Adam wants new steer put on manufacturing

For every nation-building job that disappears and ends up in tourism, the country is getting poorer, New Zealand Manufacturers and Exporters Association (NZMEA) new chief executive Dieter Adam tells people.

The native of southern Germany grew up near a massive industrial area ‘‘halfway between a Porche and Mercedes factory’’. His capsule of economic thought is a quote from the late Sir Paul Callaghan, after whom the Government’s Callaghan Innovation network is named.

Adam is a fan of Sir Paul’s critiques, including his measure of average GDP per worker.

In manufacturing, Sir Paul said the average contribution to GDP per employee was $120,000. ‘‘And every job that creates less makes the country poorer.’’

The assessment was ‘‘a very mature and interesting way of looking at economic development’’, Adam said.

But NZMEA’s frontman is not sure everyone had their head around the concept. Government had a bigger part to play in fostering manufacturing as a bright, modern wealth-creator.

Adam’s first few weeks with NZMEA had offered a glimpse of how manufacturing is seen outside its own bubble. Manufacturing seems to be offically off-the-page within government, it seems to him.

The Ministry of Business, Innovation and Employment (MBIE) had sector groups, including a kind of food and beverages department. Adam said he asked officials where he could find the manufacturing cluster. He was told there wasn’t one. ‘‘That’s fairly telling.’’

Whereas the NZMEA’s slogan is ‘‘The Real Economy’’, the attitude on high seemed to be that if manufacturing was not surviving then it was a case of ‘too bad, tough luck’.

To Adam, the mood seemed similar to the early 2000s, when IT and film was peaking in popularity and agriculture was widely written off. ‘‘We’ve come to undertstand, that with all the ups and downs . . . agriculture is not a sunset industry for New Zealand. Likewise, this country can’t exist without manufacturing.’’

Adam took his encouragement from a revival of manufacturing in the United States. ‘‘Five, 10 years ago, manuacturing there was all dead – it goes to other countries with weaker services. Now it’s coming back with a roar.’’

With the historically low US dollar, manufacturing was thriving and recognised as a central part of the economy. ‘‘I think we need to get back to that.’’

Adam did not want to be seen simply as a booster for manufacturer and a bagger of other industries.

Back to Sir Paul’s assessment of tourism, he said undoubtedly tourism had advertising agents who shunted more GDP into the economy than a service worker at the frontline.

If statistics were examined ‘‘in their own right’’, the biggest individual contributors to GDP worked in the mining and construction industries.

‘‘Because they sit in the control room of an oil well and produce millions of dollars per day. And that (statistic) gets chopped up against the average. But in general, manufacturing produces above the average contribution of GDP per worker.’’

Raised in southern Germany, but a Kiwi for nearly 30 years, Adam was aware his plug for smarter, more productive manufacturing looks unfashionable. But his personal style would fit NZMEA’s reputation for ‘‘speaking fearlessly,’’ he said.

Adam had not met his predecessor, John Walley, who had a reputation for shooting provocative barbs.

NZMEA was born from a 2007 merger of the Canterbury Manufacturers’ Association and the New Zealand Engineers Federation. Under Walley, NZMEA tended to have an interventionist approach to business, which sometimes jarred with the Canterbury Employers Chamber of Commerce, for example.

Adam, a father of four adult children, said he was ‘‘determined’’ rather than confrontational. People sometimes alluded to his Germanic background. ‘‘I tend to be fairly focused on a target and not easily deflected.’’

He comes to the association from the state-run business development agency, New Zealand Trade and Enterprise (NZTE).

Adam has a PhD or doctorate in plant biotechnology and has held research positions in Germany and Denmark. He arrived in New Zealand from Germany in 1986 to take up an academic position at the University of Waikato.

He joined the commercial world in 1994 and has held senior management positions in the primary industry with forestrybased Rayonier New Zealand and Livestock Improvement Corporation, a livestock genetics co-operative. He had also run his own consultancy business.

Adam said one of his early aims for NZMEA was a regular forum for manufacturing leaders to ‘‘speak among like minds’’. People may have family and private networks to share ideas but they didn’t always want to talk about business, he had found.

‘‘And when it comes to the question of speaking with others, there’s always the question of ‘what can I share and what can’t I share?’.

The discussion loop would probably be like one he had set up at NZTE. The NZMEA set-up would ideally bring people together who weren’t directly competing, but who had an interest in collaborating. Several businesses developing the China market, for example.

