December 2014
www.nzmanufacturer.co.nz
THE YEAR THAT WAS Building the skills of your manufacturing workforce
Positive year for manufacturers Roger Usmar.
- Roger Usmar, Sector Development Manager, Competenz A manufacturing career that spans ‘shop floor to senior management’ in operations, competitive (‘lean’) manufacturing and human resources has helped Roger Usmar understand the challenges manufacturers face. It’s also convinced him that investing strategically in training to build a skilled and adaptable workforce is one of the keys to managing these
challenges. Now Sector Development Manager at manufacturing industry training organisation Competenz, Roger shares his thoughts on how to build training into an effective workforce development strategy. “Attracting good people, then building the skills they need in a competitive manufacturing environment, is a challenge – and
it’s one New Zealand manufacturers need to take seriously,” says Roger who joined Competenz in October. “In my thirty-plus years in manufacturing with Fonterra, Kiwi Dairy and Woolworths, I’ve seen the difference a good workforce development strategy makes – and the vital part training plays in supporting the company strategy.
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More complete solutions to benefit relationship Glen Murphy, Regional Director NZTE, Greater China Do you predominantly think of China as a market to sell your products to or do you think of China as a customer with unique needs that you could help with? The way people talk about China would suggest many take the market view. If that’s your approach you need to ask yourself: ‘To what extent could we increase the value of our relationship by creating more complete solutions?’ Are you building long-term trust with your customer that will
sustain your businesses through the inevitable ‘hiccups’ in any relationship? And China does have needs New Zealand can help with: Safe food There is a well-discussed need for food products and a safe supply chain the Government and consumers can believe in. Maybe
it’s time to stop thinking about food safety requirements for China as a compliance hassle and think about the opportunity to gain a competitive advantage by meeting these needs and communicating to Chinese consumers in creative ways?
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The hassle free apprenticeship service Contact Apprentice Training New Zealand to find out how we can recruit, employ and manage apprentices to train in your business.
0800 526 1800 www.atnz.org.nz
John Walley, Chief Executive, New Zealand Manufacturers and Exporters Association
The past year has generally been more positive for manufacturers and exporters than we have seen for a while. A significantly overvalued currency continues to be an issue for margins and competition pressure, but some recovery in export markets and improving domestic conditions, for some, have provided a lift in activity. Our own survey has shown a trend of improving year on year export sales, with falling domestic sales throughout 2014, coupled with consistent expectations of improving future conditions. 2014 has been a very mixed year for international markets, with new opportunities, ongoing uncertainties and new risks emerging. Europe has struggled with stagnating growth and facing a very real risk of deflation, exporters to this area have experienced soft and falling demand coupled with intense competition as producers elsewhere search for sales. This risk of deflation and continued stagnation prompted the European Central Bank to add further stimulus, and they are considering starting a U.S style bond purchasing (quantitive easing) programme.
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NZ Food Manufacturer News – Developments – Opportunities
F ro m
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NZ Food Manufacturer brings you all the latest news and developments in food manufacturing
For further information and to advertise visit
www.nzfoodmanufacturer.co.nz Doug Green T: 0064 6 870 9029 E: publisher@xtra.co.nz
NZ Manufacturer December 2014
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CONTENTS DEPARTMENTS 1
5 7-13
ADVISORS
THE YEAR THAT WAS John Walley says it was a positive year for manufacturers. Roger Usmar and building the skills of your manufacturing workplace. Glen Murphy and building business relationships with China.
DEVELOPMENTS
Larry Wiechern
Is the Manager of the Maintenance and Reliability Centre, Manukau Institute of Technology.
13 Craig Carlyle
Product news gains worldwide exposure through joint venture.
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THE YEAR THAT WAS Manufacturers dig their way back in 2014, says Kim Campbell. XPO Exhibitions key player in business growth. Manufacturers can be proud of efforts, says Catherine Beard. New life in Indian economy. Heavy metals engineering industry has outstanding year. Exciting opportunities in Turkey. Food producers take note. NZ companies part of Indonesia’s growth Significant challenges face primary industries
Catherine Beard
Is Executive Director of Export NZ and Manufacturing, divisions of Business NZ, NewZealand’s largest business advocacy group, representing businesses of all sizes.
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Brian Willoughby
Is Senior Vice President of the NZ Manufacturers and Exporters Association and Managing Director of Contex Engineers and Plinius Audio.
Looking back at 2014 and ahead to 2015…GETBA
14-15
Is Director of Maintenance Transformations Ltd, an executive member of the Maintenance Engineering Societyand the Event Director of the NationalMaintenance Engineering Conference.
MANUFACTURING TECHNOLOGY
Lewis Woodward
Bending the costs backwards.
Is Managing Director of Connection Technologies Ltd, Wellington and is passionate about industry supporting NZ based companies, which in turn builds local expertise and knowledge, and provides education and employment for future generations.
VISI CAM software allows toolmakers expansion.
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NZ MANUFACTURER IN 2015 Editorial Calendar offers great reading for manufacturers and producers.
LIFE CYCLE ENGINEERING Making manufacturing more competitive.
20-21
WORKSHOP TOOLS
22-23
THE FUTURE OF MANUFACTURING
27-29 30
Delcam lifts the curtain on its enhanced modelling and reverse-engineering capability for 2015.
Bruce Goldsworthy
An advocate for NZ manufacturing for 40 years, he was Chief Executive of the Auckland Manufacturers Association for seven years He has been Manager of EMA’s Advocacy and Manufacturing Services, and lately manager for Export New Zealand in the north.
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FOOD MANUFACTURING Industry partnerships behind move for new agribusiness.
DEVELOPMENTS The first steps towards a hydrogen generator. One business for every nine New Zealanders. Manufacturers use asset optimisation to extract value.
BUSINESS BOOKS Responsible Leadership. The Big Pivot.
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Dr Wolfgang Scholz
Is HERA Director and a Fellow of the Institute of Professional Engineers NZ.
A basic approach to machine tool utilisation. An environmentally friendly alternative for polystyrene.
Taking self-assembly to the limits.
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REAR VIEW More industry needed in industry training.
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NZ Manufacturer December 2014
EDITORIAL
The Year That Was PUBLISHER
Media Hawke’s Bay Ltd,1/121 Russell Street North, Hastings, New Zealand 4122.
MANAGING EDITOR Doug Green T: +64 6 870 9029 E: publisher@xtra.co.nz
We are pleased to bring you our annual review of The Year That Was which you can read from Page 1 through to Page 13. NZ Manufacturer invited key business people to reflect on business and manufacturing in New Zealand to assist us to build a picture of just where the economy is going, where the opportunities are – both locally and internationally – areas that need a close eye and the skills required to make ours a more buoyant economy.
CONTRIBUTORS
NZ Manufacturer invited and received articles from some of our Trade Commissioners overseas who enthusiastically saw this review as an ideal opportunity to paint the pictures in their countries of representations as to where business growth for New Zealand companies are in their country.
ADVERTISING
As with every review this is by no means complete; it may be a reflection of how you see current conditions affecting and benefitting the productive sectors. You are welcome to respond to the review and share your picture with fellow readers.
