Make the smart choice - invest in high value manufacturing and services in new Zealand
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
make the smart choice — Invest in High Value Manfacturing and Services in New Zealand make the smart choice invest in high value manufacturing and services in new zealand 1
make the smart choice — Invest in High Value Manfacturing and Services in New Zealand contents
make the smart choice — Invest in High Value Manfacturing and Services in New Zealand All costs in this document are based on the following three year average exchange rates from 1 APR 2009 to 31 MAR 2012 NZ($) AU($) EUR GBP US($) JPY 1.0000 0.7822 0.5401 0.4673 0.7396 63.1300
make the smart choice — Invest in High Value Manfacturing and Services in New Zealand
1 Why smart investors
choose new zealand
The world of manufacturing has changed in fundamental ways. The technological revolution has
transformed the way that goods and services are developed, produced, marketed and distributed.
Globalisation has expanded the number and size of markets, and introduced for both consumers
and producers a previously unimaginable level of choice.
Investors looking for a
sustainable global strategic
position of strength that comes
from being based in a politically
Make the smart move —
advantage in high value
manufacturing and services
and economically stable
society, with a positive business
choose New Zealand.
make the smart choice – environment that is free from
New Zealand. corruption and supported by
a robust legal system that
Smart investors choose protects intellectual property.
New Zealand because of its
talented, well educated and Smart investors recognise
competitively priced workforce, New Zealand’s flair for original
its culture of pragmatic thinking and determined
innovation and its position in application, leading to the
the Asia-Pacific region, the new development of novel
engine of economic growth. products and processes
and unique resolutions for
Smart investors appreciate the difficult problems.
4
make the smart choice — Invest in High Value Manfacturing and Services in New Zealand
2 New Zealand
A compelling Proposition
Globalisation has seen the manufacturing sector become very competitive, with mass production tending
to be concentrated in countries of the lowest overall cost. However, for knowledge-rich sectors such as
high value manufacturing, lowest cost does not always mean best value. In the words of Warren Buffett,
“Price is what you pay: value is what you get”.
High value manufacturers based in New Zealand
achieve value through a:
• well educated, English speaking workforce, competitively priced • proximity and access to high-growth economies in the
by OECD standards, with an aptitude for innovation and a focus Asia-Pacific region, including Australia, China and Singapore
on excellence and quality
• clean, reliable, renewable energy
• world class research and development (R&D) capabilities,
based on a collaborative relationship between research institutes, • economic and political stability
universities and the private sector, and supported by government
initiatives and investment • a high level of protection for intellectual property
• a safe and secure investment environment with the lowest
level of corruption*.
Source: Corruption Perceptions Index, 2011
5
make the smart choice — Invest in High Value Manfacturing and Services in New Zealand
New Zealand presents
investors with the opportunity
Key areas of strength and
to achieve attractive returns
through the combination of a
opportunity include the
smart, cost-competitive and aviation, clean energy,
innovative workforce, while
securing strategic advantage healthcare, marine, security,
and minimising risk through
access to reliable, renewable
industrial equipment, food,
energy, and regional markets beverage and bio-processing
that are leading global
economic growth. technology sectors.
The ability to bring a meticulous
focus to challenges, identify
issues with precision and
develop elegant yet practical
solutions makes New Zealand
particularly well suited to
high value manufacturing
that focuses on the
development of prototypes,
pre-production and pilot
runs, custom manufacturing,
virtual manufacturing and
niche manufacturing.
6
make
make the
the smart
smart choice
choice —
— Invest
Invest in
in High
High Value
Value Manfacturing
Manfacturing and
and Services
Services in
in New
New Zealand
Zealand
case study: Pratt & Whitney
Air New Zealand Services
Pratt & Whitney is a world-leading designer, manufacturer and servicer of aircraft engines, industrial gas turbines
and space propulsion systems, with an extensive global presence. In 2001, Pratt & Whitney (51 percent) formed
a joint venture with Air New Zealand (49 percent) to operate the Christchurch Engine Centre, a maintenance,
repair and overhaul (MRO) centre that initially serviced Pratt & Whitney JT8D and Rolls-Royce Dart engines.
In 2004 the joint venture employees in 2001, the characterised by rapid Exporter of the Year
expanded the facility by Centre now employs close to turnaround and innovative award in recognition of its
developing and opening 400 staff and has an active logistics were all key reasons implementation of best
a state-of-the-art testing apprenticeship programme to for choosing New Zealand as a practice technologies
and MRO centre to service maintain its skilled workforce location for Pratt & Whitney’s and practices.
the new International Aero base. The Centre has expanding aftermarket service
Engine V2500 engine used approximately 125 service visits business,” says Brendon
to power the popular Airbus for clients from global locations McWilliam, General Manager.
A320 airliner. The computer- including the United States,
controlled test facility, a the Asia-Pacific region, and The Christchurch Engine
designated V2500 Master Test the Middle East. Centre won the 2010 Supreme
Cell, is used to set the standard Award in the American
by which others are measured. “The Southern Hemisphere Chamber of Commerce in
location, Air New Zealand’s New Zealand-DHL Express
Starting with a staff of 250 engine maintenance expertise, Success and Innovation
former Air New Zealand and the reputation for a high Awards and the Champion
Engineering Services level of customer service Canterbury – Large
7
make
make the
the smart
smart choice
choice —
— Invest
Invest in
in High
High Value
Value Manfacturing
Manfacturing and
and Services
Services in
in New
New Zealand
Zealand
“The Southern Hemisphere location,
Air New Zealand’s engine maintenance
expertise, and the reputation for a high
level of customer service characterised
by rapid turnaround and innovative
logistics were all key reasons for
choosing New Zealand...”
Brendon McWilliam, General Manager,
Christchurch Engine Centre
8
make the smart choice — Invest in High Value Manfacturing and Services in New Zealand
3 New Zealand
smart people
3.1 A well educated, skilled workforce
High value manufacturing is particularly knowledge intensive and depends on a highly skilled and
experienced workforce to transform products and processes, and give manufacturers a competitive edge.
Modern manufacturing is workforces in the world, with a with the OECD average of
No 2
much broader and more high level of graduations from 37 percent.
complex than just production. tertiary institutions of all types.
