New Zealand – (still) a good place for investing in manufacturing?

Dieter Adam 12 January 2023

There is a lot of debate and angst in Germany at the moment about whether the country is still a good place to invest in for business, compared to other countries. Not surprisingly, a lot of that debate is focused on the future of manufacturing. Part of the concerns are about the German car industry’s ability to retain its relative edge in the transition to electric mobility. Apart from major car manufacturers and their suppliers, the focus is on the very high energy costs, especially for elec­tricity, triggered by market upheavals in the wake of the Ukraine war, but primarily a consequence of years of pursuing an energy policy driven more by ideas and ideology than a rational approach.

Now the CE of German fastening and assembly product company Würth, Robert Friedmann, has come out and expressed confidence in Germany as a location for the company. “Industrial settle­ments are decided for decades. When we build a new factory, we don’t just look at the current situation,” Friedmann said. “We continue to invest in Germany as a location.” Friedmann lists the high level of skills at all levels among its workforce, combined with a well-designed (vocational) education and training system, as the main reason for his optimism.

Investment in manufacturing assets has been rising steadily over the past 30 years in Germany:

When we look at New Zealand, we see a similar picture in terms of a long-term upward trend, albeit with a pronounced spike in the past five years. That is a very encouraging picture. But what about the future? Probably ignored by many of us, and very skilfully put out for consultation over the sum­mer break, the government is planning major changes to the legislation that provides a key input into location decisions for investment in manufacturing, both in terms of the country of choice, and the location within New Zealand.

If you want to make a submission on the two pieces of legislation designed to replace the current RMA – the new Natural and Built Environment Bill, all about 900 pages of it, and the Spatial Planning Bill at a mere 80-plus pages, you’ve got to the 5th of February to do so…

A key ‘acid test’ for the new legislation will be how – and to what extent – resource consents, and the conditions set in those consents, can be altered unilaterally by the consenting authority after the original consent was granted. We’ve had plenty of very painful examples in the past where more restrictive conditions were imposed with regards to noise or odour emissions, for example, or storm­water runoff quality, often years after the original resource consent was granted. Manufacturers will think twice about multi-million-dollar investments in upgrades or new facilities if there is a risk that tightening conditions on emissions may make the new facility effectively inoperable, or unprofitable, five years down the track.

For the other key factor influencing investment decisions mentioned by Mr. Friedmann, the avail­ability of workers with requisite skills, the jury is still out here in New Zealand. Looking beyond acute skills shortages, we have yet to see whether another one of this government’s ‘big reforms’, RoVE, will make a hitherto quite unsatisfactory vocational education and training system worse, or better. Early signs aren’t promising …