Holly Green, Jane Tongatule, Wolfgang Scholz, Roger Usmar, John Walley, Glen Murphy, Kim Campbell, Tony Waite, Catherine Beard, Richard White, Goskin Duman, Tim Anderson, Andy Sommerville Doug Green T: + 64 6 870 9029 E: publisher@xtra.co.nz
DESIGN & PRODUCTION Kim Alves, KA Design T: + 64 6 879 5815 E: kim.alves@xtra.co.nz
WEB MASTER
Dan Browne E: dan@membrana.co.nz
PUBLISHING SERVICES On-Line Publisher Media Hawke’s Bay Ltd
DIGITAL SUBSCRIPTIONS E: info@nzmanufacturer.co.nz Free of Charge.
MEDIA HAWKES BAY LTD T: +64 6 870 4506 F: +64 6 878 8150 E: mediahb@xtra.co.nz 1/121 Russell Street North, Hastings PO Box 1109, Hastings, NZ NZ Manufacturer ISSN 1179-4992
Vol.5 No. 11 December 2014 Copyright: NZ Manufacturer is copyright and may not be reproduced in whole or in part without the written permission of the publisher. Neither editorial opinions expressed, nor facts stated in the advertisements, are necessarily agreed to by the editor or publisher of NZ Manufacturer and, whilst all efforts are made to ensure accuracy, no responsibility will be taken by the publishers for inaccurate information, or for any consequences of reliance on this information. NZ Manufacturer welcomes your contributions which may not necessarily be used because of the philosophy of the publication.
The review at the end of 2013 was well read – judging by the responses that came in - and was ideal in that company managers, ceo’s, engineers, department heads, and amongst others, workshop managers told us where they were going and what it would take to get them there. Precisely what the review was all about. I can’t end the year without congratulating MS Newswire, EIN Presswire and the New Zealand National Press Club for their vision in developing a joint venture to publish New Zealand productive sector news in North America. (You can read about this on Page 5.) In a world of fluctuating fortunes for manufacturers this joint venture will increase the exposure for New Zealand manufacturers focussing on key sectors with the buying power to buy more from this country. A totally new concept which sets the joint venture apart that anything before. I have found 2014 to have been most satisfying and the (very) many discussions I had with New Zealand manufacturers enabled me to share their success stories and developments throughout New Zealand and overseas. 2015 will be no different. I invite you to start talking to me soon. Ask for the Editorial Calendar and get a picture of the year ahead and what NZ Manufacturer can do for your company on its continuing journey.
Affiliates
Merry Christmas to you and your family. Doug Green, Publisher, NZ Manufacturer
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Manufacturers’ Trading Post
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NZ Manufacturer December 2014
When one door of happiness closes, another opens, but often we look so long at the closed door that we do not see the one that has been opened for us. -Helen Keller
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DEVELOPMENTS
Washington’s EIN Presswire & National Press Club joint venture with MSC Newswire publishes New Zealand Productive Sector News in North America. Washington-based news agency EIN Presswire has embarked upon a joint venture with the National Press Club. The venture sends news about the New Zealand productive sector to North America and the rest of the world. The arrangement was put together by Max Farndale (pictured at side) publisher of MSC Newswire. It is the affiliate of the Washington news company. The proprietor of EIN Presswire, David Rothstein (pictured underneath), declared that the joint venture was part of his organisation’s world-wide emphasis on the productive sector and especially in manufacturing. “New Zealand has this reputation in North America and Europe for honesty of purpose blended with an inventive sense of industry. There is now this
opportunity of presenting the products of this to the world at large.” Now New Zealand producers, no matter their size, can overcome the problem of marketing back to themselves and to the people who already know about them, and what they are doing. It has opened up an entirely new world for the productive sector here including
access into appropriate buyer segments in arguably the world’s biggest market - North America. To learn more about how you can have your messages and product information distributed with MSCNewsWire please contact Max Farndale on 0064 6 870 4506 or by email max@mscnewswire.co.nz Max Farndale, publisher MSC Newswire.
David Rothstein, proprietor EIN Presswire.
Commercial & industrial growth
Employment growth
Economic output
Crime rate East Tamaki is the largest industrial precinct in Auckland with 2000 businesses and a growth rate higher than the regional average. getba.org.nz
getba
www.nzmanufacturer.co.nz
Greater East Tamaki Business Association Inc.
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NZ Manufacturer December 2014
THE YEAR THAT WAS
You have brains in your head. You have feet in your shoes. You can steer yourself, any direction you choose. -Dr. Seuss
continued from page 1
Building the skills of your manufacturing workforce “Manufacturing is about people. You can have the best technology, but without engaged employees with strong technical and commercial skills, who can solve problems, adapt and look for continuous opportunities to improve, you won’t get the best from this technology.” Roger recommends manufacturing companies take a structured approach to training, whatever their size. He shares his recommendations:
Manufacturing is about people. 1. Put training on your board agenda. “Your people’s skills and competencies can be a critical risk or major asset in executing your strategy. So I’d like to see people development discussed around every board table in the country,
every month. Directors should scrutinise training plans and budgets the way they do investments in new plant.” 2. Look ahead. “Skills take time to build, so companies need to be constantly looking ahead. When you produce your strategic business plan, map out the skills you need to support it. Both plans need to be long-term. Look ahead at least three to five years.” 3. Treat training as an investment. “The benefits of training, including greater productivity, quality and employee engagement, boost your company’s bottom line. Support that investment, challenge the return you’re getting, and take a long-term view.” 4. Structure training programmes appropriately. “Most learning takes place on-the-job, not on ‘courses’. So make sure your training caters to workplace learning. And create a pathway of learning,
with a realistic starting point, that helps learners master skills over time. This is particularly important in manufacturing, where many employees have limited formal education.” 5. Invest in leadership and management skills. “Investing in leadership development, management disciplines like competitive manufacturing and project management, and ‘soft skills’ like communication will help you get the best from your technical training.” 6. Treat adult education as a specialty. “Training your workforce is an example of adult education – and that’s a specialist area. So pick your training team to suit and invest in their skills too. Then make sure your people managers understand how to support employees as they learn.” 7. Develop training programmes to suit people of all literacy levels.
More complete solutions to benefit relationship The middle class
The environment
This consumer group is significant, growing and getting more sophisticated in their desire to buy experiences, products and services that reflect their values and express their personality. Let’s understand these needs and provide premium, high quality products and services that allow Chinese consumers to express themselves.
It’s no secret that China’s growth has come at serious cost to the environment. As the country reaches a tipping point of wealth, they are trying to address these problems. We love the environment in New Zealand, so let’s help China rebuild environments they can love.
Urbanisation The rate of urban growth means huge numbers of people are seeking leisure options as part of a modern urban lifestyle. Kiwis are creative about how we use our leisure time, so let’s teach our Chinese customers how to enjoy theirs.
Competenz is the industry training organisation for New Zealand’s manufacturing and engineering industries. Every year Competenz works with 20,000 learners in 3,500 companies around New Zealand to build skills, careers and businesses.
especially in areas like food production. New Zealand has great agri-technology and working with our customer to help them reach their goals is not going to dent demand for the relatively small amount of high quality, premium product we can supply.
dartboards. A traditional approach would be to find a distributor / importer or two, ship a container of darts and let the distributor do their magic. But what if you thought about it as a way of enhancing the leisure options of Chinese urban consumers?
Globalisation
What different choices might you make about who to partner with in-market? What might you do to understand your users better? How might you connect with potential users to promote a game of darts as a solution to their leisure needs?