People had realised they had nothing to fear from each other, then opened up and shared their experiences. ‘‘A couple of times I had to kind of send them out the door; they wouldn’t want to go home because they were so lively.’’

For the sake of NZMEA as an institution, Adam wanted to make the group more appealing to younger business owners. It had ‘‘several hundred members’’, most of whom were in the South Island, but it wanted to have more Auckland membership to make it truly national. ‘‘We certainly have to be sure this organisation is nationwide and it’s not known for people over 60.’’

Of the 13 business he had visited so far for NZMEA, all but one of the chiefs had an engineering or industrial science background. ‘‘If you look back a generation, those jobs were usually taken up by males so it’s not a surprise that the situation we find ourselves in.’’

NZMEA had ‘‘ambitions’’ to be more involved in the food and manufacturing sector, where more employees were female. This was not to say manufacturing was generally male, conservative and unwilling to adapt, Adam said.

He was ‘‘amazed’’ how many businesses were shrugging off old habits, even if they had no choice in the matter. There is growing frustration at the bid processes required in the Christchurch earthquake rebuild, particularly the anchor projects.

The annoyance by potential rebuild companies comes at the same time as significant delays on bigger anchor projects including the convention centre, irritating some who want to breath life into the central city.

A couple of high profile developers and the Canterbury Employers’ Chamber of Commerce say there have been faults with the way tender (inviting bids) processes have run including those under Canterbury Earthquake Recovery Authority (Cera) guidance.

Robert Jones, Fulton Hogan infrastructure chief operating officer, this week spoke to an Aecom-hosted breakfast audience about the procurement process alongside Murray Sherwin, chair of the Productivity Commission.

Jones said while Fulton Hogan was not particularly involved in vertical construction, it did get negative feedback about the rebuild tender process from sector peers and potential partners.

‘‘We sense a degree of frustration in the industry about the time it has taken for these projects to come to market,’’ he said.

Initially work in Christchurch during the residential construction phase had come out in bigger packages. The industry had geared up for that.

The now smaller packages of work up for tender had led to dissatisfaction and some firms had bowed out of involvement, Jones said. ‘‘They want bigger bites, and the contract conditions they are being asked to sign up to for small contracts are totally unrealistic.’’

Firms, which were also being asked to take on a high amount of potential project liability including working on unknown ground conditions, were being scared off.

‘‘They approach us all the time wanting to joint venture, but we say to them the reality is somewhat different to what you think. These projects are taking a lot longer to come to market, they’re not as big as originally thought and therefore they lose interest.’’

Significant staffing changes amongst Cera’s design and tender project teams had been another reason for difficulties within the tender package processes, another construction firm boss said.

The fact Cera had missed its own indicated timelines for when bids would open, had been another source of frustration, he said.

Canterbury Employers’ Chamber of Commerce chief executive Peter Townsend said there had been ‘‘messier than expected’’ hiccups in key city project processes. The complicated tender processes had been ‘‘quite expensive to be involved’’ in.

‘‘It’s very, very important that those anchor projects have very clear pathways through the processes to identify the successful participants, because there has been some clumsiness in the process. My understanding is Cera are aware of that and they’re trying to tidy the process up.’’

Aecom New Zealand managing director John Bridgman said the cost of bidding for projects in New Zealand, as compared to other countries including Australia, was sometimes ‘‘very high’’. Aecom is a project services company providing architectural and other advice during construction.

‘‘New Zealand is the most expensive place to bid for engineering services,’’ Bridgman said.

Hawkins South Island regional operations manager Steve Pearson said Hawkins had been selected as a tenderer for the Avon River Precinct development packages.

This had led or ‘‘rolled on’’ to the opportunity to also tender for ‘‘accessible city’’ projects, including the widening of Manchester St into a boulevard.

He did not comment specifically on the difficulty or not of tendering for these projects.

Cera acting chief executive John Ombler said the scale of the quake disaster was unprecedented, amd the scale of projects CerA had needed to procure goods and services for was unique.

‘‘In some cases, large projects have been offered as single tenders, while for others the project has been broken down to a series of smaller parcels of work to ensure there is a level of competition to get the best result.’’

I tend to be fairly focused on a target and not easily deflected. Dieter Adam New Zealand Manufacturers and Exporters Association