Is New Zealand now LEADING by DESIGN?

By Terry Herbert June 07, 2016 NZ Made

If New Zealand manufacturing businesses are succeeding, it’s largely due to their own enterprise. They’re certainly not getting any leg ups or handouts. Terry Herbert reports.

To view a PDF of the complete feature as it appeared in NZ Hardware Journal magazine, click the download button at the bottom of this page.

In Auckland’s CBD, as you read this, there are 47 sky cranes swinging across the city. That’s an all-time record and perhaps the most obvious sign that confidence is high and our building and construction industry is very busy achieving its lofty goals.

The significance of this is that we’re all involved in the hardware channel and business is booming. This fact is skewing all results, including local manufacture.

So, as we turn to our Made in New Zealand feature, we can all give collective thanks for choosing the right channel.

 

WHO’S FEELING THE LOVE?

Paul O’Reilly from Bostik is certainly feeling very upbeat: “We’re very happy to say we’re producing more now locally than we ever have, period! We’re still producing 70% of what we sell locally and that keeps going from strength to strength. Obviously the buoyancy in the building sector is contributing to that uplift.

“Our wallboard adhesives are produced locally, our acrylic sealants are produced locally, our contact adhesives are produced locally, the majority of our tiling adhesive products are produced locally and that’s all happening in our Wellington and Auckland plants.”

At Chemical Specialties it’s full steam ahead for General Manger, Phil Breytenbach, who also reports that business is booming: “The retail building sector is doing very well for us. We’re just keeping up with demand. We’re very optimistic and we’ve been employing more staff over the last few months. We have a total of 17 staff and that includes one in Sydney and another in Melbourne.

“It’s very challenging but I’m also the bloke who enjoys his job the most. The Turbo Builders Bog is our flagship, our biggest seller. We’ve also got a metal Turbo and we’ve recently launched our concrete Bog which we started exporting in December – they’re all performing well.”

 

MAKING IT LOCAL – WHERE’S THE ADVANTAGE?

Looking for a competitive advantage of producing locally versus importing we turn to Easy Access Managing Director, Jeff Wearmouth. Local manufacturing “gives you flexibility, so we can quickly design a new product or modify a product and get it back out.

“If you’re importing, from the time something is designed, the prototype comes out, you sign it off and you get the drawings done, it can be 12 months. By comparison, we can turn around a new design in two weeks so that gives you flexibility.”

Easy Access Marketing Manager, Astrid Fisher nods agreement but adds: “It’s also getting that feedback direct from the guys on the site that ‘this is what they need’ and then we can assure them ‘this is what you will get’. ”

Bostik’s Paul O’Reilly tells us: “It’s still very cost effective for us to produce locally – that’s our advantage. We have four chemists working here involved in QC and R&D. We test our products vigorously for the local market and get end users to test our products. We have a 2 stage QC process - one when the product is being mixed and one when the product is being packed.

“A big part of our success is we’ve been doing it for so long. We’re established, we have trusted, quality brands and have built a loyal base.”

 

BEING LOCAL, FOR THE LOCALS

Glenn Boyce, CEO of Thermakraft, has a more pragmatic approach: “A big reason [to make locally] is because the four owner directors are good human beings and proud New Zealanders who are determined to support their staff. They’re good Kiwi blokes. They see local manufacture as important to the success of our country and that’s also why I choose to work here.

“I’ve been in manufacturing businesses all my life and I think it’s absolutely critical. They employ a lot of people and they make a big contribution.”

Is Glenn Boyce’s positive “keep it local” outlook being shared elsewhere? “I’ve been an active part of EMA and I look at manufacturing in NZ now and I do get concerned. If you agreed with everything you hear or read, you’d close everything down and import it all from China.

“Ultimately you’ll never make anything as cheap as you can make something in China but you still have to ship it. And, at the end of the day, you have a locally made product that has quality standards.

“The builder, when it comes down to it, will buy a product at the right price that complies and that’s the one that they buy. We do very well with specifiers and architects and they will specify our product because they know it’s going to perform and last over the long run and, invariably, in a typical house the cost differential is only 20 or 30 bucks. It makes a big difference to the liveability over many years.”

 

KEEPING IT LOCAL, DESPITE EVERYTHING

MiTek’s Richard Poole doesn’t hesitate to tell us that innovation is driving the company’s success. “We are a clear market leader in the manufacture of engineered fasteners for the construction industry. By volume and dollars, there’s no doubt about that.”

