2018 and beyond for manufacturers

13 December 2017

Looking forward to 2018 and beyond, the potential impact of changing technology on business processes appears to be one of the most significant opportunities and challenges New Zealand manufacturers face.  Industry 4.0/networked manufacturing brings the potential for productivity improvements, product customisation and even changes in business models, with new revenue from added services, for example.

At The Manufacturers’ Network, we can add value by helping our members navigate through the multitude of new manufacturing technology developments, the promises and the hype. We provide platforms for peer-to-peer learning about how to adopt and adapt these new technologies to help manufacturers grow into the future.

2017 was a big year for our efforts into Industry 4.0/networked manufacturing.  In April, we took 12 New Zealand manufacturers on an industry study tour to Germany in collaboration with Callaghan Innovation. Feedback from the delegates told us that they gained a lot of insights during the tour, involving visits to the Hanover Fair and a number of Germany’s leading Industry 4.0 developers and practitioners.

The delegates expressed a strong desire to see an on-going and more formally established effort to continue the work we have been doing since mid-2016 to help our manufacturers get their head around how they could benefit from all the advanced / digital manufacturing technologies coming their way. In response, we created the Advanced Manufacturing Initiative (AMI).  As one of its first activities we organised a study tour to Melbourne to visit a number of companies implementing Industry 4.0 technologies in a variety of ways, as well as Swinburne University, a leader in developing courses focused on practical learning in this space. 

This trip drove home the realisation that there are numerous ways to use Industry 4.0 technology, and at different cost points, and companies will have to make their own calls which technologies are affordable to them and provide a good return on investment.  The trip also confirmed what we already saw in Germany: before bringing in more robots, or cobots, and networking your machines, for example, we need to make sure that we are (close to) best-in-class for the ‘traditional’ methods to improve productivity – 5S, Lean, etc.

In the political sphere in 2018, we need to see some real commitment from Government to try and implement measures to address our long running productivity problem across a number of industries, including manufacturing.  From what we’ve seen so far, there are some initiatives that may help somewhat, but we are sceptical that core problems will be addressed.

For manufacturers, finding ways to keep improving lean processes and potentially making use of technology that is becoming more cost effective will play a role in this.  We do expect R&D tax credits to be introduced, which may start to help move this in the right direction, especially for our smaller and medium sized businesses, who have often found it hard to apply for and receive grants under the existing system.  We’ll also continue to argue the case for accelerated depreciation for machinery and equipment to reflect the much shortened technological and economic life cycle of modern manufacturing equipment.

Finding skilled staff to fulfil existing and growing orders is another core challenge going into 2018.  We have yet to see whether the introduction of free one year post-secondary school education will make a difference or simply drive even more young people into seeking to obtain a university degree – any university degree, for that matter. We still think that Labour really failed to miss an opportunity to help address industry skills shortages by not targeting areas where the needs of the economy are greatest with their fee-free education and training initiative.  Also, there were promises made before the election about improving the quality of careers advice in schools, but we are not yet convinced that this can address the existing issues of students not seeing or being made aware of the opportunities in manufacturing. 

At The Manufacturers’ Network, we have been developing a Health & Safety benchmarking service.  This service is being piloted at the moment with the input from a number of members to make sure it will be practical and useful. Our plans for 2018 include rolling out that service to the wider membership and to develop more generic benchmarking that will capture the key operational parameters that determine productivity and profitability of our manufacturers.  In addition to our work in advanced manufacturing technologies, we will continue our usual work to support, connect and speak up for manufacturers, including our Network Assist service, which saw a number of successes throughout 2017.

In our advocacy work we managed to make good progress in presenting our cause in events and meetings with the PM, Bill English, and Minister Paul Goldsmith. Our challenge now will be to build the relationship with the new Government, which will undoubtedly be helped by our informal Manufacturing Alliance that we have created with a number of like-minded industry organisations. There are a number of areas where we believe input from manufacturers will be vital for forming effective policy. We are also putting together a range of events, forums, from the factory floor sessions and training courses for 2018 that we are excited about – keep an eye out for these in the New Year.