Productivity Chinese businesses are striving to improve innovation and productivity –
Let’s take a hypothetical example: say you’re a manufacturer of darts and
With a richer, older population, the need for modern healthcare will keep growing. What better way to help a friend than to work with them to find cost-effective ways of looking after the health of their family?
8. Recognise prior learning and use it actively. “A well designed training system recognises the skills an employee has already gained, including through on-the-job learning. Then it goes a step further by using those skills. Don’t just file CVs when you’ve finished hiring. Find opportunities to use those skills.”
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Chinese businesses are no longer content to stay at home and fight a rearguard action against the onslaught of multi-national invaders. They’re taking the battle to the streets of a country near you – using their massive resources to globalise. What an opportunity to combine New Zealand product and innovation with Chinese capacity and capital to take on the world!
Healthcare
“Design your training programmes to cater to employees – both overseas- and New Zealand-born – with limited literacy. And remember that many immigrants have valuable skills and experience. So make it easy for them to share their skills, even if their English is limited.”
I think I know which approach will provide the most value for the customer and which approach will create a business that can’t so easily be replaced by a cheaper darts manufacturer from South America who’s talking about entering ‘the China market’.
Are you a Kiwi manufacturer who is NOT appearing in NZ Manufacturer? Why Not? We offer: •Case Studies•Analysis•Interviews•Opinion Articles•New Products to the Market from our Innovators and Developers FOR New Zealand and overseas readers.
Is your company busy making fantastic products and we haven’t heard about you? Why Not? Contact us now to enhance your market share.
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NZ Manufacturer December 2014
Instead of wondering when your next vacation is, you ought to set up a life you don’t need to escape from. -Seth Godin
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THE YEAR THAT WAS
Manufacturers dig their way back – 2014 in review Last century we used to say anything good for the Australian economy was good for New Zealand. When their economy went well they bought more of what we had to sell, and Australia remains today the major market for our manufactured goods and services. But the past two years have not been kind to Australia, at least not to their manufacturers. Hard on the heels of a ‘Dutch disease’ epidemic whereby the Australian dollar explored new heights on the back of high mineral prices – hard going for the competitiveness of their manufacturing exporters – came the announcement of vehicle plant closures. Reflecting this, Australia’s Performance of Manufacturing Index (PMI) has registered a steadily shrinking industrial base every month since August 2012. On this side of the Tasman over the same two years New Zealand’s PMI has in contrast recorded a steady, robust expansion, as high as 63 in November 2013 and 60.6 in October this year. Its been a remarkable run. Even more so because over the same period we have seen a large number of businesses laying off staff. Yet the unemployment rate has kept falling. This year the job losses have included 200 from Summit Wool Spinners, 120 at Fitzroy Yachts, 100 at Contact Energy, 84 at SafeAir, 120 to go at Holcim Cement, 100 at Croxley, 20 at ITL in Taranaki, 40 at Wellpack in Upper Hutt, 120 at Alloy Yachts, and several hundreds from various sawmills. Many of these well publicised losses were blamed on the high exchange rate, though there have been other contributing factors. But despite the jobs lost the official unemployment rate went from 6.4 per cent a year ago to 5.4 per cent and that also in spite the fastest population growth New Zealand has had in a decade. Average hourly pay across the economy went up 2.3 per cent during the year too while those employed in manufacturing over the past two
years to September increased by 7000 to 247,000, according to the Household Labour Force Survey. At the start of the year the success of our economy was being determined by the success of our dairy, meat, logs and other commodities. In effect they were setting the level of the NZ dollar. Our terms of trade were at heights not seen for a generation, amplified by a torrent of money printing in the US, Japan and Europe which depressed the value of those currencies. A NZ Treasury paper in 2005 noted this was hardly new, saying “..the exchange rate has tended to move in the same direction as overall commodity prices, smoothing the impact on the New Zealand dollar prices that our exporters receive.” In the face of such a major challenge, manufactured exports held their ground. Of the total exports of all manufactured goods valued at $42,038 million (including dairy, processed meat, seafood, and wood pulp) for the 12 months ended September 2014, manufactured commodities and elaborately transformed goods accounted for over a third, $15,738 million. Two major areas dominate in this non-commodity area: food and beverages exports which, excluding dairy, meat and seafood, were worth $4,154.5 million, and industrial plant and equipment exports ($2,603.8 million). The bare numbers show only painstaking advances, and not making much of a contribution to the government’s target for exports to achieve 40 per cent of GDP by 2025. In exchange rate adjusted terms they represent steady progress and a remarkable result.
But with a more encouraging currency and more competitive interest rates how much more headway could have been made? Which leads to the question: What if the OCR this year had not been raised and the exchange rate thereby underpinned? Early this year EMA said any increase in the Official Cash Rate would be precipitate, unjustified and speculative. It proved to be so. Inflation in New Zealand has all year remained stubbornly below the mid-point of the Bank’s mandated inflation target. But interest rates were raised, the carry trade encouraged, and our cross rates with the US and Australia remaining higher than otherwise, and shredded margins on our $10 billion export trade across the Tasman. Most economic commentators early in the year reasoned the present recovery would be similar to others, meaning it would be accompanied by rising demand and increasing inflationary pressures. This time it has been different. Other big factors are in play and they are new. China rapidly becoming our major trading partner represents one of them. (The Australia/ China FTA could not have come at a better time for Australia, with benefits for us as it helps lift their economy). Importantly, the price of oil has collapsed by 30 per cent with more to follow. The second round effect of this will cut more cost out of production and freight internationally. Deflation will become a more real threat than inflation, if not already, as is evident in Europe and Japan. China’s growth targets also continued to decline.
Kim Campbell
Importantly, the price of oil has collapsed by 30 per cent with more to follow. During the year a report NZ Manufacturing Sector: Its Dynamics and Competitiveness was published covering 15 high growth manufacturing companies. In passing it recorded that manufacturing accounts for 14.6 per cent of GDP, and is rich in skills, and highly paid employment and R&D activity. The companies profiled in the publication are all highly successful, a success they attribute to an intense focus on innovation, a willingness to re-invent themselves, invest heavily in R&D, and in skills and market development. Leading businesses such as these – including F&P Healthcare, Orion Health and Gallagher - demonstrate what it takes to become a successful manufacturer in New Zealand. They are showing how others too can break free of the forces beyond their control, including the currency. In doing so they are blazing the trail for New Zealand as a whole, which is that to be successful New Zealand must become a world champion at innovation and the best place anywhere to undertake R&D. www.nzmanufacturer.co.nz
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NZ Manufacturer December 2014
THE YEAR THAT WAS
Opportunity is missed by most people because it is dressed in overalls and looks like work. -Thomas Edison
XPO’s role in business growth Trade Shows play a significant role in the growth in business across the country. A face to face platform to taste, feel, smell and sight the latest business innovations, products, services, expertise and methods to grow your business to new levels.
