Country of origin – who cares?

By Hardware Journal Team June 01, 2014 NZ Made

New Zealand-made building products could face increased competition after the Government announced temporary changes to tariffs and anti-dumping duties on imported building products. What impact might this have? And who cares where something is made these days? Phil Weafer reports.

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

Looking at consumer opinion collated by Roy Morgan, “NZ made” is quite important to many consumers. Indeed 61% of Kiwis surveyed say they would “try to buy New Zealand made products as often as possible”. (See page 30 for full details of the Roy Morgan data.)

And, speaking to suppliers around the market, country of origin, especially if it’s local, certainly continues to be something to thump your chest and be proud of. It’s definitely something that suppliers are quick to champion about their products.

Patience & Nicholson General Manager, Kevin Donovan, says it’s very important to highlight the New Zealand made products the company produces. However, he tempers this patriotic outlook somewhat by underlining that the products also need to tick all the other boxes.

“We don’t want to rest on our laurels and make [NZ Made] our only competitive advantage. But we do get some very good support from nearly all of the major hardware chains and part of the reason they choose to support New Zealand made products is if all the other criteria are met.”

Bostik’s Key Account Manager, Paul O’Reilly, says the company continuing to manufacture in New Zealand is a big deal for the company.

“We’re very proud of the fact that we are probably one of the few companies that are still manufacturing, certainly sealants and adhesives, in New Zealand and that we are able to supply the market with New Zealand made products. Certainly one of our flagship products, Wallboard Gold, has been made here since 1959.”

But NZ manufactured isn’t just a touchy feely thing – it can also bring with it tangible benefits for consumers or major end users. Bruce Kohn at the Building Industry Federation (BIF) outlines some factors he feels are behind the strong performance of New Zealand made products.

“I think there are a few reasons why a buyer – especially in major projects – should look at New Zealand product. One is assurance of supply, one is overall good quality and the capability to access support in the sense of use and performance of the product.”

 

DOES RECESSION BREED PATRIOTISM?

The Global Financial Crisis affected many businesses negatively and, even though the hardware market is showing strong growth this year, many are still feeling the effects of the crisis.

Where does country of origin fit when times are tough? Interestingly, Roy Morgan data collected over the last 10 years shows a peak of Kiwi consumers preferring to buy New Zealand made products between early 2009 and early 2010 – around the time that the economy was at a low ebb.

The Buy New Zealand Made programme’s PR, Promotions & Marketing Executive, Scott Willson, says that is something which has informed the work Buy New Zealand Made has put in to raising awareness of New Zealand made products.

“Each time there has been a downturn in the economy there has been an increase in the interest levels of buying, wanting to join the campaign and then the activities of members in actually actively promoting the fact that their products are made in New Zealand. I guess another aspect is the sentiment of the general public to buy New Zealand products noticeably increases in times of economic struggle.”

Kevin Donovan of Patience & Nicholson says that despite the recession, demand from consumers and support from retailers has been a big positive: “The market is tough for everybody and even though some of the Chinese and Eastern European product that is here is considerably cheaper than ours – yes there are quality differences as well – but people are more sympathetic to the ‘Kiwi battler’ element.”

BIF’s Bruce Kohn is another to agree that support for New Zealand products is particularly strong during times of economic downturn.

“It is always good to rely on New Zealand suppliers where they are competitive. And the basic reason that they are competitive is that there have not been for some time any specific barriers to imports and our standards are comparable with those playing in other OECD countries.”

Plus, he adds, business is business and the reality is that importers are “facing the same issues as local manufacturers of supplying a thinly spread market outside of Auckland that has a high cost to service.”

From his company’s perspective, Damar IndustriesDale Young doesn’t feel that times of economic downturn have an effect in business: “The current exchange rate supports importers so we’re losing a lot of our business to importers from Australia.”

ASSA ABLOY’s General Manager, Simon Ellis, says the company, another local manufacturer, please note, noticed strong home support from Kiwis during the recession.

“We saw during the difficult economic conditions how New Zealanders themselves take pride in what we do, and their willingness to support our products as a result. We would like to believe that there is no good reason why customers and consumers alike would see any less value in this going forward.”

