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Recent key developments in MAKE│NZ
Last week we asked you how your staff movements have looked in the past 6 months, whether you’ve grown or shrunk your team, be it on purpose or otherwise. And the results are in:
Looking pretty even across the board, but that’s looking at the past. This week I want to ask you about the future:
If you’re active on LinkedIn you may have noticed that we’ve passed our 3 year anniversary of being MAKE│NZ, and for that we want to say thank you to everyone who has stayed with us since before these recent three years and thank you to those who have only just joined, and everyone in between. You’ve all helped to grow this community of ours, and together we’ll just keep finding new ways to help and grow manufacturing and it’s leaders.
Recent key developments in New Zealand
•There has been a lot of talk recently about developments in global trade that are creating (a lot of) uncertainty. That ‘talk’ doesn’t always come from people directly involved in business. On the other hand, there are ‘high-level’ facts, like exports from New Zealand to the US incurring a 15% tariff upon entering the US. Beyond that, the details are still being worked out. For example, the New Zealand Customs Service has information available regarding US President’s Executive Order [EO] issued on April 2, 2025. There is nothing available as yet, however, on the implications of the additional EO of July 31, 2025, that takes the tariff for New Zealand to 15% and, among others, says that “An article determined by CBP to have been transshipped to evade applicable duties under section 2 of this order shall be subject to (i) an additional ad valorem rate of duty of 40 percent …” This is clearly targeting China, but the text doesn’t say that.
In addition to the cost of the tariff, which may or may not have to be absorbed (in part) by the exporter, there may be (significant) business costs associated with complying with the EOs issued on April 2 and July 31, 2025. And on top of that there may be other ‘geopolitical factors’ affecting New Zealand manufacturers, such as the availability and cost of inputs stemming from the redirection of trade flows triggered by the US tariffs, or considerations regarding whom (not) to sell to in order to avoid violating informal ‘friendshoring rules’.
Over the next couple of weeks, we shall talk to some of the companies potentially affected and summarise their responses here in one of our next editions.
•The government’s Tertiary Education Commission [TEC] has just shared some more detail on what the work-based learning / apprenticeship part of the future Vocational Education and Training [VET] will look like when the Education and Training (Vocational Education and Training System) Amendment Bill – currently still before Parliament – comes into effect on January 1, 2026. Will the dust have settled by then? ‘Dust’ – or more like nuclear fall-out? From what we can see now, there are still a few questions:
- Resourcing: will the eight Industry Skills Boards [ISB] among them have enough people to execute their key role of “setting vocational education standards and, during a transitional period, managing work-based training currently overseen by Te Pūkenga.” – and do so in a timely manner? That function is reduced from what the current Workforce Development Councils are charged with, but the expectation is that the new ISBs will have to operate under significantly reduced (operational) funding. There will be a hard-to-resist temptation for the ISBs to use provisions in the new Bill to get providers and industry to co-fund their work:
- “An industry skills board may, by notice, fix fees payable by providers in relation to the board’s activities in performing its quality assurance functions.” (Cl. 372 (1))
- The Governor-General may, by Order in Council made on the recommendation of the Minister, impose a levy on qualifying members [businesses] of a levy group that is payable to an industry skills board.” (Cl. 385A (1))
- Providers: In theory, Work-based Learning will not only be able to be provided by existing polytechs, but any other Private Training Establishment [PTE] that has been approved to receive from the Tertiary Education Commission [TEC]. And herein lies the catch. The suggestion is that creating an ‘open market’ for providers of work-based learning creates the opportunity for industry and learners to identify and flock to their ‘provider of choice’.
