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News From The World of Manufacturing
•Last week’s Fieldays were a roaring success by all accounts. Which is a good thing for the primary sector and beyond, including manufacturing, which supports and benefits from New Zealand’s primary industries in many ways.
With the good news came the inevitable misrepresentation of role of the primary sector in and for New Zealand’s economy: “The food and fibre sector is not just another part of New Zealand and its economy, it is without doubt the engine room of the economy.” – a quote from our Prime Minister, speaking at the Fieldays. Rather than laying out the counter argument here, we refer to an excellent article in The Spinoff.
•It’s the same story again and again – Manufacturing SMEs being highly successful by becoming a major – if not dominant – player in a very narrow niche market. We have many examples of this recipe being applied successfully in New Zealand, including well-known Canterbury manufacturers.
Here’s an example with a twist from Germany: Techne Kirow, a global leader in railway cranes and other specialised railway transport equipment:
The twist? Normally, at least in Germany these companies are family-owned and have started business several generations ago, sometimes in a completely different product area. As reported in the German FAZ, Techne Kirow has a slightly different story.
It’s the story of a young man taking a punt in a once-in-a-lifetime set of circumstances. Ludwig Koehne (notice the fedora in place of a hard hat …) had studied philosophy, politics and economics at Oxford and was still in his early 30s when he came across the opportunity to make one of these $1 business purchases after the demise of the GDR in 1989 ->
The company he bought was a former heavy-machinery manufacturing operation, Schwermaschinenbau S.M. Kirow in Leipzig. After the fall of the Berlin Wall, the company had no business, no customers and very little in the way of (modern) manufacturing facilities.
What it had was an enthusiastic and highly entrepreneurial new owner who was able to build a globally successful company literally from the ruins. Not without jeopardy, though; the company was on the brink of collapse several times in its first few years.
For the benefit of complete disclosure we have to add that the ‘former student of philosophy, politics and economics’ wasn’t without family history – his father had been in the business of building railway infrastructure in West-Germany since 1956.
Other news of interest to manufacturers
•Many of your will probably have heard about the current shortage in DRAM (Dynamic Random-Access Memory) chips. Some of you may even be directly affected by it.
According to a recent Bloomberg report, the recent trends shown above are expected to continue well into 2027 and beyond. Behind this is the rapid growth in data centres globally. It’s not just a numbers’ game, either. Data centres use an advanced type of random-access memory, called High-Bandwidth Memory (HBM) for Artificial Intelligence (AI) applications. The manufacture of these HBM chips consumes roughly 3 to 4 times the raw wafer capacity per Gigabyte of memory compared to the standard commodity DRAM like DDR5.
Reacting to these market demands, manufacturers of memory chips plan to significantly increase production of HBM chips. This leaves the demand for other type of DRAM, used in laptops or the automotive industries, for example, increasingly unmet. And yet, even with the actual and planned increases in HBM production capacity, demands from the AI industry won’t be met, either.
Fun Facts (some of them not so funny)
•A recently updated projection on the size of the German workforce in 2035 has added further fuel to rising concerns about the long-term future of Germany’s economy, which has been stubbornly static for the past three years already. Projections by the Deutsches Institut für Wirtschaft from 2024 projected the gap between those that enter the workforce in 2036, and those retiring, to be just under 3 million people. Now the estimated shortage sits at 4.3 million.
In absolute terms, the total German workforce is projected to shrink from 55 million in 2026 to 51.2 million in 2036, a 6.1% reduction. The reason given for this major difference in projections are the increasingly restrictive migration policies and practices adopted by the current German government.
In the US, highly restrictive immigration policies, including deportations, have lead to a massive drop in net migration, as reported by The Economist:
Accompanied by a precipitous drop in successful asylum applications that were already falling during the Biden administration:
The US labour market is impacted differently by these measures, depending on skills level, visa types, and how these are impacted by their respective restrictions. You can find a detailed analysis here. Overall, however, a significant decline in employment growth is visible already.
And back home? Statistics NZ projects the total working-age population (15-64 year of age; 50-percentile estimate) to grow from 3.494m in 2026 to 3.853m in 2038 – a 10.3% increase. However, under a ‘no migration’ scenario, the number would go down from 3.45m in 2026 to 3.43m in 2038. A reminder for those calling for (more) restrictive immigration policies to consider the consequences, maybe?
•And, finally, the term Aircraft Carrier has just taken on a new meaning:
Airbus have commissioned three Ro/Ro ships designed and designated to transport the wings, fuselage sections, engine pylons, and tail assemblies of single-aisle Airbus jets across the Atlantic, from Saint-Nazaire in France, where Airbus manufactures major A320 Family subassemblies, and Mobile, Alabama, where the final assembly line completes the aircraft before handover to customers. All three ships are being built in – you guessed it – China (by the Wuchang Shipbuilding Industry Group, a subsidiary of China State Shipbuilding Corporation).
The first three vessels will be LNG-powered, but Airbus are working with the ships’ owner and operator, Louis Dreyfus Armateurs, to explore other technologies to further reduce carbon emissions from its transatlantic supply chain. Planned are ships propelled by a combination of wind power and smaller-sized engines able to use either methanol or marine diesel oil:
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