘an engine technology development company’, based in Auckland, but like a number of other companies, responds to the needs of the main markets in the USA and Europe, by using US test facilities for engine development testing to ensure quality and international standards are being met from the get-go. ‘The Duke’ is currently in its third generation ‘running prototype’. The engine has been successfully tested at University of Auckland and Mahle UK dynamometers and test facilities, with systems’ co-development by expert unnamed UK partners. An exciting adjunct to the breakthrough technology is that Duke Engines’ www.nzmanufacturer.co.nz
mechanical systems’ innovations can be developed beyond the engine platform to pumps and gearboxes. So where is ‘the buzz’ coming from? Compared to the conventional internal-combustion engines, with similar power, the Duke is considerably lighter and up to a third smaller. Incredibly, as engine capacity increases, the reduction in size advantage increases significantly with no drop off in the power density. The absence of hot valves in the uniquely-shaped combustion chamber allows high compression ratios for efficient operation on low octane fuels. With only three exhaust headers for five cylinders there is a low surface area for heat loss prior to any catalytic converter. The current engine can be run on any suitable spark ignition fuel. Kerosene/ Jet A1 operation is under development, and it is expected with further development to be able to operate on all appropriate fuels, including Ethanol/Methanol and blends, Bio ethanol, LPG, CNG, Hydrogen, Kerosene and Diesel. It would appear to be the proverbial answer to a maiden’s prayer.
Is another Kiwi company ‘generating’ global attention and success with more than 15 patents filed and solutions provided to prestigious Fortune 100 companies, from its locations in the US, Japan and New Zealand. Already, the company is regarded as the global leader in highefficiency, industrial wireless-power solutions for wet, dirty and moving applications. It has ‘a world leading team of wireless experts focused on delivering value creating solutions to challenging power problems using their industry leading
Proxi-Wave wireless platforms’. Their technology overcomes the constraints and costs of power cables and mechanical components, which can stifle design innovation and increase maintenance costs thereafter. The product was developed by PowerbyProxi in Auckland -- the so-called ‘home of wireless power’ when the company spun out of the University of Auckland’s Engineering School in 2007. Since then it is said to have built up the largest team of expert wireless engineers in the world. Basically, PowerbyProxi delivers wireless power solutions, which solve major customer issues in providing power continuously, in hostile industrial environments where traditional mechanical and electrical solutions fail, due to wet and dirty conditions or moving parts. What is special about it? PowerbyProxi can cope with significant changes in alignment of the transmitter and receiver, as well as applications that constantly need different amounts of power to operate. PowerbyProxi is currently working on delivering their technology so it can be embedded on a silicon chip, for use in a range of small electronic devices and integrated into batteries, so it can become a feature of many existing consumer devices.
Duke Engines Ltd is ‘an engine technology development company’, based in Auckland
Two of the wheeled-innovations captivating visitors to The Cloud.
Yet again, something those supposedly in the know have always discounted. Finally, a fun one, which made a startling impact by turning a worka-day motor-scooter into a clone of the look and feel of a Rolls Royce dashboard and surround.
Specialises in the application of the environmentally sustainable Digital Veneer, or what they call ‘an advanced 21st century surface decoration solution that delivers unmatched durability, stability and consistency over existing materials’. In addition the company is involved in the marketing, design, and manufacture of products which provide high-value solutions to a wide range of industries. It has developed a strong international brand and demand within the marine, aviation, automotive, and architectural markets. Their stated aim is to continue to develop a market-led, competitive advantage ‘through intelligent and innovative design, product development and delivery to market’. In essence, the Digital Veneer process decorates 3-dimensional and flat surfaces made from plastics, metals, foam, wood, composites and any other structural material, with a variety of finishes, which exactly replicate the look and feel of natural and man-made materials. So, what is special about that? In an increasingly environmentally-conscious world, where manufacturers are now frequently being asked by customers to report on the sustainability of their products -- using hardwoods like teak and mahogany -- will soon be a non-viable option. Digital Veneer, a trademarked ISO 9001 accredited environmentally sustainable ultra-high-quality surface decoration technology is said to be a cost-competitive, advanced 21st century product which delivers unmatched durability, stability and consistency over existing materials. The products are flame-proof; up to 95-percent lighter than the original material; do not rot; and require little maintenance. As they say: “With Digital Veneer, there will be no need to use hardwoods again. Their application is limited only by one’s imagination.” And, as we have had confirmed by ‘The Cloud’, we know Kiwi imaginations are in very good nick.
NZ Manufacturer October 2011
One has to do something new in order to see something new. – Georg Christoph Lichtenberg
The Interview Kevin Whitehead Managing Director Solution Management.
Solution Management have been providers of system and software solutions for Manufacturers for more than 10 years. Why do you do what you do?
MY BACKGROUND is in manufacturing, product development and systems improvement.
Career roles have included Product Development Engineer for Philips Lighting, Manufacturing Manager for Clearlite Industries and Systems Improvement Consultant with projects across more than 200 companies. Good operational software solutions like Ostendo can provide real and long lasting gains in efficiency, accuracy and performance. The sense of achievement and satisfaction in bringing operational software and technology together to provide easier ways for companies to carry out their business is one of the main reasons I do what I do. If you were not doing this, what path would you have chosen?
NOT SURE. I think the path may have found me. Originally I trained as a Civil Engineer and could have gone to Twizel to work on Dams. Instead I went into product design and manufacturing with Phillips Electrical. My successes have been in product design, manufacturing, solving technical problems and project management. These successes channelled my efforts towards building strong software development and implementation capabilities at Solution Management.
Tim Fastnedge, Director of Techspan Group
Forres McPheat, Chairman Filtercorp
he business climate in NZ at present can best be described as variable. This country has developed an international reputation for innovation and break-through technology which really started with our winning the Americas Cup in San Diego. Companies that are exporting new technology are really doing well despite our strong dollar whereas “me too” companies are struggling.
o far this year we have found the New Zealand economy is still ‘hot and cold’. Many of our corporate customers are investing in new plant in New Zealand, while a few are still heading offshore. We are also now exporting higher volumes due to our new e-commerce website, which has helped expand our customer base. Techspan Group is set to have another excellent year with very good sales of our injection moulding machinery, plastic welding equipment, and our barcode labelling systems.
How is business for your company?
BUSINESS has been good this year with a number of manufacturers implementing Plant Capture, Time Capture and Stock Capture modules we provide for Ostendo. As well as Insulpro two manufacturing companies in Melbourne have implemented Time Capture and Stock Capture this year. Time Capture has been in the market for three years and enables shop floor staff to clock in for the day with a simple scan, and then scan onto a job to automatically record production times. Stock Capture provides an easy barcode scanning system for stock takes, receiving stock, issuing material to jobs and stock transfers. Do you see growing markets?
THE NEW Zealand market is steady and we are targeting growth here with new products. Products and services we provide to Australia have steadily increased. From 2010 to 2011 Australian sales moved from 3% to 15% of our turnover. For us, Australia will continue to be a growing market. Greatest achievement?
MY MOST memorable achievement included a global review of
bathroom ware manufacturing equipment. Flight scheduling required the Concorde to be used on one leg of the trip. This was pre 9/11 and I was able to go to the flight deck and at 63,000 feet get a great view of the curvature of the earth. Following this review, I project managed the design, machinery sourcing and set up of a new bathroom ware manufacturing plant in Sydney. Advice for someone starting in business right now?
IF YOU are buying a business make sure you understand where the revenues and margins have been coming from in detail and where they will be when you take the business over. If you are starting a business with partners see a lawyer on your own first for advice. If you are starting a business as the sole Director get someone else like your accountant to do your accounts on a monthly basis and your GST. If they cannot complete the information promptly change to one of the many that can. Most businesses benefit from investing in marketing, training and technology. If the expenditure does not fit into one of these categories review it closely.
Yard 37 approval a key step for marine industry infrastructure NZ Marine has welcomed the announcement that Yard 37, the new Marine Industry Precinct (MIP) at Hobsonville Point, has received support from Auckland Council. NZ Marine executive director, Peter Busfield says the Yard 37 proposal includes the type of facilities that exported-focussed companies such as superyacht manufacturers and refit specialists require in order to continue to compete internationally. “It is very clear that New Zealand built and refurbished superyachts are held in very high regard around the world. “Not only do New Zealand built superyachts regularly win the world’s most prestigious international superyacht awards, those who buy our superyachts often come from countries in Europe or North America that also have strong superyacht industries. “However, in order to continue to compete at the very highest level, we do need infrastructure that enables us to build, launch and commission these very sophisticated vessels.
“The proposed facilities at Yard 37, together and suitable facilities that we are seeking in Wynyard Quarter, would enable us to do that.” Peter Busfield says the new facilities at Hobsonville will also allow local companies to build even larger superyachts that is currently possible. Some of these could each be worth well over $100 million to the local and New Zealand economies, he says. They will also provide well-paid employment for local trades people and allow marine businesses to offer skilled apprenticeships to significant numbers of young men and women and school leavers.
