Had a very interesting evening listening to Tim Groser, our Minister of Trade, on Friday. The setting was Bracu, and with Branka Simunovich also in attendance, we were spoiled with attention, food, not to mention some samples from their skin care range (very handy for Mothers Day on Sunday!).
Tim is obviously a very busy man, having come off a flight that morning that started in Europe, with events thrown in with great regularity. However, he had kindly taken time out from what is clearly a hectic schedule to give a very personal account of his views of policy, international trade and NZ politics in general. While all of the content was fascinating, and Tim is clearly a comfortable orator, the “revelation” comment for me came around manufacturing.
As someone who studied economics at University, I saw manufacturing as a game where you produce first or faster/leaner/cheaper/smarter than the competition with products that had mass (and therefore the largest market) appeal. Demand being greater than supply meant better prices, greater profits, better returns for investors. Size and production capabilities was therefore paramount. Our distance from larger markets (mass appeal), our more expensive labour structure (look at what the ipad production line staff get paid for a 10 hour day), our lack of heavy machinery and accessible mineral resources all made me think we had to either:
- Rely on agriculture/horticulture products as our principle export.
- Rely on tourism or services to for local employment.
- Become a service orientated economy.
However, Tim Groser gave four clear examples that showed how limited my thinking was. We can still be a manufacturing economy (in fact we have to be), we just need to ensure we don’t approach it using the historical model. All four examples were clear on why they were successful:
- Specialist, almost insanely niche markets.
- Mass production was not the focus, targeted production was (specific to the end users requirement).
- Utilisation of local people with incredible “smarts”.
- Partnerships with foreign interests to finance the operation, and/or provide channels through which to distribute.
There were even some businesses at the event who ticked the above boxes, proof that this model is becoming more of a reality all the time.
It certainly makes me think differently when I hear the word Manufacturing.
Till next time.
Lincoln
Lincoln Sharp - Thinking Forward 