Manufacturing Matters- Tuesday Top-Up

16 July 2024

This is the first of our newsletters we shall publish every Tuesday from now on. Far from being exhaustive, the aim is to inform the community of New Zealand’s manufact­uring leaders about developments in our ranks (MAKE│NZ and the New Zealand Manu­facturing Alliance), and, very selectively, relevant developments in New Zealand and around the world. Enjoy!

Dieter Adam, Community Champion, MAKE │NZ

Recent key developments in MAKE│NZ

• Invitations will soon go out for our next Fireside Chat event on August 12, where we’ll discuss the use of Artificial Intelligence in manufacturing applications. If you are a manufacturing leader interested in attending, let us know. Attendance is limited
• Our Production Managers’ Working Groups are going strong. In addition to a group that has been going since October last year, focussed on resolving issues en­countered when implementing Industry 4.0 technologies, there will now be another group focused on other approaches to improving productivity. These meetings will alternate every 3 weeks
• SouthMACH 2025 still is far away, but we have started discussions with the event organiser, XPO, about our Manufacturing Industry Conference to be held in conjunction with the event
• In our advocacy work and as part of the New Zealand Manufacturing Alliance, we are currently focusing on two areas: securing access to reliable energy supplies at affordable prices (see also below), and ensuring that support for workplace-based learning isn’t further eroded in the course of the government’s unwinding of RoVE. You’ll find more of the latter here: https://makenz.org/2024/07/08/confused-about-where-our-vocational-education-and-training-system-is-at/

Recent key developments in New Zealand

• Access to reliable supplies of energy at prices that allow our manufacturers to remain globally competitive in the medium term remains a concern for New Zealand’s manufacturers, especially those with higher process heat requirements

• As far as electricity goes, the government has announced its decision not to pro­ceed with the Lake Onslow Storage Project, but has so far not announced what – if anything – will replace it. The National Party has announced its own high-level plans in March (Electrify NZ – https://www.national.org.nz/national_will_electrify_nz ), but none of the government National Policy Statements announced in that document have seen the light of day yet

• In the meantime, MBIE’s latest update on New Zealand’s natural gas supplies predicts a shortfall of 10 petajoules [PJ] of supplies in the near future, amounting a supply deficit of 9.3%: “New Zealand has used around 150 PJ of natural gas per year for the last two years. While New Zealand holds 8.7 years of natural gas in useable reserves, field operators only expect to extract up to 140 PJ each year for the next three years.”https://www.mbie.govt.nz/about/news/gas-production-forecast-to-fall-below-demand#:~:text=“For%20at%20least%20the%20next,for%20the%20last%20two%20years

• The above is not news as such. An in-depth study published by MBIE in 2023 already provides forecasts to that effect (https://www.mbie.govt.nz/dmsdocument/27262-lng-import-and-options-to-increase-indigenous-gas-market-capacity-and-flexibility-in-new-zealand-march-2023-pdf ). The study also points out the New Zealand currently does not have any infrastructure to import LNG, or store imported LNG, nor any current plans to develop these.
  

Recent key developments in the World

• Staying with energy supply and demand, a recent report by BP’s chief economist, Spencer Dale, has created some interest around the world: bp Energy Outlook 2024 (https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/energy-outlook/bp-energy-outlook-2024.pdf ). The report points to the huge discrepancies between projected demand and supply of fossil fuels, and their replacement by renewable energies, when one compares forecasts based on current trajectories and scenarios required to meet the Net Carbon Zero Goal in 2050
• Part of the picture is an increase in demand for natural gas globally, especially to 2035, when natural gas will increasingly be used as a ‘transition’ source of energy supply in the move away from coal in emerging economies. Thus, if and when New Zealand will be forced to import LNG, it will have to do so in a market where prices may be much higher than from our current domestic supply
• And, finally, a neat little case study on the unintended (but not unexpected) consequences of trade sanctions was published by the top-ranked US think tank CSIS, partly based on information collated by the New York federal Reserve: https://www.csis.org/analysis/collateral-damage-domestic-impact-us-semiconductor-export-controls. The study highlights the negative impact on US companies of US export controls designed to restrict China’s access to advanced semiconductors and associated technologies.