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- What’s Been Happening in our MAKE│NZ Community
- Future Events
- News From The World of Manufacturing
- Other News of Interest to Manufacturers
- Fun Facts
What’s Been Happening in our MAKE│NZ Community
•We’re hiring!
Our Community of manufacturing leaders keeps growing, so we are looking for someone to support that growth. The new Community Development Manager will play a key role in shaping that Community, building relationships with members, and helping MAKE│NZ to grow the collaborative, reciprocal network we aspire to be. Do you/are you able to
- support our purpose and the idea behind MAKE│NZ? Are you able to embrace and champion our Community concept?
- have experience in manufacturing, engineering, or a related technical field?
- have the mental agility and adaptability to work in a small dynamic team where ‘the job’ will change as the situation requires?
- listen with empathy and handle confidential conversations with sensitivity and discretion?
- have an interest in ‘the big picture’ in manufacturing, and are able to share high‑level insights with members of our Community?
If so, we are keen to hear from you! The position will be available for full-time or part-time employment, or on a contract basis. To find out more, and tell us you’re interested, please get in touch (dieter@makenz.org / sabine@makenz.org )
Future Events
•We’ll start with one of our own – Next Monday (the 23rd) will be our next Fireside Chat
Many of you may still remember what it was like to deal with the operational disruptions and the rebuild of your factory after the earthquakes. Now we’re going to hear about a more recent story of ‘having risen from the ashes’ – quite literally. Richard Frew, Engineering Manager, and Glenn Morgan, Operations Manager, will be talking to us about the Sutton Tools Rangiora rebuild after most of their factory burned to the ground just over four years ago.
If you’re interested in attending and haven’t gotten an email, reach out to the MAKE│NZ team, either dieter@makenz.org or sabine@makenz.org
•Business Canterbury are organising a Manufacturing Futures Forum: Funding and Growth Pathways on Wednesday 25th March 4.30pm – 6.30pm. For details and registration, please see here
• We’ve partnered with ExportNZ to help share the word about the upcoming State of the Export Sector, presented by New Zealand’s Minister for Trade and Investment, Todd McClay.
The Minister will reflect on the challenging global environment our exporters currently face, outline his priorities for the trade and export sector, and look ahead to future opportunities through trade agreements, improved market access, and emerging growth sectors.
Following the Minister’s remarks, there will be an opportunity for discussion and questions from the audience.
If you’re interested in attending you can find tickets and more information HERE
The good people at ExportNZ have also offered a discount code available for MAKE│NZ members for $20 off ticket price, so make sure to reach out for the code!
News From The World of Manufacturing
•If you have followed some of the recent media coverage following the announcement of the closure of the frozen-vegetable and other operations of HEINZ WATTIE’S LIMITED in Auckland, Hastings, Christchurch and Dunedin, you could be forgiven to see this as another nail in the coffin for manufacturing in New Zealand. Not helped by the reason for the decision given by the company that “over recent years, the manufacturing environment in New Zealand has become increasingly difficult. Globally high inflation and various industry challenges have all placed ongoing pressure on the commercial performance of the business.”
Interestingly enough, media reports containing quotes directly attributed to Heinz Wattie’s Managing Director, Andrew Donegan don’t include the above comment but suggest it was part of the company’s release to the media, which, by the way, the company has not (yet) released to the general public.
If we pick the statement above apart, we can start with “pressure on the commercial performance of the business.” Financial statements filed with the Companies Office for the company’s holding entity, H.J. HEINZ COMPANY (NEW ZEALAND) certainly support that claim, showing losses of $54m, $52m and $188m (rounded figures) for the years 2022 to 2024.
Not sure how “global high inflation” would put pressure specifically on the profitability of a local operation that is ultimately part of The Kraft Heinz Company, wholly owned by Berkshire Hathaway?
Thus, we are left with an “increasingly difficult manufacturing environment in New Zealand” and “various industry challenges”. What would these challenges be that make frozen vegetable processing in New Zealand challenging and increasingly difficult?
Labour cost? A recent report on the frozen vegetable processing industry globally by global management consulting firm IMARC Group shows the following OpEx breakdown for a new facility:
With “gross profit margins typically ranging between 20-30% and net profit margins of 8-15%, supported by stable demand, value-added processing, and established market channels.”