 

LOCAL PRODUCT FITS THE LOCAL CLIMATE

One key point that was continually mentioned when speaking to suppliers is that anything manufactured in New Zealand should be fit for our market’s specific requirements.

This is one point strongly emphasised by Troy Smith, Marketing Manager for Winstone Wallboards. Smith says: “I think the crux of it all is that although there is some weight to being New Zealand made, the more important thing is that products and systems are designed and made specifically for our unique climactic conditions and the New Zealand Building Code.”

But there is also local advantage to be had outside of the Building Code, says Troy Smith: “Because we and others manufacture locally, we know what issues can occur and we design products to make sure that they don’t.”

Meeting the requirements of the New Zealand building standards and going above and beyond the performance required for the rugged climate New Zealand experiences means that consumers know that they are getting products built to last and sustain the conditions. Many suppliers point to the need to withstand the wind conditions and UV ratings that are part of the comparatively unique environment for building products.

Scott Willson of Buy New Zealand Made agrees that those members of the programme which are involved in the hardware channel are one of the strengths of the campaign for precisely that reason.

Simon Ellis of ASSA ABLOY adds: “Just as importantly we see how building is becoming highly customised, with consumers putting their own panache to their family home. The range of joinery styles and hardware to match has grown considerably over the past 5-10 years.

“Being New Zealand made grants us the ability to offer a broad range of styles in pretty much any desired colour, all keyed alike in order to meet the ever changing demands of consumers,” he says.

Bostik’s Paul O’Reilly also talks about the ability to produce products capable of withstanding the climate being a focal point of New Zealand made products.

“We have things like very harsh UV in this country so when we’re developing our new products we’re developing them to fit the New Zealand conditions because they can be very different to the European conditions for example.”

 

TURN A NEGATIVE INTO A POSITIVE

As consumers seek ever more information (and ever more bargains) online, is NZ made becoming less important? Could this impact negatively on New Zealand made building products? Gauging the mood of suppliers on this topic there is an unmistakable air of positivity when it comes to Kiwis online.

Troy Smith at Winstone Wallboards says that the general information available online results in consumers being more aware of what products actually offer and how they perform. But online hasn’t impacted on sales in a major way, he says.

“In terms of the actual online shopping side of it, it hasn’t made a major impact on us from a building materials manufacturer’s perspective. For smaller items online has probably had a bigger impact where the transportation costs aren’t that high, I think there is no GST, that could be an issue because it’s advantageous to be buying overseas.”

Paul O’Reilly at Bostik is another to see the positive aspects of information being available for consumers online.

“I think with the internet, now people can go online and view your products and download a lot more technical information so people are probably a lot better versed on your products than they were formerly because they can go online and download technical data sheets and safety data sheets and all the spec and I think that’s a real positive.”

Bruce Kohn says that in his role with the Building Industry Federation he hasn’t heard any negative issues in the market around the increase in online shopping and availability of information. He says: “It may be because most New Zealand suppliers are nimble in adapting to new technology and you can’t discount the fondness of the New Zealander to enjoy their visits to trade merchants…”

 

PRICE VERSUS QUALITY

There is a constant battle in the market between price and quality. While in these days of minimising risk, suppliers and retailers generally look to deliver quality over any other factor, there are always consumers and professionals who search for savings.

The dynamic of the supplier-retailer relationship is one that gives and takes equally and understanding these dynamics is key to continued success. For products made in New Zealand, sometimes this means sacrifice with pricing one side of the coin.

Simon Ellis at ASSA ABLOY understands the importance of that relationship: “Cost is a strong determining factor for retailers, which it has to be in a competitive environment. Whilst we pride ourselves on our New Zealand footprint, it is critical that we are also very cost competitive. The importing competitor more than likely has lower overheads and is most definitely realising cheaper labour, for now at least.

“However retailers are ultimately driven by demand, and therefore it is up to all of us as consumers to purchase items that support our individual values and reflect what we believe to be important.”