NZ Manufacturer October 2011
A line is a dot that went for a walk. – Paul Klee
White Knights ready to deliver
t takes some smarts to turn a frequent irritation – and potential customer “turn-off” – to translate that into a welcome new business in the rollforming business. And how appropriate that should have its origins in one of our highly-regarded, ultra-lowkey rollforming success stories, Auckland’s Tandarra Engineering, now into its third decade of producing specialist rollforming machinery. (More on them in a future edition). As Lance Watson explains it, the story went like this: in the tough times we live in would-be customers call up to get a price on a machine, shop-around a couple more places and buy a cheaper option from elsewhere. Tough, that happens. Shortly, thereafter the machine crashes and they call up the ‘loser’ in the tender, and ask for their help. “Initially, we would tell the unlucky buyer of the ‘cheapo’ that they should call the local service agent for XYZ rollforming machines, which usually didn’t exist; and note that ‘you only pay for what you get’. “That got tricky, when that company also had a couple of Tandarra machines. So, if we could, we bailed them out. But that also disrupted the core business of manufacturing tailor-made machines. “But then we thought; that’s not smart. How about if we could help out a fellow Kiwi manufacturer, who’s ‘gambled and lost’ -- and everyone does at some stage – and create a service, which would also meet a growing gap in the market, caused by companies no longer being able to afford full-time engineering staff to maintain their machines too; relying on operators to diagnose a problem and decide whether to carry-on with the run. “And face facts, the company that takes a chance isn’t likely to do it again. Next time they’ll be a
By Kevin Kevany
Lance Watson & Travis Dunn at the ‘business end’ of the specially-specced mobile workshop
little more careful about what they buy out of the country. If we’ve helped them out in the interim, they are certainly going to be favourably predisposed to NZmade, we reckon,” says Lance, (scion of Brian Watson, the owner of Tandarra), who’s been hanging about and learning about and working on rollforming machines from the moment he could clasp a spanner. He’s also spent a number of years working in the competitive Australian telco business, where he’s learnt a good deal about customer-service and marketing. So he and Travis Dunn, one of the top technicians in the business, known for his ‘can-do’ attitude and an ability to analyse and troubleshoot to keep the machinery ‘rolling’, while he specs and has a replacement part made, have launched Total Rollforming and put together the ‘total customer service package’ – way beyond trying to pop a band-aid on a problem. “We have three rates: the top one being ‘emergency response’; the second is a ‘scheduled work’ rate; and the third, our preferred one, is the ‘preventative maintenance’ rate, which means that we adopt a
holistic approach to the customer’s needs, the age and condition of the plant, ‘what is showing wear and (the potential to) tear’, and what enhancements are out there in the market, which could add to the life and performance of their existing plant.
“That we believe is going to be an irresistible offer, as Total Rollforming’s reputation grows.” Remarkably, they’ve already been tried out at least once by the leading companies in the business from across Auckland Hamilton (x 3) and to the Hawkes Bay. Of course, as Dunn and Watson gain an everbroadening knowledge across the range of machinery out there, they bring home their ‘learning’ and play that into the future, alreadyinnovative Tandarra kit. (On a rare quiet day, Dunn steps back into the engineering works and puts his skills into play on his old home ground.) “We believe it’s a winner allround, and we’ve created a new service business which is just going to grow,” Watson enthuses. That’s because they have a large fitted-out van with a comprehensive range of tools, welding equipment and consumables that enable us to remedy the majority of the dreaded ‘rollformer’ breakdowns onsite; provide advice on important issues like safety and necessary guarding measures; as well as technical advice on modifications, performance improvements and cost-efficiencies.
Manufacturing keeps its head
espite another dip in expansion, manufacturing activity managed to keep its head above water, according to the latest BNZ - BusinessNZ Performance of Manufacturing Index (PMI). The seasonally adjusted PMI for September was 50.8 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was down from 52.7 in August, along with an average result of 52.7 for the first nine months of 2011. BusinessNZ’s executive director for manufacturing Catherine Beard said that the fourth consecutive slip in expansion was disappointing in terms of building
momentum for the sector. Four of the five seasonally adjusted main diffusion indices were still in expansion during September. New Orders (51.5) led the way, followed by employment and finished stocks (both at 51.2). Production (50.8) fell to its lowest level since March 2011, while deliveries (49.7) dipped into contraction for the first time since March 2011 as well. Unadjusted results by region showed that the Central region (53.2) recovered from its flat patch the previous month. In the South Island, the Canterbury/Westland region (57.4) built on results from July and August, while the Otago/ Southland region (60.1) produced another strong result.
NZ Manufacturer October 2011
AUCKLAND MANUFACTURERS Technopak has wind at its back
If the tool you have is a hammer, you tend to see every problem as a nail. – Abraham Maslow From page 1
These guys are going places, fasterand-faster as they prepare to sail through the 10-year barrier, into the big time. Expect them shortly to be joined into a new global strategic alliance -- their only opposition is ‘conflicted out’ -- to take-on the German industry giant. It’s appropriate that those two significant events are happening in the US, because it was in Portland, Oregon, in the top north-west corner, below Washington State, that they realised, shortly after starting out in 2002, they had ‘the goods’, the gutspah and the credibility to crack the overseas market, starting at the top. The observant would have noted by now that this feature on a highly-successful business, with all the really good days ahead of it, in the milk-powder packaging business, hasn’t included a mention of Fonterra yet. That’s because that company prefers a German-owned supplier. Technopak has more than 200 suppliers, most of whom are in Auckland, Hamilton and Palmerston North: that’s lots of money and jobs being kept in New Zealand. Back to the two engineering mates, who had previously worked for Sapac, the local company which had developed the world’s first, fully-automated, hygienic, bulk milk-powder packaging system. Reckin was one of the guiding geniuses in that enterprise, before Hermans joined. When the company was bought and then sold to a German company in fairly shortorder, a number of the pioneers decided to try their luck elsewhere. Skip to the likely lads, who are now steeped in the knowledge of how to make these revolutionary machines – and what not to do – heading off, with just the plans for a proto-type, and no secured premises
for Technopak either (they rolled out an office in Henri’s home every morning and rolled it up at night). The duo met-up with a USA local-who sold milk-power bags, so knew all the right people in the business on the west coast, and went ‘coldcalling’. Incredibly, such was their passion and self-belief, they came home with ‘the cream’; never mind the powder. They were in business, partfinanced by a customer who was so impressed by them that he placed an order for the yet-to-be-built $700,000 prototype. What’s more, within a few weeks they had a deposit of $400,000 in their bank account; to make the task even more daunting. In no time, they had a home, design engineers to assist ‘the guru’; software writers; and were sifting through a short-list of suppliers, determined to have the very best only. They knew who the best were and the type of challenges and environment that would attract them. Needlessto-say, the product was produced on time, tested and installed in situ giving them a flying start. It was now time to start a business. Over time, the duo split the tasks with Reckin creating and commissioning the gear while Hermans organised the business and project management (between them, they have nearly 50 years in this specialist milk powder packaging business, plus production director Robert McClean’s 20 years ). That role has gone to a hired project manager, Hermans has slid across into running the business, and Reckin, combines the roles of technical boss and remains in close contact with new customers and those 40-50 customers he stayed in close touch with – often visiting -- after they were abandoned when Sapac was gobbled up. They have
Technopak provide everything from the controlled silo above.
been a fruitful and loyal customer base. Technopak focuses its skills on ‘everything below the spray dryer producing the milk powder’ including: • transporting the powder. • loading and positioning the empty bag • filling the bag • weighing • de-aerating (removing the air) • folding and heat-sealing the bag • check-weighing the bag again, this time including metal detection • wrapping and palletising Every machine is handassembled on their premises and given a pre-test run to ensure it is fully up to specifications. before being disassembled and packed into 40ft containers. “When most of your clients are that far away, you want to ensure that everything is +100-per-cent, before it leaves the shop. That takes pressure of our team members handling the commissioning far from home,” Hermans adds. What the global industry likes about Technopak is that it is ‘restless and perpetually innovative’; it doesn’t ever rest on its laurels. Every machine and every project delivers new insights and experiences, which
• Concept to Completion; Product Design, Tool Design, Manufacture & Mould Trials • Large Capacity/Work platforms with extensive plant & equipment • 40 qualified specialized staff; Designers, Toolmakers, CNC Operators • 20 yrs export experience to global markets • AS/NZS ISO 9001:2008 certified
Tel 09 479 8844 • 34 Apollo Drive, Mairangi Bay, Auckland firstname.lastname@example.org • www.rpmtoolanddie.com
are captured and included in the next. Even as their state-of-the-art machine goes into Colorado, the very latest iteration is scheduled for Innovation Waikato. Hermans is quick to acknowledge the pioneering role of Sapac’s Peter Cunningham, but is equally confident that Technopak (they were able to cherry-pick the best when Sapac moved to Hamilton) today has more experience and greater skills and intellectual property than ‘anyone else in the world’. They have acquired the skills to deal with multiple powders; with different characteristics, grain and levels of compaction. The not too distant future will see them packaging high-value products like pharmaceuticalgrade salt, bicarbonate of soda, dried rice extract (for milk allergy sufferers) and other powders, such as dried protein, which could be valued at $1,000-a-bag, versus $25 for milk powder – anything which requires the ultimate in hygienic standards (e.g. the USDA rating); and precision-weighing (‘being a spoonful out per bag when you are running 10-tonnes an hour is huge’). And their innovative skills go beyond the engineering and bagging process, encompassing the use of holograms, ‘optical validation devices’ and RFID technology. They are totally involved in every aspect of the business. Their current challenges include minimising the footprint of the packaging machinery; cutting the capital cost of same; simplifying the componentry and potentially revolutionising the traditional bag. Aside from their acknowledged experience and global marketleadership, what is getting the attention of the really big players is this refusal to become complacent and a perpetual search for the holy grail of perfection. The good news here for their 25-odd staff and a dozen contract workers, not to mention their 200 local suppliers is they aren’t for sale, but will be forming alliances with the top players. Until now the US market has been the dominant force and, therefore, focus (and will continue to be into the future) but already contracts have been won in China and Malaysia, with India to follow. Pity they aren’t considering an NZX listing just yet. www.nzmanufacturer.co.nz
NZ Manufacturer October 2011
Its not the hours you put in your work that counts , its the work you put in the hours.