No wonder then that the tagline for NZ’s largest trade exhibition organiser, XPO Exhibitions (XPO), is “Showcase. Educate. Sell.” Tony Waite, National Events and Sales Director talks to NZ Manufacturer about the XPO’s position in the New Zealand business environment, 2014 in business and their activities in 2015. How has XPO found 2014? 2014 has been a very busy, exciting and rewarding year indeed! We expanded our portfolio through the purchase and acquisition of the Haley Media portfolio of trade events. We launched and sold out in record time a brand new event, buildnz | designex Canterbury, which we’re excited to confirm will be a regular fixture in our calendar going forward. Concurrently we’ve been investing in exciting new smartphone lead retrieval technology that will exponentially enhance both exhibitor ROI and visitors’ event experience. New technology is to be launched early in 2015. Across the shows we have seen increased visitor attendance at each and every one of the 6 events we ran in 2014. Some of those increases are the highest in 10 years, and to top it off we have won, for the second year running, best in class industry awards from the Exhibitions & Events Association of Australasia. (Deep breath, exhale!) What do you consider to be XPO’s prime role in the business community? XPO’s trade events provide effective, engaging and dynamic forums that allow industries to connect and grow, and, in doing so, foster the growth and development of many NZ businesses. Everything we do from sales, to industry led seminars to event partners & associations, to special on site features and VIP programs, are all developed and managed with one thought in mind: to deliver a positive, rewarding and worthwhile experience for exhibitors and trade visitors alike. To validate just how important our role is for the business community we recently commissioned an independent Economic Footprint Impact study of XPO’s events. This study has highlighted the impact our trade www.nzmanufacturer.co.nz
shows have on the local economy. The report is soon to be released but, topline, XPO’ events contributed $7.3m in regional GDP (think business tourism and event investment), and that number excludes the millions of dollars in trade sales made on site and post show for companies exhibiting at our events. Trade shows provide an ideal platform for businesses to get ahead. Can you expand on this? Simply put, Trade Shows are the ideal platform to Showcase, Educate and Sell. There is no better way to reach your target market to Showcase your product or services, Educate your customer or industry on best practice and to sell directly to a quality and qualified visitor. Our events aren’t about the complimentary goody bags or the free samples. They are about generating real business leads and real growth, sharing knowledge and best practice, and providing the very best platform in which to meet new and existing customers, identifying new opportunities that take your business to the next level. One particular visitor from buildnz | designex Canterbury quoted his experience as “life changing”. That’s the kind of comment that assures us that what we do here at XPO is truly outstanding! How does XPO Exhibitions see business in New Zealand? NZ is a fantastic place to do business and we easily punch above our weight when it comes to business success, whether that be through sales, innovation or education. You only have to attend one of our events to know this is true.
NZ is a fantastic place to do business We have many world first innovations, and product launches onsite. Businesses that are commanding the
attention of the world stage - and many are contributing significant export revenue for the nation. Do you work in association with overseas exhibitors and speakers for specific trade shows? Each of our trade shows have a growing international presence, whether it be from exhibiting companies or industry associations. Recent examples of new international industry associations joining us at NZ events include the Australian Institute of Packaging (AIP) at Foodtech Packtech this year, and new discussions are underway to partner with Australian exhibition organisers running similar sector shows across the Tasman. I see that XPO Exhibitions won for the second year running a prestigious award recently in Melbourne. You must be doing something right? We certainly hope so! We have recently been awarded 2 International awards at the 2014 EEAA (Exhibition & Events Association of Australasia) Awards for excellence including, Best New Show (consumer or trade) in Australasia and Best NZ Show (consumer or trade) for our Canterbury buildnz | designex show. Being internationally recognised alongside the worlds’ largest exhibition and event organisers as a leader in best practice is a signal to the industry that Kiwis produce award winning events that sit on a level with the best in the world. Many of our competitor organisers across the Tasman have large teams, often numbering in the hundreds, and are stock market listed entities with access to significantly more resources than ourselves – so it makes the wins even more special. We are immensely proud of what the XPO team have achieved and it provides surety to our exhibitors and visitors that XPO’s events are delivering the very best. XPO Exhibitions plays a significant role in the resurgence of trade shows. This must be most satisfying for you? I think it comes down to the team and our passion for the industry. We love seeing businesses prosper from their
Tony Waite.
attendance at our events! We know that Trade events are even more important given the saturation and noise of other marketing channels and the cut through of doing business face to face. Our challenge is to overcome the old perceptions that trade shows are about men in old suits, and bad shell schemes – our events are actually reinvigorating industry. You only have to look at the event activation strategies we fulfil onsite and the multi-media awareness campaigns we implement to attract industry visitors to our events. The challenge is to continue to motivate more marketing spend from companies each year into trade shows – perhaps redirecting their spend from less effective, traditional media or marketing channels. XPO Exhibitions provide trade shows across a wide range of business activities from food to design and hi-tech development. It must be pleasing for you that these shows provide a venue for apprentices, trainees, graduates and senior students to determine what the market has to offer, especially in view of their planning for their future – the place they would like to work, the profession they would like to pursue? Education, and the sharing of industry knowledge and information, is an important part of the mix for any XPO event. To think that a visitor who has attended one of our events and has made their future career decision partly on what they saw, experienced or felt at one of our events, is a very rewarding and privileged position to be in. Trade events are the perfect platform to attract the next generation of Manufacturers, Engineers, Food Scientists, Builders, Architects and many other career paths. *XPO runs a portfolio of 13 trade exhibitions across New Zealand. To find out more about their events visit www.xpo.co.nz
NZ Manufacturer December 2014
Far and away the best prize that life offers is the chance to work hard at work worth doing. -Theodore Roosevelt
Manufacturing in 2014 -Catherine Beard, BusinessNZ
Looking back at the various measurements of manufacturing activity over 2014, the overall picture is one that Kiwi manufacturers can be proud of. Despite challenges, the BNZ BusinessNZ Performance of Manufacturing Index (PMI) has continued to expand throughout the year. It was rising steadily in the first quarter, and while it did flatten out in the second quarter, it still remained in expansion territory (above a 50.0) and has been steadily increasing since. According to Statistics New Zealand’s Economic Survey of Manufacturing June 2014 quarter, that flattening out can mainly be attributed to meat and dairy manufacturing. The survey reported that “After adjusting for seasonal effects, the volume of total manufacturing sales fell by 0.7 percent. This was led by a 1.4 percent fall in meat and dairy product manufacturing. “The sales volume for total manufacturing, excluding meat and dairy, was up 0.1 percent in the June 2014 quarter. Sales fell for seven of the 12 manufacturing industries in this group. When the effect of price changes is included, the total value of manufacturing sales fell 1.9 percent ($481 million). This decrease was driven by a 5.7 percent ($485 million) fall in meat and dairy product manufacturing sales.” By October, the BNZ-BusinessNZ PMI (the most recent one at the time of writing this article) stood at a healthy 59.3, and the survey results showed employment at its highest ever level since the survey began in 2002. As the October report’s title “Staff Wanted” suggests, this provided another boost in the arm for the sector and sends a signal of confidence. In addition, the proportion of positive comments from manufacturers (68.7%) was well up on results from previous months. This all bodes well for a healthy end to 2014. As the Bank of New Zealand reported on 13 November, manufacturing labour market indications for the year ahead look positive, “NZ’s labour
market continues to strengthen, with annual employment growth clocking in at a very robust 3.2% in Q3, enough to nudge the unemployment rate down to 5.4% from 5.6%. Manufacturing employment has been flat over the past year, following solid gains in the year prior to that. Indications for the year ahead look better.” The 2014 Exporters Survey shows manufacturing exporters made up over 69% of respondents, so it’s very encouraging to see their ongoing positivity given they have been dealing with a very high NZ dollar for much of the year. However this seems to have come back against the US dollar in recent months, which is a welcome relief. The respondents’ overall outlook is positive, with 77% expecting their business profitability to improve in the next 12 months, and 19% expecting it to stay the same. More than half (53%) expect to employ more people in the next 12 months. The Exporter Survey also showed that Kiwi innovation is still a significant factor. When asked to “rank the top three success factors that make you most successful in overseas markets”, quality of product/service ranked the highest with 83%, followed by innovative product/service (61%) and customer service (54%). Those manufacturers who have invested in R&D and productivity improvements will be well placed to capitalise on good demand – which we expect to continue. The December PMI will not be out until January and the final 2014 quarter results for the Economic Survey of Manufacturing will not be out until two or three months into 2015, but we are expecting the official statistics to show an improved final quarter for 2014.
