Govt responds to manufacturing strategy

The importance of the manufacturing industry to New Zealand’s economy is to be recognised with the establishment of a high level private-public sector advisory group to the government, Economic Development Minister Trevor Mallard announced today.

"The Manufacturing Advisory Group (MAG) will be co-chaired by Business New Zealand Chief Executive Phil O’Reilly and Engineering, Printing and Manufacturing Union National Secretary Andrew Little, and will include key manufacturing leaders," Trevor Mallard announced to manufacturers at a government function at parliament today.

"This is one of several initiatives in response to the recommendations made by the Manufacturing Vision Group in its report Manufacturing+: A vision for World leading New Zealand Manufacturers. The group will advise the government on issues relevant to the continued development of the manufacturing sector.

"Manufacturing has always been, and always will be, a crucial part of New Zealand’s economy and that is why the Labour-led government is committed to working with the sector to further transform it – as part of our work in growing New Zealand into a high wage, high value, innovative and export-led economy.

"The sector is on a growth path – it's contribution to GDP is up 12 per cent since 2000, there are more manufacturing firms and jobs have increased as well. Kiwi manufacturers have unique skills and knowledge and make innovative, quality products which are well placed to meet consumer’s ever-changing needs.

"While the industry faces many challenges, government and manufacturers can overcome those by working together.

"At the top of the agenda for the new Manufacturing Advisory Group will be assessing the extent to which the sector is aware of and is making best use of the support currently available from government; whether government initiatives are configured to best meet the needs of the sector going forward, and helping the sector adopt sustainable business practices," Trevor Mallard said.

The Manufacturing Advisory Group will also support the implementation of the Manufacturing+ report.

"Success in industry depends on the actions taken by individuals, firms and groups. However, the government has an important support role and will continue to help the industry build a strong platform for future growth.

"Many of the Manufacturing+ recommendations are being addressed by other work underway or about to begin. Manufacturers in particular will benefit from the research and development tax credits announced in the 2007 Budget. We are also funding skills and training initiatives, including the Modern Apprenticeship Programme which will have had 14,000 participants by December 2008.

"Budget 2007 provided an additional $15.8 million to help identify industry skill and training needs and to respond to those needs. The Budget also provided funding to expand the government's Market Development Assistance Scheme and successful Beachheads programme which are run by government economic development agency New Zealand Trade and Enterprise (NZTE). These popular and successful schemes help New Zealand firms, including manufacturers, to develop new markets, and deepen others.

"One third of manufacturing output is in the food and beverage sector and I also recently announced a package of initiatives and support for this sector, including $19 million in in-market assistance and the establishment of a Food and Beverage product development infrastructure project.

"NZTE is also running a series of Manufacturing+ workshops this year in partnership with Business New Zealand and its affiliate organisations to educate manufacturers about global challenges and opportunities."

"The government recognises manufacturers' concerns as outlined in the Manufacturing+ report, including the struggles to compete in rapidly changing and intensely competitive global markets, at a time when our exchange rate has reached historic highs.

"These challenges are not unique to New Zealand. Manufacturers everywhere are feeling this pressure and making changes accordingly. Different manufacturers do suit different models of production and some may choose to shift production to cheaper mass production countries or closer to their key offshore markets, while retaining the high value parts of the business, including research and development, and the use of highly skilled labour in New Zealand.

"Like the Manufacturing+ Vision Group, I am convinced there is a strong future for manufacturers who adapt to changing technologies and demands, and gain access to world markets. Our future is in the high skilled, high value end of the market where we can compete on quality not on price, and where we can play to our strengths.

"I also support the group’s aim of moving beyond the immediate issues and knee jerk responses to a shared strategy which can build lasting results," Trevor Mallard said.

• Questions and answers are attached.
• The Cabinet paper and terms of reference for the Manufacturing Advisory Group are on www.med.govt.nz