That breakdown may well look slightly different for different operations in different countries and depend on the level of automation, but generally labour costs will rank after the cost of raw material and utilities, energy in particular. Thus, the cost of labour is unlikely to be a major contributor to the losses made by Heinz Wattie’s.
Energy? Shane Jones, Associate Minister for Energy, in a media interview on March 11, when asked to comment of the Heinz Wattie’s announcement, said this: “Look no further than the non-competitive structure, the non-competitive cost imposed on our manufacturing sector by the electricity sector.” He may well have a point here, given that the cost of electricity is likely to make up the lion’s share of utility costs in a frozen vegetable processing operation.
Since NZ is far from major markets, fuel is a relatively large component of the cost per TEU compared with shorter trades, so long‑haul routes (NZ–Europe, NZ–North America) are particularly exposed. So far, however, we don’t see any major changes in container freight rates …
This comes on the heels of the company announcing last October a reduction of its vegetable and fruit canning operations, citing “a reduction in demand for home-grown canned fruit products” and an ongoing struggle against cheaper imports. In relation to the latter, Heinz Wattie’s requested MBIE to initiate a Dumping Investigation Preserved Peaches from China under the Trade (Anti-dumping and Countervailing Duties) Act 1988.
Here we have a company operating in a low-value-add manufacturing operation – as evidenced by the high share of the cost or raw materials in the overall cost breakdown – and struggling to be profitable in the face of growing competition from imports.
Without access to detailed financial information on the company’s operations – not available for a privately held entity – we can’t know what the causes are for Heinz Wattie’s lack of competitive strength. In the case of frozen peas, for example, there is little evidence that the major cost factors – raw materials and electricity would put them at a competitive disadvantage internationally. In 2023, New Zealand was the fifth-largest exporter of frozen peas behind (much larger) exporters like Belgium and Spain. The price processors have to pay growers for peas is largely kept confidential, but what evidence is available would indicate that – if anything – input prices are lower in New Zealand than in those two countries. Likewise for electricity.
Putting all of this together, the claim by Heinz Wattie’s that their lack of profitability is reflective of an ”increasingly difficult manufacturing environment in New Zealand” in general may well be a case of stretching the bow too far.
Other news of interest to manufacturers
•Fuel rationing – will it happen, or won’t it? Three probability statements up-front:
(1) It is more likely than not that the ‘Iran War’ will be conducted for longer than ‘the next few days’.
(2) While the ‘Iran War’ is on-going, no significant shipments of crude oil, naphtha or LNG will be able to pass the Strait of Hormuz, except for those authorised by the government of the Islamic Republic of Iran.
(3) If anyone were to decide that it is a good idea to attack and destroy the Iranian oil supply infrastructure on Kharg Island, that, and the ‘promised’ response by Iran, if it were to be successful even in parts, would really land the world – and New Zealand, in the proverbial.
In last week’s edition we pointed out that most of New Zealand’s manufacturing is not critically dependent directly on crude oil products, with electricity and (domestic) natural gas being the predominant sources of energy. The main dependence was related to transport upstream and downstream in the supply chain. Diesel becoming more expensive will have an impact on margins; the fuel not being available and supply chains being disrupted is a different story. Memories from the COVID-19 pandemic are still with us.
What is the risk of fuel – especially diesel – supply being restricted in New Zealand? Any crisis acts like a magnet for people with opinions that are more or less well-supported by facts. A conservative approach to reliable sources of information in this case leads us to the International Energy Agency [IEA]. In its latest update, and the associated Oil Market Update, the IEA points out the critical role of oil and LNG exports passing through the Strait of Hormuz: Around 25% of the world’s seaborne oil trade transited the Strait in 2025, and options for oil flows to bypass the Strait of Hormuz are limited. Only Saudi Arabia and the UAE have operational crude pipelines that could potentially reroute flows to bypass the Strait, with an estimated 3.5 million barrels a day [mb/d] to 5.5 mb/d of available capacity.
n.b. ‘seaborne oil trade’ – there is a lot of oil consumed domestically in countries like the US and Russia, for example, and supplied through (land-based) pipelines.
