I’ve just been sent an article about a report released late last year by the Boston Consulting Group which elaborates on why there is an American manufacturing renaissance occuring. It’s a pity I didn’t have it last year. However, it just reinforces what is becoming accepted by many New Zealanders (and Americans) that manufacturing in their own country makes good economic sense.
A return of manufacturing to the U.S. will accelerate as companies take into account the full costs of outsourcing to China and the strategic advantages of making products closer to consumers in North America, predicts a new report by The Boston Consulting Group (BCG).
It argues that the rising cost of wages in China means that the advantage of lowest cost will continue to diminish. And also there are strategic advantages in locating production closer to the consumer and the downside of global supply chains.
All these reasons make sense. Along with the economic flow on effect of tax paid on wages inside New Zealand. And keeping and building a manufacturing skill base here.
I wonder when the light will go on with this government? Buying rail wagons from China which are of dubious quality because of lowest cost is not economically sound. And certainly isn’t good for New Zealand in the short or long term.
This is worth a read.
Considering that this governments sole purpose is to transfer our wealth to their rich mates – never.
Clare, if you had been in government would your government have instructed Kiwirail’s board to buy from the Dunedin workshops?
We need to look at the intangible benefits of keeping manufacturing here in New Zealand, like keeping New Zealanders employed rather than on the dole.
Also maintaining skill levels in New Zealand which is important for a country which wants to grow and improve it’s skill levels. We have had successive Governments here in New Zealand who want to destroy the fabric of NZ society and buy everything from China or Asia where people work for a $ a day.
By putting more and more people out of work in NZ we are creating a bigger and bigger problem long term.
Also once you destroy your workforce it is more difficult to upskill it again and get it going again. The Chinese are smart they realise once we have destroyed our own manufacturing industries we will never get them back up and going again.
Whoever dismantled our Apprenticeship Schemes should have been shot, we need to motivate young people to succeed in life and give them hope. Throwing them on the scrap heap after they leave school is absolute nonsense.
Prevention is better than cure, and the devil makes work for idle hands. Think about it.
This Government is intent on destroying this country and breaking down people’s morale and hope while the wealth transfer continues to the haves and offshore Corporations.
Jack, I thought your first post there was very sensible, and I found myself agreeing with almost every word. Then you ruined it all with your stupid bigotted second post, almost as though you realised you had forgotten to front the ‘party’ line. Shame, you had come across as an intelligent commenter.
“I wonder when the light will go on with this government?”
It had better be quick.
One can only imagine how much it’s going to cost if they wait until after the asset sales.
OK we need to manufature closer to the people who are consuming the product. Where,s that for NZ. In the case of Dairy products its China and Europe. Wine: Europe UK and USA. Just what would we do here?
Then there’s the point that we need to take into account reality. Don’t see any political parties doing this.
Lance is right. Clare says as much in her own post which is internally inconsistent: “And also there are strategic advantages in locating production closer to the consumer and the downside of global supply chains.”
So in a global supply chain, Clare, who are our consumers? Certainly not little old NZ. Where are the emerging markets for our products? Not NZ. Your party’s record in government in manufacturing was appalling. The tradeable economy flatlined as early as 2005. Your government outsourced services to offshore companies all the time because it was cheaper. Some more credibility please Clare.
A Labour Govt bought back the railways. A Labour Govt knew the importance of our rail network and would have invested more in it, including building carriages inside NZ. Perhaps some of that work could be better done elsewhere, but let’s see the economic case transparently without all the dodgy accounting.
A Labour Govt would have been promoting an active relationship between the Australian rail engineering industry and our own, collaborating on skills transfers and even pitching for work for our region.
And not just in rail. We have countless manufacturers who are innovative and flexible and who could work together more if encouraged to to pitch for large jobs around our region. Farra Engineering and Allans Sheet Metal in Dunedin are two such companies. I think that’s a sensible and do-able way of approaching building a strong viable manufacturing industry. Don’t you?
High value goods aren’t affected by transport costs as much as bulky heavy low value commodities. Another reason Labour is pushing for NZ to grow its high tech high value export sector.
IMpact – Labour has learnt from the mistakes of its neoliberal free market Rogernomics past. You better start criticising National because they clearly have not. Some credibility from you please mate.
High value goods aren’t affected by transport costs as much as bulky heavy low value commodities. Another reason Labour is pushing for NZ to grow its high tech high value export sector.
CV –
In a nutshell, another reason why buying simple to manufacture plant (like rolling stock) from offshore makes absolutely no sense.
I’m not convinced of the high tech/high value export promotion meme though.
While it sounds great in theory, it needs to be supported by tangible policy changes – something we have seen neither from the left or right of the political spectrum in this country. If there is a policy framework to both ‘eat our own lunch’ wrt govt procurement and genuinely subsidise tech business (beyond the Ag sector) via meaningful R+D credits, then well and good.
But I won’t hold my breath.
Wrt to your following comment re Labour learning the lessons of neo-lib foolishness, the proof will be in the pudding.
I was not encouraged by Mr. Shearer’s Christmas reading list though if that is any indicator of his intellectual framework!
If all countries over-produced, which they’re all quite capable of doing, then where would anyone export to?
The reality is that we need produce solely for NZ with trade becoming a minor aspect of the economy rather than the major aspect that it is now. In fact, the only reason why trade is pushed so much now is because it makes a few rich people wealthier. We absolutely must become a stable state economy rather than a growth economy.