Keep manufacturing in mind, engineers tell Government

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Waikato Engineering Careers Association has spoken to dozens of engineers since lockdown with most reporting a “hump” of catch-up work for customers, and many predicting a “big ravine” looming from July.

Most small and medium engineering businesses spoken to say they are working to prepare for an uncertain future but are reluctant to predict job losses. Several larger, Waikato-based global manufacturers servicing fast-moving consumer goods say they are busier than ever meeting essential demand but are cautious in planning for the future.

Waikato Engineering Careers Association manager Mary Jensen is calling on the Government to keep the sector front of mind when planning for economic recovery, particularly as it contributes about 12 percent ($23 billion) of New Zealand’s total GDP.

“We need to understand that the primary sector is reliant on our manufacturing and engineering sectors to make its huge contribution to our economy. It is extremely important these sectors are well supported so they can continue to bring in the overseas dollar and enable New Zealand’s economic recovery,” Jensen said.

Waikato Engineering Careers Association chair Keith Fraser, New Zealand GM- HR for Pact Group, said tax relief and a clear direction from Government is needed to help manufacturers and engineers plan for the medium and long term.

“There’s definitely uncertainty about the medium term and at this point it is hard to predict what our industry is going to look like long term. We’ve initially seen higher than normal demand in some of our sectors because of the impact of panic buying at the supermarket, but we know challenging times are coming. We don’t know how this will look or how long it will last.”

A Covid-impacted global supply chain has some potential positive implications for local manufacturers, he said.

“It’s a good time for the Government to be encouraging New Zealanders to buy local, with the impacted supply chain levelling the playing field somewhat. Our biggest competitors are thousands of kilometres away, so we can supply quality, locally-made goods in a timely manner.”

Stainless Design chief executive Peter Pooran is reluctant to crystal ball gaze about the sector’s future, but says orders are likely to slow dramatically cross-sector after an initial Covid catch-up.

The Hamilton-based stainless-steel fabricator Stainless employs 120 people and services the dairy, food, automotive, packaging, and horticultural industries.

“It is difficult to predict because we won’t know our true position for a couple of months. We’re seeing a big hump of work now, but we know a big trough is coming. We do need to be financially responsible in terms of cost saving.”

Pooran is calling on the Government to incentivise the primary sector to keep the economy moving. “If they incentivise dairy companies and farmers to continue to invest, that will have a positive knock-on effect.”

He also advocates a shift by Government to write-off large asset investments instantly, similar to changes in Australia.

Under instant asset write-off, Australian businesses can immediately write off the cost of each asset that costs less than $150,000 (up from $30,000), claiming a tax deduction in the year the asset is first used or installed.

“This would be a good way to keep customers ordering which would trickle down the whole manufacturing supply chain.”

Hamilton-based smaller engineering business owner Trisha King, of Mainline, employs 19 staff and is confident her business will survive Covid.

“We will never get back the five weeks we lost during lockdown, but I am hopeful there will be a steady supply of tank orders coming through, and that construction work will pick up,” King said.

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