What got MiTek to that position? “Innovation is all important. It keeps us ahead of the game. The fastener market really is a dog-eat-dog business. It’s becoming harder and harder to manufacture in New Zealand. We put a big investment aside 12 years ago to keep that innovation edge so we could ensure we were manufacturing efficiently and it’s paid off. “

Another long term player in Kiwi building materials, for whom locally made means fit for purpose, is GIB. Winstone Wallboard’s CEO, David Thomas: “Over 90% of all plaster wallboard is GIB and that’s manufactured in New Zealand. What’s key for us is that products are specifically made for the conditions that apply in New Zealand.

“We do all our own R&D and we have engineers and chemists constantly working on innovation. For us at GIB, it’s also the employment opportunities it provides. We have for example 250 direct employees, but we have a lot more involved in our supply chain. I’d be a little scared estimating that number.”

Thomas admits to still being excited by new product development that’s specifically designed to fill a local niche and meet changing local market conditions: “A new product, for example, is being developed for the Auckland market where there will be more apartments and terraces built. That creates opportunity.

“We’re calling this product a ‘multi-tenancy system’. It is designed to be fire and noise retardant and offer better security. Auckland is our biggest market by far and I can’t see that changing for 20 years and even then what will change is the definition of Auckland.”

 

BUT DO KIWIS EVEN GIVE A DAMN?

Moving further down the supply chain to the merchants, we ask Gary Woodhouse, Operations Manager at PlaceMakers, what “Made in New Zealand” means, if anything, to his customers?

“In context PlaceMakers primarily sells timber and building materials and the bulk of what we sell is all made in New Zealand. And our customers certainly ‘give a damn’ about quality.

“Without quality we wouldn’t be selling Made in NZ. It goes hand in hand. What’s really important to our customers is the quality and reliability of our products. The fact that they’re made here is a credit to everyone involved.

“We’re performing very well as an overall business. We own our frame and truss plants throughout New Zealand and we’re particularly proud of all of them. We get that feedback from our customers every day.”

I ask Gary Woodhouse if products can be successfully made here? He adamantly tells us, “Absolutely! To me the successful manufacturers are taking a close look at what’s happening on the global stage. The great thing about Kiwis is we’re very adaptable and from an innovation point-of-view we’re up there with the best in the world.”

 

PRIDE IN THE JERSEY – KEEPING IT KIWI

Doug Foster, General Manager at Easy Access, sums up “Keeping it Kiwi” with one word – “pride”: “The Kiwi factor is all about pride. We can be proud of selling a New Zealand product to New Zealanders. It’s part of the country and we are pushing the country forward!”

Paul O’Reilly at Bostik is another proud Kiwi: “Yes, we put the Buy NZ badge on everything. We have lots of anecdotal evidence that our builder customer prefers NZ made, but as far as we can tell there’s no tangible evidence to prove that either way. While we’re enjoying great sales we don’t see the need to spend money on research to ask them how important that is.

For Glenn Boyce at Thermakraft, “It comes down to products that have been designed and developed specifically for Kiwi conditions and made by Kiwis and it’s keeping Kiwis employed at the end of the day.”

Mitek’s Richard Poole picks up the thread: “80% of what we sell is made in New Zealand. And a large proportion of that is made from New Zealand steel. That’s iron sand from Glenbrook. We put New Zealand Made proudly on all our packaging.”

DOES KIWI MADE HAVE A FUTURE IN EXPORT?

Shifting our focus to the world outside of Godzone, we return to Easy Access and Jeff Wearmouth, who incidentally has his ladder manufacturing plant in the small town of Maungaturoto, a one and a half hour drive north of Auckland.

We ask about export. “We are footing it on a world stage. We started exporting to Australia in 2004 with our Access products. We have continued to grow that until now that market is 20% of our business.

“In 2014 we started to kick off further afield so we see a big future in export. We now have distributors in Canada, LA, Cleveland and New York and we have a branch in London. From Maungaturoto, our NZ made products are appearing in London and New York and that’s kind of cool.”

Bostik’s Paul O’Reilly also sees more exports in his future: “Yes, absolutely we see a growing future for our off shore markets. We export to countries around the Pacific region, predominantly the Pacific Islands and more recently into Australia. We’re really pushing into Australia and see that as a significant opportunity for us moving forward.”

