David Thompson Posted:
So very, very true. It beggars belief that we consider ourselves to be a developed nation when so much of our economy is based on selling milk powder or logs. BTW, I own a Plinius amplifier (my second) that drives a set of Theophany speakers.
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David Thompson Posted:
A robust but sobering report. It concerns me that confidence is rising, yet sales and exports are down and "manufacturers and exporters are still lagging behind other sectors". Surely we should wait until we're earning more money before we start spending more?
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siemens Posted:
Yes true! The only thing that will never die in this world is the nature and its science behind it. Great post.
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Kieran Ormandy Posted:
Thanks for the question Steven, Germany has seen increases in manufacturing employment since 2009, and Switzerland has had stable manufacturing employment between 2006 – 2011, even in the face of ongoing Euro-zone issues. Korea has seen increases in manufacturing employment since 2008 and Israel experienced large increases since 1998, while being stable over the last 4 years. Singapore has had increases in manufacturing employment over the last two years. These countries all value their manufacturing sectors and work to protect them, this is reflected in the above numbers and their performance through the GFC. Note data around the above examples was sourced from OECD labour market stats.
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John Walley Posted:
Point one: you should have no doubt what our Association says publically represent the views of our members. Point two: we don’t knee jerk responses, if you trace back our comments around NZPower you will see them link all the way back to our research in 2004 and 2005. All that material is fully linked from our comments above. Point three: you will note our comments on major users, sadly the same advantage does not accrue to smaller industrial users. The perverse incentives of the LRMC approach in all this are well known. Point four: the NZMEA is not like any other Association in New Zealand we admit only manufacturers and exporters into membership, and our public expressions are the views of that restricted membership.
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High Value Manufacturing Article - Plinius Audio

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The following is an article written by NZMEA President Brian Willoughby. He is writing a series of articles based on interviews with various high valued added manufacturers in New Zealand. These articles originally appear in BNZ Chief Economist, Tony Alexander’s monthly newsletters.


This month I want to take the opportunity to talk about my own experience as a high value added manufacturer, through our company Plinius Audio.

Plinius is a Christchurch based manufacturer of high end audio equipment, ranging from amplifiers, through to network audio players. The company was first established more than 30 years ago to serve our domestic market due to import restrictions that existed at the time. Contex Engineers has owned the company for eight years.

We now export 97% of our products to 42 different countries around the world. We sell to music enthusiasts throughout the U.S., Europe and Asia, with the Euro being our major export currency. We own our own distribution in New Zealand and the U.S, but rely on specialist distributors in the rest of the world. Plinius has the potential to become an iconic Kiwi brand as recognised as the Britten bike, and also be a commercial success.

The appreciation of the New Zealand dollar has had a huge effect on us. Like most manufacturers, we have fixed price points in our various markets, meaning any appreciation in the currency directly affects our margins. Even the effects of vast productivity improvements we have been able to make in recent years have been stamped out by the increase in the value of our dollar. If the dollar had been at a sustained lower level we would be in a far better position for our future, as we would have had an ability to reinvest into product development and brand positioning.

The China Free Trade Agreement has been a disaster for Plinius. Like many other closed or developing territories China has their own quality system and a pre-qualification and testing requirement for electrical goods entering the country. To take advantage of the FTA we need a special New Zealand Certification Body to comply with the FTA and we still don’t have one; so any company wishing to sell electrical goods into China can’t take advantage of the FTA. This is a New Zealand bureaucratic mess of epic proportions and despite some recent efforts from MFAT and NZTE we are actually hindered in getting into China by our own government bureaucrats’ various actions and inactions.

New Zealand doesn’t understand about selling elaborately transformed manufacturing, and over six years successive government ministers have done nothing to push their departments into getting this fixed. Incredible though this may seem, in the spirit of the FTA, the Chinese Government quality organisations are presently, as a short term fix, helping us overcome New Zealand deficiencies.

This biggest challenge we have faced is building a worldwide distribution network to allow us to be successful in our export markets. Travelling the world, going to trade shows and finding new distributors is a very time consuming and expensive process, but one that is vital for export success. We have been fortunate to be owned by Contex which has been able to support Plinius during this process; had we been a fresh start up company, in the face of these market and distribution costs, product development costs and a highly overvalued dollar, Plinius would not have survived.

For all exporters of high value manufactured products, product development and brand profile are equally important since brand trustworthiness and quality is a big factor in success. Without it we often can’t even get our technical excellence through the buyers’ door, or in a shop window.

This phenomena doesn’t exist with commodity exports and our firms and our government agencies that are supposed to assist exporters don’t understand the marketing associated with complex products, simply confusing it with selling, which is very different. Therefore we fail to make the most of our potential in exporting high value technical excellence; which New Zealand has plenty of.

tags: exchange rate, exports, manufacturing, high value manufacturing, brian willoughby, audio


1 Comment(s)

David Thompson - 31 October 2013 at 6:26 AM
So very, very true. It beggars belief that we consider ourselves to be a developed nation when so much of our economy is based on selling milk powder or logs.

BTW, I own a Plinius amplifier (my second) that drives a set of Theophany speakers.

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