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THE YEAR THAT WAS New life in Indian economy Richard White, Trade Commissioner, New Delhi
The election earlier this year of a new government with a strong focus on economic growth is breathing new life and confidence into the Indian economy. Prime Minister Narendra Modi has launched a number of major initiatives including the ‘Make in India’ programme which aims to turn the country into a global manufacturing and exporting hub. Manufacturing currently contributes only 15 percent to India’s GDP, and the plan is to raise it to 25 percent through cutting red tape, developing infrastructure and making it easier for both local and foreign companies to do business. An estimated US$350-400 billion of private sector investment will be poured into infrastructure development in the five years between 2012 and 2017 to develop roads, ports, rail and airports. Mr Modi also wants to build 100 “smart cities” throughout India. Foreign governments have already committed major sums into infrastructure, e.g. Japan will invest US$35 billion into the Delhi-Mumbai industrial corridor while China will support development of high speed rail services connecting major Indian cities. Infrastructure development will extend into food processing, though the construction of mega food parks to help the industry grow from a current value of US$102 billion to US$260 billion by the end of 2015. India is the second largest global producer of horticultural products but only processes 10 percent of what it produces, and only 2 percent of fruit and vegetables produced in India are processed. The construction sector is projected to show an 18 percent CAGR over the next five years, this off a base of $441 billion revenue generated by the
sector in 2013 including $325 billion of residential construction. What does this all mean for New Zealand? India’s growth is not all about big numbers and large scale projects that can scare off smaller sized companies typical of New Zealand. Technology and services provided by New Zealand companies are successfully finding niches within this huge growth, for example in design and architecture, baggage handling technology in airports, kitchen appliances in top end residential construction projects, food processing and cold chain technology, and there is growing demand for New Zealand cleantech solutions. So the opportunities appear limitless, but the usual important caveats apply. Having an appetite for the challenges that India throws at you, spending time in the market to understand the business culture and identify appropriate niches, a long term vision, a willingness to adapt products and business models and finding the right partner are all key ingredients to India success.
Technology and services provided by New Zealand companies are successfully finding niches within this huge growth. www.nzmanufacturer.co.nz
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NZ Manufacturer December 2014
Even if you are on the right track, you’ll get run over if you just sit there.
THE YEAR THAT WAS
-Will Rogers
The Heavy Metals Engineering Industry Dr Wolfgang Scholz, Director Heavy Engineering Research Association (HERA) The New Zealand heavy metals engineering industry overall had an outstanding year of growth. The 12 monthly rolling totals for heavy steel usage in NZ end of September stood at 151,000 tonnes p.a., while a year earlier it was 130,000 tonnes, an increase of close to 16%. However, the fact remains that the industry is still around 20% below its October 2008 pre-GFC peak of 179,000 tonnes of heavy steel usage – so there’s room for further growth. Looking specifically at sub-sectors, steel construction was the winner with considerable market share growth particularly in multi-storey construction in Canterbury, where market studies indicate that 70% of buildings currently under construction are going up with a structural steel frame. The New Zealand steel fabrication capacity discussion continues but with less intensity. Main clients are realising that the industry is responding to increases in demand by putting more highly efficient plant in with expanded capacity. They also recognise the capacity reserves by the industry with potential for multiple shifts, something which can be done with relative ease in the factory-based steel construction environment.
No doubt the year’s biggest industry achievement was the introduction of the Steel Fabrication Certification (SFC) scheme in a joint effort between HERA and Steel Construction New Zealand (SCNZ), and industry members. In a short time, eight New Zealand steel fabricators have achieved the SFC and ISO 3834.2 certification. This new scheme raises the bar by providing independent, expert certification of New Zealand steel fabrication companies. The scheme ensures participating fabricators have appropriate personnel and quality management systems in place, meeting national and international best practice standards giving assurance to its clients that indeed the expected quality is being achieved. The general and not steel-construction focused sectors of our industry had a more mixed year. Industry feedback indicates that especially companies with export portfolios have had a tough year and some had to retrench and lay off staff. However, as the 2013/14 statistics of the heavy engineering export collective shows, exports despite the high exchange rate were up by 4% and some members indicated they could have gone one better if they would have had more easy access to qualified staff.
And looking ahead, industry confidence is high with particularly the construction industry pipeline prediction indicating further construction-related growth for at least the next three to four years. The international steel price development will likely not lead to major steel cost changes, providing a predictable commercial environment for the most significant material input. This positive demand prediction, coupled with the industry’s attitude towards innovation, will provide the required framework for industry members to move forward with confidence and invest further in their future.
NZ Manufacturer December 2014
When writing the story of your life, don’t let anyone else hold the pen.
11
THE YEAR THAT WAS
-Harley Davidson
Exciting opportunities in Turkey Turkey continues to offer exciting opportunities for New Zealand businesses. Not only was bilateral trade at an all-time high of US$173.8 million last year, but relations are strengthening between New Zealand and Turkey with the commemoration next year of 100 years of ANZAC. The Turkish economy continues to prosper with 4 percent growth in 2013, and 4.3 percent in the first quarter of 2014. There is a growing middle class hungry for products and services. Istanbul alone is home to 17 million people. Organic products, healthy food supplements and sophisticated
food and beverage products show around 20 percent growth rate in the last five years.
from Bulgaria to the Chinese border – in other words from Eastern Europe all the way down to Asia.
With Turkey’s unique geographic position straddling both Europe and Asia, the country is increasingly becoming a hub for multinationals supporting the Middle East, Europe and Africa.