Chemical Specialties’ Phil Breytenbach points out that export is the real jewel in the crown and one that he is particularly proud of: “We sell our NZ products to all the hardware outlets but Bunnings is the big one for us. We’re clear market leader in Australia but here where we make our products I’d say we’re not.”

We ask Breytenbach if he finds that situation ironic? “It’s marketplace dynamics. Here in New Zealand you have very strong competitors particularly Mitre 10 and PlaceMakers. In Australia Bunnings dominates. Over there we supply to a very dynamic distributor, so in essence we only have one customer, that’s Tradeware, they do a great job and Bunnings is their biggest customer.”

Meanwhile,Thermakraft and Glenn Boyce are back exporting, having literally gone through a baptism of fire last year. “Yes, we’re back to exporting. A little now but it’s something we want to focus on in the near future. At present we export to Australia, but not a lot, yet. We’re back to where we were, that took most of 2015. Now we’re ahead of where we were.”

 

DESIGNED IN NEW ZEALAND – THE POWER OF A BRAND

Apple and its iconic iPhones are the best example that successful brands don’t have to be made in their “place of origin”. The components in those desirable smartphones are sourced from all over the world, manufactured and assembled in China, but are still thought of as the pinnacle of American ingenuity and innovation.

With more local plants like Fisher & Paykel closing their manufacturing bases but keeping their R&D, is “Designed in New Zealand” the new future, the new reality?

I asked Steve Hawkes, Masport’s NZ Sales Manager, what he believes “Designed in New Zealand” means? “Trust and heritage come first. For example, Masport once again in 2015 was voted NZ’s Most Trusted Gardening Equipment brand. Masport was established over a hundred years ago.”

Amidst hearty laughter Hawkes continues, “Pundits are calling it ‘The brand my grandfather trusts’.

“Manufacturing in China hasn’t stopped New Zealanders loving the brand and buying our products. For many years we’ve been designing our products here but manufacturing in China. It’s about listening to customers, doing the research, design testing and then implementing what they wanted in the first place.

“It’s about designing great products, ensuring quality control every step of the way and what I call ‘Accessibility’. That makes us different from others. We go the extra mile not just to help our customers the retailers, but we go out of our way to help the retailer help the consumer.

“If the consumer has a problem, we’ll do everything we can to fix the problem. A great example is spare parts. We carry parts for models that stopped being made back in the 1970s.We back our retailers 100%. In a nutshell we care about our consumers because at the end of the day we know who’s buying the product.”

The proof of the pudding is that Masport has had “a bumper year in New Zealand, to the point that we’re running out of stock. Australia has had a ripper year for us too and coming up to the end of our financial year (year end 30 June) the boss is very happy.

“Export continues to grow and America is on a steep growth curve. Everything is going very well for Masport.”

 

ADVICE – THE GOOD, THE BAD AND THE FUGLY

As we turn to the local manufacturers who have indeed done well, we certainly don’t want to give the glib impression that success has come easily. We ask them about what advice they could give to budding entrepreneurs, what to look for and what pitfalls to avoid.

Bostik’s Paul O’Reilly: “I’d like to see some incentives for others from a Government or local body level to encourage manufacturing locally because it does create jobs and it does create opportunities. As of now we’re not seeing much evidence of it.

“If you look overseas and take the UK as an example, new companies or old ones are being resurrected and they’re becoming cost effective and people will always prefer the quality of a locally made product.

“Hopefully this can happen in New Zealand with other industries that can bring some of that local production back into the country. Local manufacturing is something we feel very passionate about. I believe there are still advantages for people making locally and buying locally.”

Chemical Specialties’ Phil Breytenbach is a chemical engineer by trade. His advice is practical and measured: “If I was starting out, I’d move away from the CBD to outlying areas. Be aware of staff requirements, changing legislation such as health & safety requirements and licences to keep materials on-site. Over the years the legislation has changed so it’s increasingly more and more difficult to operate from our site in Onehunga.”

He continues: “Hire good skilled people and retain them. That means training. Ensure you have quality of materials, attention to detail and keep innovation foremost, which translates to doing something better than your competitors. That’s what makes you a clear market leader.”

The term “Made in New Zealand” is definitely blurry and getting blurrier by the minute.