It encompasses the full life- Currently 40 percent of the These numbers are poised to
cycle from research, design adult workforce hold tertiary rise even higher as the rate of
and development through qualifications, compared with enrolment in tertiary education,
production, sales and marketing, the OECD average of particularly at the Bachelor and New Zealand
logistics and distribution, and 30 percent1. above levels, has increased since
the provision of services. High 2008 and the onset of the global was ranked
value manufacturers need a
workforce that has experience
The number of people
completing either vocational
financial crisis. In 2010 just over
184,000 people were enrolled
second in the world
and skills across this range of
activities.
or degree-programme tertiary
qualifications continues to grow,
in programmes at Bachelor
level and above, compared
for Education
with a 70 percent increase with 166,420 in 2008 (these by the Legatum
New Zealand was ranked between 2000 and 2009. This figures exclude international
second in the world for trend is particularly illustrated students)2. Of those 184,000, Prosperity
education by the Legatum
Prosperity Index 2011 and has
in the 25–34 age group, where
60 percent hold tertiary
approximately 37,000 were
enrolled in natural and physical
Index 2011.
one of the most educated qualifications, compared sciences, just under 19,000 in
1
Education at a Glance, 2011 OECD
2
Learners Summary, Education Counts, Sept 2011 http://www.educationcounts.govt.nz/statistics/tertiary_education/provider_summary
9
make the smart choice — Invest in High Value Manfacturing and Services in New Zealand
information technology, and are currently the two largest
12,550 in engineering and sources of international students
related technologies. In 2008, for New Zealand.
New Zealand produced around
1,500 engineering graduates3. Lifestyle factors such as short
commuting times, housing
New Zealand attracts many affordability, work-life balance,
international students across all and access to outdoor recreation
tertiary levels. Nearly 20 percent mean that New Zealand is also
of graduates with Bachelor able to attract skilled labour
degrees are international from other countries, despite
students, and trends in 2009 comparatively modest salaries
and 2010 showed an 8-9 (up to 30 percent below
percent annual increase in the OECD average). In fact
total international student engineering-related occupations
numbers. At the Doctoral experienced a net inflow during
level, New Zealand’s policy of 2003-2008 because the arrival
funding international Doctoral of skilled migrants exceeded the
students in the same way as number of departures5.
domestic students has resulted
in international students The United Kingdom, India,
comprising 35 percent of China, South Africa, the
current Doctoral enrolments4. Philippines and Fiji are the
International students frequently largest sources of skilled
remain in New Zealand for migrants6. Germany and the
employment on graduation United States are also significant
and subsequent permanent sources of temporary skilled
residence. India and China labour.
3
National Engineering Education Plan, IPENZ (Institute of Professional Engineers of New Zealand), Oct 2010
4
Profile and Trends 2010: New Zealands Tertiary Education Sector, Ministry of Education, Feb 2012
10 5
6
Engineers in the New Zealand Labour Market, Department of Labour, 2008
Migration Trends and Outlook 2010–2011, Department of Labour, Feb 2012make
make the
the smart
smart choice
choice —
— Invest
Invest in
in High
High Value
Value Manfacturing
Manfacturing and
and Services
Services in
in New
New Zealand
Zealand
case study:
Allied Telesis Labs
Allied Telesis Labs, New Zealand (ATL-NZ) is the largest R&D facility of the global Allied Telesis (AT)
Group, a global leader in IP/Ethernet networking solutions for enterprise, network service provider and
government institutions. Headquartered in Japan, the AT Group has a global staff of more than 2,300
and had annual revenues of approximately US$460 million in 2010.
From a custom-built design company, demonstrating parking, short commutes,
centre in Christchurch, ATL-NZ the New Zealand can-do and being only a short drive
designs advanced networking attitude. The product range from beaches and ski fields
products, providing IP-based and company talent impressed also make Christchurch a
voice, video and data delivery the AT Group so much that highly desirable location for
solutions for an impressive it purchased the company international engineers, while
range of customers. From small in 1999. It has since invested the quality of the New Zealand
offices to huge national Internet heavily in people and plant, universities ensures that top
Protocol Television providers, now employing 120 people graduates are available locally.
and every size and sector in in Christchurch. Staff turnover is extremely
between, well over a million low, especially compared with
customers worldwide have New Zealand’s spaciousness traditional low-cost locations;
chosen AT technology for makes a large custom- staff service time currently
their networks. built centre feasible, which averages more than four years.
encourages productivity
The Christchurch R&D centre and attracts – and retains
started out as a small local – excellent staff. On-site
11make
make the
the smart
smart choice
choice —
— Invest
Invest in
in High
High Value
Value Manfacturing
Manfacturing and
and Services
Services in
in New
New Zealand
Zealand
“The key benefit for us has been the long-term
commitment and talent of the New Zealand engineering
team. That stability has made it possible to develop
multiple generations of high-end products.”
Andrew Riddell, Managing Director, Allied Telesis Labs
New Zealanders are known convenient, and frequent video
worldwide for their friendliness conferences are supplemented
and flexibility and are very with regular face-to-face
effective at international meetings. The AT Group
collaboration. This is especially also finds ATL-NZ a great
important for the AT Group, destination for highlighting the
with nearly 40 offices company to key customers,
worldwide. The overlap offering travel to Christchurch
between the New Zealand as promotional prizes.
and Japanese work days is
12make the smart choice — Invest in High Value Manfacturing and Services in New Zealand 3.2 Intelligent design founded on the discipline of customer focus With a culture of creative self-sufficiency and resilience, the New Zealand workforce is known for original thinking with a fresh perspective that animates R&D processes and leads to the design of clever, pragmatic innovations. New Zealand’s labour force is flexible, adaptive and responsive, with exceptional care and attention given to developing and maintaining close relationships with clients and consumers in order to understand their needs and requirements. This results in the design of products and solutions that are smart, affordable and effective. That attention to detail and quality is one of the foundations for customisation and improvement through iteration, and New Zealand is well suited for niche and custom manufacturing. 13
make
make the
the smart
smart choice
choice —
— Invest
Invest in
in High
High Value
Value Manfacturing
Manfacturing and
and Services
Services in
in New
New Zealand
Zealand
case study:
philips selecon
Philips Selecon designs and builds high-performance theatrical and architectural lighting fixtures or
luminaires (spotlights, projectors, floodlights) for the entertainment and specialised display lighting
markets, which include museums and galleries. These are top-end, specialised products that are built
to last. Accordingly, volumes tend to be low and products high valued.