Turkey has started to become a major world player in a number of sectors. It is:
Political unrest in parts of the Middle East is affecting exports, yet in 2013 exports reached US$151.7 billion. GDP per capita is now $US10.782 and increasing year-on-year. Turkey manufactures 60 percent of all its industrial goods in an area stretching
• the second biggest flat manufacturer in the world
glass
• the fifth biggest automotive manufacturer in Europe • the eighth largest shipbuilder in the world and fifth in mega yacht manufacturing • the largest manufacturer of durable goods in Europe. While trade between Turkey and New Zealand is increasing, it is off a fairly low base. New Zealand’s traditional exports of butter and other dairy products, raw skin and aluminium have been the mainstay of our exports. But over the last three years we are seeing an increasing number of value-added products in sectors such as health, infrastructure, agritech and marine. Infrastructure investment and public-private partnerships offer a number of opportunities – including the introduction of twenty new health campuses with up to 3000 beds each, which are being built all over Turkey. The majority of New Zealand companies active in the market have
Goskin Duman, Country Manager – Turkey
Food producers take note
Inquiries from New Zealand businesses are on the rise which is pleasing to see, as this market and its opportunities become better known in New Zealand. New Zealanders tend to be very well received in Turkey. As a number of Turkish business people have commented, Turkish companies like dealing with New Zealand companies because they can be trusted to do what they say they will do. Turkey’s business culture, like its geographical location, lies on a spectrum between East and West. If you’re looking to do business in Turkey you must be aware that, as is the case in China, people generally don’t have an appetite for risk. They prefer to do business with people they trust, like and respect. Doing business in Turkey involves spending time understanding and developing relationships with other businesses. NZTE has recently opened an office in Istanbul to help New Zealand firms grow bigger, better and faster, so please don’t hesitate to contact us if you want to find out more.
Tony Robinson, Trade Commissioner Singapore
As the shipping and logistics hub of Southeast Asia, Singapore is a gateway to the Association of Southeast Asian Nations (ASEAN) region. This makes it an ideal base for the South East Asia/Asia Pacific operations of many multinationals and New Zealand businesses operating in the region.
Singapore is New Zealand’s 6th largest trading partner and 13th largest market for F&B products with exports valued at NZ$546 million. There is very little domestic food production in Singapore and a heavy reliance on imports with up to 90% of their food sourced internationally.
Singapore is a highly developed market for food and beverage products, with affluent and sophisticated consumers looking for quality products and value for money.
There is growing demand for high-quality frozen meat, seafood, and convenience foods, as well as a growing consciousness around sustainability, organic products and functional foods.
There is growing demand for high-quality frozen meat, seafood, and convenience foods.
a distributor, while four New Zealand companies have a physical presence or staff in-market. Fisher & Paykel Healthcare, Orion Health, Zespri, TAIT and Sourceworld are among the most active.
The food and beverage opportunity is being given a boost by the Singapore government’s current drive for increased productivity. Compared with its low-cost neighbours, Singapore is a more expensive place to operate from, and this contributes to a drive for smarter, higher-value manufacturing. So food and beverage goods and services that help drive productivity are of increasing interest. Opportunities in Singapore for food manufacturers are also driven by changes in consumer attitudes. Sales of
packaged food and ‘healthy’ products have increased as a result of consumers’ increasing consciousness about food safety and hygiene. Consumers are interested in branded, premium and added-value goods – crucial ingredients for a successful product launch in the country. Wealthy, time-poor consumers are looking for new processed and convenience foods, which can be sold at the premium end of the market. With growth opportunities available, the onus is on New Zealand food and beverage manufacturers to not look to export what they currently produce but rather deeply understand the Singaporean consumer first. Invest in the time to, amongst other things, determine purchase and consumption habits, pack size preferences, channels to market, and being clear on what problem is being solved for the consumer and in a way no one else is doing. New Zealand has very established commercial links with Singapore, a
broad range of food and beverage products currently b e i n g exported to there and a reputation for food safety and innovation. Meanwhile, Singapore has a growing resident and tourist population which depends on imports for the bulk of its food supply. Trade flows well with an established Free Trade Agreement in place between the two countries and with Singapore being a springboard into the rest of ASEAN. Combined, these make Singapore a bright prospect for food and beverage manufacturers who can deeply understand the needs of prospective customers and collaborate with suitably matched partners in market to help meet Singapore’s growth opportunities.
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NZ Manufacturer December 2014
THE YEAR THAT WAS
A professional is someone who can do his best work when he doesn’t feel like it. -Alistair Cook
NZ companies part of Indonesia’s growth Tim Anderson, Trade Commissioner Indonesia The ever-changing skyline in Jakarta is a constant reminder that the development potential in Indonesia - ASEAN’s largest economy – is fast being realised, and New Zealand companies are playing their part. Beca’s engineers have been in Indonesia for more than 40 years and around one third of the central Jakarta skyline has been built with input from Beca. They have numerous building projects on the go, for example the Signature Tower which will be the southern hemisphere’s tallest building at around 115 levels, with 450,000 square metres of commercial space.
Around one third of the central Jakarta skyline has been built with input from Beca. New Zealand’s companies are also well poised to take advantage of the growth in aviation infrastructure. Glidepath provided the baggage handling system for the recently opened Surabaya Airport Terminal 2,
the terminal built to meet growing demand in Indonesia’s second biggest city. Indonesia has 799 documented airstrips, including 233 airports (29 of which are for international traffic) and this is expected to grow to 299 by 2020. However, many of Indonesia’s airstrips across the archipelago are in remote “hot and high” conditions making flying conditions challenging – perfect for Pacific Aerospace’s P-750 XTOL extreme take-off and landing aircraft. The Indonesian State Planning agency recently noted that passenger movements across Indonesia are expected to reach 350 million by 2025 and the infrastructure investment required to meet this growth in numbers is estimated to be over $US15 billion. The current terminals at Jakarta Soekarno-Hatta Airport (known as Soeatta) – named after the first Indonesian President and Vice President – were designed to handle 22 million passenger movements.
Last year, more than 60 million went through the airport which is more than Changi in Singapore and more than 4 times that of Auckland International Airport. Terminal 3 is under construction which will add capacity for a further 40 million passenger movements. By the time it is finished in late 2015 / early 2016, it is expected that passenger numbers will have grown by a further 10-15 million, so further expansion will be required and is being planned. An additional 66 airports are also likely to be built or upgraded in the next five years. New Zealand companies are also involved in geothermal power project facilitation. Where are the other opportunities? Well, the Indonesians know their onions and this year, New Zealand will supply 85% of Indonesia’s onions (20,000 tons) – no white onions are grown here. Beef exports to Indonesia are bouncing back following the loosening of quota system. There are
also other opportunities ranging from fruit juice concentrates to bee sting venom extracts. Indonesians are very brand conscious and like to be seen following the latest trends, so how can New Zealand take advantage of this given we don’t have many truly world brands? Perhaps New Zealand is the brand. As NZ Inc develops awareness in this market, we see potential for some strong country brand values to develop for our products and the New Zealand Story has been very well received already – it’s a great start.
Significant challenges face primary industries A recent investigation into the future capability needs of the primary industries has clearly spelt out the significant challenge that exists.
Andy Somerville, CEO Primary Industry Capability Alliance.
They (the primary industries)will need a higher proportion of well-qualified staff – with post-school education and training.
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The primary industries - including pastoral farming, horticulture, fishing, forestry and the associated enterprises such as manufacturers and marketers accounted for 350,000 or 16% of the national workforce in 2012. A report commissioned by the Ministry for Primary Industries and industry groups that was released in April 2014, shows that in order to meet their growth targets these industries will need to maintain this proportion of the workforce, taking their total worker numbers up to 403,500 by 2025. But more significantly, they will need a higher proportion of well-qualified staff – with post-school education and training. In particular, more specialist skills will be required in science, marketing, engineering, IT, robotics, automatic processing and technical and management support.