– Sam Ewing
Temperzone’s half-century foundation for its reputation
emperzone is one of those ‘dream Kiwi companies’ still run by the family which started back in 1956; exporting most of its locally-manufactured production – including to China -- by supremely-loyal employees (30 years is not unusual); agents for Hitachi heat pumps in Australasia; a growing turnover figure in the +$170-million range; and highlyrated by those in the know. The Temperzone Group of Companies, based in Mangere, near the airport, modestly describe themselves as ‘manufacturers and distributors of ducted airconditioning and heat-pump systems from 3kW to 200kW. Applications include residential, strata-title office buildings, hotels and large shopping malls’. No more; no less, with the closest they get to puffing themselves up, in a corporate brochure, talks about ‘50+ years of Temperature Control’. And if that sounds pretty understated, know they are way up there in the quality and innovation ratings of the TIN100, which has seen them move into the top 5 of NZ’s technology top 20, and occupy fourth place in their Top 10 companies to watch. To put that into context the Top 10 have grown by nearly 50 percent in 2008, in very tough times.
Importantly they employ some 600 people here and in Australia, with the majority here. Derek Miles, marketing services manager, some 20-odd years with the company, points to highlights in the year through to September as: “Maintaining a good growth rate in challenging conditions. Queensland floods, Christchurch quakes and a series of other natural disasters impacted on the construction sector.” More significantly, probably an additional comment: “Significant progress in R&D has put us in a position to release a new, more energy-efficient product range in 2011.” In fact, in a very short timeframe, Temperzone has underlined its high rating, by meeting the latest, very challenging Australian energyefficiency legislation to protect its position in a market which takes some 60/70-percent of its exports. According to Miles, the Australasian MEPS (minimum energy performance standards) regulators, with their comprehensive standards, specifying minimum energy requirements, have raised the bar thereby challenging Temperzone to incorporate innovative engineering techniques to enable significant performance enhancement. This new level of performance has come at a cost. “Temperzone supports the underlying intentions of standards and labelling insofar as they help improve the energy-efficiency of our products, and enable consumers to choose products that use less energy. The increased capital cost of newer more energy efficient product is frequently offset by the operating
Todd Parkin, sales and marketing manager (left) and Derek Miles, marketing services manager, with export products in the loading bay.
cost. “We are proven survivors in a highly-competitive industry, through being a nimble and flexible manufacturer of quality products into the New Zealand, Australian, Hong Kong and Singaporean, Indian and Indonesian markets. “In recent times we have been able to sell product into mainland China. The Chinese have been impressed with both the quality of our products, their competitive pricing and their performance in high-rise apartments and commercial buildings; large projects; and shopping malls. “We have appointed distributors in Beijing and Shanghai to assist in getting our products specified and ensure we are involved in big project tenders,” says Miles. As you might expect of a company with an established reputation for innovation and quality, Temperzone has its own
HAVE YOUR STORY TOLD IN AN ISSUE OF –
For more information contact: Managing Editor – Sales Manager – Doug Green Max Farndale 06 870 9029 06 870 4506 email@example.com firstname.lastname@example.org www.nzmanufacturer.co.nz
specialised R & D laboratory which tests air conditioning units in a wide-range of environments. This facility was expanded in 2006 with the addition of two large test-rooms to meet the expanding range of unit types and sizes, as they modestly say – ‘to suit most applications’, and effectively tailor-make to client’s individual requirements; even if it is a massive skyscraper or large space. “Given that we’ve established a reputation for durability and reliability over more than half-acentury, we can confidently offer anything from split-type heating and cooling air-conditioners – up to 95kW; packaged rooftop type conditioner – up to 182kW; ducted water-sourced units -- up to 150kW; ducted chilled water fan coil units; and on through specialist computer centre air-conditioners and both heavy duty centrifugal and axial fans; among others,” says Miles.
NZ Manufacturer October 2011
FROM WHERE I SIT
Enthusiasm is the steam that drives the engine. – Napoleon Hill
Reflections from Cambridge
oday the British media announced the sale of a Cambridge software company, Autonomy, to Hewlett Packard in a £7bn deal. Its founder, Dr Mike Lynch earned £500m. This is the story of Cambridge University that the tourists don’t see. Cambridge is much more than a famous place of learning. It is a major engine of innovation and new export business for the United Kingdom. I’ve been over three months based at Cambridge University as a Visiting Fellow at Trinity College. The College has an extraordinary history, founded by Henry the Eighth, with a Fellowship including Bacon, Dryden, Newton, Babbage, Byron, Tennyson, Thackeray, Maxwell, Thomson, Raleigh. Housman, Rutherford and VaughanWilliams. When you dine at Trinity you almost certainly end up talking to someone interesting, for example, Fellow of Trinity College, Greg Winter. Sir Greg Winter FRS is a British pioneer of therapeutic monoclonal antibodies. He invented techniques to humanise them for therapeutic use. In 1989 Winter co-founded Cambridge Antibody Technology, acquired by Astrazeneca in 2006 for £702m. In 2000 he founded Domantis to pioneer the use of domain antibodies, which use only the active portion of a full-sized antibody. Domantis was acquired by GlaxoSmithKline in 2006 for £230 m. Recently he founded another company to try to develop very small protein mimics. Commercialisation is one of the great achievements of Cambridge, and its systematic role was started 50 years ago by Trinity College, founder of the United Kingdom’s first science park in 1970. That park now has over 100 companies
employing 5000 people in 16.5 hectares of building space. But Trinity’s example has been followed in multiplicative extent. It is one of many such science and business parks in Cambridge including the St Johns Innovation Centre, Babraham Research Campus, IQ Cambridge, Cambourne Business Park, Cambridge Addenbrookes Biomedical Campus, Granta Park, Cambridge Research Park and the University of Cambridge West Cambridge Site. This cluster has become known as the Cambridge Technopole. It comprises 1,000 technology-based firms employing around 38,000 people. Many of these companies are small, the median size being 32 employees. Not all originated within the University, but University of Cambridge people and technology have been at the heart of over 300 new high-tech ventures in the past 20 years. But many new businesses choose to locate here, as do subsidiaries of multinational corporations like Microsoft and Schlumberger. Cambridge is a source of first class talent. No one ‘organises’ all this. It takes a form of constructive chaos, with many new initiatives, some succeeding, some failing. But what it leads to is a highly entrepreneurial environment. And out of this chaos have come seven capitalisation companies with turnovers greater than £1 billion. They are; ARM, Autonomy, CSR, Cambridge Antibody Technology, Chitoscience, Silexa and Virata. What is the lesson for New Zealand? No-one can pretend that
New Zealand can provide a unique degree of quality.
creating innovation clusters such as one finds in Cambridge, Boston or the San Francisco Bay area is easy. But there are some key ingredients. The first is the presence of worldclass universities. The second is a place of attractive lifestyle. And the third is an entrepreneurial culture. In the second condition, New Zealand can provide a unique degree of quality. In the first, we have the potential to build on excellent universities in our main centres, should we choose to invest wisely. And in the third regard we have proven our capacity, as the TIN100 list amply demonstrates. All this requires vision and motivation. And where better to demonstrate such a vision than Christchurch? Motivation, Christchurch has in spades. I know
By Sir Paul Callaghan, ‘Kiwibank New Zealander of the Year 2011’
that some New Zealand scientists regard commercialisation with disdain. But to me, it’s a sign of real ability. That’s certainly the view at Cambridge University.
