NZ Manufacturer September 2011 September 2011
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From where I sit
The Interview
Welcome to NZ … the new Tiger Economy
Chris Vincent, Chief Executive Officer of RPM
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www.solidtec.co.nz
Rear View Know your kit and caboodle
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FoodBowl committed to Bakeworks, the ‘little global export targets bakery that could’ and did
n time to come, we will almost certainly look back at the coming-on-stream of the $16-million FoodBowl and its NZ Food Innovation Network, designed and dedicated to drive our food and beverage exports to an aggressive and challenging $150-billion -- some 270-percent increase -- by 2025, as the launch of a turbo-charged, innovative, added-value food industry. While food and beverage already accounts for more than half of our total exports, the government and a group of industry leaders are convinced, after studying similar economies, this sector is capable of even faster growth. Already its development and, importantly, productivity rates have consistently been above average across some 30,000 companies employing onein-five of our total workforce. It’s earmarked for success. First mooted, at the turn of the century, by Prof Ray Winger, former head of Food Science and
By Kevin Kevany
Technology at Massey University as a facility for SME food and beverage companies to use while developing their ideas into commercially viable products, the concept has grown in scope under the intuitive guidance of one of our food industry giants, NZFI(Auckland) chairman Tony Nowell, a man with a local and international reputation in the food industry, and a deep knowledge of and passion for Ôcollaborative venturesÕ. On the drawing-boards for the best part of a decade and now located conveniently to the Auckland International Airport , the purposebuilt FoodBowl, with its network of hubs in the Waikato; Palmerston North, with a cluster of relevant facilities including the Riddet Institute, Plant and Food Research and Fonterra Innovation; and Lincoln University in Canterbury; now offers commercial and test Continues page 14
Newly-appointed NZFIA chief executive Stuart Walker, NZFIA chairman Tony Nowell and NZFIA non-exec director and project manager, Colin Mitten.
Bakeworks staff: (from left) Alex Green, Kirsten Unger, Dave Harris and Clive Todman, in the bakery (ovens behind)
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ucked away behind a ragged hedge in a half-share of a of your average U-shaped industrial building in Woodruffe Avenue, in a Henderson, Auckland, industrial area is a most unlikely place to find this year’s winner of the ATEED organised, West Auckland Westpac award for ‘Excellence in Manufacturing’ – Bakeworks Ltd. They are the country’s leading producer of gluten-free bread and cookies, under their very attractive ‘Liberte’ brand. Then again, why would you bother with the exterior of your plant when your produce is shipped
in bulk, largely after-hours, by a courier company, to our leading supermarkets and health stores? As you don your protective gear and enter the bakery section, you instantly realise where the focus is centred and where the money has been invested over a number of years – the heart of the enterprise. “That’s the way it should be for any smart business in the wholesale and online food business. Your products speak for you, not the outer trim of your production centre. Besides we aren’t ‘look at me’ sort of people,” says Kirsten Unger, business director and the front-ofContinues page 15
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NZ Manufacturer September 2011
EDITORIAL Publisher
Media Hawke’s Bay Ltd, 1/121 Russell Street North, Hastings, New Zealand 4122.
MANAGING Editor
Doug Green T: +64 6 870 9029 E: words@xtra.co.nz
CONTRIBUTORS
Peter Allport, Kevin Kevany, Nick Inskip, Catherine Beard, Sir Paul Callaghan
ADVERTISING
Max Farndale T: + 64 6 870 4506 E: max@nzmanufacturer.co.nz
Design & PRODUCTION
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Almost all quality improvement comes via simplification of design, manufacturing, layout, processes, and procedures. – Tom Peters
Rugby World Cup benefits economy
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fter the Rugby World Cup is over, we will get the ‘skinny’ on the financial benefits for the New Zealand economy. We know that already the increased number of visitors to the country is providing an economic boost. We know that visitors are staying in hotels, hiring camper vans, going to the pub and spending in shops. What we need to hear a bit more about is if they are actually buying goods that are made in New Zealand. Around the country companies and business associations who have arranged industry visits and functions for visitors are to be commended because - you can guarantee – (that) just as there are visitors sampling the food there are visitors looking for business opportunities. For example, some are looking at real estate to purchase either as a home – a complete location change – or as investment property. Do they know what your company has to offer? In this issue Sir Paul Callaghan’s final article sees him at his controversial best arguing that prosperity matters; growth doesn’t mean degradation of the environment; our large talent Diaspora must be inspired to return; how our $5 billion per annum creative and high-technology sector is growing at three times the rate of the rest of the economy; and he makes a huge prediction to inspire all Kiwi manufacturers. Following on from August issue we take a further look at Pacific business and where the opportunities are. As a Pacific country we need to balance exporting not just making handouts, nor forcing our values on other cultures but working with them to harvest the resources that are available. Other highlights in September include Nick Inskip from HERA says we need to respond to opportunities quickly; Bruce Goldsworthy from EMA viewing our trade statistics as positive as we continue high sales levels of our goods to Asian countries.
Doug Green
ISSN 1179-4992
Vol. 2 No. 7 September 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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www.nzmanufacturer.co.nz/videos PUBLISHER & MAGAZINE DEVELOPMENT– Max Farndale max@nzmanufacturer.co.nz
NZ Manufacturer September 2011
CONTENTS Advisors
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DEPARTMENTS
12 16 17 19 21 23 26 28 29 31
BUSINESS NEWS
Stephen Drain
Where we’re at and where we’re going.
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Stephen Drain is Director at Centre for Innovative Leadership at AUT University, Auckland.
BUSINESS NEWS That’s no excuse!
OPPORTUNITY HAMILTON • Digital Hamilton to boost business. • UK trip opens global corridors.
DEVELOPMENTS
• Wake up to Pacific business opportunities. • Expertise to benefit manufacturers. • Standing still not an option.
Page 13 – AUCKLAND MANUFACTURERS – GMP relies on Kiwi clean green image and reputation. ➡
FROM WHERE I SIT
Sir Paul Callaghan: Prosperity matters.
THE INTERVIEW
Chris Vincent, CEO, RPM.
AUCKLAND MANUFACTURERS ‘The Cloud’ one of the best showcases of Kiwi innovation
BUSINESS NEWS
Catherine Beard
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 20 – PRODUCT NEWS – Surface preparation and tacking.
• Rugby World Cup boosts export industry in transition. • NZ’s competitiveness restricted by innovation performance.
Bruce Goldsworthy
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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.
PRODUCT NEWS Light fleet expanded.
MANUFACTURING TECHNOLOGY
• Quality conscious manufacturing. • MEA Mobile strengthens ties with WaikatoLink
SUPPLY CHAIN
• Maersk joins World Ocean Council. • Ports of Auckland has a good year. • Productivity Commission looks at freight transport sector.
Page 22 – MANUFACTURING TECHNOLOGY – Production monitoring system improves performance.
BUSINESS NEWS
• Innovators treated unfairly. • $1.28m for top talent to try out high-tech jobs. • Skills4Work welcome Labour youth package.
BUSINESS NEWS
Signs to watch for in the global economy.
REAR VIEW
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John Walley
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.
Sir Paul Callaghan ➡ Page 27 – SUPPLY CHAIN – Manufacturing park secures vital energy supply.
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.
Know your kit and caboodle.
Correction
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The front cover picture in August issue of NZ Manufacturer for RPM inadvertently had the wrong name in the picture caption. It was not Lawrence Dunn but Mark Vincent showing the scale of the business-end of the 5-axis milling machine. We apologise for this error.
Page 30 – TRAINING AND RECRUITMENT – Cardinal Logistics wins 2011 Skills Highway Award.
sales@plasticweldingtools.co.nz
Lewis Woodward
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.
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NZ Manufacturer September 2011
BUSINESS NEWS
You’ve got to say, I think that if I keep working at this and want it badly enough I can have it. It’s called perseverance. – Lee Iacocca
Where we’re at and where we’re going
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any manufacturers are probably wondering just how they are doing compared to other companies, and whether their prospects are better, or worse, than others. Whereas manufacturers have had several successive months of positive results as recorded in our Bank of New Zealand/Business NZ Performance of Manufacturing Index (PMI) with readings above 50 that indicates expansion, our informal surveys and other anecdotal evidence suggests many firms are still bumping along the bottom. We hear many reports the domestic economy is still flat, with the major Christchurch rebuild activity yet to get underway, and a slowing Australian market, all compounded by the high NZ dollar. Add to that the weight of local government bureaucracy, hikes in raw material costs, difficulties
in getting the right staff with the necessary skills, winter weather, and it’s plain not everything is beer and skittles. But though it may not help much on the ground or out in the market place, you should feel better knowing you are not on your own. While its tough, all of us in New Zealand are way better off than many of our counterparts in other countries. And though it may only be a diversion, the Rugby World Cup is here! What a diversion! On the business front a difficult thing to get our heads around is that a lot of our trade statistics are positive. Exports of manufactured products (excluding dairy, meat, seafood and wool) were up nearly 8 per cent to $16.5 billion in the last 12 months ended July. New Zealand reported a surplus in its overseas merchandise trade figures for the half year to June, and employment in manufacturing has been holding
October NZ Manufacturer THE EXPORT SUCCESS ISSUE • FINDING MARKETS OVERSEAS! • SUCCESSFUL EXPORTERS TELL HOW THEY DID IT! • WHERE THE EXPORT OPPORTUNITIES ARE! To take part in this issue and for more information contact: max@nzmanufacturer.co.nz
www.irl.cri.nz
Working in partnership with business www.nzmanufacturer.co.nz
steady at about 250,000. And we are still hearing how difficult it is to get good staff. Firms exporting to Australia have been making the most of the competitive cross rate, with demand there til recently better than here. However, the signs now from across the ditch are no longer flash. The figures show growth virtually petering out, unemployment up albeit at just 5.1 per cent, fewer jobs are being advertised, and major retailers’ results underwhelming. Their building activity too has fallen into doldrums similar to ours. Nonetheless our manufactured exports to Australia (excluding dairy, meat, seafood etc) for the 12 months ended June were up 5.6 per cent to earn $6.22 billion. The US is doing no one any favours. Its parlous economy is seriously impeding everyone selling there, or in fact selling anywhere in US dollars. Since New Zealand is hardly in any position to do anything about their dollar or their economy, the occasional plaintive ad hoc call for our government to “fix it” is less than helpful. Many exporters are progressively looking to do business in currencies with less volatility, with others developing new markets where growth is evident. China, South East Asia and the Middle East are amongst the most prospective. Our manufacturers sold New Zealand made goods to China and Hong Kong for the 12 months to June worth $1075 million, about the same as for the previous similar period,
By Bruce Goldsworthy, Chief Executive (Acting) of the Employers & Manufacturers Association again not including dairy, meat, seafood and the like. Manufactured exports to Malaysia, Singapore and Thailand combined earned $545 million for the 12 months on the same basis. But starting out in any new market of course requires you once again review all your costs, processes, your supply chain and your people in an effort to identify all opportunities for savings, and to maximise your competitive advantages. It’s not easy. Nobody said it would be. And if you find any shortcuts or savings in your business that might be applicable to others or to us here at EMA I’d welcome your feedback.
NZ Manufacturer September 2011
If your actions inspire others to dream more, learn more, do more and become more, you are a leader. – John Quincy Adams
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That’s No Excuse!
ew Zealand is a small “ economy and as such, we shouldn’t expect that we can do what larger economies do!” How many times have you heard that statement? Personally, I hear it at least once a week, sometimes more often and it sickens me. It smacks of defeatism and a lack of vision, and sounds like a convenient excuse. We are a small economy, but like a small business we should be nimble and able to respond to opportunities quickly, while bigger countries continue steaming down the path they are on. The problem isn’t that we need to close the wages gap with Australia; it’s that we need to stimulate growth, particularly growth in exports. In rough terms, Australia’s GDP is around A$1.84 Trillion and New Zealand’s is around NZ$189 Billion, about ten percent of Australia’s. The problem comes when we look at population; Australia’s population is about five times New Zealand’s. Most middle school math students could tell us that our GDP is about half of what we need, if we want to rival Australia. If we look at New Zealand as a company, it’s apparent that large bits of it are not paying their way. At a recent Speakers Science Forum presentation held at Parliament House, Eminent New Zealander Sir Paul Callaghan spoke of the ‘breakeven point’ for GDP contribution from various sectors of New Zealand industry. He showed a graph which indicated the needed per capita GDP for our current status as being around $135,000 per person
employed. In a company context, this is the ‘breakeven’ point. It showed icons, often touted as a Kiwi success such as the wine industry, to be around $100,000 and tourism which was around $76,000, both well below the breakeven point and areas like food manufacturing were just above. In contrast, the metals manufacturing industry was around $235,000 and the export component about $10,000 above that. It is almost a no brainer - If we are to increase our GDP, we need to focus on those industries above the breakeven point, and the further they are above, the more we need to support them to increase what they are doing and their market share. The Global Financial Crisis (GFC) has impacted on all world economies; some more than others and most commentators admit that the recovery is going to be slow. Exports are crucial to New Zealand and particularly highvalue manufactured products, sales of which were also impacted by the GFC. In the high-value, metals manufactured products sector, export sales in 2009/10 declined by 13% which saw companies tightening belts and working hard
Governments need to match the fleetfootedness of the metals industry.
WWW.NEXUSFOAMS.COM
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BUSINESS NEWS
to improve their value proposition. This paid off in 2010/11 with a 25% increase in export sales, far outstripping most other sectors. This showed that the highvalue metal industry has a clear capacity and capability to compete internationally, bringing the kind of returns that New Zealand needs for growth. For the first time since 2005, New Zealand closed the gap in metal products imported and exported across the manufactured metal product sector, a trend we need to continue. A defining feature of the New Zealand metals sector has been its ability to move from low demand to higher demand markets; it is this flexibility that is a hallmark of successful small companies and any country with a winning sector needs to back it 100%. Governments need to match the fleet-footedness of the metals industry and respond quickly to opportunities, to support the highvalue jobs and growth we so badly need. Funding cycles, particularly in R&D, can see the Government support locked in for several years to sectors and initiatives aligned to less than spectacular contributions to GDP, starving high-value initiatives that come out of industry of timely support. Do we really need a unique sauvignon blanc, or should we be supporting the establishment of research infrastructure which will attract European business to see New Zealand as a well-positioned gateway to Asia Pacific Markets? Should we be looking at importing yesterday’s public transport
Commentary by Heavy Engineering Research Association Industry Development Manager Nick Inskip solutions with their high costs and poor adaptation to the personal needs of travelers, or should we be supporting the development of an on-demand transit system, which operates at high speed and low energy needs at a fraction of the cost of traditional systems, which we can then export to the world? Both of these industry initiatives exist today, they have come about from significant investments by industry and our ability to realise them is time limited. The opportunity is now. It’s time to back a sector that is a proven, high-value performer and recognise that investment priorities need to be informed by which sectors operate above the breakeven point and are able to quickly act to find opportunities, as in the New Zealand metals sector. New Zealand is a small economy, but small should mean fast and flexible enough to see opportunities and to exploit them, not an excuse!
sales@nexusfoams.com
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NZ Manufacturer September 2011
OPPORTUNITY HAMILTON Digital Hamilton to boost business
Unless you’re willing to have a go, fail miserably, and have another go, success won’t happen. – Phillip Adams
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digital “technology revolution” is set to sweep through Hamilton, thanks to the pending rollout of ultra-fast broadband in the city. Ultra Fast Fibre (UFF) commercial manager Jack Ninnes said the network, due to be rolled out from later this year, will boost economic growth and will be available to city residents and businesses within five years. The UFB is expected to boost business productivity and economic growth by between 1.2 and 1.4 percent, with World Bank analysis indicating broadband infrastructure investment has a high flowthrough to productivity. “There is a technology revolution coming to Hamilton. This broadband is going to bring significant opportunities to businesses which have never been available before,” Jack said. Ultra-fast broadband has the potential to benefit businesses, schools, health premises and residences in the city, with straightforward connections to be provided free to each household
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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
• Understand
one of the key Lean tools and see it utilised in a real environment.
or business. “The connection will be available on the premises, so the occupants can either take just a phone service or purchase internet packages from the retailers,” Jack said. Ultra-fast broadband will allow businesses to operate their telephone systems over the internet. Higher levels of service are to be provided over the new network for about the same cost as current services, according to Jack. While Hamilton retailers have not confirmed the rates for packages, a Whangarei retailer is offering 10G of UF broadband, a phone line with free local calls and 5 cent per minute national calls for $79 including GST per month. Business, education and health sectors will be among the first to receive ultra-fast broadband, with benefits including greater engagement from students, improved learning outcomes and more opportunity to create, collaborate and connect on-line. In the health sector potential uses include tele-health technologies
• 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
allowing patients to self-monitor their health at home and improved electronic transfer of high-tech medical imagery. Business development manager Adrian Dixon, of Opportunity Hamilton, said Hamilton is well placed to be the leading digital destination in the South Pacific thanks to the new technology and innovative city businesses. Opportunity Hamilton, the economic development agency, is managing the implementation of the Digital Hamilton strategy. The strategy supports the development of “weightless” industries, such as creative and
digital. “Projects are already underway linking leading Hamilton companies to global innovators and potential strategic alliance partners with a view to accelerating their growth. We will work with stakeholders to support global growth using ultrafast broadband,” Adrian said. Programmes to increase the use of technology in non-digital sectors are also being developed. “Hamilton has world-leading technology in a number of areas, and the broadband rollout helps put us on a level playing field globally. It is safe to say Hamilton’s digital future has arrived.”