The reality is that one of the key drivers for the ‘reforms’ initiated by previous government, and their roll-back initiated current one, was to stop, or at least reduce, the ongoing financial losses incurrent by the network of polytechs. To achieve that, government and the TEC will be tempted to minimise the competition to polytechs when it comes to the provision of work-based learning. A recent document released by the TEC points to its intent to limit the size of what it calls the “Network of work-based learning provision” it will be prepared to fund. Watch this space …
•A recent paper published by Microsoft Research under the title of Working with AI: Measuring the Occupational Implications of Generative AI has created a lot of media attention. In it, researchers reported on 200,000 anonymised conversations with Microsoft’s AI-powered assistant Copilot and its performance with occupational data to see which professional tasks have the most crossover with AI’s capabilities. Measuring for which tasks users sought to use Copilot (User Goal), and for which task Copilot itself can perform a work activity (AI Action), yielded this result:
Out of this, researchers created an “AI applicability score” and a list of jobs that were the most likely to be impacted by AI, with the number of jobs in each category for the US labour market also included:
And, of course, the other end of the spectrum:
Now, there is a big caveat here: this study captures the automation of tasks by a specific generative AI tool, Microsoft’s Copilot. It does not capture the automation of tasks achieved with the help of other AI (machine learning) tools, which in manufacturing, for example, may well play as big a role as large language models.
And yet, the basic features of the picture painted here are probably still valid: Manual tasks with high levels of skills, and task variability, will be the most expensive and difficult to automate and thus are less threatened to disappear, at least in the short- to medium term.
That may well lead to young people becoming more interested in such jobs – finally! Why did we put this in the New Zealand section? Well, if it’s true that a general ‘fear of AI’ will motivate more (young) people to look at a career in manufacturing, or other occupations covered by vocational education and training, wouldn’t it be great if New Zealand had a well-functioning and well-resourced VET system to accommodate them?!
Recent key developments in the World
•We mentioned before that the so-called ‘Deals’ the US President is striking with other countries are anything but. They are high-level and, in the end, one-sided Heads of Agreement, executed in the form of an Executive Order [EO] signed by the US President. Japan’s recent experience with the pitfalls created by the lack of detail in these EOs is telling:
- The Japanese government had understood its ‘Deal’ with the US Government to mean that there would be a 15% tariff on all exports to the US – as an upper limit. Great surprise then, that after the effective date, the tariff on Japanese beef exports to the US rose from 26.4% to 41.4% – the 15% added on top of the existing rate. It took an extra rushed trip to the US by the Japanese trade negotiator, Ryosei Akazawa, to get the US to correct this “extremely regrettable error” …
- On April 2nd, the US increased tariffs on cars imported from Japan from 2.5% to 27.5%. The ‘Deal’ between the US and Japan reduces that back to the general rate of 15% – effective from August 1. Or, at least, that’s what the Japanese government thought it said. To date, however, Japanese cars are still taxed at the higher rate when entering the US, costing the combined Japanese auto industry an estimated US$20m for each day of delay. When will this get fixed? The Japanese trade negotiator, Ryosei Akazawa, said last Thursday that he expects the U.S. to issue an executive order lowering the auto tariff rate when Washington corrects its order on “reciprocal” tariffs (see above).
•“A picture is worth a thousand words” – one of those old adages that sometimes are actually true. A recent paper and accompanying video from the US Think Tank Center for Strategic and International Studies [CSIS] on the topic of “Is U.S. Trade Policy Driving Partners Closer to China?” includes an interesting graph:
The data in the graph is historical, comparing the roles of the US and China in global trade relationships from 1995 to the situation in 2020. Each dot represents an individual country. The graph shows the value added to imports, exports and domestic consumption (Final Demand) by US-American and Chinese imports, respectively, in each country. The graph shows clearly how much that balance has shifted in China’s favour just 25 years. If were to include more recent data, the difference would be even more dramatic.
•Due to the predilection of the current US President, we talk a lot about tariffs – tariffs on goods, that is. Goods make up about 77.6% of global cross-border trade – the other 22.4% is the trade in services. That share has grown over recent years – in particular digital services:
If we look at the breakdown in terms of market share, we find the US having the biggest share. In addition, a (large?) share of the services exported from the UK and Ireland are conducted by subsidiaries of US-based companies. For the EU (minus Ireland), for example, there is a substantial US surplus in digital services trade with France and Germany in particular, and the EU generally. An imbalance that doesn’t appear to figure in current negotiations to address imbalances in the trade of goods …
| Rank | Country | Digital Service Exports (USD) | Share of Global Digital Services |
| 1 | United States | $649 billion | 15.3% |
| 2 | United Kingdom | $438 billion | 10.3% |
| 3 | Ireland | $328 billion | 7.7% |
| 4 | India | $257 billion | 6.0% |
| 5 | Germany | $248 billion | 5.8% |
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