The future of manufacturing

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Manufacturing accounts for more than half of New Zealand’s export revenue and is a strong contributor to the country’s economy.

Manufacturing has one of the highest proportions of spending on research and development in the private sector and manufacturing industries directly employ around 240,000 people.

A recent report released by the Ministry of Business, Innovation and Employment – "Beyond commodities: Manufacturing into the future" – is the first report to comprehensively look at the New Zealand manufacturing sector in its entirety.

The most important trend highlighted in the report is the focus on value-added goods, differentiated through innovation, quality, brand and service.

In response to the report findings, Employers and Manufacturers Association chief executive Kim Campbell was quoted as saying: “The fact our economy has moved on from one based on a commodities approach to one of value-add, and is now a significant employer in the regions, shows the importance of manufacturing to the wider New Zealand economy”.

The future of manufacturing will be increasingly digitised and automated as “Industry 4.0” technologies become more common. Disruption and innovation are being touted as the “fourth industrial revolution.

The first industrial revolution used water and steam power to mechanise production. The second used electric power to allow mass production, the third used information technology and electronics to automate production. The fourth fuses technologies and blurs lines between physical, digital, and biological arenas.

This evolution is expected to create safer specialised jobs, as robots undertake more hazardous tasks and increase efficiency and therefore profitability, the MBIE report says.

New technologies will bring about huge changes in the sector but bring with it, opportunity.

An international report from PwC last year focused on the industrial manufacturing sector and stated that to take advantage of digitisation, industrial manufacturers need new operating models, aggressive hiring, smart partnerships, and targeted investments.

It went on to say: “Industrial manufacturers can best serve their customers (and themselves) by designing tools and equipment that improve the efficiency, costs, and performance of factories and other capital projects. Whether enhancing their or their customers’ plants, industrial manufacturers have an opportunity to profit from innovation strategies that build upon advanced manufacturing concepts and the potential of the industrial Internet.”

Taking these ideas as a starting point, it would seem that finding the right people to employ in industrial manufacturing businesses will be paramount to success.

New Zealand manufacturers should have their eyes on the smart young things coming out of advanced information technology spheres and be tapping into their forward-thinking attitudes and their awareness of how digitalisation can mesh with more traditional practices.

Maybe it’s time that the manufacturing sector took some fresh risks and looked at new business models to remain competitive and relevant in a changing industrial environment.

The PwC report goes on to say: “Industrial manufacturers must become more active players in the technology ecosystem, seeking expertise outside the industry in order to develop equipment connectivity, data analysis, and software that are beyond their current abilities.”

Exciting times lie ahead for the industrial manufacturing sector in New Zealand and if global cues are followed, change and evolution will underpin the way forward.


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