Selecon-Reid originally Opera House and the L’Opéra and improvements in
started in 1969 creating Bastille in Paris all use Philips productivity of more than
lamps for the education Selecon lighting. 50 percent across production
market, but grew to establish and product design.
itself in the niche market of Selecon was acquired by Royal
theatrical lighting, gaining Philips in 2009 and Philips Selecon valued the investment
a significant market share Selecon was formed, now part that Philips had made in
in Australia and Europe. An of the Philips Entertainment the development of LED
intense focus on establishing Global Business Unit. The technology and the potential
relationships, meeting the Selecon range of products access to new markets.
needs of the client and a meant that Philips was able to
lot of travel overcame any offer a more complete market
perceptions of difficulty portfolio and the company
caused by distance that was impressed with the
potential clients may have engagement of the workforce
had. The American Museum in lean manufacturing, which
of Natural History, the Sydney saw a reduction in inventory
14make
make the
the smart
smart choice
choice —
— Invest
Invest in
in High
High Value
Value Manfacturing
Manfacturing and
and Services
Services in
in New
New Zealand
Zealand
New Zealand remains the The company continues
company’s base of operations to specialise in its niche,
because of the depth of skills expanding the product range
and knowledge developed into established markets, and
in this niche product, innovation remains key to
New Zealand’s supportive maintaining and expanding
manufacturing base for its market position.
specialised markets that
produce low-volume, high
value products, and the
ease of doing business.
“A company like us, with
short runs of a diverse
range of products, is well
suited to a country like New
Zealand,” explains Graham
Eales, General Manager,
Entertainment Australia/
New Zealand. “We have very
good precision extrusion and
pressure die casting industries
in New Zealand, and the scales
of production that we require;
regular short runs can generally
be easily accommodated.”
15make the smart choice — Invest in High Value Manfacturing and Services in New Zealand
3.3 Cost competitive labour
The New Zealand labour force is also highly cost competitive by OECD standards, with lower market
rates for skilled labour. Engineering salaries in New Zealand are lower than they are in other developed
countries7. The average gross salary for mechanical engineers in 2010 was US$52,7708. This is consistent with
trends in other industries, where New Zealand salaries are 20–33 percent lower than the average salaries paid
in Australia, the United States, the United Kingdom and France, creating a significant cost advantage.
A study by Deloitte on high Table 1 – Comparison of Annual Salaries (US$)
value manufacturing in
New Zealand demonstrates Salaries (US$) NZ Australia Germany UK US Japan
that the labour cost advantage Skilled industrial workers 32,720 66,007 40,650 50,036 59,825 55,235
New Zealand enjoys applies
with on-costs 33,397 71,948 49,414 56,941 68,111 62,968
across the board, whether
at the design, operational Engineers 49,621 75,495 69,490 59,717 80,475 68,104
or management and with on-costs 50,648 82,290 84,472 67,958 91,621 77,639
executive level. Department Heads 44,753 110,011 77,752 62,980 88,400 87,351
with on-costs 45,679 119,912 94,515 71,671 100,643 99,580
Source: Deloitte “Taking a Closer Look – New Zealand High Value Manufacturing & Services Value Proposition Report” June 2011
7
Engineers in the New Zealand Labour Market, Department of Labour 2008
8
NZ$ 73,130 http://www.careers.govt.nz/default.aspx?id0=103&id1=j28310
16make the smart choice — Invest in High Value Manfacturing and Services in New Zealand
New Zealand salaries are 20–33 percent
lower than the average salaries paid in
Australia, the United States, the United
Kingdom and France.
Salary on-costs in New ACC is a government-owned scheme was introduced in Both of these costs are
Zealand are low because provider of comprehensive, 1974, although the Department reflected in the on-cost figures
there is no payroll tax no-fault personal injury of Labour continues to in Table 1. The salary on-costs
and no social security tax. cover for residents of and regulate and enforce safety in New Zealand represent just
The main additional costs visitors to New Zealand. in the workplace. 2.7 percent of annual salary,
are levies payable to the The Corporation’s activities compared with nine percent
Accident Compensation focus on the prevention of KiwiSaver is a voluntary, for Australia, 21.6 percent for
Corporation (ACC) and injury, and on treatment and worker-based retirement Germany, 13.8 percent for the
employer contributions to rehabilitation post-injury. It is savings scheme, introduced United Kingdom, 13.9 percent
KiwiSaver, a voluntary national funded through a number of in 2008. Participation in for the United States and 14
superannuation scheme. sources, including compulsory the scheme is voluntary, percent for Japan.
levies on earnings and payroll. but employers must make
Significantly, the ability to compulsory contributions
sue for personal injury was of two percent of any
removed at the time the participating employees’ gross
salaries or wages.
17make
make the
the smart
smart choice
choice —
— Invest
Invest in
in High
High Value
Value Manfacturing
Manfacturing and
and Services
Services in
in New
New Zealand
Zealand
case study:
CTC Aviation Group
The CTC Aviation Group is a global leader in aviation training and management, headquartered in
the United Kingdom. Its clients include British Airways, the Jetstar Group in Australia, New Zealand,
Vietnam and Singapore, easyJet and Air New Zealand.