Hamilton flight school to train British Airways pilots
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amilton-based flight school CTC Aviation Ltd. has won a major coup against international competitors to train British Airways cadet pilots, in what chief executive Ian Calvert calls “a huge deal actually.” “It’s hard for New Zealanders to understand. For B.A. to choose us to do their training is quite a milestone. They’re very particular,” Calvert told BusinessDesk. CTC already has contracts with budget carriers Jetstar and Easyjet, with capacity to handle more than 200 cadet pilots’ training a year. The company also has a U.K.
base, but the B.A. cadets will do their practical flight instruction out of Hamilton. The firm is sharing an annual intake of 100 cadets with two other international providers, and a CTC subsidiary already has the contract to manage the whole B.A. pilot training infrastructure.
Waikato is in second place, equal with Bay of Plenty in the latest ASB / Main Report Regional Economic Scoreboard June 2011 quarter on the back of its relatively strong employment growth and recovery in retail sales and housing market activity over the past year. As a result consumer confidence
has rebounded well relative to other regions in New Zealand. One weak spot is construction activity, which remains at very low levels. Nevertheless, Waikato is stronger relative to the rest of NZ across a broad range of activity indicators, thus underpinning its second place in the scoreboard.
Waikato economic indicators
October NZ Manufacturer THE EXPORT SUCCESS ISSUE
• Talk
• FINDING MARKETS OVERSEAS!
• Understand
• WHERE THE EXPORT OPPORTUNITIES ARE!
to employees who have seen the benefits of 5s workplace organisation. the five steps to a successful rollout via a simulation.
www.nzmanufacturer.co.nz
• SUCCESSFUL EXPORTERS TELL HOW THEY DID IT!
To take part in this issue and for more information contact: max@nzmanufacturer.co.nz
NZ Manufacturer September 2011
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OPPORTUNITY HAMILTON UK trip opens global corridors Honey power enhanced for Waikato innovators H O Possession of the ball is the key to winning in football, basketball, and the game of life. – Laing Burns, Jr.
pening the doors to new markets will be on the mind of Waikato Innovation Park’s Peter Maxwell when he speaks at a UK Science Park Association (UKSPA) conference in Birmingham this month. Waikato Innovation Park recently became the first Asia Pacific UKSPA member, paving the way for global alliances potentially worth billions of dollars to New Zealand innovators. Peter’s visit will establish Waikato links with international science parks and encourage businesses to register on the website innovationsearch.com, a global portal fostering relationships between businesses and technology buyers. “It’s a global coming together of the academic and business side of science from research establishments to small and large technology companies and venture capitalists. It’s about establishing links for potential partnerships, joint ventures and acquisitions,” Peter said. Peter will be speaking about connecting with New Zealand technology companies to about 200 science park representatives and affiliated companies from Europe, North America and the Middle East at the conference where other speakers include the British Innovation Gateway’s Neil Crockett, UK Broadband’s Colin Winstone and 22@Barcelona’s Josep Miquel Pique. His trip includes a whistle-stop visit to an Edinburgh agricultural science park, where he will meet with representatives from the Roslin Institute, famous for Dolly the world’s first cloned sheep. Peter will also meet representatives from the Moredun Research Institute, the Royal School of Veterinary Studies, animal science researchers of the Scottish Agricultural College and Genecom, the technology transfer company linked to these institutes. “One of the disadvantages in New
Peter Maxwell
Zealand is that we have a very small home market so companies have to look to start exporting at an earlier stage of their development which, as smaller companies, makes it difficult for them to break into off-shore markets. Here is an opportunity to link up with businesses already trading in that market and benefit from this relationship,” Peter said. The UKSPA initiative, a partnership between Waikato Innovation Park and economic development organisations Opportunity Hamilton and Priority One, initially allows Waikato and Bay of Plenty technology innovators to register on UKSPA’s virtual database, innovation-search.com. Opportunity Hamilton Digital Hamilton Strategy project manager Nicola Browne said the UKSPA membership puts New Zealand innovators in the spotlight before a membership of 1,000 UK technology companies. 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, she said. “I would encourage any technology-related business to register on the website innovationsearch.com. It’s free and it’s a great way to take Waikato technology to the world,” Nicola said.
arnessing the power of honey to create two successful businesses has been a collaborative journey for Hamilton’s Pohio whanau. Adrian and Lania Pohio had just a few beehives when they launched their now successful honey brand Nature’s Country Gold in 2003, selling product predominantly at farmer’s markets. Several years later and Hayden Pohio, their son, has launched his own successful Manuka honeybased Energy bar Manuka Boosta, selling it throughout New Zealand and exporting to Japan, Hong Kong, China, United States, Rarotonga and Australia. Initially operating under the family’s business umbrella, Hayden recently branched out on his own with Lania and Adrian retaining a 50 percent share stake in the company. “Hayden had the skills and we had the product, so it made sense to work together. We’ve helped each other along the way and now he’s grown the business to the stage it can stand alone,” Lania said. Hayden, a food technologist, was inspired to create his high-protein energy bar after finding others on the market too dry. His mother also made a similar bar using roasted cashews and apricots for him when he was a child. “The key has been creating value-added and sustainable honey products that appeal to a health conscious market. The antioxidant benefits of manuka honey and keeping the products as natural as possible is important,” he said. The Pohio’s have worked alongside Opportunity Hamilton, the city’s economic development agency, and Tekau Plus, an export support programme for indigenous businesses, to ensure their ventures started and stayed on the right track. Hayden credits the organisations with giving him the right advice and valuable networking opportunities to propel the product to export. “If I know anyone in Hamilton who’s looking at starting a business I always advise them to talk to Opportunity Hamilton. The assistance they provided me was vital, particularly in taking the first steps in the business,” Hayden said. After signing with Tekau Plus a
networking opportunity sparked the company’s first United States order – 8000 bars for a Hawaii-based distributor. Economic development workshops gave Hayden branding strategies and advice on trademarks, patents and design protection while his mother attended workshops on exporting for manufacturers. “In running your own business you have to be a jack of all trades. It’s great to have mentors on board who can look at what you’re doing objectively and give you the best advice,” he said. In the past six months Boosta produced 15,000 bars per month, 10,000 for New Zealand and 5000 for export. Hayden has capacity to make up to 30,000 bars a week if demand requires, and plans to double export sales within the next 12 months. He employs six casual staff at his Te Rapa-based factory and turns over about $250,000 a year. As well as family and economic development support, Hayden’s food technology background and interest in health and fitness have girded him well for success. Experience in developing new food products, including fruit toppings, sauces and olive oil derived products, and a Food Technology Degree from Massey University have given him a knowledge advantage. Product development is also on the agenda, with the company poised to launch Boosta Bites alongside the three bar varieties it already produces. A honey-based sports gel is also in the pipeline. Hayden’s primary focus is building the brand and selling his products, but he is keen to attract an investor when he cracks his first large-scale order to the United States. “When I need a container to ship bars the time will be right to look for investors,” he said. Manuka Boosta bars have attracted attention in high places, with endorsement from ultra-marathon runner Lisa Tamati. Even former Prime Minister Helen Clark has given them her seal of approval. According to Hayden; “We had a stall at Te Puni Kokiri (the Maori development ministry) once and Helen Clark said, “I just tasted the best bar I’ve ever tried.”
www.opportunityhamilton.co.nz www.nzmanufacturer.co.nz
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NZ Manufacturer September 2011
DEVELOPMENTS Wake up to Pacific business opportunities
Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.
– Jack Welch
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acific Island countries contribute far more to the New Zealand economy than many people realise. In the past year ending June 2011 our trade surplus with the Pacific Islands was more than $1.3 billion! We need to balance our Pacific trade by ensuring we are actively encouraging exports to New Zealand; working in partnership not just making handouts; not forcing our values on other cultures but working with them to harvest the resources that are available; helping in setting policies that ensure resources are farmed not stripped. Multi-lateral trade is the aim of business groups that have been active in the Pacific Islands for many years and one of these groups, covering all the Pacific Island Countries is The New Zealand Pacific Business Council. The New Zealand Pacific Business
Council Inc. (NZPBC) was formed in early 2005 as a not-for-profit incorporated society. The Council is a multi-lateral, private enterprise driven membership organisation whose primary objective was to promote and facilitate “two-way” trade and investment between New Zealand and 26 Pacific countries and territories within Polynesia, Melanesia and Micronesia. Whilst our focus is still on “two-way” trade we recognise the importance of supporting trade between island countries – hence our interest in “multi-lateral” trade. The NZPBC consists of over one hundred New Zealand companies interested in, or operating in the Pacific Islands. Members also include the Ministry of Foreign Affairs and New Zealand Trade and Enterprise. Over the past six months the NZPBC has revved up its operation to ensure members have more opportunities to meet Pacific trade visitors, to network amongst each other, and participate in trade missions to the Pacific. Business After 5 functions are held each month, and three trade missions are planned per year (some in conjunction with other business councils) and the newsletter and web site have been stepped up. Last month the Ministry of Foreign Affairs and Trade, in conjunction with the New Zealand Trade and Enterprise, (both organisations are represented on the NZPBC Executive Committee) invited members to their offices in Albert Street, Auckland CBD, to hear
John Hayes, MP for Wairarapa, and Chairman of the NZ Government’s Foreign Affairs, Defence and Trade Select Committees, put forward his views on “Supporting Business Growth in the Pacific”. John commented on the links between New Zealand and the Pacific Island countries through history, constitutional links, family and community ties and our geographical proximity. He also highlighted the need to make significant changes to trade, aid and economic development policies on both sides. “Foreign Minister Murray McCully recently said that this is the Asia-Pacific century. Our geography – so long our weaknessis now our strength as the global focus moves to the fast-growing Asian economies.” John pointed out the challenges - the Pacific Paradox – “Crucially, despite the Pacific receiving the highest rate of international aid in the world, there has been a lack of economic growth.” He says the current government has moved from the previous “poverty elimination” with aid money spread over 800 programs in 100 countries to “increased economic
Multi-lateral trade is the aim of business groups that have been active in the Pacific Islands.
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development” particularly job creation. The focus is more on the Pacific with NZ aid lifting from one-third (2008) to over fifty percent today, and requiring measurable outcomes. “Building sustainable economic development is not a task for governments alone. Politicians cannot legislate for prosperity and cannot regulate to create wealth. Sustainable economic development needs the input of the wider community. A crucial role is played by the entrepreneurs and traders, large and small, who ultimately drive economic enterprise and create jobs.” John went on to comment on the previous aid allocation. “The (Aid) money which was spent in the Pacific produced papers and conferences, but no real outcomes or jobs. That was not good enough. Employment makes a difference – that is genuine employment in local economies, not in highly-staffed and well-paid international organisations.” John said we should support the Pacific Island nations to ensure sustainability – to support them in moving away from simply receiving royalties on their exploited assets – fish, timber, minerals and tourism – to the community’s total involvement in extraction, processing, marketing and sales. John commented on the potential for sustainable energy development – solar, wind and tide power; utilising the fertile soils, good rainfall and productive climates to reduce food imports and build to exporting food – particularly “organic”.
NZ Manufacturer September 2011
Vision without action is a dream. Action without vision is simply passing the time. Action with Vision is making a positive difference. – Joel Barker
Expertise to benefit manufacturers
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he University of Auckland is making it easier for the manufacturing and materials sector to tap into its expertise with the creation of a one-stop shop, the Innovative Manufacturing and Materials Programme. Manufacturing Chair Professor Xun Xu says the programme, which has three strands – idea generation and discovery, technology development and innovation implementation – will bring together expert researchers from science, technology, engineering, management and other parts of the University. “Our specialists and crossdisciplinary teams can help manufacturers in a number of ways, from innovation in new materials, to new product development, renewal of manufacturing systems, enhancement of supply-chain processes, through to business growth strategies and the redesign
of work systems.” Professor Xu says the University wants to make it easier for manufacturers to access its research and development capabilities and specialist management advice as well as ensuring it is meeting the needs of the manufacturing businesses. “We want industry to come to us and tell us what they need. In the past we have been more inclined to push our ideas onto industry rather than invite them to come to us.” The manufacturing sector is important for New Zealand’s economic well-being as one in every nine workers is employed by the sector and it is responsible for 14 percent of the country’s GDP and 65 percent of all exported goods. High-tech niche-based manufacturing was an area the University was most likely to have the greatest impact, he says.
Royalties significant revenue source
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etroleum royalties, the government’s share of proceeds from oil and gas produced in New Zealand, could be a very significant source of government revenue for many more years. Independent financial advisers Woodward Partners have assessed the asset value of future petroleum royalties, from known petroleum reserves as well as potential production. If recent patterns of exploration and development continue, future royalty income could generate $8.5 billion to New Zealand. If current exploration rates were to increase by 50 per cent over the next 10 years, New Zealand could earn $12.7 billion in royalties. Independent financial advisers Woodward Partners have assessed the asset value of future petroleum royalties, from known petroleum reserves as well as potential new production. Anticipated future royalty
payments have been discounted for inflation and adjusted for commercial risk, so the estimated total value of future royalty cash flows is equivalent to a lump sum payment of $8.5 billion (as at June 2010): * royalty income from existing production facilities in Taranaki could be worth $3.2 billion in gross royalty income to New Zealand. This is on top of royalty income received in past years from these operations * new production from future discoveries could generate royalty income equivalent to a $5.3 billion (in June 2010 prices) – and up to $9.5 billion if exploration activity accelerates by 50 per cent over the next 10 years. Coupled with company tax, the government receives about 42 per cent of a petroleum company’s accounting profit. The money helps fund government services, such as education and health care.
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DEVELOPMENTS
Standing still not an option
static performance is not enough when our competitors are accelerating, says BusinessNZ. Commenting on the World Economic Forum’s Global Competitiveness Report, BusinessNZ Chief Executive Phil O’Reilly said this was the clear message from this year’s report. Two years ago New Zealand ranked as the 20th most competitive nation in the world; last year that slipped to 23rd; and this year it is 25th - because New Zealand’s score has remained stable while other countries have improved. Mr O’Reilly said the report was helpful in highlighting areas for improvement. “Some of the problem areas result from New Zealand’s geographic location and small population size, including domestic market size (60th), state of cluster development (60th), value chain breadth (59th), local supplier quantity (58th) and intensity of local competition (45th). “But other problem areas are more within our power to fix. We should focus on doing better in the
Static performance is not enough when our competitors are accelerating.
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Phil O’Reilly
areas of balancing the budget (112th), taxation as a percentage of profits (51st), quality of infrastructure (50th) and government debt (47th). These reflect a need for more restrained, better quality government spending.” “Gaining better scores around innovation and technological readiness should also be a priority. “New Zealand has retained high rankings for many of the foundational elements of competitiveness – health, education, low corruption, low trade barriers, low inflation and ease of starting a business. We need to build on these to gain higher rankings in the more sophisticated areas of business and trade.” The Global Competitiveness Report ranks countries according to their ability to compete internationally, using factors such as markets, institutions, infrastructure and human resources.
