[ Last Updated 6 August 2007 ]
Short Description
Speech to the launch of the government's response to Manufacturing+ Report, Beehive.
Author
Hon Trevor Mallard, Minister of Economic Development
Welcome to parliament. I'm pleased to see people here today representing different industry sectors, unions, and universities. I'd also like to acknowledge my parliamentary colleagues.
This is an important occasion. Today we are here to discuss and respond to the strategy put forward by the Manufacturing+ Vision Group.
The group's report A vision for world leading New Zealand manufacturers: A strategic framework puts our manufacturing sector in context.
Manufacturing in New Zealand involves more than 20,000 different enterprises and over a quarter of a million employees.
The Manufacturing+ report delivers some very significant messages. It acknowledges that New Zealand has some world leading manufacturers who are competing effectively in the current environment.
And it challenges us to create a more innovative, vibrant and energetic manufacturing industry that will act as a catalyst to many other sectors of the economy.
We need to move beyond individual success and tactical policy responses and build sustainable success through industry-wide transformation.
The Labour-led government endorses the group's vision.
Manufacturing has always been, and always will be, a crucial part of New Zealand's economy and that is why the Labour-led government is committed to working with the sector to further transform it – as part of our work in growing New Zealand into a high wage, high value, innovative and export-led economy.
The sector is on a growth path – production is up 12 per cent since 2000, there are more manufacturing firms and jobs have increased as well. Kiwi manufacturers have unique skills and knowledge and make innovative, quality products which are well placed to meet international consumers' ever-changing needs.
The manufacturing sector continues to offer significant opportunities to contribute to economic growth and the vision set out in Manufacturing+ complements our objectives for economic transformation, in particular improving the productivity and global competitiveness of New Zealand firms.
I know that not everyone is as optimistic. The report highlights the concern some manufacturers feel that policymakers do not appreciate their work.
Believe me, we do. I regularly visit firms both in my electorate and around New Zealand. Most recently I spent quite a lot of time with manufacturers in Canterbury and Invercargill to listen to the challenges people are facing at the coalface. I regard these visits as hugely valuable and I do take on board what I am hearing and keep it in the frame as we progress policy initiatives.
Some manufacturers are struggling to compete in a world of rapid change and intense global competition, at a time when the exchange rate has reached historic highs. These challenges are not unique to New Zealand and in terms of the currency there are no single quick-fix solutions, especially when we have no control over the US economy. What we are working to do is create the right business environment so our industries are highly productive, innovative and producing high value goods that enable them to withstand currency fluctuations.
Manufacturers around the developed world are also feeling the pinch from increased global competition. Responses to this include shifting production to lower wage countries or closer to supply chains in their key offshore markets.
One thing is clear – manufacturing globally is changing and New Zealand manufacturing has to change with it.
New Zealand cannot compete in all areas of manufacturing – nor should we try. Modern manufacturing is no longer just making a product. It now includes design, branding, servicing and end-of-life disposal. New Zealand manufacturers have the option of competing across the entire chain or parts of it, depending on their judgement of where they can create value and increase returns.
Like the Vision Group, I am convinced that there is a strong future for manufacturers who adapt to changing technologies and new consumer demands – the issue of sustainable, climate-friendly products being just one of the latest emerging opportunities that our kiwi innovators could seize.
Our future is in the high skilled, high value, innovative end of the market where we can compete on quality not on price. In this respect New Zealand should aim to be a nation of price makers – not price takers.
I also support the group's aim of moving beyond the immediate issues and knee jerk responses to a shared collaborative strategy which can build lasting results.
We can learn from our past success in manufacturing and exporting. Our manufacturing industry was based on innovation, change and the enterprise of individuals prepared to have a go – these traits have resulted in brands and businesses that have stood the test of time.
For example Gallagher group's products which stemmed from a resourcefulness borne out of the Great Depression are now known in more than 100 countries. The business emerged out of Bill Gallagher's father's use of hotwire to protect his car from horses, then moved to the invention of electric fences for livestock - and expanded over the years into animal management systems and then security systems for people.
And Methven which was founded to make agricultural implements now exports state-of-the-art bathroom fittings.
Current manufacturing success stories cross a huge and exciting spectrum – and they have grown out of New Zealand's natural talents, innovation and resources - from firms producing and exporting boats, niche market clothing, ice cream, products for the visually impaired, innovative packaging, furniture, avocado oil, aircraft, cosmetics, fire engines, buses, healthcare IT systems and GPS systems. I could go on and on.
We are even exporting manufactured goods into China and this trade is increasing significantly.
Success in industry depends on the actions taken by individuals, firms and groups. But the government has an important support role and will continue to help industry build a strong platform for future growth.
The Manufacturing+ report, as well as laying out goals for manufacturers, contained 16 recommendations for government. As you will see from the Cabinet paper I am also releasing today, we have responded to them through work already underway, or through new Budget initiatives and other work about to begin.
Manufacturers will benefit from Budget's business tax package, and in particular the research and development tax credits announced in the 2007 Budget.
The 2007 Budget provided an additional $15.8 million to help identify industry skill and training needs and to respond to those needs – and the Modern Apprenticeship Programme continues to grow – there will be 14,000 participants by December 2008.
The Budget also provided funding to expand New Zealand Trade and Enterprise's (NZTE) Market Development Assistance Scheme and the very successful Beachheads programme which will assist New Zealand firms, including manufacturers, to develop new markets, and deepen others.
One third of manufacturing output is in the food and beverage sector and I also recently announced a package of initiatives and support for this sector, including $19 million in in-market assistance and the establishment of a Food and Beverage product development infrastructure project.
One of the strongest messages from the Manufacturing+ Vision Group is the need for successful co-operation to revitalise and transform the industry. The group wanted a mechanism to ensure a collaborative approach with government to address future issues, and to work together towards achieving the vision.
Our government agrees whole-heartedly with this approach, and in response to this, I am announcing today that the government is establishing the Manufacturing Advisory Group, a joint business and government working group.
As Minister of Industry and Regional Development the group will advise me on issues relevant to the continued development of the manufacturing sector.
Its work will include reviewing the skills, capability and growth needs of the sector, what the industry needs to do to respond to global competition and it will as a conduit for information and ideas between the members and the government.
I very much look forward to working with the group and I wish it every success. I urge all of you here today to support it, likewise.
On that note, I would like to introduce Phil O'Reilly from Business New Zealand and Andrew Little from the Engineering, Printing and Manufacturing Union who will co-chair the Manufacturing Advisory Group.
Thank you.