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Recent key developments in MAKE│NZ
•Returning to a recurring face on our board, and likely a familiar one, we have Dean Boston, GM of Kaffelogic and Director at FeWorkx.
Can you share a quick summary of your background in manufacturing and what got you interested in the field?
After a career in the RNZAF, I decided to enter business and found a rewarding home in manufacturing and specifically completing Turn-Arounds in manufacturing businesses. This has led to a 28-year career completing contracts in multiple industries and locations focused not only on resurrections but taking businesses through change and expansion.
What got you interested in joining the MAKE│NZ board?
I was approached to take part in the creation of MAKE│NZ as an evolution of the NZMEA. After many years in multiple industries, I realised that we all face similar challenges but often fight them in isolation. I am passionate in creating an environment where manufacturers can share their knowledge and their challenges in a trusted community.
What do you think is the biggest opportunity—or challenge—for manufacturing in the next 5 years?
Challenge: making the public in all aspects (kids, the young, and politicians) realise that manufacturing is, along with primary produce, what powers this country and is what will drive its regrowth – and fun.
Opportunity: we can be and are, world leaders in many fields. The world will take our products with both hands once they know they exist, go teach the world what we can do, and bring the money home.
If you could offer one piece of advice to emerging leaders in manufacturing, what would it be?
People, people, people. It all comes down to your team. You can have the best technology, but the quality of your team and the state of their focus is what makes or breaks a business.
Outside of manufacturing, what’s something you’re passionate about that people might not know?
Starting life in the aviation engineering world I continue that as my hobby. I am currently rebuilding a 1938 7-cylinder radial aero engine to make noise to annoy my neighbours, and I spend my Saturdays messing around at the Ferrymead Aviation Society workshops.
•We’re restarting our Women in Manufacturing group!
A space for women at all levels of their manufacturing journey, from team lead to owner operator, a chance to learn together from each other. Maybe you’re looking for some advice on how to manage a shift, or you’re looking to help support emerging leaders grow? Well, this will be a great opportunity to connect and share.
Our first meeting will be on the 12th of November as an opportunity to learn what women in manufacturing need and how we can help them grow.
If you’re a woman passionate about manufacturing, or you know someone who is, get in touch to be on the list for the official invite that will be sent out this week (sabine@makenz.org).
•Last week we asked you about this image, and what this map could represent- and if you want the answer you’ll have to make it to The World section of this weeks Tuesday Top-Up
Recent key developments in New Zealand
•Like New Zealand (Q1-2019 = 100):
Germany’s lack of GDP growth has given rise to concerns (Q1-2019 = 100; adjusted for inflation):
Among the suggestions to kickstart growth, there is a strong focus on innovation and new technologies. With that comes the concern that Germany – like many other EU countries – is caught in a ‘mid-tech trap’. The country is criticised as being too reliant on industries like automotive, machinery & equipment, and chemical, where incremental improvements / innovation are drivers of growth, and behind others, especially the USA, in the development and – in particular – adoption of disruptive or step-change innovations, with AI being mentioned first.
The same could well be said for New Zealand. We have many highly successful manufacturers where ‘mid-tech innovation’ is common practice and behind their success in global markets, but – outside of aerospace, maybe – not (m)any of the disruptors whose share prices are growing exponentially. The topic crops up regularly when the annual TIN Report is published, which for this year is only a couple of days away. Interestingly, that report, listing New Zealand’s top 200 tech companies, regularly includes manufacturers that would be considered mid-tech by international standards. To be precise, these companies would be classified as Medium-high-technology according to classification by the EU and the OECD, with the latter being heavily based on R&D intensity. To answer the ‘high-tech better than mid-tech’ question, we need to choose the right criteria. Arguably, share price should not be the only consideration when assessing commercial activity from a long-term sustainable-wealth-creation perspective, both for owners/shareholders and the interests of the country as a whole.
An important measure is ROCE [Return on Capital Employed]. It works well within sectors when comparing companies in their efficiency at which existing resources are used to generate profits, but has its limitations when comparing across sectors, as some are (much) more capital-intensive than others. That will be the case when comparing ‘mid-tech’ manufacturers to the ‘high-tech’ sector, but still, as the case has been made that one is more desirable than the other …
Because most manufacturers in New Zealand – with very few exceptions – are privately owned, we can’t report corresponding data for New Zealand manufacturers. In general, a 10-15% ROCE is considered solid performance in manufacturing – at best half of what the big high-tech companies are achieving.