Shirking responsibilities
he Government and the Reserve Bank must take ownership of the overvalued exchange rate say the New Zealand Manufacturers and Exporters Association (NZMEA). It is not acceptable just to decry the effects of a high New Zealand dollar. Other countries are taking action and it is long past time for our policy makers to the same. NZMEA Chief Executive John Walley says, “There was some talk at the Monetary Policy Statement about the Swiss intervention to
reduce their currency, whether nontradable inflation would be a better target for the Reserve Bank and additional tools that could be used. Unfortunately we see no action and the resulting tradable sector decline.” “The Swiss said what they would do and got on with it; to date it has worked. A firm commitment from the Reserve Bank to target domestic inflation would immediately see the dollar fall. Currency traders know that another tool would have to be used as interest rates don’t work against domestic inflation.”
WWW.SOLUTIONM.CO.NZ/OSTENDO kevinw@solutionm.co.nz www.nzmanufacturer.co.nz
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NZ Manufacturer September 2011
FROM WHERE I SIT
We will either find a way, or make one.
– Hannibal
Welcome to New Zealand...the new Tiger Economy rises above a moderate level. Compare Switzerland, Norway and Sweden with Turkey, Mexico and China.
How would New Zealand benefit from increased prosperity?
In this the final of three contributions to “Director’s Chair: from where I sit”, the ‘Kiwibank New Zealander of the Year 2011’, Sir Paul Callaghan is at his controversial best, arguing prosperity matters; growth doesn’t equal degradation of the environment; our huge talent diaspora must be inspired to return; NZ’s $5 billion per annum creative and high-technology sector is growing at three times the rest of the economy; and he makes a huge prediction to inspire all Kiwi manufacturers. Does prosperity matter? Isn’t it enough that we have a beautiful country, a good lifestyle, and are happy?
I WANT to begin by arguing that prosperity does matter (and here I really do mean GDP per capita) and that we have insufficient prosperity to be the country we want to be. First, let me slay two dragons. Economic growth does not mean greater environmental degradation or the pillage of resources. On the contrary, international evidence1 suggests that once a moderate level of prosperity is achieved, environmental degradation reduces as prosperity grows. If New Zealand were wealthier we could, Middle-Eastern style, choose to gold-plate our taps. Or we could choose to eliminate possums and mustelids from our forests. I think we would be wise enough to choose the latter. Next, economic growth does not mean an increasing gap between the rich and the poor. Again, evidence2 tells us that income disparity decreases as prosperity www.nzmanufacturer.co.nz
ALL HEALTH systems are challenged by limited resources, but New Zealanders cannot afford modern anti-cancer drugs available in Australia and Canada and we are short of specialists, because we can’t pay internationally competitive salaries. Our universities are slipping in world ranking because they are under-resourced. Our roads and railways are decrepit, our infrastructure is poor by modern standards and our housing stock is a disgrace. And then there is Christchurch. This hit to our economy is around two-to-three times the impact of Japan’s Sendai Tsunami and Earthquake on theirs. We will be paying for Christchurch for a generation to come. I could add one more comment on prosperity. New Zealand has the highest proportion of skilled migrants and one of the largest diasporas in the OECD. We export 24-percent of our graduates3 who leave to earn substantially better incomes overseas. We do replace them with skilled immigrants, but many New Zealand families would prefer that more of our young saw economic opportunity at home. In the last two perspectives I mapped the history of the New Zealand economy, pointing out that we had reached a high plateau thanks to our cultural and resource assets, but that we were reaching the limits of resource-based economic growth -- if we are to protect the environmental assets that we New Zealanders hold dear. Tourism is a valuable employer of the unskilled, but its revenueper-job is substantially below that required to maintain our current per capita GDP. Dairying is highlyproductive, but we cannot scale it up significantly if we are to protect our land and water.
All health systems are challenged by limited resources, but New Zealanders cannot afford modern anticancer drugs available in Australia and Canada.
We must therefore more effectively export intellectual services, to manufacture, to design, to innovate. How do you see us achieving that?
ON AN optimistic note, being behind the OECD average, and in particular, 35-percent behind Australia, presents us with an opportunity. Experience shows that it is easier to grow from behind. Our economic fundamentals are excellent. In terms of property rights, political-legal rights and lack of corruption, were are, respectively 7th, 2nd and 1st in the world4,5. Our taxation rate is 3rd lowest in the OECD6. Our educational performance in the OECD PISA tests for reading, maths and science, has us in the top handful of countries. And we have grown a $5 billion per annum creative and high-technology sector, invisibly, in the sense that awareness of its significance, let alone its existence, is largely absent in our politics, media and education system. Therein lies our greatest opportunity. We can grow the $5 billion sector to $50 billion, for that indeed is our target. They will export to niches in a world market 500 times larger than our own where niches can sustain large enterprises. Fisher and Paykel Healthcare sells sleep apnoea devices and respiratory humidifiers for $500 million per year. They will make unusual, even mysterious products, for that is what niche-marketing entails. They may be in no way connected with agriculture or the environment. We will be good at what we are good at, and so far, that seems to be electronics, software, ICT and physical manufactures. And, these industries will be environmentally benign, with growth limits determined solely by our capacity for entrepreneurship and innovation. But, once successful, why would such businesses remain in New Zealand? SURELY because their creative people insist that this is the place they choose to reside. We need to articulate a vision for New Zealand as a “place where talent wants to live”. A consequence is that we protect our environment and improve infrastructure. We need to see ourselves, and project ourselves to the world, as smart, creative and innovative -encouraging the best and brightest to live and work here. Our cuisine, wines, outdoors, and life quality are helpful to this end, but so are our writers, our theatres, our orchestras, our universities and the quality of our journalism.
But most importantly, in our homes and in our schools, we should imbue our youth with a sense of opportunity. We must tell the stories of our creative and innovation successes; encourage entrepreneurship; and educate for future opportunity; ensuring that students make informed subject choices; aware that maths and reading are vital, and that there will be opportunities for those with engineering and technical skills. Some political leadership and media awareness around these issues would help accelerate the process. But with or without that, change is inevitable, simply because the growth rate of the high-technology export sector is greater than the rest of the economy, averaging over 11-percent in the past two decades7, while the economy as a whole has grown at around 3.5 %. It really doesn’t matter what I say or write. Exporting smart products to the world is good business. We have shown we can do it and an increasing number of New Zealanders are determined to be part of it. In 10 years, the benefits will be apparent to all.
1. Grossman and Krueger, Economic Growth and the Environment (1994). NBER Working Paper Series, Vol. w4634. 2. Alderson and Nielsen, Income Inequality, Development, and Dependence: A Reconsideration (1999) American Sociological Review , Vol 64 3. Dumont, International mobility of the highly skilled :a new perspective (2005) Directorate for Employment, Labour and Social Affairs, Division of Non member Economies and International Migration, OECD, Paris 21 April 2005 4. 2010 International Property Rights Index, Americans for Tax Reform Foundation/Property Rights Alliance 5. Transparency International Global Corruption report (2010) 6. OECD annual report on income taxes in OECD countries (2010). 7. United Nations, Comtrade database (http://www.indexmundi.com/facts/ new-zealand/high-technology-exports)
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NZ Manufacturer September 2011
There are three ingredients in the good life: learning, earning and yearning.” – Christopher Morley
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AUCKLAND MANUFACTURERS
GMP relies on Kiwi clean green image and reputation
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t’s always good when the good guys win. Often, it’s the companies who know how to play the competition and the award ‘game’ which come away with the spoils. Which brings us to GMP Pharmaceuticals Limited – winner of the prestigious Employers and Manufacturers Association (EMA) Award for Excellence in Manufacturing at the recent annual Westpac South Auckland, ATEED organised, black-tie event. The East Tamaki-based GMP Pharmaceuticals Ltd reception area is already bulging with manufacturing and exporting awards, despite being a relatively new company. GM Minesh Patel, who works a 12-hour-plus day Monday-to-Friday, and “just a sixhour half-day on Saturday”(the family get the remaining day-anda-half) moved from India just on a decade ago, largely to accompany a friend who had selected New Zealand, after three of their mutual friends had opted for Canada. He was ‘sitting pretty’ at the time, but his friend was persistent. So this is a ‘might not have happened’ story too of a model immigrant who remains modest; committed to helping dozens of small businesses develop products and turn into big businesses; package, export and distribute – primarily in China, Korea, SE Asia, Hong Kong, Europe and the USA; and would have the most diehard immigration critic drop any prejudice in five minutes talking to him. He oozes those old-fashioned values that used to predominate here. Patel has a Degree in Pharmaceuticals and had a stint with Revlon. He started at the very bottom, as is the norm in this situation, in a company that was struggling and desperate for orders. Resilience, endless energy, attention to detail (as we tour the two factories and warehouses he is alert to anything from an order form on the floor to a stray leaf, which he reattaches or puts in his pocket, all the while singing the praises of Karl Ye, the overall GMP Pharmaceuticals boss back in Australia, who gave him his first job (he pleaded with the MD to “try me” and was given quality testing in the lab) and continues to give him a freehand in running the New Zealand operation. Wouldn’t you, especially with a motto which reads: ‘We work HARDER for you’? Given that 45-percent of the GMP branded production of the health tablets, capsules, creams, powders and liquids -- containing everything from abalone, bee products, milk,
kelp, alfalfa and on to avocado oil -- GMP produces ends up in China (make that 85-percent once their local OEMers have sent those overseas), won’t they be moving the factory to China in the near future? After all, we’ve seen that happen time-after-time. “There are a couple of issues you have to first get your head around to understand the positioning and the services which GMP provides – at no cost – and leaves us with bulging order books, even as we manufacture 24/7, other than the statutory days we have to close. “Our market in the East likes the fact that New Zealand has a ‘clean, green’ image; that it is highlyregulated, with the very highest standards imposed; it’s honest and the product is ‘true to the label’. That’s terribly important; especially with Chinese parents, who are only allowed one child. “They are not going to take a chance with their child and buy a cheaper product versus one from New Zealand. As well as being NZFSA registered, Medsafe GMP certified, adhere to Therapeutic Goods Administration (TGA), E-Certifications for bee and animal products, US FDA registration etc, our own GMP Certificate on our products carries huge status and credibility in the markets we serve.” The mind races to how many other manufacturers might have not listened to the market on this score. And that is the basis of the good guy/s comment at the outset. Patel, now with others, provides the whole deal: ‘General Service; Documentation Service; and Logos and Mark Application’. General Service includes everything from R & D, through listing and registrations to the likes of stability testing and sourcing packaging material or ingredients to graphic design and their celebrated ‘One Stop Service for Export to China’, which has helped a legion here and Australia. With its AUNEW colleagues, GMP has more than 20 additional stores planned in major cities including Beijing, Shanghai, Tianjin, Dalian, Zhengzhou, Fuzhou and Yiwu. It already has offices and wholesale/retail stores in Beijing – a three-storey Hub concept store, for display, test-marketing and sale of Australasian products -- and Shenzhen; a bonded warehouse in Tianjin port; a regulation and distribution team in Beijing; a distribution office in Hong Kong; and a new office set-up in Yiwu city in China. If that wasn’t enough, you can have them assist with everything
from technical documentation, to import permits, pre-clearance, export documents, China import permits and dairy export registration, to name a few. And, of course, when it comes to those all-important logos and trademarks, there is ANZHCA, New Zealand Made, anti-counterfeiting (where the label effectively implodes if tampered with), certified organic, through to Halal and the muchprized GMP Certificate. When Patel heard that a multinational was closing its operation next door (they were consolidating manufacture in China!) he moved on them, rejecting their rental offer and buying it. $7-million later, it is fully equipped and starting initial production of infant formula – you guessed – for the Chinese market. At $10-a-can, it’s North Island’s latest gold mine. Their USP? We are ‘next door to the world’s best dairy farms’. The day after a TV advert around that theme aired in Hong Kong, they sold 20,000 bottles of supplement product! Next door the former Quest International factory and warehouse, acquired by GMP in 2002, and employing just seven staff, is hitting the limits in terms of people and machines, so you wonder whether Mr Patel will be looking closely at neighbours in the quiet Averton Place cul de sac, since they have a constant funnel of 400-500 orders pending, and the export container trucks need that large turning area out front. If the theoreticians and the management gurus are still reading, prepare to quit now. There is no structure, or make that a ‘very flat one’. And Patel isn’t interested in having anyone in the 200-plus employees now thinking they are cosy in a nine-to-five job. “I have a great deal of pride in our employees. Some of the people work 60-hours. I tell them: ‘we have plenty of work; it’s up to you’. I remind them, when someone is
buying baby formula in China, they want to know we can be trusted – we are honest, legal and hard-working. “When they join, I remind them they didn’t come to New Zealand to go on the dole. They must work hard, establish themselves and get a good education and training. If they aren’t, they’d be doing nothing for themselves and their careers, or for GMP. What’s the point in that?” he asks. “I tell them: ‘Go and work on a farm or at McDonalds, if that is where your head is’.” Most of the staff are immigrants too, as you note when the shift changes, a plus factor in dealing with overseas markets too. “To be successful, you must understand the unique cultures of the countries you export to, and the level of evolution of the market. You might expect me to tackle the Indian market, but we couldn’t get much traction there, given local market conditions.” And the man is creative and innovative too. Two brief examples: how to sell cod liver oil (something we all recall as ‘child-abuse’) and excite a market for calcium. Simple, Patel reckons. Put a specific amount of cod liver oil (400 mg) in a fish shaped gel. Twist it off onto food, and that’s onedown. Calcium gets to be a bone shaped ‘lolly’ to be chewed. By his calculations, in addition to the +200 staff directly employed, through the value-added GMP provides, another 500-700 jobs have been created – “they are effectively employees” --across the 350 customers they have locally. GMP is currently a $40-million operation. “That makes me believe, that if you follow the split above, we are worth close to $100-million to the New Zealand economy.” Casually, he notes: “I have business in my blood.” Most would add: “And some.” Remember the names – Minesh Patel and GMP Pharmaceuticals; you’ll hear more about them in years to come. www.nzmanufacturer.co.nz
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NZ Manufacturer September 2011
AUCKLAND MANUFACTURERS
From page 1
The secret of success in life is for a man to be ready for his opportunity when it comes. – Benjamin Disraeli
FoodBowl and NZFI Network committed to global export targets
kitchens, laboratory facilities and a short-run processing capability to allow in-market testing of new product concepts, to all existing (or yet-to-be-created) local companies, across the board. “We want anyone with a wellthought-out idea, who has done some prior testing, and who understands our vision of ‘scalingup’ to meet the demands and opportunities of the international food and beverage market, to hire the facility, at our reasonable rates ($2, 850 for the first 24-hour day,” says Nowell. He points out too that in addition to the open-access commercialisation facilities, the network will provide, what he calls ‘a cloud of professional competency’, consisting of approachable, experienced and highlyskilled technologists, scientists and consultants to support companies’ use of the facilities. And an IP knowledge-base to identify and develop opportunities for intercompany collaboration to achieve operational scale – which will ensure international success. “Overseas data from similar economies indicates significant growth can come from adding value to the primary sector by constantly innovating on what we are already good at. New Zealand has many SMEs which have excellent ideas, but lack the financial, material or knowledge resources to bring them successfully to market.” Nowell is known to admire the way the very similar Danish food and beverage industry is achieving success and acknowledges the influence of the highly-successful Northern Netherlands Food Valley in the scoping of Auckland’s FoodBowl. Already there are some 1,600 food processing companies around the airport and the former Manukau City. And the indication is that many more will congregate around the FoodBowl facility to be near to it and the international freight facility. Which explains why the Auckland International Airport company has provided the build and leaseback of the facility. (Under-fire Auckland City mayor, Len Brown is held in high regard in the FoodBowl for having the vision to support it, while leading
Manukau City, and backed that up with an essential $2.5-million to ‘bridge’ matters, until the Ministry of Economic Development came to the party on this facility and the network of hubs, with $20-million: $9.4-million of which is being spent on the FoodBowl fit-out.) Nowell again: “The resources of the FoodBowl will overcome a critical deficiency in New Zealand’s new product development process – the ability to upscale innovative and sophisticated new products from laboratory to commercial production – and will fill the gap between the idea stage and getting successful product on local and international market shelves. “It will also help to manage the risks of innovation and entrepreneurship by minimising investment in capital plant and expertise, until products and markets are proven.”
will be the primary application; the Canterbury ‘SOUTH ISLAND’ centre will support South Islandbased manufacturers, and the Palmerston North, ‘FOOD PILOT’ hub, which already draws on the expertise of some 600 scientists and technologists in NZFIN partner facilities – including AgResearch and Massey University – will provide a pilot stage for ultimate users of the Auckland FoodBowl. A key feature of the FoodBowl is security against competitive interests and cross-contamination. Anyone hiring a facility will have exclusive access to that facility, protected by security card access and the ability to bring in all their own supplies in anonymous wrapping and hold them in controlled storage space. The facility is powered to accommodate their recording and computer technology. The FoodBowl monitors each
The facility on Verissimo Drive, Mangere.