CTC established its second CTC New Zealand specialises market. The growth is the result In addition to its proximity
aviation training facility in in developing customised airline of large orders for aircraft to the Asia-Pacific region,
Hamilton, New Zealand in pilot training programmes and that need crew to fly them, Ian Calvert, the Chief Executive
2004 after a process that has needed to increase capacity an ageing pilot population and Officer of CTC, says that one
also considered Australia, the due to increased demand for increasing passenger numbers. of the primary things that
United States and South Africa its New Zealand-trained pilots. Recent contracts include the makes New Zealand attractive
as locations. CTC Aviation CTC currently trains about recruitment and training of for both the company and its
Training (NZ) Ltd operates a 180 pilots annually, although up to 20 Vietnamese trainees clients is the ease of getting
19,000-square-foot purpose- growing demand from Asia for Jetstar Vietnam, the business done in New Zealand.
built Crew Training Centre means that rate is predicted to recruitment and training of first
based at Hamilton Airport grow to 250-300 pilots a year officer cadets for Jetstar Asia
that houses state-of-the art by the end of 2012. based in Singapore, advanced
Diamond DA42 simulators, pilot training contracts with
computer based training Its New Zealand location means Spice Jet from India and a
facilities and a fleet of modern that the company is well- cadet pilot contract with Royal
training aircraft. positioned to take advantage Brunei Airlines.
of forecast growth in the Asian
18make
make the
the smart
smart choice
choice —
— Invest
Invest in
in High
High Value
Value Manfacturing
Manfacturing and
and Services
Services in
in New
New Zealand
Zealand
The capacity at Hamilton
“Access to airspace and having a well respected regulator Airport to handle CTC’s
operations and the willingness
committed to quality and security all contribute strongly to an of the airport management and
overall confidence in New Zealand as an excellent location for pilot local councils to facilitate the
arrival of CTC also illustrate the
training facilities.” ease of doing business and the
Ian Calvert, Chief Executive Officer, CTC Aviation positive business environment
in New Zealand.
The availability of a skilled
workforce at moderate cost
provides another advantage.
Labour forms a significant
proportion of CTC’s costs,
and CTC can access highly
skilled pilot trainers and
engineers at a cost that is
lower than those in the other
locations evaluated by the
company. CTC New Zealand
employs 73 staff, most of them
engaged locally.
19make the smart choice — Invest in High Value Manfacturing and Services in New Zealand
3.4 Collaborative research and development environment
Cross-fertilisation between research institutes, universities and the private sector is a significant
feature of the New Zealand economy, and results in products and processes that are user focused.
There are a range of research- universities in New Zealand The most significant CRI for of innovative products and
focused organisations in New host a variety of research high value manufacturing is technologies is a particular
Zealand of direct relevance institutions. Of particular note Industrial Research Ltd (IRL). feature of IRL operations,
to high value manufacturing, is the MacDiarmid Institute IRL is organised into and several of the case
with the eight universities and for Advanced Materials and three clusters: Advanced studies in this document
eight Crown Research Institutes Nanotechnology, a multi- Manufacturing Technologies feature technologies first
(CRIs) forming the core. The institutional Centre of Research (which includes the Advanced developed at IRL.
tertiary education system in Excellence hosted by Victoria Materials, Intelligent
New Zealand is world class. University of Wellington. Machines and Devices, There are also a number of
New Zealand was ranked 17th MedicalDevice Technology, independent research-based
for the quality of its scientific CRI’s are corporate entities and Superconductivity and organisations, such as the
research institutions in the (limited liability companies) Energy Groups); Industrial Heavy Engineering Research
World Economic Forum Global owned by the New Zealand Biotechnologies; and the Institute (HERA). HERA is an
Competitiveness Index 2011- Government. They receive Measurements Standards industry-owned, non-profit
2012, ranking favourably with partial Government funding Laboratory. research organisation serving
Singapore in 12th position and but also undertake contracted the metals-based industry,
Australia in 13th place. research and commercialise The establishment of long- including metal fabricators,
new technologies and products. term relationships with clients designers, suppliers and
As well as carrying out basic for the development and manufacturing companies.
and applied research, commercial application
20make the smart choice — Invest in High Value Manfacturing and Services in New Zealand
3.5 Government support for science and innovation
The New Zealand Government actively supports the development and commercialisation of technology
and innovation and recognises collaborative research as a critical driver for business growth. Figure 1
over the page shows the location and proximity of New Zealand’s research organisations, including CRIs,
universities and other research institutions.
The Ministry of Science Development Grants for Reflecting both the increasing
and Innovation is the lead firms that spend a significant globalisation of New Zealand
Government agency in the proportion of their revenue firms and the complexity of
science and innovation sector. on research (it reimburses global value chains, the most
As well as providing advice to 20 percent of eligible R&D recent round of Technology
Government, it has a specific expenditure up to US$1.73 Development Grants included a
investment function, with million per annum), and Project grant to NextWindow, a wholly
two investment boards that Funding to co-fund the cost Canadian-owned company
distribute R&D funding. of technically challenging with its headquarters and
R&D projects (generally at a R&D staff in New Zealand that
The Innovation Board makes rate of 50 percent, available manufactures digital touch
decisions for business-focused to companies at all stages of screens in Asia.
technology funding, while growth). Capability funding
the Science Board allocates is available for the use of
research organisation science experts and fellowships,
funding. Specific mechanisms and for undergraduate and
include Technology postgraduate internships.