Most of the crude oil normally passing through the Strait of Hormuz (about 80%) is destined for Asian markets:
As crude and oil product flows through the Strait of Hormuz have plunged from around 20 mb/d before the war to a trickle currently, and production facilities have been damaged by acts of war, Gulf countries have cut total oil production by at least 10 mb/d. However, the IEA expects global oil supply to drop by 8 mb/d only in March, with curtailments in the Middle East partly offset by higher output from non-OPEC+ producers, Kazakhstan and Russia.
In spite of these reductions, the IEA estimates global oil supply to rise by 1.1 mb/d in 2026 on average, with non-OPEC+ producers accounting for the entire increase. However, widespread flight cancellations in the Middle East and large-scale disruptions to LPG supplies are expected to curb global oil demand by around 1 mb/d during March and April compared to previous estimates. On top of that, higher oil prices and a more precarious outlook for the global economy pose further risks to the above forecast. Global oil consumption is now expected to increase by 640 kb/d year-on-year in 2026; last month the forecast was 850 kb/d.
Fuel for transport is one thing. Other refined products is another. Gulf producers exported roughly 3.3 mb/d of refined products (naphtha and polymers), and 1.5 mb/d of LPG in 2025 – roughly a quarter of the total global petrochemicals market. Much of this takes the form of exports through the Strait of Hormuz, by tanker, gas carrier or container ship. Some of this production capacity has now been lost due to refineries suffering war damage, or temporarily reduced due to a lack of storage capacity. Depending on for how much longer the war goes on, and how much further destruction of refinery capacity will occur, the impact on global supply chains – including for manufacturing – could be much more widespread and serious than a shortage of fuel for transport.
Take one example: Japan, South Korea and Taiwan are all major suppliers of advanced electronic components, including semiconductors.
Looking at it in more detail:
| Country | LNG Share of electricity generation | Storage Buffer | Primary Risk in 2026 |
| Taiwan | 40% | ~11 Days | Maritime blockade or Hormuz disruption. |
| South Korea | 28% | ~60 Days | High dependence on Middle Eastern (Qatari) gas. |
| Japan | 34% | ~90+ Days | Price volatility and global supply competition. |
In semiconductor production, the reliance on LNG exists at three distinct levels: base-load electricity, direct thermal processing, and the supply of critical noble gases and other chemical inputs.
For electricity, TSMC alone consumes nearly 10% of the Taiwan’s total electricity. Taiwan is particularly vulnerable because it maintains only about 11 days of LNG storage on land. In South Korea approximately 20–30% of the power grid is fuelled by LNG. The massive “Mega Cluster” in Gyeonggi Province requires a massive, uninterrupted supply of gas-fired power to avoid catastrophic “voltage dips” that can ruin entire batches of silicon wafers.
In terms of other inputs, helium is a critical byproduct of LNG processing (notably in Qatar, which produces about one-third of the global supply). Helium is essential for cooling magnets in lithography machines and providing an inert atmosphere for delicate etching processes. To cope with supply shortages, both TMSC and Samsung have intensified their helium recycling efforts.
The current conflict has also triggered a “sulfur squeeze.” Over 90% of global sulfur supply is recovered during the desulfurisation of crude oil and natural gas to reduce emissions and the Gulf states account for 44% of global elemental sulfur production. In semiconductor manufacturing, sulfur is essential for producing the sulfuric acid used to clean and etch wafers.
That’s just one example of many when it comes to potential downstream supply chain disruptions, should the ‘Iran War’ drag on.
Returning to New Zealand and potential restrictions on fuel supply, one can only hope the government will have the wisdom to prioritise supplies to the commercial transport sector if restrictions have to be imposed. As we’ve had to learn during the COVID-19 pandemic, digital connection can, to a large extent, replace personal encounters in human communication. The beaming of physical objects, on the other hand, is still very much in its infancy …
Fun Facts
•We talked about competition from imported foreign foods being a threat to local manufacturing. There is, of course, also the option of local processing of imported raw materials – think processed pork products. Here’s another one, even if ‘processing’ is stretching it a bit in this case:
The cheapest butter on offer by a significant margin in a local supermarket last week
•Staying with the food, albeit further upstream in the supply chain:
Behind Australia, New Zealand is the OECD country with the second-highest dependence on fertiliser imports requiring passage through the Strait of Hormuz.
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