Nowell believes that with New Zealand being a small economy the FoodBowl facility and the countrywide network will largely limit the likelihood of unnecessary duplication of expensive processing plant and equipment too. (Waikato already has a large spray-drier for milk products). He also paid tribute to the enormous amount of voluntary work – ‘thousands of hours’ – which had enabled the concept to come to fruition. The FoodBowl is operational from October, Palmerston North and Canterbury are now operating, and Waikato will follow in 2012. Each is focused on industries relevant and connected to their region, e.g. in the ‘FOOD WAIKATO’ hub, dairy
machine to ensure that it meets critical control measures, so as to ensure performance; and ultimately to be able to issue the essential food compliance records. ‘Flexibility’ is a keyword. Each hall is capable of a modular fit-out to meet specific needs. But so is ‘discipline’: on entering and leaving each module your passage is barred by a red bench, an uncompromising reminder to swap shoes and don/ remove protective gear. Project manager for the facility, Colin Mitten, worked in the UK, Europe and the USA prior to settling in New Zealand in 2004. He has led Regional Economic Development initiatives both in NZ and in the UK, has consulted to and held local government board positions, as well
as owning significant, successful businesses around the world, across both the manufacturing and service sector. He believes these measures are vital to the success of the operation, and is equally determined that cross-contamination will not occur through installed control processes and rigorous cleaning procedures between users. Rooms are capable of being pressurised as well as temperature and airflow-controlled. An excursion into the roof reveals the sophisticated, filtered airconditioning plants – all systems are duplicated – and a myriad of highly-ordered and meticulously labelled pipes conveying every type and temperature of water, including carbon-filtered, as well as compressed air, glycol and ammonia. While the process and product halls are dominated by the largely burnished stainless steel equipment (some 140-odd at last count, ranging from a high-performance V Blender to blend under ‘a modified atmosphere’ to a state-of-the-art Multivac large double-chamber C500, which delivers 6,000 Bar highpressure pasteurisation and has a deep-tray and gas-flush capability) the behind-the-scenes areas controlled by cleaning and assisting staff have the feel of a vast intensive-care unit. Mitten, who will stay involved as a non-executive director, clearly means business. There are seven halls (Mitten calls them ‘factories’): six process halls and a single product hall. These are sectioned off into four secured units. Some two weeks before the official opening, when we visited, Nowell, the former Zespri and Griffin’s Foods boss, who had previously served some 13 years in senior management with L’Oreal and Sara Lee Corporation, covering Pakistan to Japan to Indonesia – with extensive JV experience in China, India and Indonesia – was enthusiastically (and somewhat nervously) monitoring the groups of local industry leaders and colleagues pouring through on hosted tours. You could tell the man, already awarded a Companion of the NZ Order of Merit, was dying to call: GAME ON.
WWW.EMEX.CO.NZ www.nzmanufacturer.co.nz
NZ Manufacturer September 2011
High achievement always takes place in a framework of high expectation. – Jack Kinder From page 1
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AUCKLAND MANUFACTURERS
Bakeworks, the ‘little bakery that could’ and did
house co-owner who has shapedup into a sales and marketing whiz with metaphorically ‘big feet’ to get Bakeworks’ bread and cookies into national supermarket chains too. She also has them so successfully ensconced in the rapidly growing gluten-free baked products market in which some of the bigger brands - Vogels – are trying to steal their thunder. No one on the tight team looks even vaguely concerned, since the last big brand to try it, Burgen, didn’t have much impact. “We created the market and are now going to have to fight for it. But that’s okay; we are good at reinventing ourselves. “I love Vogels bread, but our gluten-free is, ironically, ‘more Vogelie’ than theirs. They’ve sort of fluffed it up, for some reason?” says Unger. ‘Liberte’ is the French for ‘freedom’, the critical component of gluten-free. It is a strong, eyecatching logo which makes it standout on crowded supermarket shelves and gives it a ‘lift’ away from the: ‘I have an embarrassing problem; so let’s wrap it up in a brown paper-bag ’ category. “We thought this was the perfect word to describe our bread range the freedom to enjoy eating bread without all the nasty side effects attributed to eating wheat breads. Freedom yeah, no more restrictions,” explains Unger. The brand and packaging, all worked out by Kirsten and co-owner and baker-supremo, Dave Harris (with the help of a good designer and photographer: no fancy ad agency needed) and launched earlier this year, sent sales soaring just before the award – “nearly double”. Interestingly, neither of the Bakeworks’ founders suffers from Coeliac disease. Back in 2002, Dave’s mother ran an organic food store and the two of them got into baking organic bread from the back of her store. They dabbled in gluten-free bread (“We cooked it for three hours, thought it was terrible and the crusts were like concrete; but people liked
Kirsten Unger with promo material and a range of cookies
it”). Six months later, Harris had the game-changing recipe and they moved to their current premises. So what is their secret recipe or process that has given them this clear edge? “Traditionally the baking of a ‘perfect loaf’ is dependent on the correct balanced formation of gluten during the kneading process of water and flour to form an elastic, but strong structure required to trap the gas (CO2) released during fermentation. “The ratio of the two resulting proteins is important in ensuring a good loaf, and the composition of each changes with the type of grain used. Commercial wheat flour is processed for a high gluten content to ensure a maximum yield in a commercial bakery. When viewed alone gluten is a tough, elastic greyish substance almost resembling chewing gum. “Unfortunately for almost 1:100 people this dietary gluten reacts with the lining of the intestine, through an immune response, known as Coeliac Disease, resulting in the reduction in the absorption of
nutrients from food – which, in turn, leads to deficiencies in vitamins, such as iron, folic acid, and calcium. Proteins, sugars, and fats are poorly absorbed as well, which overall can lead to (amongst others) fatigue, anaemia and osteoporosis. “While gluten-free baking is not always easy due to the lack of elasticity in the dough, we have perfected our recipes to include ingredients that are rich in all the good things your body needs. Eating Liberte Bread helps you maintain a balanced diet and give you extra goodness, especially from our seeded varieties or our new Grain Sustain loaf.” She stresses that it is naturally low in sodium, making it attractive to those with dietary problems, is effectively “natural, home-baked, delivered overnight and has a shelflife of up to 10 days”. “Because we understand the impact of each of the constituent parts, we don’t just use any ingredients to bake our wonderful products. We insist on knowing where they came from, and more importantly that they haven’t harmed our planet in their production,” Unger says, still true to their organic roots. “So only certified organic palm oil from renewable plantations; freerange and certified eggs; NZ-made and certified organic apple cider
Timing is everything in this industry. That separates us from the rest. Bread baked in the afternoon is in stores across the country the next morning.
vinegar and gluten-free flours plus seeds and grains from approved suppliers – and still tested before we use them -- are used. Real and pure chocolate (‘and not fake or full of crap’) makes up the ingredients we use.” Their premises are ‘a 100-percent gluten-free zone’, meaning they have to take extreme caution daily with all ingredients handling, to assure there is no cross-contamination. The supermarket and organic stores they supply from Northland to Invercargill number in the hundreds today, but it wasn’t all plain sailing. Unger pays tribute to management in the Progressive Stores chain. Sadly one of them has died in the time they have matured their operation and isn’t alive to see that the cautious strategy pay-off. Bakeworks was given a couple of stores –Auckland and Mt Eden -- to get all the production, packaging and distribution elements right, and only then did they gradually increase the number of outlets to them, thereby helping to build a stable and successful supplier. Since then (2006), Foodstuffs, which has a more complicated owner-operator, regional and North/South Island structure has also come on board, and their online trade has grown too. After initially handling all the distribution themselves, it has now been outsourced. “Timing is everything in this industry. That separates us from the rest. Bread baked in the afternoon is in stores across the country the next morning. “That shows we have learnt from our mistakes along the way. We did cakes, slices, muffins and pies, along with bread and cookies. People loved our pies, but they were pricey and needed a second process – chilling. Reluctantly, we’ve cut our range of products to bread and cookies and added breadcrumbs, following the ‘stick to the knitting’ principle,” she notes with a sigh. You never know: these guys have beaten the odds before. Watch your pie shop...one of these days?
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16
NZ Manufacturer September 2011
AUCKLAND MANUFACTURERS The Interview Chris Vincent
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hris Vincent is CEO of RPM, a business which is celebrating 25 years of experience in their field. Why do you do what you do? I revel in the challenge around a business that is struggling with any facet of it’s business cycle be it company vision, business structure, finance, sales or human resource. I am a firm believer that we should all make a difference at the place we work, every day we turn up. The buzz of success far outweighs the challenges in business. If you were not doing this what path would you have chosen? I come from a farming background so it would undoubtedly be something aligned to the great outdoors and of course the opportunities that exist today for
the current and next generations are endless in this area so I envy them. How is the business currently placed given difficulties faced by NZ manufacturers? Over the past two years we have worked hard on creating a business platform and work environment that has enabled steady growth in a particularly unstable global market place. We are excited about where we are at now and for growth plans over the next 24 months irrespective of what happens in our local market. Greatest achievement? Marrying my wife of 31 years, who is also a high achiever in her full time role and raising together two wonderful children both of whom value the difference between what is right and wrong and above all believe in their own ability. Biggest influence? I started my working career in the CBA Bank and had the good fortune to work under a manager by the name of Bill Hodgson. He instilled in me that honesty and integrity would stand you in good stead for your entire working life through both the good and bad times and this has proved to be unquestionably true as I have experienced both. How do you relax? No brainer, either in some remote part of NZ deerstalking with family or scuba diving. How do you see the present business climate in New Zealand? Challenging and difficult to read so we just have to concentrate on what we are good at and get on with it. Don’t wait around for a hand out or lift up as you will be disappointed. Having just returned from Europe and the UK I could say that we have little to complain about.
– Spike Milligan
Export award to Modtec
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Silverdale- based engineering and manufacturing company claimed the major exporting award at the Westpac Auckland North Business Awards 2011. Modtec Industries Ltd took home the EasiYo Excellence in Exporting Award impressing judges with its potential for further growth on the back of its 41 percent sales export increase in the last three years. A privately owned engineering and manufacturing company, Modtec provides design and quality solutions in zinc pressure die cast components, steel tube and powder coating products. The company designs and manufacturers Integ monitor arms and Apollo mounting solutions. The judges liked Modtec’s well designed and constructed product that serves a growing need in a huge market. They predict the
company will become even more successful as it expands its export sales in Australia, North America, Singapore, China, India and the UK. Ngaio Merrick, Manager Business Development – North for Auckland Tourism, Events and Economic Development is delighted for Modtec Systems. “Exporting is the primary way the New Zealand economy is going to grow. It is fantastic to have a company of Modtec’s calibre leading the charge in exporting,” says Ms Merrick. “It is a wonderful company that is set to achieve even greater feats in the future.” The annual Westpac Auckland North Business Awards celebrates excellence in the local business community and honours successful companies across 12 awards categories.
George Fernandes, Wade Brownlee, Abhijit Roy, Bruce Davies, Ian Cooper (award winner) of Modtec Industries Ltd, Sandra Sweetman and Paul O’Brien (award sponsor) of EasiYo.
THE FACTS
• Auckland is the best performing region in the country. • Population growth has outpaced the rest of the country. • Consumer confidence is relatively strong. • Auckland provided 32.6% of the nation’s economy. • 5% annual growth in employment. Where we export to: • UK 3.85% • Japan 7.55% • USA 8.74% • China 10.1% • Australia 23.73% • All other markets 46.03%
• 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 sales@rpmtoolanddie.com • www.rpmtoolanddie.com www.nzmanufacturer.co.nz
Money can’t buy friends, but you can get a better class of enemy.
NZ Manufacturer September 2011
Success is not permanent. The same is also true of failure. – Dell Crossword
17
AUCKLAND MANUFACTURERS
‘The Cloud’ one of the best showcases of Kiwi innovation
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t’s a tribute to the innovation and commitment of those involved in making ‘The Cloud’ happen that it has risen above the controversy and the namecalling to be one of the best ever and certainly largest -- showcases of Kiwi innovation, when it comes to manufacturing, across a broad plane, business creativity, quality food and wine, exciting fashion and diverse culture, all part of the REAL New Zealand Festival. And according to New Zealand Trade and Enterprise (NZTE), our economic development and trade promotion agency, and a key guiding light behind ensuring ‘The Cloud’s’ success international visitors - especially the media - are delighted with it. Even more importantly, market research of visitors, pre- and post, shows local visitors are having their eyes opened to the fact that ïwe do more than ship milk powder, logs and wool to the rest of the world. The much-maligned Auckland City has come to the party by adding the talents of ATEED to the mix. Fortunately, it would seem that The Cloud is not just a passing one, and could have a life of some 10-years. It includes an exhibition space, two giant screens for an innovation AV showcase (and to broadcast the Rugby when it is a ‘Fanzone’; a ‘Taste at The Cloud’ food and beverage experience; the NZ 2011 media lounge; and the NZ 2011 business lounge - one of the best view-sites on Auckland-s waterfront. What’s more; it’s FREE. Queens Wharf is open to everyone seven-days-a-week from September 9 to October 24 and the programme changes daily, so there’s plenty for young and old right throughout the RWC Tournament. Dave Gibson of the Wellingtonbased, Gibson Group and Michael Barnett of the Auckland Chamber of Commerce are credited with driving the concept of creating a showcase to capture the interest of the international visitors and media, while they attend one of the most significant sports events in the world, to show Kiwi ingenuity has evolved a long way from the days of the ‘Number Eight Wire’. Gibson is credited with the theme: ‘Doing things differently’. ”’The Cloud’ is an important moment for New Zealand’s business sectors. Our goal was to ensure New Zealand’s innovation story plays a strong role in showcasing New Zealand during the RWC Tournament. It is an investment which is a legacy that New Zealand Trade and Enterprise will continue to build on long after the Tournament ends,” said Rugby World Cup
The QSUB, one of dozens of innovative Kiwi products on show in The Cloud
Minister, Hon. Murray McCully, at a preview. ”Our investment in ‘The Cloud’ for it to be more than just an entertainment venue is deliberate and important. Countries participating in Rugby World Cup include some of our biggest trading partners - Australia (largest), the USA (third), Japan (fourth) and the UK (seventh largest). From aviation to agribusiness and bioscience to marine - these forwardthinking business sectors are changing international perceptions of New Zealand. The showcase is the first step in broadening the brand story of New Zealand Inc. to encompass world-class innovation that is world-scalable. It is time to confidently market New Zealand as a great destination for ingenuity, knowledge, investment, talent, as well as tourism and culture. First up, a showcase for our major export, the best of New Zealand food and beverages are on offer daily during Rugby World Cup at ‘Taste at the Cloud’, as part of the REAL New Zealand Showcase. ’Taste at the Cloud’ opened its door on 13 September and will run through to the end of the RWC on 24 October. “It is a journey through one of this country’s best kept secrets - our exceptional food and beverages,” says New Zealand Trade and Enterprise’s Operations Manager, Food and Beverage, Mark Roxburgh. ”The world knows we have top quality lamb and outstanding sauvignon blanc for example, but our food and beverage industry has expanded into so many other new culinary directions.”(See FoodBowl) ’Taste at The Cloud’ has four food zones: seaside, urban, winery/ orchard and rural, and four food options within each zone. Each dish
can be accompanied by a specially selected New Zealand wine, though there are other beverage options available. The wines were carefully matched with the menu options to offer a complete, creative culinary experience for visitors. The wines on offer will change daily. While there is a certain amount of subjectivity at play when a small group chooses which innovative products and processes to showcase, those responsible - and all fingers point to the Gibson Group and Fit Architects, who developed and erected ‘The Cloud’, their selection is proving impactful, according to the research. Here are some chosen at random – from a random selection - to give you a flavour of what’s on offer: * Able X: Im-Able was established in 2009 specifically to introduce treatments to stroke victims. Sunil Vather and Geoff Todd, together with a group of people bringing medical, business and technology expertise, formed the company. The technology was exclusively licensed from Industrial Research and a strong relationship between the two organisations now exists. * Core Builders Composites: Its current New Zealand location in Warkworth opened last year having originally started in Ventura, California in 2001. The move to New Zealand was recognition of the fact that high precision boatbuilding requires the plant, space, technologies and facilities on a permanent basis and with a lifespan of more than one campaign. The AC45’s wing is a 45ft long catamaran, built for a new racing series leading up to the 2013 America’s Cup. Core Builders Composites have assembled 10 identical AC45s for the teams. These catamarans usher in a new era of
America’s Cup racing. * Duke Engines: engine technology development in an advanced stage of developing a unique high-speed, valve-less, five cylinder, three injector Axial internal combustion engine, with zero first-order vibration, significantly reduced size and weight, very highpower density and the ability to run on multiple fuels and bio-fuels. * Corner Solutions International: The Roundy system is the result of extensive research and development by Walter Hensch, who has a commercial building background in both Europe, and New Zealand. Walter’s research began after numerous requests from his clients, both architects and homeowners, for round corners made with plaster boards, using the same board that is used in todayÕs residential and commercial buildings. Clients wanted a cheaper option with more adaptability and a much higher standard of finish than what was available on the market. The result is a perfect, seamlessly curved board for walls and ceilings. * Rocket Lab: rapidly developed, innovative solutions for commercial and defence customers. Its latest innovation, Instant Eyes T is a lightweight, hand-launched, real time ISR system created to provide instant, close range ïsituational awareness for soldiers in dynamic tactical situationsÍ. * Williams Warn: (most popular on show). Ian Williams, New Zealand’s first qualified brewmaster, lager beer award-winner, consultant to more than 60 breweries and a professional beer taster, along with Anders Warn, have developed a personal homebrew kit, attracting huge, world-wide reaction. More on these and other products in the October edition. www.nzmanufacturer.co.nz
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NZ Manufacturer September 2011
AUCKLAND MANUFACTURERS
I feel that luck is preparation meeting opportunity. – Oprah Winfrey
Where to live in Auckland Panmure including Mt Wellington, Sylvia Park and Tamaki
An excerpt from the Where to Live in Auckland book 2011 edition. jobs is changing the population Smart Buy profile in the area significantly. Many migrants – from a huge range of countries, and mainlanders from the South Island – also live here, attracted by the lower prices and major employment areas in Mt Wellington and further south. The townhouses and terrace blocks around the Panmure Lagoon and near the shopping centre attract young professional couples. Right on the water, Rich-Listers hide out and gaze at their yachts moored off properties that enable them to step straight off the back lawn and on to the water. Generally though, this suburb is a solid working class area that acts as a gateway to the eastern suburbs. In Panmure and Tamaki, the University of Auckland Tamaki campus attracts students and lecturing staff to live nearby.
