Science and Technology and the Economy
Canterbury Manufacturers’ Association.
6 July 2006
The Canterbury Manufacturers’ Association agrees with the Ministry of Research Science and Technology’s statement that hi-tech success is a challenge - “like hitting a series of sixes off top class bowlers”. However, given that economic growth in primary and tourism sectors have natural limits, what option does New Zealand have but to get into the hi-tech game?
The Association says that the primary sector is an important element to New Zealand’s economy as it generates export earnings and provides the opportunity and comparative advantage for post farm gate food processing. Such processing opens opportunities for branding, support services and provides value-add to on-farm activity. However, the CMA says that this sector has inherent disadvantages similar to those in the tourism industry. Success holds its own limits in that too many tourists looking for a wilderness experience spoil the very experience sought and we might have many cows to sustain the clean and green perception that is very useful in food sales channels. CEO John Walley says that if such advantages are over exploited they have a tendency to consume their own brand image and there are natural limits to the growth in these areas that should be tested with care.
Mr. Walley says that such limits to growth are not that constrained in the Hi-Tech industries where the value density of some in the elaborately transformed manufacturing (ETM) sector is huge. A bulletin released by the OECD last month stated, yet again, that innovation, research and development and the protection of intellectual property are the key drivers of long-term economic growth. Countries such as Singapore and Taiwan provide examples to New Zealand of how elaborately transformed manufacturing, driving off R&D, applying knowledge, developing niche high value products and markets provide a sound basis for export growth.
Mr. Walley say that the wine industry has grown strongly in recent years, yet it has only reached the point of selling half the value of three of our larger ETM companies, because manufacturing is less visible it does not make it less important. Primary, primary processing and food manufacturing are important to exports, but it is hard to see a first world future for New Zealand without a supported and growing ETM component in the economy.
The fact is that almost the entire spending of the CRIs is targeted at the primary sector but it is encouraging that Government is thinking about economic transformation as firms involved in this process have been left without support for too long. Mr. Walley says that at their early stages of development, ETMs firms are often undercapitalised, personally guaranteed and exposed to all the slings and arrows the world throws at them – interest rates, policy settings, exchange rates and competition with low cost countries. “Success is not guaranteed but when it happens it brings vast benefits to the economy. Just look at Tait, Rakon, Endace, Navman, Aucom, Skellerup, Skope and in the new, new economy, Trademe”.