Posted: 03 February 2020
According to a recent New Zealand survey of manufacturing, sales volumes fell 0.3% in Q3, but that this dip is likely to bottom out, and we'll be seeing some growth return in 2020. Finance Minister Grant Robertson has said that the economy is in good shape, and will see an expansion of manufacturing industries in the near future. And an economic survey of manufacturing conducted in September 2019 revealed that the value of manufacturing sales rose 0.9 percent ($269 million) in the September 2019 quarter.
While we've seen the New Zealand economy diversify into several areas over the past few decades, there's very much still a place for traditional manufacturing. Being able to make our own products offers employment, as well as transparency around environmental and social impacts. In other words, concern that our consumer items are being produced offshore under what amounts to slave labour is going to increase.
However, manufacturing locally is easier said than done. Some of the main challenges faced by Kiwi manufacturers include:
- Difficulty finding labour - both skilled and unskilled workers are in high demand in New Zealand. That means there's plenty of jobs available in the manufacturing industry; the challenge is finding people to fill them.
- Finding enough time and resource to focus on core business activity – for example expanding market demand. It needs to be focused on, instead of spending time on manufacturing concerns.
- Falling behind when it comes to adopting best practice technology - most manufacturers realise they're behind the curve. Innovation is increasing and it's essential to keep up with it.
- New product development costs are too high - following on from the technology point, innovation is often hampered because the costs are prohibitive.
What's the solution for Kiwi manufacturers? How can they continue to produce and develop their products locally, while keeping costs down and adhering to technology best practices?
Increasingly, manufacturers are exploring outsourcing - to contract manufacturers in New Zealand - as a solution to these problems.
There are a variety of reasons for any business to decide to make use of a contract manufacturer. Obviously, it depends on what the business does and what their requirements are, but when it comes to sheet metal fabrication, going with a contract manufacturer brings with it benefits such as:
- You don't need to invest in your own plant or equipment
- Less inventory and stock capital requirements
- Quality, resources and expertise
Access to innovation is also a major plus. A contract manufacturing business that has leading edge technology, highly trained and qualified staff, and top-of-the-line equipment mean that you'll be getting all the advantages of their innovative thinking, quality controls and efficient processes.
Within the sheet metal fabrication industry, you might get the manufacturer to make just a sheet metal box, or follow through to fitting it out with plastic parts, cables and electronics, and then supplying that as a finished product. In response to market demand, some sheet metal fabricators have developed a ‘crate to carton’ outsourced offering, providing services from design concepts right through to shipping finished product.
In New Zealand, the term contract manufacturing is often used to describe outsourced manufacturing of circuit boards and electronic parts. But in recent years the term has expanded to include companies contracting sheet metal fabricators to make repeatable, metal-based products.
These days, a lot of products incorporate fabricated sheet metal components. Specifically, sheet metal is a critical component of machinery and instrumentation. When it comes to contract manufacturing in the sheet metal industry, it’s a lower risk, cost-effective and innovative way to proceed. Not only that, but outsourcing to a contract manufacturer means you can spend more time focusing your energy on core business issues, without having to worry about manufacturing concerns as well.
If you’re keen to learn more, we’ve got a guide to achieving leaner manufacturing through outsourcing you’ll find interesting.
Blog categories: Contract Manufacturing