KEY POINTS:
Five manufacturers talk about whether they see a long-term future in New Zealand:
Methven
* Showerware and tap maker
* 150 New Zealand employees
* Auckland factory
Methven's constantly evolving high end manufacturing strategy ensures the firm's New Zealand base remains sustainable, says chief executive Rick Fala.
The
showerware and tap manufacturer maintains a key design and production facility in New Zealand focused on first-off manufacturing runs (see illustration, left) before transferring products to partners in China for large-scale manufacture.
"We're constantly evolving so as those products go out the new suite of proprietary products come through from our plant."
Manufacturing work sent out to China would not have stayed in New Zealand had economic conditions been different, Fala said.
"I think if it's not China it'll be somewhere like India and then it'll be somewhere else ... could be South America."
New Zealand's point of difference was not large-scale manufacturing but in design and first-up production, he said. "Our edge is for the way we think and if we concentrate on that as opposed to just being mass manufacturers I think we've got a really important and a sustainable role to play in the world economy."
Skellerup Industries
* Rubber products manufacturer
* Around 250 jobs in New Zealand, 130 in China
Five plants in New Zealand
As economic conditions worsen for manufacturers in New Zealand, Skellerup chief Donald Stewart says he cannot rule out sending more of the Kiwi business offshore. Skellerup sacrificed 25 Auckland jobs four years ago to boost its plant in China, where 130 staff now produce the classic Kiwi gumboot.
"The higher the dollar is, the less competitive you are, [and] the more likelihood there is that you would end up taking more of your business to a lower-cost environment," Stewart said. "Interest rates are higher, for us the New Zealand environment is worse. Nothing's ruled out."
Most of the damage came from the US dollar but Skellerup's other markets were also under pressure: "Most of the other currencies are at the upper end of their normal range."
The domestic market was also hurting.
Even so, he hoped Skellerup's core business - including the production of rubberwear for the dairy industry - would remain internationally competitive. "We're not planning on moving every mortal thing we've got right now."
Fisher & Paykel Healthcare
* Separate company to F&P Appliances
* Makes breathing products
* 1300 New Zealand employees
* Auckland factory
NZX-listed Fisher & Paykel Healthcare is committed to manufacturing in New Zealand but could never rule out heading offshore, says chief executive Michael Daniell.
"It's something you've always got to be reviewing and making sure that we are doing the right thing."
There was value in keeping research closely associated with production "but there can come a point where that value is outweighed by other benefits".
However, the opening of a new building last year to provide increased space and capacity was evidence of the firm's commitment to its Auckland site.
"We don't believe we are at a tipping point at present but it's easy to see how many manufacturers could be."
The rising value of the New Zealand dollar was slicing into the company's profitability. "We are exporters so we're quite sensitive to the exchange rate. We are fortunate to have products that enjoy a relatively low cost versus their value, so we are able to weather the currently high currency pretty well."
Tubepack
* Makes plastic tubes and containers for the cosmetics and personal care industry
* 67 jobs remaining in Auckland
The rise of the kiwi dollar and growing competition from China and Australia forced Tubepack to lay off 47 staff last month, and its managing director Ron Cave cannot see things improving for his company or the industry.
Overall, exports have sunk by $5 million in 18 months and US orders (which accounted for 10 per cent of exports) have withered from nearly $2 million to a point where Cave, who has sacrificed his own paycheck to try to keep the business viable, says reaching $600,000 will be optimistic.
"It's harder to export - America's almost gone for us now and Australia's getting harder and harder. We had 150 people in this company and we were going gangbusters - exporting up to 70 per cent of what we made and the balance going to two local companies who were, in turn, exporting 95 per cent of what they'd made."
He didn't see Tubepack moving offshore, but changed the topic when asked if conditions would force further staffing cuts. Another human toll was the inability to offer apprenticeships. Post 9/11 freighting requirements squeezed Tubepack further.
Sleepyhead
* Bedding maker
* 500 New Zealand employees
* Three plants.
Sleepyhead MD Graeme Turner says the company is being forced to examine offshore options such as China.
Conditions had become increasingly difficult during the past five years, and interest rate rises and the high dollar were squeezing companies out of New Zealand.
"Fisher & Paykel's [Appliances] departure shows manufacturers have reached the tipping point," Turner said.
"If conditions don't improve, our options will ultimately be the same as for other manufacturers."
The company was constantly reviewing its international competitiveness, Turner said.
"Manufacturers are not asking for handouts; they are asking for economic policy that assists them to be globally competitive.
"There was probably a 12-month window before most companies would have to start making hard decisions," he said.
"However, at this point, leaving New Zealand is not a decision Sleepyhead has or wants to make," he said. "Companies lost now will never return."
