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Recent key developments in MAKE│NZ
•And to wrap up our cast of merry directors, a familiar face, Charlie North, head of global supply chain for Dawn Aerospace!
Can you share a quick summary of your background in manufacturing and what got you interested in the field?
I’ve spent my career working at the intersection of engineering and manufacturing. I started with Medical Devices (Fisher & Paykel Healthcare) and now I’m in Aerospace (Dawn Aerospace). Much of my work has focused on bringing complex hardware from prototype to reliable, repeatable manufacturing. What hooked me early on was the satisfaction of seeing ideas turn into real physical products. Things that can be made and ultimately sent into the world to do something useful and valuable.
What got you interested in joining the MAKE│NZ board?
New Zealand has a manufacturing community full of ingenuity, but it can often feel fragmented. MAKE│NZ is genuinely focused on raising the tide for everyone. This means sharing knowledge, connecting people, and lifting the profile of our sector. That “rising tide lifts all ships” philosophy really resonates with me. I joined the board because I want to contribute to that effort: helping manufacturers learn from each other, build capability, and collectively move the industry forward.
What do you think is the biggest opportunity—or challenge—for manufacturing in the next 5 years?
The biggest challenges are often the biggest opportunities. For manufacturers, I think the biggest challenge is going to be twofold: a) attracting the talent that will be required to steer them along the path of b) becoming the digitally mature organisations that they will need to become to survive and thrive. Businesses that can digitally transform will in-turn become the places that employees of the future will want to work.
If you could offer one piece of advice to emerging leaders in manufacturing, what would it be?
Building on the previous question (and answer): Make sure to establish a strong digital strategy as soon as possible. The world is awash with smart gadget and software tools. If you’re not careful, then you and your team will stumble into a digital quagmire before you know it.
A solid digital strategy will result in a highly functional ecosystem of smart things (both software and hardware) that can grow and adapt with the business.
Outside of manufacturing, what’s something you’re passionate about that people might not know?
I really enjoy getting out into the back country. There’s nothing quite like a few days away from civilisation with good friends and/or family to clear the head.
There’s generally a chosen activity that underpins these trips and ski touring, bike packing and jet boating are currently top of the list for me.
Recent key developments in New Zealand
•An introductory comment by the chief economist of a major international consultancy at a recent webinar on How Industrial Policy Is Rewriting The Rules Across Key Industries was interesting: “While ignored for a long time in the West, industrial policy is now making a strong comeback.” That statement is supported by the findings of a recent OECD report that also lists a lot of examples. However, that report also points to the fact that what constitutes ’industrial policy’ is in the eye of the beholder.
The OECD itself defines it as “government assistance to businesses to boost or reshape specific economic activities, especially to firms or types of firms based on their activity, technology, location, size or age. Governments use industrial policies to address important economic, social and environmental challenges that markets cannot address on their own, such as to accelerate the green transition, or improve the robustness of value chains for critical products and services.”
By that definition, does New Zealand have an industrial policy? Setting aside the R&D Tax Credits, and other R&D support, as it not targeting specific sectors, the combined allocation (Screen Production; Elevate NZ; Primary (PSGF), gas exploration (Gas Security Fund); Tourism) amounts to 0.4% of total government expenditure in FY2025/26. By comparison, in 2023 the German government allocated 4.2% of its total budget to subsidise foreign investments in several semiconductor plants, and multi-year industrial policy budgets in Australia, Canada, the US, and the EU all will constitute a much higher relative share of total government expenditure than that in New Zealand.
Not part of the OECD definition, but an implicit assumption, is the fact that there has to be a plan first – an economic development policy – that has led to the identification and selection of the specific economic activities to be ‘boosted or reshaped’. Does New Zealand have a plan for its economic development?
•It is in the nature of governments that they want to share good news, especially about the economy. No different for our current government, where the Prime Minister, the Rt Hon Christopher Luxon, said in Parliament on Feb. 11, 2025: “… we actually have some green shoots appearing in this economy.” And as recently as a couple of weeks ago, the Hon Chris Bishop, in a speech in his capacity as Minister of Transport, stated that: “There can be no doubt that we live in difficult economic times … We have had a raft of positive economic indicators in the last few weeks, which does suggest the economy may be starting to turn a corner … Times are still tough; there is no doubting that. But green shoots are starting to show.”
