By EMA Head of Advocacy and Strategy Alan McDonald
This article first appeared in The Post, 21 April 2025
OPINION: Recent business confidence surveys suggest an increasing number of companies are expecting general economic indicators to improve after winter, in the latter part of this year and into the next.
Both the NZIER survey and the BNZ-BusinessNZ Performance of Manufacturing Index (PMI) share these positive sentiments, though the PMI comes with a warning.
While large manufacturers, those with more than 100 workers, are generally positive about their future prospects, smaller businesses continue to feel the impact of the recession. In fact, manufacturers with fewer than 10 workers continue to downsize.
The EMA receives this feedback from members often in person.
Three times each year, the EMA embarks on a roadshow of in-person briefings to our members. In our recent summer series, which concluded in March, we spoke to almost 2000 members – a pleasing return to pre-Covid levels of attendance.
At a number of these events, manufacturers indicated that electricity pricing continues to put pressure on their ongoing costs, following the significant increases in wholesale energy prices over the last 12 months.
Our mid-scale manufacturers are often unhedged energy users, while others may have hedged price contracts, but will come off them shortly, and subsequently experience an energy price shock to their business. Last year, many were forced to reduce their power consumption in order to survive, which led to a drop in production and profitability.
And inevitably, some companies were forced to reduce their labour costs through the restructuring process.
This stress on business is mirrored in the enquiries fielded by the EMA AdviceLine team over recent months. In the first quarter of this year, AdviceLine received a record number of calls from companies seeking advice on redundancies and restructuring.
Over the coming months, as these restructuring processes play out, the downstream effects on small and mid-scale manufacturers will likely be reflected in growing unemployment numbers. While the official unemployment rate sits at 5.1%, most economists expect this to rise, albeit slightly, through winter.
Nevertheless, in order to improve productivity, many manufacturers are using this time to invest in upskilling their staff.
Improving productivity in manufacturing is a key reason why the EMA has partnered with the ASB to launch the ASB Manufacturers Workshop series ‘The Impact of Industry 4.0 on Your Business’, which runs nationwide through to June 2025. The workshops help manufacturers understand the benefits of these transformative technologies. More and more manufacturers are understanding that they need to take action now to stay competitive and viable into the future.
At the EMA, we have noticed an increase in enrolments from manufacturers in our core learning and development courses. These include team leadership and digital skills training, along with health and safety courses such as managing machine risks and due diligence for managers.
Manufacturers are keen to improve outcomes for their workers and reduce harm, and they recognise change is needed. One of the issues facing the sector is a lack of capacity to lead and co-ordinate that change on behalf of the sector.
Last year, the EMA had the privilege of leading a collaborative, “by industry, for industry” project supported by ACC to create a strategic plan aimed at reducing harm in manufacturing, both in the short and long term.
The benefits of reducing harm are far-reaching: a safer and more productive workforce, reduced pressure on the healthcare system, and a stronger, more productive manufacturing sector for everyone involved.
One tool the EMA would like to see introduced to help lift productivity in manufacturing is a much-improved depreciation regime for investment by businesses in new technology and machinery.
It worked recently in Australia, where an enhanced depreciation regime encouraged rapid investment in smaller manufacturing businesses, resulting in a subsequent productivity boost.
New Zealand’s minimalist depreciation regime encourages the ongoing application of our famed ‘number-eight wire’ approach to extracting minimal gains from outdated or near-obsolete technology and machinery.
There are obvious exceptions, such as large-scale internationally renowned companies like Fisher & Paykel. However, many smaller New Zealand manufacturers often don’t invest, as they tinker with old machines for incremental gains.
The EMA is committed to improving productivity in New Zealand manufacturing, and helping businesses stay one step ahead with the use of technology and process improvements.
Retaining, training and supporting our valuable manufacturing workforce will help reduce the skills gap that is likely to appear when some of the major streams of infrastructure work come on line in the very near future.