An idyllic place to live
P
anmure is one of the few Auckland suburbs that can be compared with London and Paris. Unfortunately it’s not for the shopping. The infamous Panmure roundabout is at least as difficult for drivers to navigate as Hyde Park Corner or the Arc de Triomphe and best approached with trepidation and a steady hand on the wheel. But Panmure deserves to be talked about for its other attributes such as its varied housing, proximity to the city and good motorway access, as well as the large and exciting projects afoot. Mt Wellington is now home to the King Kong-like Sylvia Park shopping centre sprawling over 24ha. Sylvia Park is expected to do much for the area’s profile and will create employment opportunities that will, in turn, positively influence property values. Next, is the Stonefields community development at old Mt Wellington quarry, which will pump 2900 new houses and 6500 new souls into its re-sculpted crater.
Who lives there?
Typical homes
A relatively affordable suburb fairly close to town, Panmure appeals to first-home buyers, while Mt Wellington is seen as an aspiring man’s Ellerslie. With the opening of the business park aspect of Sylvia Park, the injection of white-collar
The types of houses in Panmure are as diverse as the suburb itself. There are turn of the century villas, brick and tile units, townhouses, renovated bungalows. 1960s and 1970s family homes and state and ex- state houses. Many of the latter have been sold by the Government in recent times, although this trend has slowed with current policy. With many sizeable sections between 600 square metres and 950 square metres its an ideal spot for families. Spacious executivestyle houses can be found along the Tamaki River, and on the hill heading towards Pakuranga, where they have views towards St Kentigen’s College, Farm Cove and Mt Wellington.
Panmure is well placed to show good price appreciation. Housing is relatively affordable; it’s close to the commercial areas of Mt wellington and Penrose; the motorway network is easily accessible and the beaches of the Eastern Bays are a short drive away.
Stephen Hart
Moving to the New Zealand’s largest city brings with it challenges that test most people’s resources not least one of them being ‘where to live’. So here is a resource that will make it just that little bit easier for you whether you live in the Midlands, Singapore or Invercargill. Where to Live in Auckland is written by Stephen Hart and provides a unique insight into the 200+ neighbourhoods, schools and amenities that make up New Zealand’s largest city. Now into its 6th edition It can be ordered online at www.wheretoliveinauckland.co.nz. Stephen also runs Auckland HomeFinders which helps with every aspect of home buying and negotiating. www.aucklandhomefinders.co.nz
COMMERCIAL
Thinking of moving your business to Auckland? Here are a couple of premises we identified as being available. They are located in the Panmure area.
For further information: email max@nzmanufacturer.co.nz www.nzmanufacturer.co.nz
NZ Manufacturer September 2011
Sometimes when you innovate, you make mistakes. It is best to admit them quickly and get on with improving your other innovations. – Steve Jobs
19
BUSINESS NEWS
Rugby World Cup boosts export industry in transition
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espite the Tournament lasting six weeks, Rugby World Cup 2011 is set to give a muchneeded boost to the New Zealand export industry, with the impact felt into 2012 and beyond, says the 2011 DHL New Zealand Export Barometer. Exchange rates, fuel prices and the Christchurch disasters topped the list of factors that have negatively impacted exporters in the past 12 months, but New Zealand exporters are positive about the year ahead with 70% saying their export orders will increase in the coming year. The DHL Export Barometer provides accurate insights into the factors impacting on New Zealand’s export trade. The export industry has taken a hit due to several factors in the last few years, but there is a slow-burning confidence, with two thirds believing orders will increase over the next year. Some of this confidence can be attributed to the Rugby World Cup effect which has put a bit of energy
into the sector, with 40% saying they believe it will have a positive impact on their business’ bottom line. Nine out of ten of those who believe it will have a positive impact say this will continue beyond 2011.
media for their marketing. This is a huge percentage when we consider that the export industry is mainly made up of people who haven’t grown up with this technology as the norm.
Economic Impact of Asia
Showing the increasing reliance on the Asian markets, those exporting to Korea, China and Taiwan are most confident of orders increasing over the next 12 months. To prove this, 68% of those surveyed feel orders from Korea will increase over the next year. Australia continues to be the top export destination. China has emerged as another top export destination in 2011 coming in ahead of North America, Europe and the UK for the first time.
Online Commerce
The export community has had a difficult year but online commerce is presenting growth opportunities. Half of the exporters surveyed reported an increase in the
Australia
levels of online commerce they have undertaken in the last year. Although competition has increased, e-commerce is making it easier for exporters to reach out to a wider market and will help many businesses react to opportunities in a timely and efficient way. The impact of online commerce on the industry has now been felt to a much greater extent. Social media in particular has crept up as a big factor, as Corcoran comments: Almost a third of New Zealand exporters say they rely on social
In comparison, the DHL Australia Export Barometer shows the strong dollar and natural disasters at home and overseas has significantly dented the confidence of Australian exporters. Corcoran highlights the stark contrast in confidence between New Zealand and Australia: “Interestingly, only 48% of Australian exporters expect an increase in orders over the next 12 months, compared to 70% in New Zealand.” The annual survey of Australian exporters found that exchange rates are challenging 81% of exporters, affecting their ability to compete with overseas rivals (72%), the prices they charge (70%), sales revenue (69%) and profit (68%).
(1st), diversion of public funds (1st), number of procedures to start a business (1st), quality of primary education (7th), and quality of math and science education (7th). But the good overall rankings for these two sub-indices mask weak performance in some indicators. The infrastructure ranking remains low at 34th (37th last year) particularly in quality of electricity supply, mobile telephone subscriptions, rail and road. New Zealand’s hiring and firing practices (86th) and impact of FDI rules on business (56th) are also areas of relative disadvantage. Rank in the macroeconomic environment pillar dropped from 20th to 48th as the Government budget balance as percent of GDP dropped from 13th to 112th place. Gross national savings as percent of GDP is also relatively weak, ranked 86th. New Zealand ranks 1st for annual percentage change in inflation. Dr Boven says, “New Zealand continues to focus on inflation as the primary goal of macroeconomic policy. Some other countries appear to be managing more strategically, using quantitative easing (printing money) to stimulate their economies, limit fiscal deficits, lower exchange rates to increase competitiveness and reduce the value of their real debt.” Performance in Innovation and sophistication factors (ranked 28th the same as last year) continues to
bring New Zealand’s overall ranking down, and remains the greatest challenge and opportunity for New Zealand. Areas that continue to constrain overall competitiveness include government procurement of advanced technology products (71st), availability of scientists and engineers (69th), state of cluster development (60th) and value chain breadth of exporting companies (59th). The New Zealand Institute’s research shows that shortages of specialised talent and capital availability are constraining innovation performance too. Dr Boven says, “Despite the efforts of many in New Zealand’s innovation ecosystem much more effort and investment will be required to improve competitiveness and lift prosperity. The countries that are improving competitiveness have well-formulated strategies and much more investment. To illustrate, there is still nowhere in New Zealand offering full-time world class professional training in international marketing and sales to lift the success of our many hundreds of internationalising businesses. Complacency must be replaced by urgency or we will continue to fall behind.” A presentation summarising New Zealand’s competitiveness is available at – www.nzinstitute.org nextSTEP Visit: www.weforum.org/gcr
NZ’s competitiveness restricted by innovation performance
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ew Zealand’s Global Competitiveness Index score has remained stable since last year but the country has slipped two places to 25th of 142 countries, overtaken by Israel and Malaysia. New Zealand’s overall performance is limited by innovation and business sophistication, the most important drivers of economic performance in advanced economies. The New Zealand Institute Director Dr Rick Boven says, “Government has increased efforts and investment in innovation but we cannot yet see evidence of improvement. Other countries are doing more. New Zealand needs to lift performance more or our competitive position will continue to slide”. The Global Competitiveness Report is produced annually by the World Economic Forum. Switzerland ranked 1st for the third year in a row, followed by Singapore which overtook Sweden to claim second position. The United States declined for a third year to 5th place as macroeconomic vulnerabilities continue to build and some aspects of the institutional environment have raised concern among business leaders. Canada (12th) slipped out of the top ten, replaced by the United Kingdom. Australia ranked 20th a drop of four places since last year. China improved by one place to 26th, continuing to lead the way
for large developing economies. Among the four other BRICS economies, South Africa (50th) and Brazil (53rd) move upwards while India (56th) and Russia (66th) experienced small declines. The World Economic Forum Founder and Executive Chairman, Klaus Schwab says that while most advanced economies are experiencing a sluggish recovery from the economic crisis, much of the developing world is seeing relatively strong growth. The Global Competitiveness Index is made up of 111 indicators categorised into twelve pillars of competitiveness in three sub-indices:Basic requirements, Efficiency enhancers, and Innovation and sophistication factors. New Zealand continues to do well in Basic requirements and Efficiency enhancers, ranking 17th (14th last year) and 18th (same as last year) respectively. Strongest performance is in strength of investor protection
The United States declined for a third year to 5th place
www.nzmanufacturer.co.nz
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NZ Manufacturer September 2011
PRODUCT NEWS
The competitor to be feared is one who never bothers about you at all, but goes on making his own business better all the time. – Henry Ford
Surface preparation and tacking - plastics repair welding
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By Tim Fastnedge, Techspan Group
echspan’s Tech Tips will help guide you in achieving 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. In this article we are looking at “Surface Preparation” and “Tacking”.
Surface Preparation
As with all forms of welding, cleaning of plastic components prior to welding is as important as any other welding preparation in achieving strong, structural welds. Poorly prepared plastic components will lead to weld failures. Plastics surface preparation involves ensuring all soils are removed. Any paints, oils, greases and even UV degradation must first be removed prior to welding. With large parts, e.g. Bumper bars, washing the part is usually a good start. This will ensure we are removing any atmospheric soils, eg. Mud, Traffic films etc. Use a soft sponge with warm water - don’t use any industrial detergents as these can also introduce film coatings that may also affect the welding results. Any painted surfaces should also be cleaned right back to the parent material.
What tools do I use?
Paints and other remaining soils should be removed easily using a standard abrasive wheel
Cleaning of plastic components prior to welding is as important as any other welding preparation.
Tacking of part.
(sanding disc) with any high speed air drill or electric drill will do the trick. A grinding disc will make quick work of this process, but be warned - plastics yield easily to abrasives, so take care you don’t end up damaging other sections of the part where the wheel can ‘catch’ and ‘drag’ across the component. This process can create a fair bit of dust, so we recommend the use of a face mask when performing this task. Other methods for preparing plastics include - paint scrapper, sharp blade, clean wire brush and even a solvent. These other tools can also be employed for assisting in your plastics preparation - Note: the least used method is that involving solvents. Solvents can assist you in removing greases and oils, however different plastics will also react differently to a range of solvents so finding a suitable solvent for the specific plastic you are working with may be more trouble than it’s worth. Imagine attempting to clean a high gloss plastic part with a solvent that reacts with the plastic making it sticky and dissolving the paint - so my advice is not to use solvents. Not only are they hazardous to store,
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but can be hazardous to use and even more hazardous to your plastic parts. Once the part has been properly cleaned are prepared, we are now ready for the “Tacking” step.
Tacking
Welding of plastics components relies on a number of factors • Surface Preparation • Good joint interfaces • Plastics Identification/Correct welding rod selection • “V” Grooving, using the rotary burr • Correct welding temperatures
Welding technique
A Rotary Burr is used to provide a “V” groove along the weld line.
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Tacking of plastics components prior to welding helps the welder to achieve two things • Good joint interfaces and • Alignment of the plastic components The “Tacking Nozzle” can be used to ensure close joint interfaces and alignment of broken parts. Unlike metal welding, where tacking is carried out at the ends of the welding area, Plastic Welding requires “Tacking” to be carried out where ever you intend to place welding rod. So if you have a crack of 100mm in length, you must “Tack” along the entire length (100mm) of the weld area. The “Tacking Nozzle” is an easy ‘push-fit’ onto the Techspan welding tool. It heats up to the corresponding temperature set on the welding tool, then simply run the tip of the tacking nozzle along the welding area. You will notice this will provide a slight “swaging” together of the two materials - closing up any gaps in the weld area. If you notice any “un-tacked” areas, simply run the tacking nozzle over the weld line again, until there are no visible gaps between the mating surfaces. The next Tech Tip will cover “main welding”. Look out for this in next month’s issue.