Another parameter of interest is the number of employees required to generate returns, expressed in net income per employee. From an individual business perspective, it may well be desirable to maximise that number. From a country perspective, it is desirable to maximise the number of well-paid jobs. When we look at the data from some of the biggest high-tech companies in the US, we see a fairly consistent pattern – apart, as for the above, for the past two years for Nvidia:
In terms of net profit per employee, again we don’t have the numbers for New Zealand’s manufacturers, but they’d be doing quite well if they matched the figures for high-tech companies in terms of revenue per employee.
Is New Zealand caught in a mid-tech trap? Does it even make sense to put this as an either/or question, or should we aim to build (more) high tech companies in addition to our strong layer of mid-tech manufacturers? One of the things we have learned recently is that, at least for high-tech manufacturing, having a strong local network of mid-tech manufacturers as suppliers is a critical success factor.
One reason we’re likely to miss out on an industry that is growing very fast – data centres – was mentioned by Datacom CEO, Greg Davidson, in an interview with RNZ last week: the cost of electricity. And there it is as much the extreme volatility alongside a long-term upward trend that makes it very hard to make an investment case for any enterprise that has electricity as one of its major input costs:
Recent key developments in the World
They’re sailing again! Of course, ship movements across the Pacific never stopped. But when the port fees imposed by the US Trade Representative [USTR] on calls to US ports from Chinese-built and/or ~owned ships came into effect on Oct. 14 this year, disruptions to (container) freight movement had already become visible. Those disruptions were mostly caused by shipping lines rearranging ship movements to avoid the fees. Chinese countermeasures, announced on Oct. 15, only made things worse.
As part of their agreement finalised during their meeting in Seoul on Oct. 30, US President Trump and China’s President Xi agreed to suspend their respective port fees for 12 months: “The US will suspend for one year the implementation of its Section 301 measures targeting China’s maritime, logistics, and shipbuilding industries,” a spokesperson for China’s Ministry of Commerce told reporters.
“In response, China will also pause its countermeasures against the US for one year,” the spokesperson added.
•Staying with shipping, last week, we asked what the map below represented. The answer:
As reported earlier, the IMO [International Maritime Organization] had developed a detailed plan to reduce Greenhouse Gas [GHG] emissions to zero by 2050. The specific measures in this plan include a new fuel standard for ships and a global pricing mechanism for emissions; they were approved by the IMO’s Marine Environment Protection Committee in April 2025. These measures were to be formally adopted in October 2025 before entry into force in 2027.
Instead, at an extraordinary session of its Marine Environment Protection Committee (MEPC) on 14 to 17 October 2025, the IMO members voted to adjourn the adoption of the plan for 12 months. “In the meantime, Member States will continue to work towards consensus on the IMO Net Zero Framework.” The map shows the voting of Member States on the decision to adjourn.
•“We’re going to rebuild our manufacturing and it’s going to happen.” Donald Trump in a campaign speech in Savannah, GA, on September 24, 2024.
“Remember the army of millions and millions of human beings screwing in little screws to make iPhones? That kind of thing is going to come to America,” US Secretary of Commerce Howard Lutnick on April 6, 2025.
Reindustrialising the USA? A recent article in the NYT looked at progress to date towards that goal:
That is not to say that that the US government’s plans are without success. Automotive manufacturer Stellantis has announced plans to “invest $13 billion over the next four years to grow its business in the critical United States market and to increase its domestic manufacturing footprint.” This comes at a time when the company temporarily halted or reduced production in several of its European factories (see here and here) and there are doubts about its future commitment to manufacturing in Europe.
The question remains – and not only for the US – whether the long-term trend in declining contributions to GDP from manufacturing can be halted or reversed by government intervention. In short, there are a number of countries that have – until recently – been able to maintain a stable contribution from manufacturing at a relatively high level (around 20%): Japan, South Korea, Mexico, and several Eastern European countries. At least for the latter two, the explanation lies in a combination of a highly-skilled workforce, low(er) wages, and recently opened free market access (NAFTA/USMC; EU membership). When it comes to reversing the trend, there is little evidence for an enduring impact on a national scale. A review of initiatives to boost manufacturing in rural areas in a range of countries, comparing data from 2000 and 2018, found a decline in employment, but an increase in GVA (gross value Added / contribution to GDP) in three of the five regions studied.
Another recent OECD study points to the methodological challenges when trying to connect cause and effect: “Despite the renewed interests in industrial policies, empirical evidence on the effects of these policies is relatively scarce, as highlighted in various extensive empirical literature reviews … The paucity of evidence can be explained by methodological challenges …, and in particular the difficulty to identify causal impacts of industrial policies on specific outcomes.”
The study concludes that “There are well-grounded economic, social and environmental justifications for some industrial policies. However, there are legitimate concerns that the benefits of such policies could be limited and the costs high. This mainly relates to measures curbing domestic and international competition and the practical and political challenges in designing and implementing effective measures.”
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