21make the smart choice — Invest in High Value Manfacturing and Services in New Zealand
Figure 1 – Research Organisations around New Zealand Auckland
2 4 5 6 7
Crown research Universities Research 1 3 4 6
institutes (Main (Main campus associations
and organisations 7 6 7 8 13
campus highlighted) highlighted)
4
1 AgResearch 1 Auckland University 1 BRANZ (Building
Hamilton, Palmerston of Technology Research)
North, Wellington, 2 Lincoln University Wellington
Lincoln, Dunedin, 2 Cawthron Institute
Mosgiel 3 Massey University
Albany, Palmerston (Marine Biology)
2 ESR (Environmental North, Wellington Nelson
and Social) 3 Cement and Concrete
Auckland, Wallaceville, 4 University of Auckland
Whangarei, Auckland Association of New Hamilton 7
Wellington, Zealand
Christchurch 5 University of Wellington 1 5 6 7 7
GNS Science Canterbury 8
3
4 CRL Energy (Coal 7
(Geological and 6 University of Otago Research) 3
4 5 5
Nuclear Science) Auckland, Wellington, Hamilton, Wellington,
Wairakei, Wellington, Christchurch, Dunedin Greymouth,
Lower Hutt, Dunedin 7 University of Waikato Christchurch
4 IRL (Industrial Tauranga, Hamilton 5 7
5 Dairy NZ
Research) 8 Victoria University Hamilton, Wellington,
Auckland, Wellington, of Wellington Lincoln 1 5 7
Christchurch
6 Fert Research 11 3
5 Landcare Research Auckland
Auckland, Hamilton,
Gisborne,Havelock 7 Harmonic
North, Palmerston Auckland, Wellington 5 6 7 Wellington
2 7
North, Wellington, 8 Heavy Engineering 1 2 3 4 5 6 8
Nelson, Alexandra, Research Association
Lincoln, Dunedin Auckland 3 6 8
6 NIWA (Water and 9 Malaghan Institute 1 3 4 5 7 9 10
Atmosphere) Wellington
4
Auckland, Hamilton, Meat and Wool
10
Wellington, Nelson, New Zealand
Christchurch, Lauder Wellington
7 Plant and Food
Christchurch
11 New Zealand Leather
Kerikeri, Pukekohe, and Shoe Research 1 2 4 5 6 7 8
Auckland, Hamilton, Palmerston North
Te Puke, Hastings, 2 5 6
12 New Zealand Plant
Havelock North,
Breeding and
4 5 12
Palmerston North,
Nelson, Blenheim, Research Association 7
Lincoln, Clyde, Christchurch 5 6
Dunedin, 13 Transport Engineering
Invermay, Gore Research New Zealand
Auckland 1 3 5 7
8 Scion (Forest Research)
Rotorua, Wellington, 7 6
Christchurch
* Not all institutions have research capacity. Please check with your local institution or regional Ministry of Science and Innovation partner. Figures in bold indicate a main campus.
Source: Ministry of Science and Innvovation
22make
make the
the smart
smart choice
choice —
— Invest
Invest in
in High
High Value
Value Manfacturing
Manfacturing and
and Services
Services in
in New
New Zealand
Zealand
case study:
HTS-110 and American
Superconductor
High-temperature superconductors (HTS) are materials that carry electrical
currents with effectively zero resistance when cooled to sufficiently low
temperatures, for example -196°C, the temperature at which liquid nitrogen boils.
HTS technology enables large analytical instruments. The and long-term relationship
currents to be transmitted international market for with American Superconductor
without loss of energy through superconductor technology is Corporation (AMSC), then
thinner wire than conventional predicted to grow to US$20 the world’s leading company
copper wire and so permits the billion annually by 2020. developing HTS wire.
development of products that
are smaller, lighter, stronger New Zealand scientists at Founded in 1987, AMSC is
and more energy efficient. Industrial Research Limited headquartered near Boston,
(IRL) have developed HTS Massachusetts, with operations
Applications for HTS include technologies in a 25-year in Asia, Australia, Europe and
power cables, motors, research and development North America. It remains the
generators, medical imaging programme. An early, and key, world’s largest vendor of
devices such as MRI scanners, IRL patent was for the material (HTS) wire but has broader
chemical analysis tools such as used in the first generation activities ranging from wind
nuclear magnetic resonance of HTS wires; this led to an turbine technologies to
systems, and other scientific exclusive licence agreement advanced grid systems that
23make
make the
the smart
smart choice
choice —
— Invest
Invest in
in High
High Value
Value Manfacturing
Manfacturing and
and Services
Services in
in New
New Zealand
Zealand
optimise network reliability, semiconductor equipment Scott Technology, a
efficiency and performance, all manufacturers. New Zealand company
focused on the generation of acquired a controlling share in
solutions to meet the world’s AMSC’s shareholding provided HTS-110 in March 2011. Scott
demand for smarter, cleaner, HTS-110 with access to wire Technology’s global presence
better energy. supply, technology and some and high value manufacturing
products and markets. Donald expertise will be invaluable for
Building on the deep Pooke, Chief Executive of HTS-110, particularly as HTS
understanding of HTS HTS-110, says: products increasingly move
materials and properties that into industrial applications.
was developed, IRL spun “AMSC’s investment in HTS-
out HTS-110 Ltd in 2004 to 110 Ltd provided access
commercialise HTS technology to an established product
employing the new HTS wires, range and key technology
with AMSC as a founding transfer while leveraging
shareholder. HTS-110 now the R&D relationship with
designs and manufactures IRL, as well as drawing in
magnet systems for major New Zealand’s high-tech
research institutes such as manufacturing base. AMSC
the Brookhaven National has provided early access to
Lab in New York and the new wire architectures, and
Australian Nuclear Science has also been able to connect
and Technology Organisation. HTS-110 with US-based
opportunities, employing HTS-
Industrial customers include 110’s magnet manufacturing
computer component capabilities in new technology
manufacturers and developments.”
24make the smart choice — Invest in High Value Manfacturing and Services in New Zealand
4 New Zealand
A Competitive Location
The Deloitte report on high value manufacturing in New Zealand, prepared for New Zealand
Trade and Enterprise (NZTE), included a comparison of the costs of manufacturing and supplying
a manufactured item to China from a variety of manufacturing locations, including Australia, the
United Kingdom, Germany, the United States and Japan.
A scenario considered in the with an annual volume of overall manufactured goods
report looked at the cost of 25,000 units shipped in produced in New Zealand had
supplying a market in China containers holding 100 items the lowest total landed cost by
with a high value, relatively per container. The material a significant margin, in large
low-volume item produced costs were assumed to be part due to the lower cost of
by a skilled workforce of a constant 20 percent for skilled labour and low salary
100 (75 skilled workers, 20 all locations. on-costs.