From page 5
China projected to top 30% of world manufacturing by 2021 Key statistics on China’s Manufacturing in 2011 to consider: • 95% of the world’s socks are made in China (all made in one town in China). • 90% of famous branded PCs, such as Dell, Compaq, Sony, HP, Apple, Toshiba, are made in China. • 50% of the world’s cameras are made in China. • 30% of the world’s TVs are made in China. • 30% of the world’s air conditioners are made in China. • 72% of shoes sold in the US are made in China. • 50% of appliances sold in the US are made in China. • 50% of toys sold in the US are made in China. Wal-Mart alone purchases US $10 billion a year of manufactured
Reading, Maths and Communication skills are used in areas such as; • Working with production schedules • Taking phone messages • Using equipment, computers or tools correctly and efficiently • Following instruction manuals • Reading dials and gauges • Complying with health and safety requirements • Estimating lengths, quantities and weights • Completing forms and orders • Making sense of performance and sales graphs • Participating in team meetings • Acting on verbal instructions
goods from China. China has the world’s largest work force 112 million workers (excluding millions of migrant workers). Relative to only 14 million in the US. China’s average manufacturing worker’s wage is US$0.81 an hour (2.7% of their US counterparts) The number of Chinese engineers joining the work force is growing by 350,000 per year. Population: China – 1.3 billion US – 301 million Balance of Trade: China – $177.5 billion Surplus US – $225 billion Deficit China exports in excess of 80 million containers of manufactured goods each year. That is two containers every second, around the clock, all year round.
and your employees. These programmes can be around workplace health and safety, customer service, communication or relevant workplace needs. Employees will be up-skilled in a workplace applicable environment contributing towards individual and workplace improvements. The programmes a fully funded therefore there is no $ investment required by the company.
t is increasingly apparent that difficulties with reading, maths and communication have a Employers have observed: significant effect on business performance. • Increased levels of engagement in the workplace; People with gaps in these core skills are often valued • Increased interest in higher level jobs and further study; and employees. Although they have difficulties with core • Increased confidence of their employees skills, this doesn’t mean they are unintelligent or unmotivated. They may be capable, hardworking Employees are able to: Source: Department of Labour • Participate fully in the workplace; and loyal. But their difficulties will make it hard for them to get ahead and hard for your business to Skills4Work offers a solution to these challenges that • Cope better with rapidly changing workplace demands; achieve best performance. businesses in NZ are currently facing through a series of workplace • Develop higher-level technical skills; and training sessions that assist and support the employee to grow and • Build confidence to engage in everyday life situations and work The core skills of reading, maths and develop in these skills. communication are fundamental to almost every If you would like to know more about what we can do for you and We tailor our programmes to meet the skills needs of the business the eligibility criteria please contact Tamai Roff on (09) 588 5131. task across any business.
NZ Manufacturer October 2011
PRODUCT NEWS Almost 30 years service from Hi-Q Why custom assemble every drive application? T I
I apologise for writing you a long letter but I didn’t have time to write you a short one. – Blaise Pascal
n 1982, Hi-Q Electronics Ltd, now known more as Hi-Q Components, started manufacturing small plastic spacers for the Electronics industry. The demand for the plastic spacers and other plastic hardware and electronic components soon grew as new local industry and manufacturing re-established and grew out of the change of government, floating the dollar, and freeing up of importation in the 1980’s. Very early on, Hi-Q recognised the need to quickly establish relationships with reliable overseas manufacturing suppliers, to source a range of components to meet the growing demand. The relationship with these suppliers has now become solid and long term, and critical for Hi-Q to be able to maintain a consistent quality and supply of components to their manufacturing customers Hi-Q is always looking to establish contact with new suppliers and to introduce new lines to keep developing the range. In the last ten years, the introduction of the Hammond Small Enclosures range, StockCap Protective Caps and Plugs, and the Tecnodin Industrial Components and Operating Elements range has broadened HiQ’s inventory and customer base. Hi-Q is a stocking importer/ exporter, with over 6800 component lines and inventory of over 4 million parts. This local stock source of
Hi-Q is always looking to establish contact with new suppliers.
StockCap range of protective caps and plugs - one of the new ranges introduced in the last ten years.
components is a fantastic resource for local manufacturers and industry. Customers and design engineers are able to discuss their projects with long term experienced Hi-Q staff members to find the right solutions to design problems, and receive free samples immediately from stock. Hi-Q can then supply from local stock to meet customer’s start up and ongoing manufacturing schedule requirements. The ability to get this assistance from a local stockist of such an extensive range of plastic and electronic components is a real asset. This saves customers time and the many potential problems associated with them trying to source parts overseas, eliminating high minimum order quantities, overseas currency, and long lead times. Hi-Q‘s plastic component inventory is second to none in New Zealand. This is certainly a one stop shop for plastic components including, fixings, fastenings, hardware, knobs, handles, small enclosures, protective caps, plugs and hi-temp masking products. Hi-Q has also an extensive range of electronic components, which includes, AC and DC cooling fans, terminal blocks, connectors, switches, mains filters, crystals, buzzers and indicators. nextSTEP Visit: www.hiq.co.nz
here are several very strong customer advantages to having every drive application quickly and individually custom assembled. Lowest possible power consumption,elimination of over specifying which saves cost and potential damage to any other drives in the manufacturing or processing system and optimum long term performance. Perhaps the biggest advantage for the customer is that fast turnaround custom assembly, (in a matter of just hours) ensures that every drive application is solved with the exact power/size, gear configuration and mounting, output speed and torque requirement. A vast difference to choosing the next best and larger option from imported stock items. In New Zealand, SEWEurodrive maintain a large range of componentry in stock at all times at both their Auckland and Christchurch plants. Stock items include motors with or without brake. Servo motors. A wide range of gear housings for a variety of mounting configurations,
gears and related components. This unique modular system provides a very comprehensive `power/size’ range. Electronic control options for basic applications include a geared motor range with speed control built into the terminal box of the electric motor. Also available, are powerful positioning and sequence controllers that can be deployed in conjunction with the range of SEW servo motors. All of these drive solutions are available from stock and are quickly custom assembled to individual customer application needs. To pinpoint the right drive for your need, the SEW team offer free advice, planning and drive calculations. A surprising range of optional extras are also available from stock:Thermisters, mencoders, forced cooling fans, motor enclosures, high inertia flywheel fans, TorqueLoc hollow shaft mounting systems. Double output seals. Backstop units. Shrink disc shaft locking. A range of paint finishes. nextSTEP Visit: www.nz.sew-eurodrive.com
NZ Manufacturer October 2011
The best ideas come as jokes. Make your thinking as funny as possible. – David Ogilvy
Main Welding - plastics repair welding
echspan’s Tech Tips will help guide you in achieveing a good understanding of the Plastic Welding process. Each month we will provide you with new tips and techniques on how to get your Plastic Repairs right first time. Today we are looking at “Main Welding”. The “Main Welding” of plastics can be carried out using two welding techniques.
1. Pendulum Welding 2. Speed Welding
Firstly, please ensure you have followed the previous steps in the Plastic Welding process - as outlined in our previous “Tech Tips” Plastics Identification & Surface Preparation.
The “Pendulum Welding” technique, can be used for short weld runs, or when access is difficult. Fit the standard nozzle (LE100303) on the welding tool. Set the required welding temperature on the welding tool using the guide provided. This is carried out using the red rotary dial on the end of all Techspan Plastic Welders. Once up to temperature (from cold, this takes approx. 1.5 minutes),
select the correct welding rod (see our previous Tech Tip covering “Plastics Indentification”). Cut the start of the welding rod to a point. This will help with the initial flow of the weld rod. A pendulum motion is used to evenly heat the parent material and the welding rod. Feed the welding rod into the welding area, while curving the tail of the weld rod away from the welding tool. This will help you control the rod feed during welding and will allow the operator to observe the material flow during welding. Welding should be carried out in one continuous run along the length of the area to be welded. Welding speed should be adjusted to the point where you observe a slight ‘wash’ at the sides of the welding rod. Ensure that your pendulum motion is providing even heating of both the parent material and the welding rod throughout the weld run. When complete, allow the plastic component to cool completely before attempting to trim or clean up the welding area. This is important as the plastic will not be at full strength until completely cool. Triming and sanding can now be carried out if required.
Contactor Select App now available
electing contactors and overloads for three phase electric motors is made easy with the Contactor Select App.. By simply selecting the motor voltage and kW, the Contactor Select App will display the motor FLC (Amps) and suggest which contactor and overload to use. The Contactor Select App can select from either Allen-Bradley or Sprecher + Schuh brands, with contactor and overload selection made easy by providing exact product number and photo of the contactor or overload needed., Useful for designers and electricians as a handy pocket
By Tim Fastnedge, Techspan Group Speed Welding
The “Speed Welding” technique should be used for long weld runs. The term “Speed Welding” gets its name from the fact that it is a relatively fast process compared to that of the “Pendulum Welding” technique. Fit the standard nozzle on the welding tool. Select the correct “Speed Welding” nozzle to suit the corresponding welding rod profiel - these are available to suit a range of welding rod profiles. In round profiles, Techspan can supply 3mm, 4mm or 5mm diameter. In Tape profiles, Techspan supply an 8mm x 2mm Speed Welding nozzle. And in Triangular profiles Techspan supply either a 5.7mm or 7mm Triangular Speed Welding Nozzle. The Speed Welding nozzles are
T reference tool, the Contactor Select App calculates full load current of three phase motors and allows correct product selection and overload settings to be made. nextSTEP Contact: email@example.com
an easy push fit onto the standard nozzle. Once up to temperature, simply insert the welding rod into the Speed Welding nozzle and apply a downward pressure on the welding rod itself. Apply approx. 2.5 - 3 kgs of downward pressure, forcing the welding rod through the speed welding nozzle and into the weld area. The welding tool will only need to be supported, as the force on the welding rod will move the tool along the weld area with ease. The “Speed Welding” process is fast, and very easy to achieve. The next Tech Tip will cover “Plastic Welding Tools” and we’ll explain what to consider when buying your first plastic welder. Look out for this in next months issue. nextSTEP firstname.lastname@example.org
Intelligent battery chargers
he new Projecta Intelli-Charge takes battery charging to the next level. Engineered and designed for use on all types of battery including Gel, AGM, Wet and Calcium, the new chargers provide an opportunity to have just one charger to meet all needs. By selecting the battery chemistry type, Projecta’s new Intelli-Charge range adjusts the charge to precisely match the battery, extending battery life and performance. Intelli-Chargers are fully automatic and deliver a
Projecta Intelli-Charge battery chargers.
