Value adding to stay in the game
victoria-university-of-wellington
Tue Oct 19 2010 13:00:00 GMT+1300 (New Zealand Daylight Time)
Value adding to stay in the game
Tuesday, 19 October 2010, 11:45 am
Press Release: Victoria University of Wellington
Value adding to stay in the game
New Zealand manufacturers need to create and retain more ‘value-added’ products in order to continue to be successful.
This is one of the conclusions of Victoria Professor of Management Lawrie Corbett, who will be delivering his insights on the state of manufacturing at his inaugural professorial lecture titled ‘Manufacturing in New Zealand: from second division to the premier league?’ next Tuesday evening.
Professor Corbett observes that over the last 10 years there has been a growing interest among manufacturers in bundling services with products—and he believes this will continue to grow.
“Services are more profitable than products per se, and the source of revenue is more stable so they can provide a more sustainable competitive advantage.”
However, he warns that the move into adding services has to be deliberate, well planned and systematic.
“Manufacturing organisations are suddenly being asked to develop a whole new set of capabilities, new processes, new resources and also a new culture—and has to develop a whole new set of relationships with their customers. This can take some adjustment.”
He also notes the changing face of manufacturing. “Manufacturers from developed countries are locating new production facilities closer to where their growing markets are—generally in emerging economies.
“Meanwhile, factory jobs are vanishing all over the world, even in China, largely because technology and new knowledge has enabled manufacturing to become more efficient.”
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Like most OECD countries, New Zealand has experienced a steady decline in the share of manufacturing in total employment, Professor Corbett says. However, the sector still employs a significant portion of the workforce. His research indicates that manufacturing accounts for 14.1 percent of GDP and employs 12.7 percent of the workforce, and as many as five more jobs depend on each person directly employed. Manufacturing and technical capability plays a role in 50 percent of New Zealand’s tradable exports and this percentage is growing.
A recent stint in Switzerland while Professor Corbett was on research leave earlier this year enabled him to observe small central European manufacturers close at hand. He found that many of these companies survived by improving the quality of their products to match world-class levels.
“Rather than being tied to an outdated product range they focus on research and development to produce differentiated products. As the product matures they move production to a lower cost location in their global plant network, but keep the research and development at home.”
This is another lesson New Zealand manufacturers can learn from, says Professor Corbett. He also believes more companies need to develop international plant networks in order to grow.
“For the future of our economy we need global head offices and globally managed manufacturing businesses here in New Zealand, to develop our international capability.”
Victoria University Vice-Chancellor Professor Pat Walsh says Professor Corbett is a highly valued teacher and researcher at Victoria Management School who has been with the University for more than 25 years.
Victoria’s Inaugural Lecture series is an opportunity for professors to provide family, friends, colleagues and the wider community with an insight into their specialist area of study.
“It is also an opportunity for the University to celebrate and acknowledge our valued professors.”
Professor Lawrie Corbett’s inaugural lecture will be held on Tuesday 26 October at 6pm at Victoria University’s Hunter Council Chamber, Level 2, Hunter Building, Gate 1 or 2, Kelburn Parade, Wellington.
ENDS
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