Leaders of these industries are confident they can offer interesting careers for young people. Their challenge is to communicate this to young New Zealanders. With this in mind, several organisations are backing the new Primary Industry Capability Alliance – known as PICA. MPI is a partner in PICA, along with DairyNZ, Beef+Lamb, Young Farmers, Primary ITO, Lincoln University and Taratahi. A number of other organisations are looking to join to assist in this collaborative approach. PICA has started by developing a strategy to support schools in providing clear career options for students. This will be a major focus for PICA over 2015. The PICA alliance members will join forces at the Careers Expo to provide
an industry wide message about the breadth of exciting and rewarding jobs available. The PICA stand will provide collateral to educate the Expo attendees about the wide variety of career paths available in the primary industries. • For further information about PICA, contact Andy Somerville phone 027 289 7162 or email andy.somerville@ pica.org.nz • The report, Future capability needs for the primary industries in New Zealand, by Infometrics and Nimmo-Bell, is available from the MPI website • For further information about the Careers Expo please go to www. careersexpo.org.nz
NZ Manufacturer December 2014
A man should never neglect his family for business. -Walt Disney
13
THE YEAR THAT WAS
Looking back at 2014 and ahead to 2015…GETBA East Tamaki is Auckland’s largest industrial precinct. This significant manufacturing and distribution hub continues to grow at a rate higher than the regional average and provides 30,000 jobs. Business NZ’s Performance Manufacturing Index has shown continued growth since mid-2014, and industry-leading local manufacturers such as Fisher and Paykel Healthcare and GMP Pharmaceuticals are evidence of this. GMP Dairy, a division of GMP Pharmaceuticals, opened a second canning line at GMP Dairy’s plant in East Tamaki in September. Fisher & Paykel Healthcare have had another strong year and also feature in the TIN 100 (Technology Investment Network) leading technology businesses. Companies such as Bobux International and Alpha Laboratories have grown their exports, despite the challenge of the high NZ dollar. It is heartening to see the 2014 Exporters Survey undertaken by Export NZ shows exporters planning for growth, which bodes well for 2015. It’s clear that manufacturing is changing and that there is more emphasis on technology and innovation. Investment in new plant and capital equipment, which has historically lagged is moving in the right direction, up 9% on an annual basis. We have seen several local companies increase their focus on R&D. East Tamaki businesses including SIKA Technology Ltd, Tandarra Engineering and Technopak Limited have been recipients of R&D funding this year. SIKA Technology is an example of the change in manufacturing, moving from a traditional foundry business to a company that specialises in the design and manufacture of high quality, innovative cast aluminium solutions. In August Fisher and Paykel Appliances, acquired by China’s Haier in 2012, sought some 40 workers for research and
development after opening a new design centre at its East Tamaki headquarters. It is now one of Haier’s five global centres of excellence for product development in the group. Nautech Electronics which recently celebrated its 25th anniversary won the Excellence in Innovation category in the Westpac Auckland South Excellence Awards this year. They are an example of companies designing and producing quality niche products. Their latest success story is their new Alitrax race lights system for motor racing circuits. Export sales are steadily increasing with interest from around the world.
Artline, Trio, Steel and Tube, Open Country Dairy and Metroglass. Things are looking good for 2015, with falling petrol prices, low inflation, and we are seeing increased business confidence and plans to employ more staff. Housing affordability however is likely to continue to be an issue at least in the short term and the low dairy payouts will have an impact, but most likely predominantly in the regions. The regional disparity is a challenge for the government. With economic woes in foreign economies pointing to continued inward migration, the increase in building consents is likely to
continue which is good for the construction sector. Companies such as NALCO and MiTek NZ Ltd are experiencing an uplift in activity and are positive about growth over the next few years. So from the business perspective 2015 is shaping up to be another good year, with low inflation, interest rates held the current historically low level, GDP growth forecast at around 3% and the NZ dollar finally back below the 80c mark. However there is always a flip side and that is the large drop in the price of milk based export products and the revenue that this will take out of the economy.
Another local company Medical Plastics which specialises in accelerated product development, adding value through design and development of niche products, cites innovation and speed to market being vital to maintaining business sustainability and providing a competitive advantage for clients. East Tamaki has a number of food and beverage companies taking advantage of The FoodBowl, a state of the art semi-commercial pilot plant, located close to Auckland Airport, created to support the growth of food and beverage businesses, by providing both facilities and expertise - a cost effective and low risk way to develop and prove initiatives through commercial pre-production. We have seen a growing interest in sustainability. Bell Tea and Coffee Company for example have recently gained Rata Sustainability Certification. East Tamaki continues to out-perform other industrial property areas, and as such is an attractive location for businesses. Some recent additions to Highbrook Business Park include Pelikan Jane Tongatule, General Manager, Greater East Tamaki Business Association Inc. (GETBA)
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NZ Manufacturer December 2014
MANUFACTURING TECHNOLOGY
A man should never neglect his family for business. -Walt Disney
Bending the costs downward Bert Zorn, Managing Director, Schwarze-Robitec There are many kilometres of pipe on oil platforms, complex chemical plants, refineries and large power stations. All feature similarly large stretches of pipeline. In view of these quantities, pipe fitting plays a special role in plant and pipeline construction; the conduit system must be installed quickly and efficiently. Moreover, these constructions are essential for the function and efficiency of the plants. Challenges of pipe bending A cursory glance at an oil pumping facility clearly shows the central challenge: The pipes form a highly complex network and the conduit system inevitably includes many bends. As such, a large number of different formed pipe bends in a variety of dimensions, forms and angles are used in the piping installation. These components need to be welded to the straight, long pipes on the construction site to form the desired pipeline. As a result, these processes represent considerable costs in the construction of these plants. First, the curved elements must be produced in advance, is some cases at an off-site facility. Second, these components must be transported to the work-area and welded to the corresponding pipes, including the associated cost of logistics that can generate additional costs. Additionally, it is often vital to check every finished weld joint for compliance to industry standards or special customer requirements. The processes of using ultrasound or x-ray technology to inspect the welds can also cost a great deal of time and money. It becomes clear that the many pipe bends and the processes involved to produce a complete assembly can offer a tremendous potential for savings in plant construction – if ultimately, many of the in-situ welded
bends could be replaced by pre-bent pipelines that are able to be fabricated to the exact specifications of the construction site. In order to meet these production requirements, there are essentially two options: Cold and warm bending. With warm bending, the pipe is initially partially heated at the desired bend location. Through the factors of temperature and pressure, the material begins to flow. The disadvantages of the warm bending process are that it takes a long time to form the material and the energy consumption used in the production process is very high. Time and Cost Advantages of Cold Bending In comparison to the option of warm bending, cold bending offers several advantages, because this procedure eliminates the energy-intensive and protracted heating process.