engineers, five department
heads). The assessment of Table 2 on the next page
costs included salaries and demonstrates that although
on-costs, rent, electricity, some costs such as rent,
telecommunications, materials, electricity and shipping
shipping and insurance. Other were comparatively higher
parameters were that the in New Zealand than in
market price was US$3,000, some of the other locations,
25make the smart choice — Invest in High Value Manfacturing and Services in New Zealand
Table 2 – Comparative Costs of Production and Supply of Manufactured Goods to China
Landed Cost (US$) NZ UK Germany Japan US Australia
Total salaries 149 215 199 243 262 286
Total salary on cost 3 30 43 34 36 26
Total rent cost 14 7 18 49 3 20
Total electricity cost 10 6 6 3 4 2
Total telecoms cost 7 6 7 14 28 9
Materials costs 600 600 600 600 600 600
Total shipping cost 18 12 13 5 18 15
Total insurance cost 26 26 26 26 26 26
Total Cost 828 902 913 974 977 984
total cost in US Dollars
New Zealand United Kingdom Germany Japan United States Australia
$
828 902 913 974 977 984 $ $ $ $ $
Source: Deloitte “Taking a Closer Look” – New Zealand High Value Manufacturing & Services Value Proposition Report, June 2011
26make the smart choice — Invest in High Value Manfacturing and Services in New Zealand
Figure 2 – Landed Unit Cost - Comparison between five Countries
UK
Salaries $215
Overheads $48
Materials $600
Shipping $38
Total: $902 Japan USA
Salaries $243 Salaries $262
Germany Overheads $99 Overheads $71
Salaries $199 Materials $600 Materials $600
Overheads $74 Shipping $32 Shipping $44
Materials $600 Total: $974 Total: $977
Shipping $39
Total: $913
Australia
Salaries $286
Overheads $56
Materials $600 New Zealand
*Figures in US$
Shipping $41 Salaries $149
Total: $984 Overheads $34
Japan
USA Materials $600
Australia Shipping $44
Germany Total: $828
UK
New Zealand
Source: Deloitte “Taking a Closer Look” – New Zealand High Value Manufacturing & Services Value Proposition Report, June 2011
27make the smart choice — Invest in High Value Manfacturing and Services in New Zealand
5 New Zealand
A Strategic Position
5.1 An Asia-Pacific partner
The New Zealand economy is export oriented with a focus on building international partnerships and
identifying market opportunities, and its strategic location in the Asia-Pacific region offers investors
short term gains and long-term advantages.
New Zealand is an English- including Australia, China, the most respects. There is free to negotiate a Free Trade
speaking country with strong United States, Japan and the trade in goods and services, Agreement (FTA) with China.
trade and immigration ties Republic of Korea, account citizens can travel, work and Since the FTA came into effect
to its Asia-Pacific partners. for over 70 percent of New reside without restriction in in 2008, New Zealand exports
It provides an economically Zealand’s total goods trade. each country, and an ongoing to China have almost doubled
and politically stable base process of coordination, mutual in value to US$3.25 billion.
for companies seeking to Australia is New Zealand’s recognition and harmonisation
establish business relationships principal trading partner, of many laws, standards, and The United States is New
in some of the highest growth accounting for around 20 regulatory regimes enables Zealand’s third-largest trading
economies in the world. percent of both exports and businesses to manufacture to partner for both exports and
imports. Australia is also only one standard for the trans- imports, and second-largest
New Zealand’s main trade the largest investor in New Tasman market. investment partner. Exports to
and investment relationships Zealand. The Closer Economic the United States in the year to
are positioned firmly in the Relationship (CER) agreement China is New Zealand’s December 2010 were valued
high-growth Asia-Pacific negotiated with Australia in second largest trading partner at NZ$3.75 billion (US$2.71
region. Asia-Pacific Economic 1983 makes New Zealand and and New Zealand was the billion), just under nine percent
Cooperation economies, Australia a single market in first developed country of total exports.
28make the smart choice — Invest in High Value Manfacturing and Services in New Zealand
Figure 3 – NEW ZEALAND Exports – Top 20 countries Figure 4 – foreign direct investment
stock in New Zealand
60000
Italy
Venezuela
Canada
Netherlands
Saudi Arabia 50000
Australia 51,775
Thailand
Germany
Philippines
Malaysia Australia
India
40000
Taiwan
NZ $ (million)
Hong Kong (SAR)
Indonesia
United States of America 11,216
Singapore
China including Hong Kong (SAR) 895
Republic of Korea
30000
United Kingdom
People’s Republic
of China
Japan
United Kingdom 2,390
Netherlands 3,092
United States
Singapore 1,994
of America 20000
Japan 2,623
Canada 1,018
Germany 765
Belgium 273
0
Source: Statistics New Zealand Source: Statistics New Zealand
29make the smart choice — Invest in High Value Manfacturing and Services in New Zealand
Foreign Direct Investment Figure 5 – Free Trade Agreements to which New Zealand is a party
(FDI) from the United States
is valued at NZ$10.62 billion
Russia
(US$7.66 billion), around
China 2008
11 percent of total FDI in Kazakhstan
Hong Kong 2011
New Zealand. Korea
Belarus Japan
FTAs facilitate access to
other significant markets
including Singapore, Brunei,
Thailand, Malaysia and Chile.
Negotiations are currently
underway with India, Bahrain, Kuwait,
Korea, Russia, Belarus and Oman, Qatar,
Saudi Arabia United States
Kazakhstan. Negotiations have & United Arab
of America
also recently commenced Emirates 2011 Vietnam 2010
to extend the Trans-Pacific Philippines 2010
Partnership agreement Cambodia 2010
Brunei 2005
between New Zealand,
Indonesia 2010 Peru
Singapore, Malaysia and Chile
to include the United States.
India Australia 1983
Myanmar 2010 New Zealand Chile 2005
Thailand 2005
Malaysia 2010
Laos 2010
Singapore 2001
Countries with Free Trade Agreements
Countries with Pending Status
Future possibility
Source: Statistics New Zealand
30make
make the
the smart
smart choice
choice —
— Invest
Invest in
in High
High Value
Value Manfacturing
Manfacturing and
and Services
Services in
in New
New Zealand
Zealand
case study:
Preformed Line Products
Preformed Line Products (PLP) is a United States company that designs and manufactures products and
systems used in the construction and maintenance of underground and overhead networks for energy
and communications firms. Those products include high-quality cable anchoring and control hardware
and systems, fibre-optic and copper splice closures, and high-speed cross-connect devices. PLP’s annual
revenue in 2010 was US$338 million.