In reference to the company’s drill bits, Patience & Nicholson’s Kevin Donovan emphasises that price is not the driving factor behind the purchase of the products. Donovan feels that the products are a means to an end, bought to fit the purpose.

“Quality over price is something I’d go along with and I always say to retailers that people aren’t buying the product because they want our product, they’re buying it because they want it to do something else.”

 

RETAILING CONVENIENCE

The convenience factor for retailers when dealing with locally manufactured goods is prominent among suppliers in the channel. Talking about the company’s new keyless digital locksets, ASSA ABLOY’s Simon Ellis touches on the subject of convenience in product turnaround.

“We know people are time poor and being able to get what they want, when they want it is valued. For us this is not just about speed to market, only two required to take raw material to a finished product, but other factors like keying.”

Troy Smith of Winstone Wallboards points to the ability to keep up with demand as an imperative aspect of the convenience of locally manufactured goods. With the company employing a next day delivery service nationwide, Smith feels that this convenience is a very important component of the company’s offer to customers.

“I think convenience is very important and the thing about producing closer to the market is that you’ve got lower lead times and essentially with lower lead times it means that retailers will stock less and also they’ve got more surety of supply. Because you’re manufacturing close to the market, you can manufacture what you need when you need it. You don’t have the long lead times that potentially mean you can stock out of certain lines.”

Damar Industries’ Dale Young is another to emphasise the importance of rapid supply for New Zealand suppliers and how useful it is for retailers. Certainly a message that suppliers are emphasising to push local products is the quick turnaround to supply the demand of consumers.

“Being a New Zealand manufacturer means you have less lean time to supply. Whereas with imported material, if they run out of stock there can be some time before they get new stock – you’ll notice it in retailers with imported products that sometimes they have empty shelves.”

  

EMPLOYING THE MASSES

When suppliers manufacture locally, one thing that is always championed is the creation of jobs. It’s certainly something that local suppliers like to hang their respective hats on, and rightly so. Dale Young over at Damar Industries is one such supplier that speaks about supporting the local economy in reference to the company’s Rotorua-based plant.

“The thing is we are a New Zealand manufacturer, we employ 180 people and our main plant is in Rotorua. The more we can get supported by the New Zealand economy it’s good for us, the people we employ and overall the economy.”

Similarly, Paul O’Reilly says that supporting Bostik’s New Zealand made products is good for the company, its employees and the economy.

“The big thing for us is the fact that a large percentage of what we sell is New Zealand made and it is still viable for us to do that. We are very proud of that fact and we hope that in our key lines the people buying our products take that into their decision because it is supporting New Zealand jobs.”

Kevin Donovan at Patience & Nicholson says that while it is important to highlight the wider benefits of buying New Zealand made, that should not be viewed as the only advantage. The focus must be paced on the product.

“We have a quality product, we do push the fact that we employ 100 people directly – there’s hundreds of millions of dollars that are paid out in other industries through our work in New Zealand – but it’s important we don’t hang our hat on that as the only advantage we have. We import products as well, to supplement our offer.”

Interestingly, when speaking about the programme’s plans going forward in raising awareness of New Zealand-made products, Buy New Zealand Made’s Scott Willson says that the focus will predominantly look at celebrating the qualities of New Zealand products.

“We are saying that we make a lot of great stuff in New Zealand. The message changes depending on the industry, but those days of ‘if you don’t buy NZ stuff, everyone is out of work and the country will collapse’ are gone, we don’t go down that line of messaging.”

To sum up – who cares about country of origin? Pretty

much everybody involved in buying and selling hardware, as it

turns out. 

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INSTANT EXPERT – NEW ZEALAND MADE

  • Kiwis support locally made products more in hard times.
  • Quality is perhaps the common driving force behind support for locally made products.
  • Does the average trade account holder also think like this?
  • Yes, when it’s a high-risk component, but possibly not when it comes to generic, low-risk products…
  • Still – woe betide locally made products that don’t stand up to scrutiny…
  • Looking past the usual hoary old chestnuts, buying NZ made should not be dismissed as mere flag waving! 

_________________________

 

  

WILL THE BUDGET FUDGE-IT?