comprehensive and accurate charging technique known as 7-stage charging, especially engineered for optimum performance on all types of batteries. nextSTEP Contact: email@example.com
NZ Manufacturer October 2011
BUSINESS NEWS Government procurement and how to win bigger tenders B
Everything should be made as simple as possible, but not one bit simpler. – Albert Einstein
usinessNZ and the Industry Capability Network (ICN) recently joined forces to host a series of seminars on how to win bigger government tenders and what it is that supply chain procurement managers (local and global) are looking for in supply chain partners. The rewards for business and for the economy of having greater involvement in local and global supply chains are significant. ICN consultant Deb Archbold found there is room to boost revenue for New Zealand suppliers up to $170m for every $1 billion spent on major projects/chains -a potential 25% increase. BusinessNZ and the ICN are promoting the use (in large government tenders) of industry participation plans, where a large tenderer should be able to demonstrate they have assessed local industry capability. They are also keen to promote through-life value in tendering, where tender decisions are not just made on purchase price, but also quality, servicing, installation, maintenance and factoring in the importance of local capability. Interestingly the interviews
The rewards for business and for the economy of having greater involvement in local and global supply chains are significant.
that ICN consultant Deb Archbold conducted amongst large supply chain procurers and companies responding to tenders found that both were in favour of local industry participation plans. This is because large supply chains understand the value of good responsive and flexible local capability to the success of large projects. Local industry policy in Australia is about full, fair and equal consideration for local suppliers, which is what BusinessNZ is recommending is adopted for New Zealand. Deb Archbold says that Local industry capability is very good, but lacks visibility in some cases. Local industry were urged to ensure they are registered with the ICN (link http://www.icn.govt.nz/register. html)and they register on the government electronic tendering site http://www.gets.govt.nz/ and they seek to develop relationships with tier one, two, three or four suppliers, depending where they could fit into the supply chain. There are also guides to winning tenders on both the ICN site and the MED website http://www.med. govt.nz/templates/ and it is worth companies looking at the guidelines for government procurers as well. It was agreed that government can do more to help local industry capability, including giving adequate notice and lead times for tender responses, having a whole of life approach to assessment, greater visibility of who tier one supplier’s
are to enable firms to prepare for tier two or three involvement, better briefings and debriefs and more streamlined tender processes. The MED presentation was encouraging in that these issues seem to be well recognised and work is going on in all these areas to make improvements, including a new training academy for professional procurers to lift the standard of procurement in the government sector. There are annual procurement plans on the MED website (government departments are required to publish proposed spending for the year ahead) and various government agencies such as Police and Defence and NZ Transport Authority do the same on their own websites.
he seasonally adjusted PMI for August was 52.9 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). Although this was down slightly on the July result of 53.2, almost all results since November 2010 have been above 50.0 and within a relatively narrow band between 52.7 and 54.7. BusinessNZ’s Executive Director for manufacturing Catherine Beard said negatives for August were equally matched by positives elsewhere. Unadjusted results by region
NZ MANUFACTURER • November 2011 Issue • Features Opinion Manufacturing Profiles Letters to the Editor Politics of Manufacturing Trade Fair World Diary of Events World Market Report Q/A Export News Business Opportunities Commentary As I See It Business News Appointments Around New Zealand Australian Report New to the Market Lean Manufacturing Equipment for Sale Recruitment Environmental Technology Manufacturing Processes www.nzmanufacturer.co.nz
Some key tips for local industry were: find out what your customer wants and understand their needs, engage early, answer the questions in the tender documents (they are trying to compare like with like from a large number of respondents) and if you do get to the interview stage – they know you have the capability and you need to show them you understand their business needs to set yourself apart from the competition. Tips from Deb Archbold’s survey included; be visible, work out what tier supplier you are for a project (this can be done on a confidential basis on the ICN website) and therefore who you need to connect with (tier one supplier or tier two?). Also, meet the global supply chain requirements which are value, competitiveness, quality and good systems. nextSTEP Visit: www.icn.govt.nz
showed the South Island in better heart during August. The Otago/ Southland region (61.8) led the way with its first expansionary result since January this year, and also led the way for all regions in August. The Canterbury/Westland region (57.2) built on its solid result in July, with three of the last four months showing expansion levels over 56. The Northern region (51.5) continued to slip with its lowest result since January 2011, while the Central region (49.9) also fell to a level of almost no change for August.
Manufacturing Technology Workshop Tools Sustainable Business Export Success
Advertising Booking Deadline –12th November 2011 Advertising Copy Deadline – 12th November 2011 Editorial Copy Deadline – 12th November 2011 Advertising material is to be sent to: Max Farndale, P O Box 1109, Hastings 4156, Hawke’s Bay Email: firstname.lastname@example.org Tel: 06 870 4506 / Mobile 027 628 2033
Editorial material to be sent to : Doug Green, P O Box 1109, Hastings 4156, Hawke’s Bay Email: email@example.com Tel: 06 870 9029 Fax: 06 878 8150
At NZ MANUFACTURER our aim is to keep our readers up to date with the latest industry news and manufacturing advances in a tasty paper morsel, ensuring they do not get left behind in the highly competitive and rapidly evolving manufacturing world.
NZ Manufacturer October 2011
You will never find time for anything. You must make it. – Charles Buxton
The Toyota philosophy: learning and improving
n our last article on the quality issues at Toyota it became apparent that although these were perhaps not as significant as first thought and portrayed by the US media, Toyota needed to consider identifying changes that would prevent the recurrence of the problem. In early February 2010 President Akio Toyoda acknowledged in an opinion piece he wrote for The Washington Post the company had “failed to connect the dots” between the sticky pedals in Europe, surfacing as early as December 2008, and those in the US that culminated in the massive recalls. Whilst the errors in Europe were corrected, starting with the Aygo hatchback in August 2009, those models were not included in the latest global recalls. Toyota Europe spokesman, Colin Hensley, stated that in principle such fixes stemming from customer complaints are communicated via headquarters for speedy checks in other regions. Confounding the effort were factors such as the European models being righthand drives and mostly manual transmission, according to him.
Analysts noted that the learning and improvements from the recalls were a challenge for the Toyota manufacturing philosophy, partly because the recalled parts were not due to factory errors or quality control problems but because of design issues leading to consumer complaints. Better communication of consumer issues with management was needed. In early 2010 a new global
President Akio Toyoda acknowledged that the company had “failed to connect the dots” between the sticky pedals in Europe, and those in the US that culminated in the massive recalls.
quality committee to coordinate defect analysis and future recall announcements was announced by Toyota, along with product recalls. The introduction of a Swift Market Analysis Response Team (“SMART”) in the US will conduct on-site vehicle inspections. Improvements in expanded Event Data Recorder usage and readers, third-party quality consultation, and increased driver safety education initiatives included other activities. Apart from that, in February 2010 Edmunds.com released the findings on its review of all NHTSA complaints from 2001. It noted that any individual can file a NHTSA complaint without providing a Vehicle Identification Number (VIN), but this can lead to misleading statistics as “not all NHTSA complaints are created equal” and range from legitimate to nonsensical. Consequently on June 5, 2010, NHTSA shut down online access to its complaint database following revelations of redundant, unverifiable entries and improperly secured personal data. So in conclusion, Toyota didn’t sack the CEO or panic; they learnt
By Ian Lines
from the situation and recalled millions of vehicles at huge expense, focusing on the customer. As ever there are two sides to the story and the facts show a very different picture to the one painted in the majority of the US media. Finally, I will leave you with Akio Toyoda’s Opening statement in his testimony before the US Congress, February 24, 2010, not something CEO’s often say! “I am Akio Toyoda of Toyota Motor Corporation. I would first like to state that I love cars as much as anyone, and I love Toyota as much as anyone. I take the utmost pleasure in offering vehicles that our customers love, and I know that Toyota’s 200,000 team members, dealers, and suppliers across America feel the same way. However, in the past few months, our customers have started to feel uncertain about the safety of Toyota’s vehicles, and I take full responsibility for that.” Ian Lines is National Productivity Manager at Skills4Work www.s4wbusinessimprovement.org.nz
NZ Manufacturer October 2011
MANUFACTURING TECHNOLOGY Feature-based machining launched at EMO
In order to be irreplaceable...One must almost be different.
– Coco Chanel
FeatureCAM’s target part comparison now works for multi-axis operations.
aunched at the EMO World of Metalworking exhibition in Hannover this month was the 2012 version of FeatureCAM feature-based CAM system A range of enhancements will enable faster and easier programming, and produce more efficient toolpaths to give greater machine productivity. All these developments will ensure that FeatureCAM retains the leadership in programming speed and ease of use it has held since its launch in 1995, when it was the world’s first feature-based programming system. A number of the improvements will make FeatureCAM even easier
to use. For example, a range of keyboard shortcuts have been added, including isometric view options, that will allow faster programming. It has been made easier to select multiple items from the operations tree and to move all the features in a group, for example, a network of similar holes or all the operations on a particular spindle. In addition, warning or error messages can be displayed simply by hovering over the relevant icon in the Operations List. Toolpath editing has also been made much easier. Toolpaths are displayed more clearly, selection of toolpaths has been simplified and an “undo” option added.