In 2010 PLP purchased and leads the expansion nicely with ours. We are very
Electropar, a New Zealand- of its presence in the pleased that our strategic
based company that designs Asia-Pacific region. focus on geographic diversity
and manufactures pole line has resulted in this strong
and substation hardware for PLP’s Chief Executive addition of talent, energy and
the global electricity utility Officer and President, expertise to the Preformed
industry. Electropar also has Rob Ruhlman says: family.”
an Australian subsidiary.
“We are very excited about
The acquisition of Electropar joining forces with Electropar
strengthens PLP’s position whose culture, including
in the power distribution, a deep respect for
transmission and substation engineering expertise
hardware markets in and high-quality products,
New Zealand and Australia and customer service meshes
31make
make the
the smart
smart choice
choice —
— Invest
Invest in
in High
High Value
Value Manfacturing
Manfacturing and
and Services
Services in
in New
New Zealand
Zealand
PLP GLOBAL OPERATIONS
Belos-PLP
Bielsko-Biala, Poland
Employees: 253
Established: 1947/1997
PLP-Great Britain
Andover, UK
Employees: 94
PLP-Canada
Established: 1959
Cambridge, Ontario
PLP-Spain Employees: 54
Seville Established: 1985
Employees: 54 PLP-USA
Bejing-PLP
Established: 1960 Global HQ, Cleveland,
Bejing, China
Employees: 174 Ohio (166)
Established: 1996 Albemarle, North Carolina
PLP-Indonesia Employees: 195
Jakarta FT2: 260,000
Employees: 153 Rogers, Arkansas
Established: 1995/2009 Employees: 332
PLP-Australia FT2: 310,000
Sydney DPW Solar, Albuqueque,
Employees: 185 New Mexico
PLP-South Africa PLP-Thailand Established: 1962 Employees: 162
Pietermaritzburg Bangkok FT2: 27,000
Employees: 132 Employees: 240 Electropar-PLP PLP-Brazil
Established: 1965 Established: 2002 Auckland, New Zealand Sao Paulo
Employees: 116 Headcount: 332
PLP-Malaysia Established: 1950/2010
Kuala Lumpur Established: 1967
Employees: 21 PLP-Mexico
Established: 1997/2009 Queretaro
Employees: 114
Established: 1968
EMEA Asia-Pac Americas
Source: From PLP Corporate Presentation 2011 PPT
32make the smart choice — Invest in High Value Manfacturing and Services in New Zealand
5.2 Clean, reliable, renewable energy and water
New Zealand offers high value manufacturers and service companies with a strong brand commitment
to the environment access to low carbon, renewable energy - a scarce global resource. As increasing
consumption places demands on energy and water resources, New Zealand’s development of renewable
energy and sustainable management of natural resources mean it is better positioned than many other
developed and developing nations to maintain long-term economic growth.
Carbon pricing is inevitable and wind. The New Zealand that with careful management
in a world of diminishing Government has made a will continue to support
natural resources and commitment to the goal of economic development.
amenities. Leading the sourcing more than 90 percent
way to a sustainable future, of electricity from renewable
New Zealand’s Emissions sources by 2025.
Trading Scheme is the first
national greenhouse gas Many economies such as
trading programme in the Australia, China and India have
world to include all gases to confront the prospect of
and all sectors. diminishing or constrained
clean water resources in the
About 75 percent of the face of increasing demand.
electricity generated in New With a temperate island
Zealand already comes from climate, New Zealand is
renewable sources such as fortunate to have abundant
hydro generation, geothermal renewable water resources
33make
make the
the smart
smart choice
choice —
— Invest
Invest in
in High
High Value
Value Manfacturing
Manfacturing and
and Services
Services in
in New
New Zealand
Zealand
case study:
Quest Integrity group
Quest Integrity Group is a United States-based multinational company specialising in the life cycle
management of critical energy infrastructure such as the equipment used in the refining and chemical,
pipeline, syngas and power industries. These industries tend to operate in extreme environments with
complex equipment and dangerous processes. This challenges the management of asset integrity and
reliability and places particular emphasis on materials, measurements, and assessments.
In 2006, Quest Integrity Group Executive Officer of Quest with Industrial Research service our customers in
acquired Materials Performance Integrity Group, said: Limited (IRL) for the research Australia, South East Asia
Technology Solutions (MPT) “Many interesting and relevant and development of additional and South America.”
in Wellington for its deep technologies are developed products and technologies
materials engineering and in New Zealand. We saw the for the global market. In November 2010, 95 percent
R&D and merged it with a country as an ideal research of the company was purchased
Colorado-based company to base for both developing “Quest Integrity provides by Team Industrial Services
form wholly owned subsidiary knowledge and converting high-quality services using Inc, a leading provider of
Quest Reliability, a company technology into services high-value technology-based mechanical and inspection
focused on materials and and products for global solutions. New Zealand is a services for high-temperature
engineering assessment. commercialisation”. competitive location for this and high-pressure piping
Today this subsidiary is called and has good connections systems and vessels used in
Quest Integrity NZL Ltd. At the The acquisition of MPT also within the Asia-Pacific region, the refining, petrochemical,
time of the acquisition, Milton marked the beginning of a which makes it an effective power, pipeline and other
Altenberg, Chairman and Chief long-term strategic relationship base from which to also heavy industries.
34make
make the
the smart
smart choice
choice —
— Invest
Invest in
in High
High Value
Value Manfacturing
Manfacturing and
and Services
Services in
in New
New Zealand
Zealand
Quest Integrity Group
continues to operate as a
separate entity and had
revenues of about US$32
million in the calendar
year 2010. The materials
engineering base remains
in Wellington, while Seattle,
Denver and Houston are the
other hubs for the company.
A significant proportion of
the technology developed
by Quest Integrity originated
from its strategic affiliate,
Quest Integrated (Qi2). In
2011, Qi2 invested in Im-Able,
a Wellington firm that
uses a game console and
applications to assist
rehabilitation following
brain injury.
35make the smart choice — Invest in High Value Manfacturing and Services in New Zealand
6 New Zealand
A Business-Friendly
Environment
6.1 An easy place to do business
New Zealand is the easiest place in the world to start a business, with the shortest time to register
a company, and it ranks first in the OECD and third globally for overall ease of doing business
(Doing Business 2011, World Bank).
