5 Reasons Why It’s Good To Be In Local Manufacturing Right Now
If you don’t remember it, you’ve heard of it: the late ’80s era of slashed import tariffs and ‘bargain stores’ spreading up down the country like measles on the face of the local manufacturing industry. For the next two-and-a-half decades almost any New Zealand bought product was much more likely to have a “Made in China” sticker on it than a “Made in NZ” one. This has now changed. Our manufacturing sector has expanded almost every month since October, 2012 – and, according to Business New Zealand’s Performance of Manufacturing Index, that trend looks set to continue. Here are the top reasons why local manufacturers are once again riding the purchase order wave – and why, if you’ve been thinking about it, now’s the right time to join them.
1. Everyone wants to buy local
Ten years ago Climate Change was seen as something of a fixable fad – now it’s a firm fact. People want to buy locally, companies want to make things locally, and it’s once again cool to be the guy who can facilitate that. In May, Nielson’s Global Brand Origin Survey found “brand origin is as important as nine other purchasing drivers, including choice, price, function and quality”. This is a point driven home by Colmar Brunton in 2014; finding that 90% of New Zealanders want to buy ethically and socially responsible products. So there is good reason to manufacture locally – and an even better reason to boost the clean, green credentials you already get from your “Made in New Zealand” label, by producing products with an eco bent.
2. It makes financial sense
The costs of the raw materials and services used in manufacturing are now much more competitive than they were when everyone started shipping their production off to China – helped largely by the fact that things aren’t as cheap as they once were at the other end. China’s labour costs have risen 71% since 2008. Meanwhile, many New Zealand companies have realised that compromising on the quality of raw materials to reduce unit price costs them customers, and therefore hard cash, in the end.
3. We can be more responsive
In the age of same day deliveries, you can’t be taking four months to respond to requests for production changes. Yet, with communication difficulties and Customs hold ups, that is often exactly what is still happening. With lower production runs and, more importantly, kilometres away from your clients, New Zealand manufacturers can more responsive and turn changes around far faster. Because the time from concept to creation can be much shorter, Nielson recommends “local brands “use these advantages to innovate in areas of unmet and emerging needs and get products to market ahead of competition”.
4. We know small
I mean, let’s look at the difference in population. China: 1.3 billion; New Zealand four million and three (est.) A large run for us is not big enough for a lot of Chinese factories to bother with. Fast-rising labour costs have expanded their minimum production runs, leaving a lot of New Zealand companies bringing business back here where local factories with lower overheads are happy to tackle it.
5. We know what we know – and we know it well
The Government’s recent High Technology Manufacturing report found “where our top high technology manufacturers are global leaders, it is because they specialise in niche markets”. We’ve always been a country of innovation, and while we can’t compete on a lot of the biggest jobs, when we focus on what we know we do it better that anyone else. Specialisation is key: even if the value of our dollar increases again, highly customised and highly responsive niche manufacturing on high demand products will always be in demand.