Target part comparison has been extended to cover multi-axis operation for both milling and mill-turn equipment. This allows the user to compare a model of the desired final shape with the shape achieved by the programmed toolpaths. It provides a quick check of any material remaining on the part, and of any gouges or collisions. Previously, this option was only available for 2- and 3-axis operations. Two new strategies are now available – back boring and spiral roughing. Back boring allows more parts to be completed in a single set-up, with larger bores able to be produced on the reverse side of the part. Spiral roughing can be used instead of Z-level roughing. It uses a single continuous toolpath instead of a series of levels and so gives a smoother finish with no dwell marks. The most important improvement for increasing machine productivity comes from further developments in the use of stock models to cover 2D features, including bosses, sides and slots. The models allow the user to visualize the stock remaining after each operation. This makes it easier to eliminate air cutting and so generate more efficient toolpaths with reduced machining times. The models also simplify the selection of the most appropriate tool sizes
for rest-roughing and finishing operations. A number of extra options have been added to the tooling database. This database is a key part of the automation in FeatureCAM as it allows the optimum operating conditions to be associated with each tool. In most companies, the database is developed by the most experienced user. It then ensures that even inexperienced operators use safe and efficient cutting parameters. The new options in FeatureCAM 2012 allow more variables to be specified, including maximum cut depth and the optimum ramp angles. Fully-automated de-burring and chamfering, when programming 2- or 2.5-axis parts, was added in FeatureCAM 2011. Tool selection for this operation has now been improved, to avoid unnecessary tool changes. Other improvements include a new option to automatically counterbore holes before drilling, the ability to have a negative leave allowance (such as a fitting allowance) for turning or wire EDM to produce undersized features without remodelling, and much improved performance on the largest part files with hundreds of thousands of entities.
Better inventory management
i Vis Signs and Safety are large manufacturers of road, safety and specialty signage & safety products. They can design, manufacture, print, and install just about any kind of signage. The company was created in 1960 and decided to implement Epicor ERP in 2005 to support the growth and allow better efficiencies across the business. The signage industry is very competitive and subject to money fluctuations — most of the supply chain is based overseas. Much of the primary material is imported and managing suppliers and stock is a crucial element of Hi-Vis’ business and one that led them to look for an ERP system. “One of the reasons we started to look for an ERP system was to be able to have integrated data. We felt confident that with Epicor ERP’s embedded functionality, we could keep expanding whilst increasing visibility and efficiencies,” says Graeme Bashford, Hi-Vis Marketing and Sales Manager. Early in the implementation project, COGITA emphasised that www.nzmanufacturer.co.nz
for the project to be successful, Hi-Vis must take ownership and responsibility for the system. HiVis committed the internal resource and management time required to ensure the project team was doing its job internally.
Reporting a dream
“With Epicor ERP, it is now possible for us to run reports very quickly,” says Graeme.Accessing data and having one version of the truth was another reason Hi-Vis chose COGITA and Epicor ERP. “All I have to do now is ask a question and I get a report within a couple of minutes. I can get everything I dream off”, says Simon Watson, Operations Manager. “We were quite surprised when we realised how easy it is to access the data. Whilst it takes a bit longer to get the data into the system, we can get much more information about the business quickly and easily from the system. We are currently running a lot of purpose built Business Activity Queries and Dashboards. As long as you know
how to build the reports and where the tables are, it is not a complicated process. COGITA helped at the start with creating reports for us but we are now self sufficient and Peter can run any type of reports,” says Peter Davey, IT Manager. When Hi-Vis implemented Epicor ERP, one of the expected benefits was to be able to measure Key Performance Indicators. Prior to Epicor ERP, everything was managed in Excel — a tedious endeavour but quite transparent. “Whilst we have been using the reporting tools a lot, we haven’t yet utilised it for KPI performances. This can be done in Epicor ERP and it is something we will be looking at in the weeks to come. In particular, measuring labour productivity, understanding the variances in labour and getting an overview of the productivity.” Says Simon.
Inventory Management gets a big tick
“Business has changed a lot in the past 18 months and we need to
purchase a lot more from overseas and sometimes need to forecast a couple of months in advance.” Having an inventory management system that would allow keeping stock on track was a key requirement. Hi-Vis’s previous system was very manual; one person had to go and check the status of each part and then place an order. The system was 100% relying on people. Now the ‘surprise factor’ has gone. “The Time Phase report automatically tells us to reorder as soon as we are below the safety net and factors in the delivery time to have it delivered on time for production.” Says Simon.
NZ Manufacturer l PRINT l DIGITAL l WEBSITE l YOU TUBE
NZ Manufacturer October 2011
It’s taken me all my life to learn what not to play. – Dizzy Gillespie
Barcode scanning accurate and efficient
nsulpro manufacture a comprehensive range of building insulation products which are non itch and use polyester fibres from recycled polyester bottles. With three manufacturing plants in New Zealand Insulpro identified the need to provide: • Full traceability for each bale of insulation including supplier batch numbers, plant settings, quality metrics, operator and despatch data. • Accurate stock management • Real time performance information on screen for operators and supervisors • Barcode scanning and serial number tracking Ostendo Software, developed in New Zealand and successfully implemented in more than 1000 organisations in New Zealand and Australia, was able to provide an ideal ERP system with: • Multi – Level Bills of Materials and MRP Inventory management by • warehouse, location, batch, serial number and expiry date. • CRM and web store integration capability • Shop floor data collection • Biometric identification for staff attendance • Strong Reporting and Analysis Capability Solution Management provided process analysis, project management and software programming expertise, Wedderburn provided weighing scale interface units, Ingersoll Rand provided biometric hand scanning devices
Green for Go on the Ostendo Plant Capture Screen. One scan of the serial number instantly triggers a weight check and records production time against this bale.
and Bar Code Products provided mobile scanners for picking and dispatching stock using Ostendo inventory. The solution development and software programming was lead by Jason Drake a recent graduate from Auckland University’s Engineering School. Jason completed a Bachelor of Engineering in Operations Research and Computer Modelling with Honours.
The Ostendo Solution
Asked what benefits have been provided by the introduction of a bar code scanning production system users have identified the following: • Accuracy of stock. • Reliable weight and quality information recorded with one scan as products come off the production line. • Easy extraction of data from the Ostendo system to support process control decisions. • One hundred percent confidence that no reject product will go out to a Customer.
• From the serial number on a bale used by a customer we can identify the source of materials used, weight and measurement data, operators running the plant and the plant conditions at the time. Comments made by Manufacturing Manager - David Edwards. • No need to write down weight and quality data. Everyone likes that. • We have an accurate count off the end of the line without tally checks. No shortcuts on quality are • possible. Comments made by Line Supervisor Nooroa George. Asked how the Introduction of the Ingersoll Rand Biometric hand scanner was received by staff, Manufacturing Manager David Edwards commented – • Buddy punching where one staff member clocks another in has been reduced to zero.
• Staff had a sense of increased fairness and confidence that the clockin and clockout times were their own. • Staff adopted the new system quickly and it soon proved to be a robust way of recording attendance times. Vetting and preparation of times for wage records was significantly reduced. Factory Manager, Alex Davies commented – • I no longer need to decipher and enter time card data. Ostendo now automatically brings back clock in and clock out times and calculates attendance times for me to review on my computer. • The guys have found the hand scanner easy and simple to use. • The overall system has enabled accurate stock, process and product data to be captured easily and create a uniform and efficient approach throughout the company. Asked what benefits have been provided by the introduction of a full bar code scanning system to the dispatch of trucks and containers, Dispatch and Logistics Manager Logan Budd commented – • We now have the information we need instantly at our fingertips. • The scanning system is perfect for stock control and enables us to see bales of Insulation in stock and available for dispatch within seconds of the time they are finished on the production line. nextSTEP Contact: Kevin Whitehead, Solution Management Ltd Tel: 09 446-1204 firstname.lastname@example.org www.solutionm.co.nz/Ostendo
The Pirtek Group is an international success story specialising in mobile “on site” service and replacement of hydraulic and industrial hose and fittings. We operate under a proven franchise system and enjoy continued growth both internationally and within New Zealand. Not only a respected industry name, but universally trusted for our commitment to service excellence and customer focus. High end quality products and systems, continued growth plans, customer demand, and greater brand awareness have paved the way for us to establish new franchise opportunities for astute customer orientated people. Our businesses are suited to someone with a mechanical trade or mechanical aptitude, a sound understanding of business principals, customer focus and a commitment to existing and established operational methodologies under a franchise model. We have opportunities for both greenfield locations and existing Pirtek businesses for the right people. You may foresee that a Pirtek franchise could blend or integrate successfully into your existing business. Provision of service excellence and a personal approach to each and every customer are key components to maintaining a successful and profitable business. For further information regarding business opportunities with Pirtek in New Zealand, please contact us on 09-274 6925 or email email@example.com.
NZ Manufacturer October 2011
BUSINESS NEWS Business Books
e feature some of the best business books for your consideration. If you have a book you think readers might appreciate please let us know.
Don’t open a shop unless you like to smile. – Chinese Proverb
ecentre celebrates successful ten years
Concept of the Corporation
by Peter Drucker. Companies as communities rather than just productive units.
The Machine that changed the World by James Womack. On Toyota’s JIT manufacturing.
Re-engineering the Corporation
by Michael Hammer and James Champy. Encouraging companies to sack large numbers of workers even as their profits soard. Shame on them!
My Years with General Motors
by Alfred Sloan. He turned GM into the biggest company in the world.
The Organisation Man
by William Whyte. Inside the daily life of the giant corporations.