Dust collection filter
new HemiPleat dust collector filter combines high filtration efficiency, long service life, and energy-efficient performance with conductive properties. The manufacturer uses a special carbon-impregnated media designed for use where conveyed dusts generate static charges that require dissipation. Applications include fumed silica dust; plastic, PVC or composite dusts; and carbon black/toner dusts. Cartridge filters manufactured with carbon-impregnated media can also be used in explosive dust applications and lessen the risk of ignition sources due to static electricity charges. Conductive filters allow the use of media-type dust collectors in applications where they otherwise could not have been used, due to the dusts having low minimum ignition energy characteristics. The conductive media is available in the full selection of HemiPleat cartridge styles, to fit virtually all
new and existing cartridge dust collectors. With media resistance levels less than 1 MOhm/sq. (106), the cartridge filter meets NFPA and ATEX requirements stating that all components must be bonded and grounded and provide resistance paths of less than 1 MOhm to be considered conductive components. The filter also combines conductive properties with an award-winning, patented open-pleat design that results in better airflow through the cartridge and better cleaning characteristics, resulting in energy-efficient performance and long life. Initial efficiency based on ASHRAE 52.2-1999 is MERV 10/11. Average filtration efficiency is 99.99 percent on 0.5 microns and larger by weight. HemiPleat filters carry a written performance guarantee to run at a lower pressure drop, meet or exceed current collection efficiencies, and last longer. nextSTEP Contact: max@nzmanufacturer.co.nz
NZ Manufacturer September 2011
You must either modify your dreams or magnify your skills. – Jim Rohn
Light fleet expanded
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ireQuip has for hire the latest concrete breaking and drilling tools from Hilti. Prior to this, customers have been unable to hire such Hilti equipment and now thanks to HireQuip, they can. Other quality brands like Kerrick, Maruzen and Husqvarna, whose small plant products have proven to be popular, are also part of a wider range of product upgrades that provides HireQuip customers with the right tools to get the job done. Ease of transportation and set up is also a major attraction for the hirer, with the TE3000 having a portable trolley that can be easily transported in a regular station wagon or ute. With no compressor required, the speed of set up is fast with minimal fuss, allowing the operator to quickly start breaking up to 6 tons of concrete per hour. To date no other electric tool is able to compete in this class. The Hilti TE1500 mid breaker and TE60, TE70 and TE30 combihammer drills are also recent additions to HireQuip outlets
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across the country, with the Hilti (AVR) Active Vibration Reduction and (ATC) Active Torque Control the major attractions of these models. The comfort and performance of these tools offer benefits of increased productivity to HireQuip customers. The Hilti VC40 and VC60 offer a powerful yet lightweight and robust vac that is ideal for a wide variety of workplace applications. In addition to the above electric concrete tooling, HireQuip has acquired some Mazuren hydraulic breakers which are very powerful machines and weigh in at just 21 kg and come with a light weight power pack that weighs only 44kg. Powered by a Subaru/Robin OHC OHV petrol engine, it can be transported, much like other light equipment from HireQuip, in the boot of a car or in the back of a ute rather than hassling with large towable units. When it comes to concrete cutting Husqvarna has proven itself to be a precise and reliable piece of equipment for HireQuip and its customers and hence HireQuip
21
PRODUCT NEWS
The latest concrete breaking and drilling tools available for hire
have additional fleet of the latest Husqvarna K760.14 that features a new air filtration system, a 14” blade and an anti-vibe handle making it a dream to use. More Kerrick trailerised waterblaster units are another example of HireQuip commitment to additional new light fleet which is specifically designed and built to withstand the rigours of the hire industry. Used mainly for cleaning
up industrial building sites where its reliability has contributed to reducing downtimes, the single axle trailer unit provides greater manoeuvrability and convenience. The Kerrick waterblaster has a 3,000-psi pump delivering 30 litres per minute to the nozzle, giving it extremely good cleaning power. The pump is driven by a 25-horse power diesel engine that is water cooled to minimise operational noise.
BOC ‘s new prescription safety eyewear
OC has sharpened its focus on eye-injury prevention with its state of the art range of safety prescription eyewear for the huge number of Australian and New Zealand workers who wear spectacles. The new safety eyewear is in response to BOC figures
showing 36% of the 11 million people employed in Australian manufacturing and industry required visual correction and that eye injury was having a devastating impact on human health and the economy. The vast majority of eye injuries can be avoided by taking a common sense approach to hazardous activities and
ensuring you are wearing the correct eye protection during all potential hazardous tasks around the home and in the work place, even if you are just lending a hand. Providing optimal peace of mind for employers and employees, BOC’s Certified Safety Prescription Eyewear is a cost effective and
diverse range built to the highest level of compliance with Australian and New Zealand standards. Available with a certified Bollé prescription safety frame range, features include unique polyurethane lens material which is chemically inert, strong and lightweight.
Or visit: www.filtercorp.biz
www.nzmanufacturer.co.nz
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NZ Manufacturer September 2011
MANUFACTURING TECHNOLOGY
Success is not so much what we have as it is what we are.
– anon
Production monitoring system improves performance
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lantMaster – production monitoring and scheduling system Is an more efficient way of coping with customer demands and changing delivery priorities. The BarcoVision PlantMaster MES system easily integrates with SAP systems and provides the features required in production monitoring and scheduling. Customer orders are easily downloaded into the PlantMaster database, allowing production schedulers to assign the orders to individual work centres. Based on the actual load of the
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machine and the routing for each product, the system calculates the delivery time for each order. The PlantMaster is able to calculate the raw materials and printing cylinders and creates a work schedule. All of the machines in the production plant are connected to the PlantMaster server by means of a wireless data collection network and this provides information in real time, updating the scheduling application and assists in the calculation of all KPI’s. nextSTEP Email: max@nzmanufacturer.co.nz
Simple quality punch and die grinding
he Mate ValuGrind is a tool grinding system that regrinds, punches and dies to maintain optimum condition for highest quality punch press fabrication. Apart from being compact in size, ValuGrind has a sturdy construction to stop it from moving or tipping
when in use. Its grinding wheel has minimal exposure, it comes with a safety-stop button, tinted polycarbonate safety shield and diffuser-lined tub walls keep coolant splatter to a minimum. ValuGrind accommodates thick turret A-E station, MultiTool and
Trumpf-style Size 1 and 2 tooling, plus it is customised to specific requirements as the user can select the required model based on fixtures, style and electrical wiring needs. What the machine does is provide a superior grinding finish on ground surface flatness with its belt drive that ensures optimum wheel rpm, a large diamond grinding wheel with inner-cooled cup style design that keeps coolant exactly where it’s required to prevent burning or discoloration; plus it has a rigid and robust design for industry. The reason it can rapidly and accurately grind larger tools is that it comes with a large motor that can accommodate up to thick Turret
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EECA welcomes Fulton Hogan’s Christchurch biodiesel trial
ulton Hogan’s decision to trial sustainable biodiesel in its vehicle fleet has been welcomed by the Energy Efficiency and Conservation Authority (EECA). Fulton Hogan has announced it will be working with Biodiesel New Zealand to test a blend of biodiesel and diesel across a range of its Christchurch-based trucks and other vehicles, with a view to expanding its use to the rest of the company’s operations. “Fulton Hogan is a household name in roading and contracting. I congratulate them for showing leadership and environmental responsibility,” EECA Chief Executive Mike Underhill said. “It will be great to see renewable fuels being used in the reconstruction of Christchurch. This move will not only benefit the company itself, but inspire others to
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E-station dies and a large grinding wheel (165mm). The overall size is 820 mm length, 520mm width and 675 mm high. With simple and safe operation, it provides superior finishes on ground surfaces, has low maintenance and operating costs, and allows easy tool set-up and installation. ValuGrind uses diamond grinding wheels that do not need to be dressed, is manufactured with quality components such as Siemens electric motors, plus it has coolant screens that greatly reduce the amount of grinding swarth and allows for easy cleaning. nextSTEP Email: max@nzmanufacturer.co.nz
follow suit.” EECA has supported Fulton Hogan with a business grant to assist the installation of a speciallydeveloped fuel blending pump, which will enable the company to use different proportions of biodiesel blends, depending on the vehicle being filled. The plant has been designed and built in New Zealand. “More businesses in New Zealand are taking the opportunity to use biodiesel blends, to show their commitment to environmental responsibility,” Mr Underhill said. “Biofuels available in New Zealand are better for the environment. They are made from sustainable feedstocks, and their use results in lower greenhouse gas emissions in the atmosphere.” nextSTEP Visit: www.eeca.govt.nz/biofuels
NZ Manufacturer September 2011
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MANUFACTURING TECHNOLOGY Quality conscious manufacturing
The only place success comes before work is in the dictionary. – Vidal Sassoon
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aving explained the benefits of the Toyota Production System in the last issue, it would be worthwhile to mention something about the Toyota recalls that occurred through 2009/10 and the steps taken to address the issues. Toyota initiated three separate but related recalls in late 2009 and early 2010, as a result of a fatal car crash. The first recall was in November 2009 to correct a possible incursion of an incorrect or out-ofplace front driver’s side floor mat into the foot pedal well, which can cause pedal entrapment. In January 2010 the second recall was started after investigation showed that some crashes were not caused by pedal entrapment. Toyota also issued a separate recall for hybrid anti-lock brake software in February 2010. Toyota had recalled approximately 5.2 million vehicles by January 28, 2010, for the pedal entrapment/floor mat problem, with an additional 2.3 million vehicles for the accelerator pedal problem. Toyota recalled a further 1.8 million vehicles in Europe and 75,000 in China. By then, total recalls by Toyota stood at 9 million. At first glance this seems to be a major problem - 9 million cars recalled by the world’s most quality
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conscious manufacturer! Further investigation though shows a slightly different picture. Incidents of Unintended Acceleration can be reported by anyone to the National Highway Traffic Safety Administration (NHTSA). Depending on the year, Toyota has seen either more or fewer complaints of unintended acceleration than other carmakers, indicating that the problem is not unique to Toyota. A full review of the NHTSA database of 15,000 unintended acceleration complaints over the
past decade showed that among all manufacturers, Volkswagen had the highest rate of unintended acceleration complaints in 2009 and 2008. The chart below shows consumer complaints per 100,000 vehicles sold in 2008. So although the numbers of vehicle recalls may seem high for Toyota, the number of complaints for unintended acceleration was not out of the norm compared to other vehicle manufacturers over recent years. For Toyota the recalls came at a difficult time - like all vehicle
By Ian Lines, National Productivity Manager at Skills4Work
manufacturers it was struggling to emerge from the recession and suffered from a decrease in sales. In the US it was estimated that each Toyota dealership could lose between US$1.75 million to US$2 million a month in revenue. Toyota Motors announced that it could face losses totalling as much as US$2 billion from lost output and sales worldwide. The company also suffered criticism from the media with commentators suggesting that emphasis on profits had resulted in manufacturing defects. A study by 30 NASA scientists released in January 2011 could not find any link between the electronic system and unintended acceleration. So it’s debatable if it was a real problem, media frenzy or something more sinister connected to the U.S government’s partial bailout of General Motors and Chrysler. In the final part in this series, we will discuss what steps Toyota has taken to ensure product quality remains the leading driver at Toyota. nextSTEP www.s4wbusinessimprovement.org.nz
MEA Mobile strengthens ties with WaikatoLink
EA Mobile and WaikatoLink has announced they have entered into a formal technology transfer and mobile software development agreement. WaikatoLink is the commercialisation arm of the University of Waikato. MEA Mobile is a Hamiltonbased company specialising in mobile application development. Managing Director of MEA Mobile, Bruce Seymour, says the agreement with WaikatoLink demonstrates their company’s commitment to build local ties with centres of excellence and expand its mobile portfolio. “Our agreement includes supporting WaikatoLink with our software development capabilities and to release a suite of mobile
The pipeline between academic research and commercial activation is getting faster.
applications based on their work in this field.” WaikatoLink is at the forefront of technology development in New Zealand,” says Mr Seymour, “Its role is to bridge the gap between academic research and commercial potential.” “As such it facilitates developments across a wide range of emerging technologies and many of them are ideally suited to mobile application platforms. That’s where we come in.” He says the pipeline between academic research and commercial activation is getting faster and mobile technology will play an increasingly important role in capturing that momentum. “We recognise that mobile applications are the next generation of the information age.” “Our venture will be to commercialise some of the mobile development work that has already been done by WaikatoLink and to support them with our technical capabilities for future developments,” Mr Seymour said. “We will also support the University’s teaching capability in this area and provide career opportunities for future graduates.”
Chief Executive of WaikatoLink, Duncan Mackintosh, said that WaikatoLink was one of the early developers of mobile technology on various platforms. “This association with MEA will enhance our capabilities,” he said. “It gives us the opportunity to focus on new opportunities in mobile technology where they can add value to our development projects.” WaikatoLink’s activities include
facilitating: industry and business access to University technologies, expansion of research opportunities for the University, increased opportunities to form mutually beneficial industry partnerships and collaborations, and increased work experience and employment opportunities for students. “We anticipate working together in each of those areas,” said Mr Mackintosh.
www.cogita.com www.nzmanufacturer.co.nz
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NZ Manufacturer September 2011
FOCUS Brightwater Engineering extend their reach
Leadership is doing what is right when no one is watching. – George Van Valkenburg
In our June edition, Brightwater noted its dynamic growth as a leading provider of innovative engineering and clean technology solutions to Australasia’s Resources; Industrial Energy; Quarry and Minerals; and Wood and Forestry sectors. The company consists of three divisions – Engineering, Manufacturing and Services – linked with a shared vision for excellence and results. It employs more than 300 people, whose safety is always paramount. This edition focusses on the Brightwater Engineering Division and in particular their mechanical, electrical and automation capabilities. eneral Manager Peter Reiber of the in-house skills and innovation leads the Brightwater Engin- which can be applied and coeering Auckland operation, ordinated across the mechanical, which along with Perth and electrical and automation disciplines. Melbourne make up the branches These same professionals are equally located away from the company’s adept at delivering large scale head office in Nelson. His team of 40 turnkey engineering projects like the professionals includes a full range of Laminex industrial energy plant in mechanical, electrical and automation Gympie, Queensland and the Solid engineers. This team has delivered Energy Stockton coal handling and engineering design services across processing plant. He points out that many engineering disciplines. So ‘taking responsibility to see a project when he points to the company’s core through to the end’ is best reflected in values statement, proudly displayed the long-term relationships which the on his office wall, you know this is no company has built up with leading companies in different industries. ordinary business. “Take for example, the long-term “Courage is being prepared to think differently; to be innovative; and relationship we’ve enjoyed with New to seek continuous improvements. It’s Zealand Steel. Today we have some also actively resolving any adversity 16 professional engineers embedded as soon as it arrives and having in the company which deliver skills, the courage to take the complete knowledge and services across several responsibility to see a project through disciplines. We’ve been actively to its successful conclusion is at the involved with them through thick-‘nthin, and our people feel as much a heart of who we are.” Reiber, who enjoyed a well- part of them as they do of us. “That’s because we take rounded 25-year career with Fisher in a joint-team and Paykel – covering automation, responsibility project management and offshore capacity and add innovation and marketing -before joining commitment to the mix to deliver a Brightwater Engineering in 2010, required solution, one minute and points to a recent automation project the next we might be having to trim which they undertook on modernising back our team to help New Zealand the operations of a South Auckland Steel meet altered targets. We have importer of jumbo rolls of toilet paper. the willingness and capacity to do Bulk rolls of tissue which are that,” Reiber adds, saying that is a rewound into logs; split into standard good example too of the flexibility toilet rolls; collated into bundles; Brightwater Engineering is prepared wrapped in plastic and palletised to apply in their customers’ interests. He also notes that he detects a for distribution to retailers is proof
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growing tendency for companies in the more traditional sectors to seek long-term relationships, with proven companies, as a reaction against the insecure and volatile financial world. But, he acknowledges all the big companies start out small and that means being geared to be able to meet the widest-ranging needs of a start-up through to a specific need in a large established company. “To that end, we have always encouraged our people to develop multi-disciplinary skills across their specific discipline to ensure we always have the flexibility and capability to respond to client needs at any moment.” Why would a company want to contract the services of Brightwater Engineering when there are many choices out there in the market place? You get the feeling it’s the question Reiber has been hoping for. “It’s our whole approach to the business relationship that distinguishes us. We offer our clients a verticallyfully-integrated, professional offering of the best in mechanical engineering and electrical engineering talents, combined with proven industrial automation capabilities which give you a ‘one-plus-one-equals-five’ outcome,” says Reiber. “As mentioned, we like to form, what we call ‘extremely close working partnerships’ with clients, particularly with their members of staff with specialist skills and/or intimate knowledge of particular aspects of the engineering process, at the outset. “We prefer to be involved at the outset or feasibility-stage of a project, or as companies are reaching the conclusion that upgrades or improvements are needed in their processes. But we are equally used to
coming in at all the various stages a project goes through – adding a new dimension or even ‘doing a rescue job’. “Next step is to agree a single point of responsibility (SPR) to ensure the integration takes place across the team and to simplify the communication between the client and those involved in the project to ensure that the ultimate, future-proof solution has been achieved. “That ‘differentiator’ flows naturally from our established culture. It’s not something others can learn overnight. And we know it works,” says Reiber confidently.”When asked at the end of a project, what they particularly enjoyed about the working relationship with Brightwater Engineering, most clients focus on the SPR as simplifying communications and cementing ongoing confidence that the desired result will be achieved in the most cost-and-time-effective way. “The other comment we frequently get is that although they note that we appear to enjoy good relationships with suppliers – as reflected in our product knowledge and the prices we achieve for them – they recognise that we don’t ‘play favourites’. Product choices are totally independently assessed for appropriateness to the task at hand and future upgradability.” Having spent a good part of his career in the FMCG game, Reiber is a breath of fresh air in what can sometimes be a hide-bound profession. The client-focus that seems to dominate every aspect of the ‘war stories’ and illustrations that dot the conversation, says Brightwater Engineering is driven by what the customer needs and recognise that you are only as good as your last project.
