Kiwi manufacturers stay resolute - and patriotic

Click Clack chief executive John Heng says his plastics firm's stubbornness in keeping its manufacturing in New Zealand is an act of "patriotic stupidity".

"It wouldn't be much better than that. If we moved offshore tomorrow, we could make one hell of a lot more money than we would have done in the last four years."

Ask Davey Hughes, co-director of clothing manufacturer Swazi, why his company is still here and he speaks not of profits but of passion.

"We could make huge gains in our profit and our bottom line if we shifted our production offshore, I believe," he said.

"I worked it out at one stage that it cost me about $900 an hour to run a production floor. And if I was to do that in China I think it was going to cost me about $48 an hour.

"So why do we stay? Good God. It's a complex question.

"We stay because we have a huge amount of respect for the Kiwi workers. The other part of it is that I just have a real passion about New Zealand made."

Both companies are doing well enough to have the luxury of being able to use the measurements of patriotism and passion.

Swazi makes hardy outdoor wear which Hughes said outsold Swanndri about 50 to one. He owns the company with his wife and they employ about 50 people in the manufacturing arm in Levin and contract out work to other local factories.

Click Clack, which is foreign-owned, has a $30 million turnover and employs about 300 manufacturing staff in Levin, Christchurch and Palmerston North.

Seventy-year-old bedmaker Sleepyhead is also resolutely staying put, although it does have factories in Melbourne and Brisbane as well as Auckland and Christchurch. It employs more than 300 people in its New Zealand factories. Like Click Clack and Swazi, it imports a significant amount of its materials.

Unlike Hughes and Heng, Sleepyhead group general manager Martin Ellis did not speak of an emotional element to its continued presence. He said the company did not see a financial benefit to moving its manufacturing offshore.

The freight costs associated with bringing beds into New Zealand, the company's main market, were a factor, but Ellis said that didn't necessarily protect it from cheaper imports.

"Anyone who thinks that is a little foolish because they are coming and we are definitely aware of the Chinese threat."

He said the prospect of moving overseas was not on the company's radar.

"We believe that we can foot it with the best around the world. And we believe that New Zealanders have got the skills and expertise to provide the best products to New Zealanders. We don't have any plans to move."

The three companies are bucking a trend set, in recent years, by Sunbeam, Macpac, Interlock, Electrolux, Icebreaker, Moontide, Kathmandu, Fairydown and Bendon. They have moved all or part of their New Zealand manufacturing operations and contracts to Asia.

Hughes said he could not foresee a day that Swazi would take its manufacturing offshore and that was not just a quality or price issue - "if you're prepared to pay for good quality out of China you'll get it".

"Sometimes, you have to go and stand on the bloody edge and commit yourself.

"We're here to stay. At the end of the day what is it when you go offshore? It's only one thing, it's money. People say: 'Oh it's the only way we can compete' or 'it's the only way we can get the volume that we need to meet the New Zealand and the offshore markets. We have to go offshore'. Well, that's their call."

Heng doubted Click Clack would ever take all its manufacturing overseas, but it does make some products - less than 2 per cent - in China. It is also eyeing Mexico as a manufacturing base for the United States market, to avoid high freight costs.

"It's getting harder and harder not to move some aspects of your business away."

He said as well as "patriotic stupidity", the company was staying because it was committed to its workforce.

"A lot of Government officials and others are saying that's [going overseas] what we should all be doing. But they keep forgetting that in places like Levin, where we have one of our factories, a company like that is worth 130 jobs there. [If it] moves away, it's absolutely devastating to the region."

He was optimistic the decision would pay off long term.