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Manufacturing locally has become gradually less common in New Zealand’s hardware channel but, for those who continue, the results can be extremely rewarding.
Take Thermakraft, whose recently appointed Chief Executive, Glenn Boyce, has decades of experience in New Zealand manufacturing and remains positive about the current state of New Zealand made products as well as the company’s newly rebuilt facilities after last year’s fire.
“After the fire the owners could easily have just taken the money and closed the business down but they didn’t blink an eye about reinvesting as they are really committed to having this company up and running in New Zealand,” Boyce says.
SO WHY MAKE IT HERE?
I asked Glenn Boyce what he felt were the main advantages of manufacturing in New Zealand.
“Going back to first principles, one of the major things is that it creates employment in the New Zealand manufacturing environment. And that’s not just the employees but all the stakeholders, including suppliers and the like,” he explains.
“Technically speaking, in this business we are as advanced as anyone overseas, we have highly qualified technical people in terms of our engineers and chemists that do all the product development here.
“Response times are also a lot shorter compared to purchasing from overseas and there are things that we can do such as custom printing of wraps with customers’ logos that can be turned around in a matter of days compared to imported competition which can take weeks.”
For Paul Industries’ Ben Lloyd, local manufacturing enables the company to meet the very specific and timely needs of the New Zealand construction industry.
“People feel reassured when things are made here – there’s a quality aspect to it. First and foremost, however, is the ability to react locally. Our big thing is quality and service and by manufacturing here in Tauranga we can service our customers immediately.
“We have the ability to deliver anywhere from Kaitaia to Bluff overnight and with distribution centres in Tauranga and in Christchurch we can supply stock to any customer at any time. And we do custom measurements for some of our products so if people say they have a roof of a specific size we can actually make it to that length if they need it.
“So that’s an extra feature we can do because we manufacture here,” Lloyd says.
Adapting quickly to technical challenges is another advantage that Paul O`Reilly of Bostik feels is crucial to the company’s continued manufacture of key products in New Zealand.
“Our products can be made to New Zealand’s specific conditions of UV, temperature and humidity and we beef up our manufacturing process with four chemists that we employ locally,” O’Reilly says.
THE MIND OF CONSUMERS
Kevin Donovan of Patience &Nicholson sees the ability to control quality, react to demand and cater to local preferences as big incentives for companies to manufacture here and that this informs the decision making of consumers as well.
“They know that the quality is great and most understand that drilling a hole is normally a step in the process of completing something else, so while cost/price is a consideration, a cheap Chinese drill that goes blunt or bends half way through the job is disruptive,” he says.
And while every manufacturer I talked to stressed that quality, service and value are always a priority, the emotional aspects behind buying locally manufactured products should never be overlooked.
Edge Protection’s Karl Emslie points out that trust can be a huge factor for consumers, especially when safety is involved: “The Joe Average tradesman in New Zealand likes the security of a product that has been developed by his peers. They know that it’s going to perform and be fit for purpose,” he says.
WHAT’S THE RETAIL OUTLOOK?
Mitre 10’s Dave Elliott feels that consumers prefer locally made products in certain product categories but not all.
“New Zealand made seems to be a plus for some products but not some others. In products like barbeques for example people are happy to buy NZ made and companies like Steelfort have a good reputation and are a fantastic company that deserves our support,” Elliott says.
Patience & Nicholson’s Kevin Donovan is another to recognise the emotional benefits that people attach to purchasing – and selling – locally manufactured goods.
“End users and retailers are often surprised that we make drill bits here and there is a feelgood factor that they are supporting our local factory. Store staff also really engage with our products and over the years I’ve often heard them tell customers ‘they make those drills in Christchurch’,” Donovan says.
Donovan also suggests some less immediately tangible, but very important, benefits that local manufacturing offers such as an increase of profits going back into local communities as well as a ripple effect that sees benefits for local employment.
“One job in manufacturing supports about five jobs outside of the business,” Donovan says. “It also offers an understanding of the products and an ability to train that cannot be matched by most importers.”
There are of course some drawbacks that threaten the future of local manufacturing and have already reduced the number of products made here, including tight retail margins, higher material prices and overheads and a lack of volume compared to international manufacturing.
Patience & Nicholson’s Kevin Donovan also suggests that, with manufacturing not seen as a glamorous profession and subject to relatively low level of promotion in New Zealand schools, a lack of skilled local labour for manufacturing is an issue of concern.
THE FUTURE OF LOCAL MANUFACTURING
So how is the future looking or New Zealand manufacturing in the hardware channel? Are those who do so a dying breed?
Thermakraft’s Glenn Boyce shares his thoughts: “The doomsayers will tell you that everything will collapse and die and everything will end up being manufactured in China, but I don’t believe that as Kiwis are innovative people and typically look at different ways of doing things. Labour costs and overheads are more expensive in New Zealand but these are offset by shipping costs and I tend to be an optimist and think there is always a case for manufacturing in New Zealand,” he says.
Bostik’s Paul O’Reilly is also happy to report that the company will be looking to improve its local manufacturing capacity.
“Our international owners are investing into increasing and modernising some of our machinery here so we are looking to invest in the future of New Zealand manufacturing currently.
Paul Industries is also committed to ongoing New Zealand manufacturing, with plans to further enhance its production and distribution processes in the next 12 months.
“Our focus at the moment is moving our three separate facilities and amalgamating them into one new multi-purpose plant,” Ben Lloyd explains. “This will enable greater efficiencies because we will have our marketing, administration, warehousing and manufacturing in one particular area.”
The future is never certain of course and Kevin Donovan at Patience & Nicholson takes us out with has some sobering thoughts for those looking to continue manufacturing locally.
“Those who don’t adapt quickly, utilise technology, diversify and export are probably doomed,” Donovan says.
Hopefully that won’t be the case for your business.
THE BENEFITS OF SPENDING LOCALLY ON HOME SWEET HOME
Looking overseas, Independent We Stand – a US equivalent to Buy NZ Made set up to encourage consumers to buy local – has sponsored a study along with Hardware Retailing magazine, STIHL and the North American Retail Hardware Association “to quantify the local economic impact when consumers concentrate their purchases for a home improvement project through local, independently owned businesses versus national home center chains.”
The study posed a theoretical home improvement project worth $10,000 with allowances for hardware products, specialised power equipment, lumber and building materials and professional installation services. It then calculated the actual proportion of revenue recirculated in the local community when carried out through local independent retailers versus big box dealers, taking into account labour, profits procurement and charitable giving.
So what were the results?
Turns out the hypothetical homeowner would have spent comparable amounts whether buying from the biggest chains or the smallest independents. However the study also found that purchasing home improvement products from locally-owned retailers would generate “twice as much local economic activity than purchases made at big box chain stores”.
And, while this is America, not New Zealand, the potential benefits to local communities shouldn’t be ignored. As the study concluded, if even 10% of the US$114 billion in goods that the two major US hardware chains sold in 2013 went to independents, small towns could enjoy an additional US$1.3 billion in economic activity.
“That kind of money turns home improvement into hometown improvement,” says the report.