With cold bending, materials can be processed that cannot be bent warm. Only the properties of the material are what set certain limits to the plasticity. Otherwise, the pipe can be shaped into almost any form. For example, with the CNC 320 HD bending machine from Schwarze-Robitec, the cold bending of a pipe with a nominal diameter of 12” NPS takes only around one minute – in contrast to the 30 minutes at least that would be needed for the warm bending process. In addition, there are other advantages. For example: With cold bending, materials can be processed that cannot be bent warm or for which heating is simply not permitted because it changes the microstructure of the material. As a result, cold bending has therefore only two real constraints: The space available in the workshop and the length of the machine. If during the bending process the long pipes do not axially collide, they can be processed into complex shapes directly in one pass. Additional positive points of the cold bending process are: The
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pipe is clamped in an index head and held in place by means of a collet in the transport unit and index head. After the first bend, it is directly transported forward and rotated as required. As a result, three dimensional pipe systems can be created very quickly without a single weld joint. When the bending radius is critical What is particularly important in plant construction is the achievable bending radius of the pipe – and it is precisely in this area that the mechanical engineers from Schwarze-Robitec have exceptional experience. The machines allow bending of pipe with very small radii, even when the pipes are very large and thick-walled. What does this mean in regards to plant construction and why is this characteristic so important? The critical advantage of the ability to produce a small radius becomes apparent when installing the pipe: the tighter the bend of the pipe, the less installation space is required – ultimately, the entire pipe system or platform requires less floor area. Moreover, a great deal of pipe can be saved with a small bending radius. The saving with a 180-degree bend and a bending radius of 1.5x D is around 3.5 metres compared with a conventional 5x D bend – on larger production facilities, this small value naturally offers a huge effect on cost reduction. Only recently, the German mechanical builders constructed and delivered a machine to a customer in the refinery and offshore oil industry. The machine is able to process pipes up to 16” NPS with a radius of 1.5x D.
As a result, a 16” Schedule 40 (323.5 by 10 millimetres) pipe, for example, can be bent with a radius diameter of only 485 millimetres – all of course in observance of the required standards (for example in respect to reduction of the wall thickness and ovality). Focus on quality The technology developed by Schwarze-Robitec is always based on a very rugged machine frame. It reliably resists the huge forces that arise during bending and has abundant power reserves for the clamping functions. In addition, the issue of quality control is particularly important for the specialists at Schwarze-Robitec. For example, the SpringMatic system can measure the pipe bend while still in the bending machine and correct its curvature as necessary. The measuring and correction process takes only a few seconds. As a result, even pipes with unknown properties or widely fluctuating quality can be processed directly with a high level of accuracy. The machines in the CNC-MW series from Schwarze-Robitec also ensure additional productivity in the bending process. The reason for this is that setup times are minimal. To achieve this, the production facilities use stacked tooling with various nominal diameters constructed one above the other. If a new batch of pipes with a different nominal diameters are used in the production sequence then only the bending mandrel and collet insert need to be changed. This process takes only a few minutes. Consequently, the current bending process is able to continue with unchanged speed and
NZ Manufacturer December 2014
Yesterday’s home runs don’t win today’s games. -Babe Ruth
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MANUFACTURING TECHNOLOGY
VISI CAM software allows toolmakers expansion accuracy. Likewise, the processing of flanged pipes is unproblematic. Even before bending, the flanges or sleeves can be welded on. The sophisticated control of the machine and its stable structure ensure accuracy. The stable structure of the machine prevents twisting and the pipe therefore going out of specification, or the flanges ending up at the wrong angle. Complete know-how Naturally, the structure of these specialised machines is heavily dependent on the specific requirements of the customer. Schwarze-Robitec therefore supplies customised solutions. An important criterion in the construction of the machine is also the energy efficiency of the production facility. At the same time, the experts at Schwarze-Robitec have a wealth of practical experience with the different pipe materials and as a result, with the corresponding tool and machine requirements. With this complete know-how, Schwarze-Robitec develops answers for the most difficult production jobs. As such, the experts have previously constructed production facilities with a pipe length of over 40 metres and integrated high-rack pipe storage into the automatic pipe feed to the bending machine. Of course, the machines and their control have the latest EDP networking, quality control functions and simulation technology. Not be underestimated is the advantage that is closely bound to the promise “Made in Germany”: the reliability of the production facilities. In recent decades, Schwarze-Robitec has delivered over 2500 cold bending machines to customers on all continents. Many machines supplied thirty or more years ago are still in use today. Here, Schwarze-Robitec guarantees spare parts availability over many years; for the entire operating life of the machines. In addition, international customer service is available – for maintenance on-site or for the optimisation of production processes. Bending complex pipelines quickly and accurately which results in saving considerable time and expense with installation – these are the central advantages of the Schwarze-Robitec technology. In view of increasing international energy demand and the associated investments in an efficient, state-of-the-art manufacturer infrastructure, the German mechanical engineers are expecting great market opportunities for their bending solutions.
all their parts are stored in a database, so ordering parts for jobs is handled as a simple parts and cutting list.
VISI software was at the heart of a mould maker’s recent move to new 6,500 square foot premises. KA Tooling say VISI gave them confidence to invest in additional CNC machines and move to larger premises to meet the growing demand for their custom made injection mould tools. According to Director Alex Hill, VISI ensures jobs are finished on the machines much faster than with their previous software. “When we first installed VISI the efficiency gains in terms of speed and accuracy enabled us to take on more work, but we were becoming limited by the size of our premises and number of machines.” They recently moved to their new larger more efficient premises, Alex says they utilise VISI to the full – four seats of VISI Modelling and VISI Machining, a VISI Viewer package, and a seat each of VISI Mould, Electrode, Flow-Lite and Compass Technology. “We maximise technology to reduce costs and improve turnaround, especially in the aluminium market, and VISI enables us to achieve this with top quality moulds. The days of producing aluminium tooling to get the customer’s product to market and then replacing it with a P20 steel tool after around 50 shots off it, have gone. We make aluminium tools where customers produce over half a million mouldings.” As KA Tooling now manufacture more than 100 high precision tools a year, Alex Hill says VISI’s Compass Technology is particularly important for automating the process of manufacturing bolster sets. “It’s rules based machining, by setting parameters for different features within a bolster plate. Thanks to Compass, we’re now using just one machining centre, rather than two, to produce bolsters. “We offer an expedited service – customers come to us because we can offer a two week turnaround from start to finish, whereas most companies quote four to five weeks. So we can’t afford to have machines tied up with bolster plates for two or three days when we’ve only got a week to
“Then we generate 2D drawings to send to customers, and VISI also exports 3D models in a number of native CAD formats if the customer requires those. When everything’s been approved, the job is issued to the three operators who keep our nine machines running.” produce the mould tool. “The bolster assembly has all the features attached to each individual plate, and instead of each plate being programmed separately, we just hit one button and the machining file is ready for the whole bolster set.” Depending on the complexity of the tool, mould designer Director Kien Chung will run a VISI Flow-Lite plastic flow from simulation to analyse how the part will mould, highlight the best gate location, and check for weld lines, air traps, and if there are any gassing issues. “We use Flow-Lite where we need to produce more demanding technical tools, as it gives us all the information we need to assess a component’s mouldability. “Otherwise, I go straight to VISI’s analysis features to check aspects such as draft and wall sections prior to tool design. I don’t want to design the tool and then find the wall section’s too thick or too thin, or there are no draft angles.” Using VISI has cut their average tool design time by half – from two days to less than a day – and means KA now undertake around 90 per cent of designs in-house. “Before we installed VISI Mould we were only creating around a quarter of the designs ourselves. It also gives us greater efficiencies in ordering parts; we’ve got standardised lists from suppliers,
And he says VISI 3D machining is now an essential part of the manufacturing process. The software creates intelligent toolpaths on even the most complex 3D parts. Dedicated high speed milling techniques and built-in smoothing algorithms create highly efficient NC code, reducing cycle times, improving productivity, and continuously producing their high quality mould tools. “We have a greater variety of 3D machining strategies now. