Build “intelligence” into products, don't compete with Asia's sweatshops

Get smart about how you approach manufacturing for the export market, and oh, drop that mentality of forever trying to compete to make things cheaper than sweatshops in Vietnam, Bangladesh or the Philippines.

In line with that thought, regional economic development board Grow Wellington will be focusing its energy on getting Kiwi startups to focus on climbing up the value chain from day one.

Central to its new strategy is building intellectual property for startup. This is to ensure startups produce products that have high component of design and development; and utilises ICT in the development.

Grow Wellington has already started a series of forums for manufacturers to connect with software providers, says Grant Lumsden, Grow Wellington’s Sector Development Manager (Manufacturing).

“These forums bring together those working in the physical manufacturing domain with people working in the software space to explore ways of working together. The aim is they will together eventually create unique and improved products with high intellectual property,” he says.

Angela Brownie, Grow Wellington’s General Manager (Business Growth) notes that ICT businesses can help manufacturers develop higher value products by tapping the power of software or electronics.

An example of a regional business succeeding in this area is iKE GPS, who has designed handheld devices containing a 3D compass, digital camera, laser range finder, GPS and mobile computer, she says.

These devices enable people to safely collect information about utility assets such as power poles. The embedded software transforms the information into a usable form for maintenance staff.

Another example is Mattermachine, a software that enables manufacturers to offer customizable features to their customers.

No sweatshops, please

Lumsden says: “If you have a product that has a high amount of labour content then it’s going to be a challenge to compete against the likes of Vietnam, Bangladesh or Philippines. By adding more value to products, increasing automation, and owning intellectual property, businesses will have more opportunity to grow and survive changing environments.”

In 2012, Grow Wellington prioritised three sectors to strengthen: manufacturing, primary and ICT Screen, and digital.  Already a leader in screen and digital technology, Wellington is home to 60% of all post-production businesses in New Zealand.

The region already has diverse capability, a number of high tech manufacturers, and the ability to compete in new markets.

However, it decided it needed to lift its competitiveness by using a more comprehensive approach to harness the region’s list of specialist skills available, including concept design, product development, commercialisation, and distribution.

The region also needs a stronger startup scene, he notes. “We need a pipeline of new product ideas and people with skills in product development and commercialisation,” Lumsden adds.

Why use Welly to manufacture?

“The Wellington region has some real advantages. Geographically, it is in the centre of the country half way between Auckland and Christchurch, which is a strength for distribution in the local market.

“It has a large, deep port to export from. Its compact nature means manufacturers work in close proximity – they can collaborate easily with each other and with potential partners, such as technology businesses. Wellington has a strong ICT sector and a diverse range of skills,”says Brownie.

For the year ended March 2013, Wellington contributed 13.5% to the country's GDP of  $211.6 billion, second to Auckland's 35.3%. Wellington's GDP per capital at $57,941, is the second highest in the country after Taranaki, against the national average of $47,532.

But to continue its growth path, the region needs more startups and more manufacturing. Specific skillsets are needed to successfully commercially ideas.

The manufacturing sector’s biggest challenge is the ability to commercialise ideas. “Product development and commercialisation often demand specific, well-defined skill sets, and getting those skills and the right staff can be a challenge for manufacturing firms,” Lumsden says.

Scoping new markets?

Brownie says, as the regional business partner for New Zealand Trade and Enterprise, Grow Wellington can advise manufacturers on what markets are available for their products, provide solutions for, and identify the offshore government support that’s available, and how to access these programmes.

“Grow Wellington has also formed a Digital Manufacturing Cluster, to bring together tech smarts with traditional manufacturing to explore new opportunities in innovation,” Brownie.

Grow Wellington’s new strategy can be found on its website.