Email: inquiries@brightwater.co.nz
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www.brightwater.co.nz
NZ Manufacturer September 2011
I like thinking big. If you’re going to be thinking anything, you might as well think big. – Donald Trump
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MANUFACTURING TECHNOLOGY
Using design automation to reduce costs
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cross most industries today, profit margins are narrow and will continue to become even thinner. Even in segments where margins are relatively healthy, competition and global outsourcing make cost reduction mandatory. Historically, the high cost of engineering has contributed so significantly to the attack on profit margins that numerous attempts have been made to cut the process time or the cost of engineering activities. Most of these approaches have been point solutions, which can be highly important in their own right, but are not applicable across the board. Design automation, on the other hand, stands out as an effective means of dramatically cutting costs for a well-defined, well-proven range of engineering activities. This is especially so where business needs demand rapid, accurate quoting; consistent engineering; and, most important, minimum time to finished product delivery.
Driving design automation
The majority of companies share a common goal of reducing design costs. Traditionally, they have had two options: (1) to design less and standardize the product range, or (2) to design faster. If you want to limit your customers’ choices, the first option is fine. However, the pressure to customize products has risen tremendously over the past few years. In a recent Cincom study, 73 percent of total respondents viewed product customisation as critical for products over $100,000, while another 25 percent considered it crucial even for products under $1,000. This trend will only grow. The Cincom study revealed that 63 percent of engineers have seen requests for customised products increase over the last five years, and 26 percent anticipate that the growth rate will be between 25 and 50 percent in the next two years. Another survey of CAD users asked key questions about the users’ design processes. All survey respondents were aware of design automation since they work in various industry segments that document paybacks from design automation. These include almost all engineer-to-order products and many custom or customisable products—basically, any enterprise whose product must be touched by engineering for a significant percentage of orders.
A variety of companies across a multitude of industries are searching for ways to save time and lower costs in the engineering process. As a result, various vendors refer to different features or utilities as “design automation.” Unfortunately, most of these are not useful mechanisms for automation because they cannot handle the entire job. For companies that offer engineer-to-order products, design automation is specifically defined as a system that captures and more or less automatically applies that engineering activity to product variants resulting in finished designs in minimum time. • System: a controller—rather than a random assortment of features—that provides an overarching workflow. Design automation systems often drive CAD systems and interact automatically with product lifecycle management (PLM), as well as with other engineering and office applications. • Engineering activity: all the calculations, rules of thumb, engineering precepts, and product lore that go into a product variant. • More or less automatic: intelligent design automation systems automate some things, usually repetitive or donkey work, and keep their hands off others, generally areas where experienced engineers can quickly assess a design requirement and rapidly supply a creative solution. • Product variants: families of products derived from a central or standard design that must be touched significantly by engineering before full product functionality can be gained. From an engineering perspective, you can overcome the difficulties encountered in customising a product by using design automation software. This type of software evolved with CAD technology as a way to streamline customized product development. The idea is to capture a company’s in-house design rules and thereby simplify the creation of variations on a theme.
automation. Within 24 hours, an elevator manufacturer can now create quotes and drawings, including engineering and documentation, which once took weeks with manual methods. A lifting beam company can respond to customer enquiries with general arrangement drawings and a quotation in less than an hour—deliverables that previously took 16 hours. Even small products benefit— component brackets that took 45 minutes to configure manually at one company are now done in less than one minute. So, yes, design automation is both effective and efficient. The benefits of design automation In the table below, the key benefits of design automation are reflected by organisational level. From the table below, we can see that design automation frees up engineering time formerly given to repetitive tasks, recalculation, and specification changes. The resulting benefits apply across the organisation, from the individual engineer to the company as a whole.
Design automation in practice Design automation should be viewed as a new way of working, not as a single project with a beginning and an end that is only done once. With design automation, you can literally treat every part of an assembly as a variable design that can be automatically modified by inputs. Doing so, however, would be a mistake. Your first step is to determine which variable parts require engineering while they are being varied, and which will generally be a subset of a given assembly. Then select a best candidate from among these to tackle the first design, which is typically a redesign that literally takes more time than it is worth. Choose to design faster—and take your inspiration from the many companies who have successfully implemented design automation. It is a perfect means to raise your visibility in the company, increase your company’s profitability on custom sales, and allow you to do what you do best—design innovative new products.
Is design automation effective and efficient?
Design automation systems have been in use since the early 1980s, helping companies to save time and money. Recently, a machine builder accomplished all the engineering that once took 80 hours in less than one hour by implementing design www.nzmanufacturer.co.nz
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NZ Manufacturer September 2011
SUPPLY CHAIN
To succeed… You need to find something to hold on to, something to motivate you, something to inspire you. – Tony Dorsett
Maersk joins World Ocean Council Ports of Auckland has a good year
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he A.P. Moller - Maersk Group has joined the World Ocean Council to support global leadership and collaboration on ocean sustainability. Through its signatory to the World Ocean Council, Maersk supports the efforts to promote sustainable development and stewardship through collaboration across private sector industries. The World Ocean Council is the only international organisation bringing together a broad range of ocean industries to address sustainable use of the seas. “The oceans are core to our activities in shipping and energy. We are pleased to join this forum which provides an important collaborative platform for sustainable advancement,” said John Kornerup Bang, Lead Advisor on Climate & Environment in the A.P. Moller – Maersk Group. Maersk’s environmental strategy pledges to protect the marine environments and biodiversity and reduce the impacts of operations at sea. “The marine environment is fragile and we are determined to be
good citizens of the world’s oceans. This partnership will help us go beyond regulatory standards and take a proactive approach,” added John Kornerup Bang. The World Ocean Council is an unprecedented global, cross-sector industry leadership alliance on ocean sustainability and stewardship. It is building an alliance of companies to create the platform for developing science-based solutions to the collective ocean environmental challenges facing the ocean business community. The WOC will work to educate other ocean stakeholders, provide the eyes, ears and voice in the ocean sustainability policy fora and processes and catalyze ocean business community action on priority issues. The WOC is pulling together proactive leadership companies to develop into coordinated action across the ocean business community. For example, its National Business Forum on Marine Spatial Planning in Washington D.C. on July 13-14 will bring together responsible ocean companies to engage in U.S. ocean planning efforts.
orts of Auckland has announced an increased normalised profit for the 2010/11 year of $24.9m (after tax), up 2.1% on the previous year’s result of $24.4m. Port operations EBIT was up 5.3% on increased revenue, up by 7.0%. Ports of Auckland Chief Executive Tony Gibson said he was pleased with the result, which reflected the improving New Zealand economy. Break bulk (non-containerised) cargo volumes were up 24% to 3.5m tonnes and container volumes up 27,015 or 3.1% to a new record high of 894,383 TEU (twenty-foot equivalent units). The large increase in break bulk cargo reflected an 11.4% increase in motor vehicle volumes and a 36% increase in other commodities. Assisted by a strong dollar, the port’s container division recorded 5.9% growth in full import TEUs. “What is particularly pleasing is that we have been able to cater for this import growth while delivering record turn times for our customers and improvements in crane rates. Dwell times of less than 1.7 days underpin the attractiveness of the Auckland port’s location for importers,” said Mr Gibson. Mr Gibson said the company was also delighted to see 5.3% growth in full export TEUs through its container division, off the back of a strong dairy season. The trend in recent years towards greater hubbing and trans-shipment of cargo through Ports of Auckland continued, with volumes up by 7.7% on 2009/10. Mr Gibson said the consolidation of lines services into Vessel Sharing Arrangements,
thus enabling greater ‘inter-service’ connectivity, was a key driver of the trend. Total ship calls finished the year 13 higher than the prior year. “The mix was quite different, with 17 additional passenger vessels, 14 additional calls to Multi-Cargo and Onehunga, and a reduction of 18 calls to the container terminals despite overall container volumes increasing,” Mr Gibson said. The cruise business continued to go from strength to strength with 79 calls over the financial year and a record high of 97 booked for the upcoming 2011/12 season, with extra business generated by the Rugby World Cup in September. Port operating costs excluding depreciation increased compared to last year by $8.9m (9.5%). This increase was due to the consolidation of the CONLINXX accounts into Ports of Auckland’s. CONLINXX commenced operation in February 2010. Transport of containers via rail increased by 9% over 2009/10, with rail moves now representing 15% (13% in 2009/10) of total landside moves, and further growth anticipated. Debt levels reduced $19.1m, to $240.3m as at 30 June 2011 compared with $259.4m for 30 June 2010. Net finance costs were down on the previous year by $0.5m in line with a reduced debt level. After a challenging year, all time best crane rates were recorded over the June quarter, contributing to an annual result up 2.4% on the previous year. June quarter rates were 4.1% up on the previous best quarter.
Commission examines performance of freight transport sector
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ocal authority ownership of ports, and the ways in which competition, co-operation and regulation play out in international freight transport are scrutinised in an Issues Paper released by the Productivity Commission. The Commission wants public submissions on the Issues Paper to shape its inquiry into the performance of international freight transport services. Releasing the Issues Paper, Commission Chairman Murray Sherwin said the inquiry would explore some important and contentious issues for New Zealand’s international freight industry. It puts all components of the international supply chain under the microscope. “This is an important inquiry www.nzmanufacturer.co.nz
for New Zealand. We live in the most remote developed country in the world and the way we get our products to and from international markets is critical to our success,” Mr Sherwin said. “Better performance in freight transport should result in lower prices for imported goods, higher profits for exporting industries, and quicker freight turnaround – benefiting importers, exporters, employees and consumers. “New Zealand exporters and importers currently spend about $5 billion on freight each year. We’re looking at whether these costs can be lowered and the services improved.” One of the questions the Issues Paper asks is whether council ownership is getting in the way of ports and airports performing more
efficiently to help exporters and importers. It asks whether ports need to be more collaborative and innovative to improve performance, which is lagging behind that of ports in some other countries. The paper also asks if regulatory arrangements are adequate to deal with anti-competitive behaviour in the international freight industries and whether the Minister of Transport should continue to exercise certain regulatory functions, or hand these over to the Commerce Commission. “The inquiry will help ensure that New Zealand has the best regulatory framework and the right incentives to achieve best practice across the industry. It will also help to drive improvements in infrastructure investment, innovation and supply-
chain coordination,” Mr Sherwin said. The issues paper is the first step in the inquiry process. It elaborates on the context for the inquiry, the approach that the Commission intends to take, and identifies key questions. The Commission encourages New Zealanders to get involved in the inquiry. For a copy of the Issues Paper, including information on making a submission, visit www. productivity.govt.nz The Commission is due to release its draft recommendations for improving the performance of international freight transport services in December this year. It will deliver its final report and recommendations to the Government in April 2012.
NZ Manufacturer September 2011
There’s no secret about success. Did you ever know a successful man who didn’t tell you about it? – Kin Hubbard
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SUPPLY CHAIN
Manufacturing park secures vital energy supply
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hen downtime costs big money – and when your customers are world names in manufacturing, energy and advanced technology and environmental engineering – electricity generators prize world class reliability and service. That’s why the global Konecranes group – with strong operations in Australia, New zealaand and the Asia Pacific – is expanding its range of crane services to customers involved in electrical generation and distribution who depend on maximum uptime and reliability from the heavy lifting equipment that is vital to their operations 24 hours a day. An example is Northern Utility Resources Generation, which has chosen Konecranes as its crane service partner at its Kedah plant providing 220 Mw of electricity to the Kulim Hi Tech Park, where more than 50 companies have set up their headquarters for Malaysia and the broader Asian market. Technology leaders relying on NUR’s power include AIC Semiconductor, Axcellis Technology,
BASF Electrical, Fuji Electric, Hertz (Sime Darby), First Solar, Intel, Maybank, Novellus, Schenker, Toyo Memory Technologies and Wafergen Bio Systems. NUR’s Kulim co-generation plant – involving four gas generators and two steam generators driven by heat from the gas generator processes – is dedicated to providing reliable supply to the Park through its high technology facilities serviced and maintained by a total of seven production and service cranes from Konecranes. The cranes are integral to the energy production process, being used for everything from lifting turbines and rotors for periodic maintenance to day-to-day service of diverse, heavy, delicate and expensive workpieces. To service NUR’s 2X20 ton, 2X10 ton, 2X1 ton gantry cranes and its 3-ton workshop crane, Energy Management Services chose Konecranes, the OEM of its cranes and the world’s leading crane services organisation, with more than 373,000 cranes of all makes under service contracts worldwide. Operating through a well established
South Asia network as part of Konecranes international network of more than 500 locations worldwide, Konecranes offices in Penang, Kuala Lumpur and Johor Bahru combine access to global resources and expertise, while offering local knowledge and expertise honed by servicing hundreds of cranes in the areas in which their local customers operate. Konecranes Singapore won Konecranes Group Best Service
Award for 2010. Konecranes branches in Australasia have also won local, State and national awards for service excellence. The Konecranes group is dedicated to the same high world standards of safety reliability and efficiency that it applies to electricity generators and all other crane users across Australia, New Zealand and across the globe. nextSTEP Visit: www.konecranes.com.au
Or visit our websitewww.konecranes.com.au
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NZ Manufacturer September 2011
BUSINESS NEWS
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– Norman Schwarzkopf
Innovators treated unfairly
ew Zealand tax law’s unfair treatment of intellectual property owners is undermining the Government’s efforts to encourage an innovation economy, according to an intellectual property commercialisation expert. Paul Adams, Chief Executive Officer of intellectual property commercialisation firm EverEdge IP, says the Income Tax Act (2007) taxes patents and patent applications unfairly because it treats them as an asset when they are in someone’s possession, but taxes them as income when sold. “Money spent on patents must be capitalised and therefore treated as an asset, rather than a tax deductable expense. Yet revenue earned from selling patents is considered to be income and taxed at income tax rates. “From a tax perspective, patent owners are getting the worst of both worlds. This approach punishes innovators for developing intellectual property assets.” Mr Adams commented that if Labour introduced an encompassing capital gains tax patent owners would be further penalised. The approach to patent taxation
The Income Tax Act (2007) taxes patents and patent applications unfairly.
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Leadership is a potent combination of strategy and character. But if you must be without one, be without the strategy.
Paul Adams, Chief Executive
has the potential to undermine the development of New Zealand’s innovation sector because it encourages innovators to locate their intellectual property offshore. Relocating intellectual property offshore is even more compelling when New Zealand’s high tax rate on royalties is taken into account. Other countries, such as Singapore, Belgium, Spain and the Netherlands, are attractive because they have very low tax rates for income derived from intellectual property. Mr Adams is aware of a number of New Zealand businesses that have relocated their intellectual property overseas as a result of our tax regime. “This legislation makes absolutely no sense. R&D tends to base itself
$1.28m for top talent to try out high-tech jobs
bout 200 of our best scientific, engineering and technology undergraduate students will get a taste of working for innovative high-tech businesses this summer, Science and Innovation Minister Wayne Mapp announced. “We are investing $1.28 million so businesses can hire undergraduate interns to do research and development projects over the university summer holidays,” said Dr Mapp. “This Government wants to see better connections and more collaboration between science and business. These internships contribute to this goal.” Dr Mapp said up and coming engineers, technologists and scientists will get a chance to www.nzmanufacturer.co.nz
prove themselves in a commercial research environment. “In turn, businesses can tap into students’ knowledge, insights and skills to contribute to new products, processes or services.” The Undergraduate Internships programme, administered by the Ministry of Science and Innovation, provides funding of $16 per hour (excl. GST) for up to 400 hours of work by the student. Many of the internships from the previous investment rounds resulted in jobs for the interns. “This programme has proven to fulfil a real business need over the past few years,” said Dr Mapp. “I expect this year it will also be in popular demand.” nextSTEP Visit: www.msi.govt.nz
where intellectual property is held. With this regime there is no incentive to keep patents in New Zealand. The country ends up missing out on high value job creation, innovation and export revenue.” Further the law is not well understood and many companies are unaware of the situation. “This anomaly is an obscure part of New Zealand’s taxation law. People are being caught out because they don’t realise that selling intellectual property, even in the context of a receivership, liquidation or restructure could create a substantial tax liability.” He notes that the specialised nature of valuing and transacting intellectual property means that few accountants understand the law’s implications, so they are not bringing it to their clients’ attention. Mr Adams advises innovators and those who own patents or patent applications to seek expert intellectual property commercialisation advice on how to fulfil their tax obligations when valuing or dealing with their intellectual property. “It simply does not make sense to tax innovation in the current way,” he says. “As much as it pains me to say it, New Zealand innovators should be thinking long and hard about where best to locate their intellectual property.”