Tasks, Responsibilities, Practices. Management, the most important innovation of the 20th century.
In Search of Excellence
by Tom Peters and Robert Waterman. Consultants can talk to a general as well as a business audience.
The Innovators Dilemma
by Clayton Christensen. Great companies can fail dispite doing everything right.
The Fortuna at the Bottom of the Pyramid by C K Prahalad. Unleashed a business revolution that has done more good than any “Live Aid” concert.
More women – better financial performance
ncreasing the number of women on boards of directors is good for business. Dr Stuart Locke, Director of the University of Waikato’s Institute for Business Research, says they analysed ten years of data from NZX companies and found increasing the number of women on the board increased financial performance. The New Zealand Stock Exchange is proposing new rules that will require all publicly listed companies to declare the composition of their boards – stating how many women and minorities they have as directors and in senior roles. The average percentage of women on NZX top 100 boards is 9.3% while for public sector boards, it’s 41%. “In global terms New Zealand does not rank well based on NZX figures, which is surprising given the number of women university graduates,” says Dr Locke. “Most companies seem to ignore the talent available and their shareholders pay www.nzmanufacturer.co.nz
the price.” The Australia Stock Exchange has changed its rules and that’s led to a 50% jump in female representation on boards in less than two years. The Australian policy recommends publicly listed companies have a gender diversity policy. The New Zealand proposal calls for it to be mandatory and goes beyond gender diversity to include ethnic diversity. However, Dr Locke also points out that just because women are associated positively with financial performance in New Zealand, it’s not the case in all economies. “It’s certainly not a given. Take Sri Lanka for example; female directors are often spouses of the business owner and only there so the business can distribute income at a lower marginal tax rate – theyíre not expected to know anything about the business and even the courts recognise their lack of input and do not hold them accountable for any decision making.”
Two of ecentre’s founders Dr Brian Chrystall, (left), and Dr Chris Kirk with Steve Corbett ecentre chief executive in the middle.
ver 120 people joined Massey University’s ecentre to celebrate ten years of working with entrepreneurs to create what CEO Steve Corbett called “successful technology companies that will drive New Zealand business forward.” Success and innovation was the theme of the night with Steve Corbett outlining several of the companies which started at the ecentre in 2001 and are now exporting around the world and operating as multimillion dollar entities. ecentre has also formed excellent strategic partnerships with companies like India’s CMC which is a subsidiary of India’s TATA Consulting Services, one of the largest consulting companies in the world. This joint venture, supported by New Zealand Trade & Enterprise (NZTE), identifies New Zealand technology companies that can successfully enter the Indian and Middle Eastern markets. The ecentre has a long standing relationship with NZTE which has led to many companies achieving global success. In representing NZTE, Richard White spoke of the value of the relationship with the ecentre and how the broadband rollout over New Zealand and the Pacific Fibre project will drive
significant growth of technologybased companies such as those already developed by ecentre. Over 200 companies have benefited by having access to Massey University experts and the ecentre is now managing commercialisation from Massey’s Albany campus. ecentre sponsors such as Sir David Levene & Sir Stephen Tindall, work closely with the centre as do a large number of mentors from the business world. Sir Stephen Tindall said that although agricultural products are an integral part of New Zealand’s economy, going forward we need to export our expertise through technology based innovation. Sir Stephen acknowledged the great work of the ecentre and is keen to continue backing their activities. He announced that his investment company K1W1 will work with the ecentre and challenged other investors to come on board. Going forward, ecentre will build on its expertise in identifying and validating markets for technology businesses and is planning to expand the ecentreSprint programme, a 12 week programme that assists entrepreneurs to determine whether their business idea can work and demonstrates how to create a successful business.
Team spirit achieves sound results
ulton Hogan’s 2010/11 financial results have been described in their Annual Review to shareholders as a difficult year for many of the communities in which it operates. Nick Miller, Managing Director said that Fulton Hogan staff have rallied together to support local communities at their time of need. “The 2010/11 year will be remembered for the significant natural disasters that occurred in our operating regions of New Zealand and Australia, in particular the Christchurch earthquakes and Queensland floods,” says Miller. “While the physical damage from these events is extensive, it is the social cost that has also taken a heavy toll on the affected communities. Despite many Fulton Hogan employees being directly affected, they have all shown the Fulton Hogan spirit of coming
together to help get communities back on their feet, and back on the road. “It is this commitment to helping others that personifies our company’s values and allowed us to increase revenue and consolidate operating surplus by 14% and 13% respectively this year, in a market that continues to feel the effects of the global financial crisis.” In the Chairman’s report to shareholders Ed Johnson announced that revenue for 2010/11 exceeded $NZ2.4 billion, with a consolidated operating surplus of $NZ104.5 million. Johnson says, “The acquisition of PRS and its first full year of financial contribution to the Company helped realise our strategic objectives of increasing our presence in the Australia, with 59% of revenue now generated from our Australian operations.
NZ Manufacturer October 2011
Eighty percent of success is showing up. – Woody Allen
Why NZ manufacturing has a great future
wenty years ago some New Zealand manufacturers were still trying to make a living by producing a wide range of consumer products. But by then the tide had well turned. The raft of industrial protections behind which many of them had built up local markets was being dismantled. In their place our manufacturers were being asked to specialise, focus on where they had, or could develop a competitive advantage, and find international markets. Fortunately the CER agreement freshly inked with Australia at the time offered wide prospects to cut our exporting teeth. Not a moment too soon; 80,000 jobs had disappeared from New Zealand manufacturing in the six years to 1991. At the time those engaged in the sector had dropped to 240,000 jobs. Kiwis were told we had invested too much in manufacturing. What was the future for such a ‘sunset’ industry, they were asked. Economic ignorance was epidemic. Fast forward to now. More New Zealand manufacturing has recently been undercut by the vagaries of an unforgiving exchange rate and the challenges represented by Asian prowess and ambition. But now as then New Zealand manufacturers employ 240,000 people, as and far more productively than hitherto. It’s the largest employer in Auckland and the second largest in New Zealand, and producing half the country’s exports. Over the past two decades our manufacturers won success by focussing on short run tailored solutions for clients, being very customer focussed, by studying Lean, investing in innovation and R&D, and finding new markets everywhere. But their efforts have not stemmed a tide of talented people leaving for careers offshore, especially in Australia. To attract them back we need to lift New Zealand pay rates to
match those elsewhere, and to do that we need to invest in the high productivity sectors that can generate earnings per employee of at least $174,000 per annum. Ironically manufacturing is the leading contender for doing just that. Statistics NZ’s latest Annual Enterprise report shows on average the total income per worker in New Zealand manufacturing is $404,000, highly favourable compared to tourism’s $82,800 revenue per employee. The figures show some sectors within manufacturing, including chemical products and metal products, generate figures upwards of $630,000 and $863,000 respectively. Indeed high-tech manufacturing has the highest productivity of any sector and is the only way we will catch Australian wage rates, so New Zealand’s future overall depends significantly on developing a stronger manufacturing sector. Currently New Zealand exports $6 billion of hi tech goods and services, about half the earnings from dairy derived products. Or, to express this indicator of success in another way, manufactured exports earned $16.5 billion in the 12 months to August, up 6.4% for the year. This figure excludes processed dairy, meat, seafood, scoured wool and wood pulp, and includes$11 billion of elaborately transformed manufactured goods. The export data offers solid evidence our manufacturers are
We need to invest in the high productivity sectors that can generate earnings per employee.
responding quickly to changes in global markets; major capital investments are being made here on the strength of this, and despite the sure knowledge our exchange rate will continue to fluctuate! Their investment decisions are being made by manufacturers who have identified where they have competitive advantage; they are confident of their place in the sun, irrespective of the dollar’s swings and roundabouts. They are backing themselves, knowing they need to work smarter and to make good use of every resource available. So they recognise their need to drive toward greater innovation, increased R&D, and improved productivity. They realise to stay ahead they need to work more closely with the universities and research institutes, to make better use of academic knowledge, and to commercialise scientific research. Other country’s strategies are targeting more investment in science, technology and innovation, technology transfer, intellectual property protection, a skilled well educated workforce and coherent national policy to advance their manufacturing competitiveness. It’s the same for us. Just as other countries do not leave their success to chance, we too must plan for success. The three major areas requiring far higher priority for manufacturing are: • Skills and education especially at secondary, tertiary and management levels. • Stronger business-public research collaboration and to boost science and engineering research from 0.52% to 0.7% of GDP. • Giving local firms a fair and equal opportunity to win tenders in local and global supply chains. I don’t know any developed nation that doesn’t have a manufacturing base at the core of its economy. New Zealand is not, and will not be any different. I can see in future we won’t continue to make the things we
By Bruce Goldsworthy, Manager of Advocacy and Manufacturing for the Employers & Manufacturers Association (EMA) currently make but I’m certain we will always continue to manufacture things in New Zealand, and that they will increasingly be high value items with a profitable place in world markets. If we Kiwis have an ambition to match Australia’s standards of income, and I suggest we do, we will invest in our manufacturing strengths to produce innovative products for global markets, and this will underpin a great future for New Zealand manufacturing and New Zealand.