What does ‘green shoots showing in the economy’ actually mean? There are a couple of measures we can look at. The first one is simply the growth in GDP, or lack thereof. The second one is the Output Gap, which measures the difference between an economy’s actual output and its potential output, expressed as a percentage of potential output. Potential output is the maximum amount of goods and services an economy can produce when operating at full capacity.
Four times a year, the Reserve Bank of New Zealand [RBNZ] publishes its Monetary Policy Statements [MPS], which represent the Bank’s Monetary Policy Committee’s views, analysis, and forecasts for the New Zealand economy, including projections for inflation, employment, and the overall economic environment. Given its importance, it is reasonable to assume that what’s in the MPS is the fruit of the work of some of the country’s leading economists. Also, keep in mind that the RBNZ enjoys statutory independence from the government and is thus not obliged to share the government’s desire to spread good news about the economy.
Below are the output gap and GDP graphs from the February 2025 (left) and November 2025 MPS (right). Upon closer inspection, you will note that in both cases the projections foresee a steady rise after a decline (output gap) or flat (GDP) development up to the date of the report. You will also note that the steady rise for both projected in the February MPS did not materialise as recorded in the November actuals, but November projections again predict an immediate and steady rise:
What makes up the ‘soil’ green shoots will thrive in?
- Domestic consumption
- Immigration
- Business investment
- Government spending
- Export revenue
Here is some of the data related to the above, all taken form the November MPS, except for Export Volumes, Business Investment and Government Spending – that data is from the August MPS, as it wasn’t covered in November:
The Hon Nicola Willis, in her role as Minister of Finance, commented on the release of the November MPS by saying, among others, that “New Zealanders have had a tough few years, but things are looking up.” Let’s just hope that’s her conviction as the Minister for Economic Growth as well, and that she’s right!
Recent key developments in the World
•On the occasion of the publication of this year’s TIN200 report, the organisation’s CE, Greg Shanahan, was interviewed last week. In response to questions about sills resources, Mr Shanahan said: “Increasingly you find the profile within the companies themselves, and ours in particular, of being migrants, so we are increasingly reliant on new migrants to keep the country and to keep the whole thing afloat. So, I guess, it’s a job to make these companies more attractive to our young graduates who want to stay in New Zealand and have an exciting time with a global perspective.”
If a company – or an industry in a given country – can’t find the workers with the requisite skills it needs, there is essentially one root cause: locally, or, increasingly, globally, there is a shortage of the workers in question, and companies, industries or countries will have lost out in the competition for a resource in short supply. In turn the short supply of workers with a particular combination of skills and experience will be caused by a combination of three drivers: Other career paths / job types with other requisite skill sets are more attractive, the education and VET system is lacking the capacity to produce what’s required, or there simply aren’t enough people, full stop.
We’ve repeatedly talked about the shortcomings in our VET system, and, recently, about Australia appearing to be winning in the trans-Tasman tug for talent. But the underlying issue that will increasingly come to the fore is the fact that populations decline – in some cases quite rapidly – in pretty much all the countries that have traditionally trained and employed workers in industry at all skills levels. And yet the ‘demographic time bomb’ isn’t really attracting much attention in day-to-day politics. Or, rather, it crops up in bitter debates about future pension payments. That debate currently has left governments in at least three European countries in a perilous state: Belgium, France and Germany, and even in New Zealand has motivated the government to propose a change in the individual pension funding system. A recent article in the Economist provides an overview of the size of the problem in Europe.
Beyond that, however, the topic attracts remarkably little interest. And that in spite of the fact that – unlike the other (potential) global threats to our health, wellbeing and material wealth, which are still in the eye of the beholder because they describe future scenarios that may or may not materialise at varying rates of probability – about the demographic decline we can be absolutely certain, at least for the most optimistic scenario. We already know what number of people currently alive in New Zealand will become available to the labour market in around 2045, because they have been born already. And in terms of probabilities, there is little evidence in recent history of a reversal of declining total fertility rates over a short period of time.
What’s all that got to do with manufacturing in New Zealand? In a world of increasing requisite skills requirements in manufacturing driven by technology changes and a decline globally in people having those skills, it might be a good idea to complement efforts to attract skilled labour from abroad with a more systematic approach to attracting new people and training them as required, as well as upskilling the existing workforce. Keeping in mind we are preparing for a future scenario that is bound to materialise …
•A recent report by Roland Berger on the impact of AI on business models and work practices in industry provides a good summary of the state of the art. It also contains this useful diagram:
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