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BANZ welcomes funding
he Bioenergy Association of New Zealand (BANZ) has welcomed the announcement of a new funding scheme to promote the uptake of bioenergy. The Energy Efficiency and Conservation Authority (EECA) has announced that grants of 40% (up to $20,000) will be available to fund feasibility studies to investigate using bioenergy (e.g. wood) or geothermal energy for large-scale industrial and commercial heat. Brian Cox, the Bioenergy Association’s Executive Officer said, “New Zealand has immense untapped potential for bioenergy, particularly from our forests. A strong local bioenergy industry would reduce our reliance on fossil fuels, and also bring huge economic and social benefits through increased employment. It’s very pleasing to see Government supporting bioenergy through initiatives of this kind, and in its recently-released energy strategy.” Mr Cox added, “Bioenergy is based on well proven technology and so doesn’t require research, but what it needs is demonstration and this funding will allow good ideas to proceed to implementation.” nextSTEP Visit: www.bioenergy.org.nz
Skills4Work welcomes Labour youth package
kills4Work has welcomed the announcement of the Labour Party’s new youth skills and employment package, which promises to offer all teenagers the opportunity to be earning or learning within three years. The announcement focuses on the 24,000 teenagers who are currently not working or in education or training, and proposes support and mentoring for at-risk school leavers into earning or learning opportunities. Rosalie Webster, Skills4Work CEO, says the figure of 58,000 young people under 25 years old not in work, school or training is a wakeup call. “Improving the school-to-work transition, creating active training programmes and supporting employers to provide apprentice opportunities are critical,” Rosalie
Webster says. “This policy shows a real understanding of the problems and the current disconnects. Young people need the opportunity to train and industry needs skilled workers in order to grow the economy. What is needed is a clear pathway from school to the world of work.” The announced package includes 5,000 new training places for 16 and 17 year olds, 1,000 extra group and shared apprenticeships and plans to fund 9,000 additional apprenticeship places. “As a Gateway provider and a trainer in industry skills and apprenticeship programmes, we understand and support any initiatives aimed at supporting youth employment and training. In the end, our future is our young people. This is about NZ Inc.,” Rosalie says.
NZ Manufacturer September 2011
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BUSINESS NEWS
A business has to be involving, it has to be fun, and it has to exercise your creative instincts. – Richard Branson
Signs to watch for in the global economy
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hen investors pile into “flight-to-safety” assets, it’s a clear indication of market nervousness about global economic conditions. In December 2008, three months after US bank Lehmans imploded triggering the global financial crisis, the price of gold hit the then record high of US$1200. At the time, analysts predicted it had reached the top of its cycle, an opinion given substance by gold’s rapid drop in value to around US$1100 in the months following. Back then, the other “flight-tosafety” asset was the US dollar. Panicked investors piled into the greenback, pushing the New Zealand-US cross rate to US49c in March 2009. It was not until June, when fears of a meltdown abated, that the kiwi pushed above US60c again. Today global financial markets are again jittery because of uncertainty around the ability of some European countries to meet debt repayment schedules and the US, which is closing in on its US$14.3 trillion debt limit despite a last minute deal to lift the bar. The price of gold is again reflecting market nervousness: an ounce is now more than US$1600; less than a year ago, it was US$1150. But the NZ-US exchange rate tells a different story, one that reveals the unique nature of the present dangerous period: the kiwi has reached a post-float high of more than US88c. As Roland Randall, Singaporebased senior strategist for TD Securities, notes, the US dollar is no longer the safe haven it once was. The greenback is low because of the the historically high deficit level in the United States and its sluggish economic recovery. Analysts predict the kiwi dollar will remain above US80c for the next six months. There is much international uncertainty, exacerbated by the “fast-moving” nature of events,
kevwrite@xtra.co.nz
comments BNZ chief economist, Tony Alexander. But in the event of continued turmoil in financial markets due to concerns about the US deficit and nervousness over debt levels in the Eurozone , the following sequence of events, says Alexander, might go like this: “World markets would seize up again, leading to banks having to recapitalise [by] using government money and deficits would get worse. “They would have to rein in spending, so there would be weakening activity,” Alexander says. If the Chinese find their export orders are collapsing as consumers go back into their shells in the US and Europe – you’d basically get some version of a repeat of the postLehmans situation.” Randall believes the impact on New Zealand from such a scenario could be severe: “It’s not the direct trade links that are so important; it’s about confidence in the financial markets. “The risk to New Zealand is its exposure to offshore borrowing and the impact of the Euro contagion on financial markets,” Randall continues. “The tap could be turned off as a result of these global issues and then the banking system in New Zealand would be in crisis.” David Tripe, head of Massey University’s banking studies, says the Australian-owned banks are in much better shape than they were in 2008. Reserve Bank capital requirements, including shifting a greater proportion of bank funding
Analysts predict the kiwi dollar will remain above US80c for the next six months.
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from short-term to long-term, provides greater comfort. “But they still do have significant dependence on non-resident funding,” Tripe warns. However, it’s not all doom and gloom. Standing New Zealand in good stead is an improved overall debt position. Tripe: “[Treasury] figures, as at 31 March, suggest that the net foreign position is less than 80% of GDP – it’s hardly good but it’s not as bad as it was.” By comparison, the US debt is 98.6 percent of GDP. How international financial institutions treat New Zealand as a debtor, Tripe says, in the advent of a second crisis is debateable. But people “might consider New Zealand’s counterparty risk as quite good”. Then again, he readily concedes, they might not. All the commentators agree that events are too fluid and fast-moving to make definitive predictions. Some certainty around the US debt situation has been achieved and is easing market jitters, they say. Tripe, Alexander and Randall also say that the immediate problems in the US are temporary and that the European situation poses a much more serious medium term risk to the stability of financial markets. “Europe has that risk [of engendering another crisis],” Randall says. … “European growth could go sub-zero and really take the world backwards.” Another factor is the fact that the arsenal of weapons governments and regulators can bring to bear on another crisis is limited, says Alexander. Interest rates are already at record lows, government indebtedness will hamper bailout efforts, tax revenue is under stress, austerity measures are already in place, Alexander notes. In other words, they have no fresh ammunition; they’ve already fired all their bullets. So, even a small shock originating from the
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sandra@shinegroup.co.nz
by Nick Smith US or the Eurozone could engender another crisis. Of course, the last time an international crisis hit, New Zealand was already in recession; this time we’re in the positive. Despite the Christchurch earthquake, the national economy grew 0.8% in the three months to March. Randall believes the broader longer-term picture for New Zealand is robust. “You can’t ignore the fact that GDP and [inflation] data printed strongly,” he says. Asian growth, particularly in China (which is beginning to ease capital controls imposed because of inflation fears), will continue to support commodity prices and the near-record terms of trade New Zealand is enjoying. “Commodity prices will probably remain at elevated levels for some time, 18% above historical norms,” he predicts. Alexander concurs but points to the fragility of the domestic economy and questions some of the assumptions around GDP growth of 0.8 percent. Half of the increase was due to manufacturing, Alexander reports. “The average change in manufacturing on a quarterly basis has been a decrease of 0.5% - this was most definitely an outlier result and I don’t expect that to be repeated,” he says. The other factor is the collapse in imports (reflecting weak demand, little investment and subdued domestic business activity) and a surge in exports: “Normally net exports have no impact on a quarterly basis but they actually boosted growth 1.1%.” Strip those anomalies out and the New Zealand picture isn’t as pretty. “There’s still some rough patches ahead,” Alexander adds. Much depends on overseas events and these are beyond New Zealand’s control.
bwhyte@whytepr.com.au www.nzmanufacturer.co.nz
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NZ Manufacturer September 2011
TRAINING AND RECRUITMENT
Whether you think you can or whether you think you can’t, you’re right! – Henry Ford
Cardinal Logistics with 2011 Skills Highway Award (left to right): Mike Guy, Cardinal General Manager; Tony Gorton, Cardinal Managing Director; Karen Stent, Cardinal Human Resources and Organisational Development Manager; Peter Cook, Cardinal Operations Manager; Jeremy Corban Department of Labour Deputy Chief Executive; Cardinal Team Leaders Faletolu Faletolu and Kalolo Sutter; Cardinal Floor Staff Picker Barbara Gorton; Cardinal Team Leader Lui Vitale.
Cardinal Logistics wins 2011 Skills Highway Award
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uckland logistics and freight company Cardinal Logistics has won the Skills Highway Award category of the 2011 Equal Employment Opportunities Trust (EEO Trust) Work and Life Awards. The award recognises employers who successfully boosted employees’ reading, writing, maths and communications skills with workplace literacy training. Sponsored by the Department of Labour, it is one of six award categories within the annual EEO Trust Work and Life Awards. Cardinal Logistics Chief Executive Tony Gorton is delighted with the win. “I’ve been smiling for days. It’s given us all a huge sense of achievement and something we are very proud of. It also recognises the huge commitment and dedication my people have put into training over the past two
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years. I’m very proud of what we have achieved.” Cardinal Logistics employs more than 150 people. They store, pick, pack and transport goods from premises based in Auckland, Christchurch and Palmerston North. Approximately 70 percent speak English as a second language. Mr Gorton introduced workplace literacy training in 2009 to give staff the reading, writing, maths and oral communication skills they needed at work and to complete industry training. He set up New Zealand Qualifications Authority (NZQA) industry training and two organisational change programmes known as the FiSH! philosophy and Lean Manufacturing. FiSH! is based on the four basic principles of choose your attitude, be there, play and make their day. Lean Manufacturing aims to help a
company and its employees identify opportunities for continuous improvement. “I knew if I could get and keep my people motivated with FiSH! and improve the company’s performance with the Lean Manufacturing approach, then resolving our numeracy and literacy issues and getting our people industry-qualified would be that much easier.” In less than two years Mr Gorton has noted several positive improvements to his business. Absenteeism has reduced. Staff engagement, picking and data accuracy and health and safety performance have all improved. Cardinal customers are happier. Productivity overall has increased, he says. “I’ve witnessed some lifechanging moments over the past couple of years. Staff who left school
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
early or whose first language isn’t English have gone on to complete NZQA qualifications. And that’s boosted their confidence and the quality of their work significantly. The way I see it, training is a winwin-win. It’s a triple dose of the good stuff. I win, our employees win and our customers do too.” Jeremy Corban, Head of Policy and Research at the Department of Labour, says: “Cardinal Logistics is a very deserving winner. The company shows us how literacy training works well for a small to medium enterprise with big growth ambitions. I encourage other SMEs to follow their lead.” Other organisations to enter the 2011 Skills Highway Award included Framework Trust, Snap Fresh Foods, Spicers Paper and Stevenson Group. Stevenson Group received a highly commended award.
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.
www.nzmanufacturer.co.nz
NZ Manufacturer September 2011
REAR VIEW
I had to make my own living and my own opportunity! But I made it! Don’t sit down and wait for the opportunities to come. Get up and make them! – C.J. Walker
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Know your kit and kaboodle
f your business has a substantial investment in physical assets – typically machinery and vehicles – it should be obvious that it’s in your best interests to ensure they’re managed properly, so they’re always operational and therefore making you money, rather than losing it. Yet too many firms today remain clueless about proper asset management, according to David Sankey, CEO of Greentree partner Addax Business Solutions. To be efficient, plant operations require three core components: good tools (including the maintenance system), good people, and good vendors (including the maintenance system support). “I’m surprised how many businesses do not seem to practise this”, David says. “Companies need to know whether their assets are working as hard and as effectively as they should be.”
Minimising breakdowns
Any business owning fixed or mobile plant that requires maintenance has to allow for maintenance costs in its budget. Accurate forecasting of maintenance requirements and costs is key to a good maintenance budget, with unplanned maintenance (breakdowns) costs being kept to a minimum to avoid wreaking havoc. An asset management tool is crucial, to ensure that proper, planned maintenance is done in a timely and controlled way. For one thing, it can manage costs against the budget; for another, it can help to avert those costly breakdowns. Companies that need good asset management fall into two categories: businesses that own and use their assets in their own production, and businesses that own assets for hire or contract work. The first sort of business might be a mining company, for example. Those massive dump trucks that move tonnes of rocks and dirt can cost anywhere between half a million and two million dollars apiece. They’re expensive to maintain, and maintenance has to be carefully scheduled. Every hour that they’re not moving earth is unrecoverable in
both time and cost, and for contract mining companies it is lost revenue. The other sort of business might be a company that owns tower or mobile cranes for construction work. If they can’t supply a particular type of crane for a job because it’s unavailable due to a breakdown, that’s lost revenue again.
Managing diverse information
Asset management fails when a company doesn’t know whether an asset is making money, or is unable to keep plant running as it should. It is important to know and easily report on key performance statistics, such as planned and actual uptime, unplanned downtime, plant efficiency and availability, and other such measures of operational assets. “Does the company know that it’s actually getting 98.65% utilisation out of that asset?” David asks. “How much unplanned down time do they have? How much is it costing and how efficiently is the plant working? That needs to be measured.” Greentree brings all these components together. Greentree’s Asset Management module allows you to track your physical assets, wherever they may be. The Field Service capability handles the details of service requests, such as timesheets and spare parts required. All this activity, whether planned or unplanned, has to be documented so it can be managed and the costs controlled. Greentree can provide crucial revenue and cost information across many dimensions, including asset, groups of assets, sales contracts, jobs and job types, to contribute to the company’s overall understanding of its revenue and expenditure figures. Breakdowns, work orders, timesheets and spare parts are
Good asset management the difference between profit and loss.
linked in a single Greentree system, providing comprehensive management across Jobs, Assets, Field Service, Inventory, and Purchasing. “This is where Greentree is really strong,” David says. “It’s one big system, and it’s seamless. So whatever information is entered, it will be immediately visible and available in all the relevant places throughout the system. The maintenance system is not a bolton product that has to be integrated with inventory, financials, or purchasing – by design Greentree is a single system with each module inherently part of all the other modules. It doesn’t matter where your transactions are coming from, it doesn’t matter how they originate or who’s entering it; in Greentree it’s going to be captured once and updated throughout the system.”
Plans need a planner
Having good Supply Chain and Maintenance systems is only one significant part of a successful operation. Just as a good accountant will maximise the benefit of an accounting system, a good Procurement Manager is required to maximise a Supply Chain System, and a good Maintenance Planner is required to run a maintenance system efficiently. David sees many businesses being let down by not having the right people. “In our market, it does not matter how good your IT person is; it does not mean they can produce good financial statements from an accounting system. Similarly, it is a common mistake to think a good mechanic or technician can produce good work orders from a maintenance system. “
Understanding complex data
Collating accounting data, physical tracking information and a wide range of other activities that relate to plant and equipment, into something that can be quickly accessed in an intelligible and simple form, is a daunting prospect. This is the job of Greentree’s IQ* business intelligence module. With
David Sankey, CEO of Greentree partner Addax Business Solutions.
easily navigable and understandable dashboards, detailed information on planned availability, actual availability, number of breakdowns, frequency of breakdowns, planned and unplanned maintenance costs, or lost productivity due to lack of inventory, becomes a simple exercise for the users of Greentree. The dashboards are always tailored to give the information relevant to each business and at a level of detail required for each type of user. Anything else is confusing and could cost a business dearly. “The costs a company can incur are massive and can vary widely by industry type, because an asset could be literally anything from a photocopier to an entire gold processing plant,” David says. “A gold processing plant could shut down just because you’re missing a $1 O-ring. It’s a little component, but how do you know it’s a critical component if you don’t have a list of critical parts properly controlled in stores? “The cost of a properly implemented and managed supply chain and maintenance system is miniscule compared to the consequential costs of not having such a system. Unfortunately, we often see businesses only implement these systems after they have experienced significant losses – a very costly lesson!”
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NZ Manufacturer September 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 doesn’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, it’s your publication both online and in the printed version. Email the editor, Doug Green words@xtra.co.nz to share your story and keep your company moving forward in its search for new markets.
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