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NZ Manufacturer October 2011
Anything in life having is worth working for. – Andrew Carnegie
Service sector expansion within tight band
he service sector remains within a very tight band of expansion that has now continued for three months, according to the BNZ - BusinessNZ Performance of Services Index (PSI). The PSI for September was 53.2. This was down 0.6 points from 53.8 in August, and 0.4 points down from 53.6 in July. A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining. The average PSI value for 2009 was 48.8, while for 2010 it was 53.2. So far for 2011, it is 52.8. BusinessNZ CEO Phil O’Reilly said the survey gave positive and
negative insights. “After going through a long period of little change, the last few months’ consistent and solid if not spectacular expansion is good to see. However, while Rugby World Cup games throughout the country over September have brought some businesses additional sales, others have lost out through consumers diverting spending from normal activities.” The BNZ BusinessNZ Performance of Composite Index (PCI), which combines the results of both the PSI and PMI, shows both lost steam in September (52.4 and 51.6), with a weakening
Grants promote bioenergy and geothermal
ndustrial and commercial heat users are being targeted by a new Government grants scheme to promote the uptake of bioenergy and geothermal energy. EECA’s new Renewable Energy Feasibility Study Grants will help businesses consider the benefits of moving away from fossil fuels like coal or oil to generate heat. The scheme can provide up to 40% of the cost of the study (up to $20,000) to examine the potential for switching to bioenergy (e.g. wood) or geothermal energy to provide heat in larger applications. The New Zealand Energy Efficiency and Conservation Strategy sets a target that by 2025 New Zealand will be using up to 9.5 petajoules (PJ) of woody biomass or geothermal energy each year over 2005 levels. That is equivalent to the amount of energy used every year by more than 250,000 homes. The fund is open to both industrial and commercial applicants, such as manufacturing or processing companies with large process heat needs, or organisations running complexes with large space heating requirements. For example: • food and beverage industries e.g. dairy, meat processing, wine production • large commercial space heating e.g. hospitals, universities, tourism • glasshouse complexes.
“This fund is a natural extension of the work EECA has done over the past few years to promote the wood energy industry,” said Chief Executive Mike Underhill. “The bioenergy industry is maturing steadily. There are now numerous businesses using wood energy as a viable, cost effective heat source. The big potential for geothermal in New Zealand includes not only the shallow high temperature resources of the central North Island, but lower temperature resources throughout New Zealand, especially the South island. To maximise the benefits for New Zealand, we’d like to see more big energy users looking at how they can apply bioenergy or geothermal to their own business needs.” Mr Underhill said there were already good examples of wood being used for large-scale heat. Earlier this year, the New Zealand Defence Force completed the conversion of its 8MW boiler at Waiouru Army Base from coal to wood pellets. The facility is now the largest wood pellet consumer in New Zealand, and the largest conversion from coal to wood in the Southern hemisphere. EECA will hold two funding rounds for the grants. The first closes on Friday 18 November 2011. The second funding round will be held in March 2012.
manufacturing activity the main underlying cause. BNZ economist Doug Steel noted the considerable variation in the PSI details in September. “The Rugby World Cup, the change in school holiday timing, Christchurch earthquakes and world growth fears are just some of the influences on the services sector over recent times. The combination of factors has led to some unusual results in the details, like a softening in sales growth, yet robust new orders and a lift in employment.” Four of the five sub-indices were in expansion during September, with new orders/business (56.2) again leading the way although slightly down on expansion from August. Activity/sales (51.2) dipped
significantly in expansion, while supplier deliveries (52.1) decreased one point from August. Stocks/ inventories (49.8) improved from August, although still under the no change mark of 50.0, while employment (53.5) had its highest result since April 2010. Activity was again expansionary for three of the four regions. This was led by Canterbury/Westland (57.2) which increased 0.7 points from August. The Central region (57.0) was close behind, with its highest result since March 2011. The Northern region (55.8) dipped in expansion during September, while the Otago/Southland region (34.4) had worsening results with its lowest level of activity since the PSI began in April 2007.
Business ethics: look to the East
he world’s second largest economy has its own business ethics and doesn’t need western values forced on it, according to a leading international business academic. Victoria University Business and Law Executive Dean Professor David Lamond has presented research on the 2,500-year-old Confucian philosophy underlying Chinese business ethics. Speaking at Beijing’s Central University of Finance and Economics recently, Professor Lamond explained the global financial crisis had shown western business ethics were more honoured in the breach and questioned how we could expect China to follow our example. “In the West we act like we have the best ideas on business ethics and they should be adopted by China, and then events like the global financial crisis happen,” Professor Lamond said. “Our ideas have not even been adopted in the West so why would we think that China could or should adopt them?” He said Confucian thinking had been informing ethical business practice in China for several millennia, providing a “home grown” solution that could work not only for China but in the West too.
“We in the West should look to learn from China rather than just think we are the teachers,” he said. He said a follower of Confucian moral philosophy aimed to become a junzi, or a ‘person of virtue’ – an ideal that was still spoken of as the standard of personal integrity in China today. When applied to a business person, this ideal is termed rushang. “The modern Confucian business person applies the Confucian principles of benevolence (ren), rightness (yi), propriety (li), wisdom (zhi), and trustworthiness (xin) to their business practice,” he said. “At the same time, the rushang respects the rule of law and avoids the limitations of administration by personal power alone (renzhi) and should welcome both feedback and criticism without enacting or supporting retribution on those who provide it.” He said there was growing political and popular support in China for management based on Confucian moral philosophy. “Far from needing to impose a western framework as solution, China has its own framework to derive solutions to the issues in business ethics it is confronted with, core ideas equally germane to the western context,” he said.
NZ Manufacturer October 2011
You miss 100% of the shots you never take. – Wayne Gretzky
The key to export success
Why should manufacturers care about exporting?
ome of the benefits are obvious to me when I talk to different manufacturers and hear how their business is performing. It not only gives you access to a larger customer base; it spreads your risk as well. If the New Zealand economy is flat and depressed, the Australian economy might not be in the same state at the same time. This is particularly true of Asian economies which are still enjoying significant economic growth compared to the flat lining we are seeing in parts of Europe and the US. Having access to markets with larger populations also means access to a bigger range of customers in the different segments. If you are targeting the top end of the market for example, there are significantly more “high net worth individuals” in Sydney than there are in Auckland. In addition to a bigger pool of potential customers, exporting brings real competitive discipline to a business. To compete globally you must be able to compete with the best. This means being lean and productive and most importantly innovative to set yourself apart from the competition. Get it right and the rewards are significant – not only for your shareholders but for the New Zealand economy in general. I recently attended the Australian Industry Group conference (they represent the manufacturing sector in Australia) and I picked up some useful tips for New Zealand manufacturers. Dr Martin Parkinson, secretary to the Treasury noted that as global
competition intensifies, so does the need to deliver innovation, plus increasing productivity to keep wages up. Research shows that companies that describe themselves as innovators perform significantly better across a whole range of measures than those that don’t. Another speaker, Professor Roos, who is European, who recently spent a year in South Australia as their “thinker in residence” for 2011 with a focus on the future of manufacturing had some good insights. Professor Roos says competition and free trade are what make manufacturers thrive and become globally competitive. He says the small to medium sized manufacturers in Europe that are exporting and dominating a global niche are worth analysing and emulating, because they significantly outperform all other companies in terms of profitability and growth. They tend to be global leaders in their niche, serve mature industries and are boring businesses that noone has ever heard of. He gave examples of a machine that fills lipsticks or a machine that tears up tarmac on the roads. He says these sorts of companies are typically financed by their lead customers, rather than by venture capital or other types of investment, or they self-fund through reinvesting their own capital. They are the sort of company that did not notice the global financial crisis. They tend to be companies that were started by an entrepreneur
and are in private ownership, so they have longer time horizons for investment than a publicly listed company would have. He noted that Swiss manufacturers have been successful despite the value of their currency increasing seven fold since the 1970’s, through high value, high levels of R&D etc. They make the best; stay close to their customers and close to their suppliers. New Zealand examples of this sort of manufacturer that dominate their global niche are companies like Gallaghers (electric fences) and Hamilton Jet. I am sure there are many others and would be interested to hear about any that would be considered dominant in their field globally so we can compile a brag sheet of New Zealand’s manufacturing champions. Professor Roos says if a car manufacturer falls over (because it is no longer globally competitive) like SAAB at present – too bad, that is business. However, there is a role for government to ensure that all the suppliers are assisted to think about how they could redeploy their talents and skills. There is certainly concern about the manufacturing sector in Australia as they struggle with a highly valued Australian dollar,
Competition and free trade are what make manufacturers thrive.
Catherine Beard, Executive Director, Export NZ and for NZ Manufacturing but the clear message from the Secretary to the Treasury was that manufacturers will need to focus on being innovative and globally competitive, because they would not be getting any form of shielding from overseas competition. The mineral boom that is keeping the Australian dollar high is not expected to taper off any time soon, with demand from China predicted to be strong for some time into the future. What this means for New Zealand manufacturers is that we could have a sustained competitive advantage manufacturing in New Zealand compared to Australia. We have lower overheads and significantly lower wage costs than Australian manufacturers and currently lower tax rates. Australia is a good first export market for New Zealand manufacturers, but Kiwi’s need to do their homework. Many a large New Zealand company has come to grief in Australia by not understanding the market well enough. It is not just a bigger version of New Zealand and manufacturers that go well prepared will be the ones that succeed. In the words of Professor Roos – know your customer, be very close to your suppliers and innovate your way to success.
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NZ Manufacturer October 2011