Many of the companies that are proudly New Zealand are actually owned offshore and are often better for that: Bostik for example is owned by French company Arkema; Fisher & Paykel is owned by Chinese multi-national Haier; Masport is owned by American Tom Sturgess (now a proud NZ resident); and MiTek is owned by Warren Buffet’s Berkshire Hathaway.

While local companies might not have vast resources for new product development, they have a deep understanding of their consumers. Local decisions are also quicker, so the time from concept to creation will be shorter.

Innovation will get products to market ahead of competition and that will always assure a place and a future for “Made in New Zealand” or in some cases “Designed in New Zealand”.  


Buying NZ – what does it even mean?

The media and behavioural research gurus at Nielsen have recently confirmed that traditional definitions of country of origin have become blurred.

Some iconic “local” brands are actually manufactured abroad, while some foreign brands have built a manufacturing presence here.

And some global brands have been in the market for so long that consumers perceive them to be local. Whichever way, brand origin can be a valuable asset for both global and local companies.

Hard fact of this around building materials is scarce but, in the FMCG market, according to Nielsen, just over half of New Zealanders (52%) try to buy NZ made products as often as possible but it really depends on the category.

Only 14% of New Zealanders say national pride is the most important reason for choosing local brands but almost 60% strongly or somewhat agree they prefer buying local brands because they support local businesses.

When asked the top decision factors for choosing either global or local Nielsen indicates that, when deciding on a brand, New Zealanders place most importance on price, previous good experience, promotions and better product benefits.

Having said this, Nielsen’s figures also indicate that Kiwis are less price sensitive when buying locally made compared to something from overseas, which isn’t a bad thing in these price competitive days.





World famous in the Hutt

With manufacturing operations in Wellington, Tauranga, Fiji and Australia and on the occasion of Resene’s 70th birthday it seemed appropriate to devote some space to this iconic “Made in NZ” story.

I had the good fortune to spend time on the phone with Managing Director, Nick Nightingale (seen above with Minister Nick Smith), who lives and works in his beloved Hutt Valley.

His answers including shared frustrations were thoughtful, off the cuff and from the heart. For anyone considering taking the plunge into the challenging and many would say thankless task of manufacturing in New Zealand, you will find his comments inspirational and I thank him for his time.

Resene’s brand radiates straight from the CEO, and they’ve successfully injected that into their staff. And, unless Nick hires every single person, they’ve managed to systemise that intellectual property so it scales nationally.

 

NZHJ: You are only the third managing director in 70 years, having taken over the reins from your father who took over from his grandfather before him. Running Resene Paints must be hard-wired into your DNA?

Nick Nightingale: No, Resene was not what I wanted to do originally. I used to sit around the dining table listening to my dad talk about business since I was seven. But, like many Kiwis, I travelled offshore. I did business, accountancy and commerce at Vic (Victoria University) and I worked in the City of London.

When I came back to New Zealand I thought I’d be working for one of the banks or a brokerage firm. I went for an interview and I recall it was a beautiful sunny day but inside all the curtains were pulled and the blinds were down. Everyone was stuck behind screens. They were a bunch of surly, grumpy human beings and I thought there is no way I’m ever going to work in this place.

So I started work for Resene as an architectural sales representative but I still had to go through an interview process. I’m not a natural sales person so I had a lot to learn. But I love my job. I think I’ve got the best job in the country.

 

NZHJ: How important is manufacturing in New Zealand to you?

Nick Nightingale: From very small beginnings we are now the largest paint manufacturer in New Zealand. That’s hugely important to me personally and to Resene. I believe we should be doing much more at a local and national level to support Made in New Zealand, just in terms of procurement policies. And I accept I might be roundly criticised for this, but not everyone can drive a tourist bus or work behind a bar.

Having manufacturing roles here is vital. New Zealand is a unique paint industry because the quality is so high. How we use paint and the use of colour here is dramatically different from anywhere else in the world.

We have very high UV and the air is so incredibly clear. Europe has pollution and fog, Australia has dust. You’ll find a paint will last 10 years in Europe but only five years here. Plus we use a lot of timber, it’s often wet and it moves a lot. These are tough conditions for paint. I’m always pushing my team to come up with world-class products. And we do.

I’m passionate about our business. I’m passionate about the opportunity to supply other New Zealand businesses. I don’t want New Zealand to become the seventh state of Oz. I don’t want to see all products sourced from offshore. I think there is still a big role to play here for New Zealand manufacturers – it’s the only way you get innovation.

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