The World Economic Forum an environment that supports comply, such as registration, regional parks; significant
described the New Zealand enterprise by removing licensing where applicable business assets of more
business environment in unnecessary regulation, and meeting the planning than US$73.96 million
its Global Competitiveness providing strong protection requirements of the Resource (NZ$100 million); and fishing
Report 2010-2011 as for intellectual property, and Management Act 1991. quota. Assessments are
“extremely conducive to having a straightforward, made against predefined
business, supported by low-rate corporate tax system. The Overseas Investment Act criteria, with approximately
efficient goods and labour With one of the most open 2005 regulates an acquisition 98 percent of investment
markets and by one of the economies in the world, by an overseas entity when it applications approved.
soundest banking systems the barriers to imports are involves acquiring an interest
in the world”. New Zealand extremely low, reducing in any of three classes of There are no restrictions on
ranked 25th in the overall manufacturing input costs. asset categorised as sensitive. debt or portfolio investments,
Global Competitiveness Approval is required to and there are no restrictions
Index for 2011-2012. Most investments do not need purchase an interest of 25 on currency transfers,
approval beyond the normal percent or more in sensitive repatriation of profits and,
An ongoing process of processes with which New land, such as farm land, access to foreign exchange.
economic reform has created Zealand businesses must historic landmarks and
36make the smart choice — Invest in High Value Manfacturing and Services in New Zealand 6.2 A simple tax system The corporate tax rate is 28 percent and R&D costs are tax deductible. There is no social security tax and no payroll tax, and the goods and services tax of 15 percent is recoverable for businesses. There is no capital gains tax in New Zealand and there are no capital controls or restrictions on the repatriation of funds. New Zealand also has double taxation agreements with 37 countries, granting credits for foreign tax paid on income that is also subject to New Zealand tax and reducing other tax impediments to cross-border trade and investment. 37
make the smart choice — Invest in High Value Manfacturing and Services in New Zealand
6.3 Modern infrastructure
New Zealand has a well developed, modern infrastructure that facilitates the transfer of goods, energy and
information, and supports connections to domestic and international markets. This infrastructure includes
a stable and reliable supply of energy from gas and electricity, extensive domestic and international freight
and logistics systems using road, rail, sea and air, mobile networks, and international submarine fibre-optic
telecommunications cable systems.
An extensive rail, road, sea There are international
and airport infrastructure airports in seven urban
allows for cost-effective centres, providing time-
and reliable transport to sensitive delivery.
global destinations. New
Zealand’s commercial ports Government and the
are among the most efficient private sector are investing
and productive in the world, in an ongoing program
with rapid turnaround times of capital upgrades in
facilitated by round-the-clock the national electricity
operations. More than 30 grid, roading network
global and regional shipping and ultra-fast broadband
lines serve New Zealand’s networks in order to support
deep water ports and over 99 growth in New Zealand’s
percent of exports by volume economic performance.
(85 percent by value) are
carried by sea.
38make the smart choice — Invest in High Value Manfacturing and Services in New Zealand
Northland region
Rail AND Main Airports, Ports 158,300
Highways and Population Bay of Plenty region
277,100
Whangarei Port of Marsden Point
Auckland Gisborne
region
KEY KEY 1,486,000 46,600
Auckland
Rail Network – freight only International airports
Tauranga
Tauranga
Rail Network – passenger and freight Ports Hamilton
Waikato region
State Highway 1 Population 413,000
Source: Statistics New Zealand 2011
State Highways (based on 2011 provisional data)
New Plymouth Gisborne Eastland
Taranaki region Port
109,700 Napier
Manawatu-Wanganui region
232,400 Nelson
46,200 Hawke’s Bay region
155,300
Picton Wellington
Tasman region
Wellington
48,100 West Port
487,700
Marlborough region
West Coast region 45,600
Greymouth
32,900
Lyttelton
Christchurch Christchurch Canterbury region
560,700
Prime Port
Otago region
Queenstown
Port Chalmers 209,900
Dunedin
Dunedin
Southland region
South Port
94,900
39make the smart choice — Invest in High Value Manfacturing and Services in New Zealand
7 New Zealand
Safe and Secure
7.1 Strong social cohesion
New Zealand is a peaceful, democratic society with a high level of social cohesion and civic
participation. It ranked third in the Social Capital Sub-Index of the 2010 Legatum Prosperity Index.
Political, economic, social have been engaged in the Iwi have successfully sought to
and individual freedoms have New Zealand was the process of settling claims grow their positions by making
strongly shaped contemporary first country in the and establishing productive investments in New Zealand
New Zealand. The World relationships at an institutional businesses, either in their
Democracy Audit ranks world to allow women level with iwi (Maori tribes). own right or jointly with
New Zealand first for political the right to vote. Those iwi that have secured other domestic and
rights, civil liberties and lack settlements have established international investors.
of corruption, and fourth significant economic bases.
overall, immediately behind held by women, including the Some settlements have
Finland, Sweden and Denmark, Governor-General, the Prime included key positions in
which all came first equal. Minister, the Speaker of the strategic industries such as
House of Representatives, fisheries and forestry.
At one point early in the the Attorney-General and
21st century, all of the key the Chief Justice.
constitutional positions were Successive governments
40make the smart choice — Invest in High Value Manfacturing and Services in New Zealand
7.2 Free of corruption 7.3 Institutional strength
New Zealanders pride themselves on their There is a strong adherence to the rule of law and
honesty, openness, reliability and integrity. strong protection of property rights. The Heritage
Foundation ranked New Zealand first in the OECD
for Intellectual Property protection in the Index of
Economic Freedom 2010.
New Zealand has had the Similarly, the Economic
lowest levels of corruption Freedom of the World Index
in the world since 2006, as 2010, prepared by the Fraser
measured by Transparency Institute, ranked New Zealand
International’s Corruption first for legal system and
Perceptions Index. It ranked property rights, and credit
second for control of market regulation.
corruption in the World Bank’s
Worldwide Governance
Indicators 2009 and second
in the Global Peace Index
2010 of the Institute of
Economics and Peace. It
was ranked first in that Index
in 2009. It holds first place
in the Asia-Pacific region.
41You can also read