What of the 2014 Budget announcement, with the Government temporarily cutting tariffs and anti-dumping duties on imported building products to zero as part of efforts to improve housing affordability?

Included in the duty cuts were plasterboard, reinforcing steel bar and wire nails, and the tariffs have fallen to zero for roofing, cladding, insulation, paints, electrical and plumbing and fittings. All key components of the building materials channel.

With these changes coming in, how much of an affect will it have on local manufacturers competing against importers? Not many people around the hardware channel in the days following the Budget announcement were expecting major implications.

The Building Industry Federation’s Bruce Kohn for one doesn’t foresee any issues arising as a result of the changes: “We don’t see the abolition of tariffs and import duties as having a major impact on New Zealand suppliers.

“The reason for that is that they became accustomed to very harsh market conditions and have adapted their businesses to take account of a very difficult trading situation over the three to four years prior to the current upswing in the industry’s fortunes.”

Kohn also speaks about how New Zealand businesses are operating in a highly competitive market and are accustomed to dealing with competition and new market entrants. Therefore, he says, these businesses are capable of and familiar with adjusting their marketing and supply to competition.

Troy Smith at Winstone Wallboards, one such company that could face increased competition, echoes these sentiments and feels that there is already evident competition in the market.

“New Zealand has always been an open market and had quite low barriers to importers and this might be a tweak but there is competition in the market already.”

www.budget.govt.nz 

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“NZ MADE” NOT AS CRUCIAL AS QUALITY FOR THE BUILDING TRADE?

The retail consumer may be flighty and may accept the risk of limited life with lowest cost products, but Dean Fradgley, Chief Executive of Fletcher Distribution (PlaceMakers and Mico) says that his trade customers are telling him the opposite.

“In our last survey, 85% of our customers said ‘we don’t care where a product comes from and are not prejudiced towards New Zealand domestic produced product’.

“If our customers are saying ‘give us more choice’ and it doesn’t have to have a New Zealand sticker on, then we will respond to that; I don’t think we would proactively push that if it wasn’t wanted but at the moment our customers are saying to us ‘what are you doing for us to unlock more value?’”

Does this mean sourcing everything from low-cost producer countries and adopting a blanket own brand approach? “The challenge is to look at global sourcing with our preferred vendors – we need to be able to offer good, better and best and they should come with us on that journey.

“Do I think we should have a PlaceMakers drill? Absolutely not! I love brands, our customers love brands and I think the online experience says that, when customers do research, they look for brands. Our customers are saying ‘give us solutions but brands are really important’.

“[However] if there is something that is commodity based and we can do it well, we should not be afraid to put our name on the product. But if it doesn’t add value for the customer or for us I am not for it.”

“In B2B [i.e. builders], our customers want good quality product. If they ask for different quality products for different jobs and it doesn’t compromise specification, then we should give them what they want. In my experience, brands count and quality counts. [As a business] you have to be careful you don’t damage your brand by selling something with limited longevity!”

www.placemakers.co.nz 

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BUY NZ MADE – CELEBRATING NEW ZEALAND PRODUCT EXCELLENCE

Since its establishment in 1988, the role of Buy NZ Made has been to encourage the production and purchase of New Zealand-made goods both domestically and internationally. The iconic “Kiwi in a triangle” logo adorns the products and marketing of member businesses and is a key benefit of joining the campaign for many Kiwi businesses. The origin of products is an important factor in the purchasing decisions of many, and being proudly New Zealand Made can be a competitive advantage both domestically and offshore.

In addition to administering the campaign logo, Buy NZ Made offers an increasing range of opportunities to help put NZ Made goods on the map. These include trade show assistance, networking and business partnerships, Facebook competitions, free web profiles for all members, database marketing and widespread advertising and publicity promoting the ‘NZ Made’ message.

Kiwi ingenuity is as strong as ever according to Buy NZ Made’s PR and Marketing Executive Scott Willson. “There are so many examples of businesses that have found success by coming up with either a better, or a completely new way of doing things. We are constantly amazed with the innovation we see in the inventions, tools and hardware products that are made here”.

www.buynz.org.nz

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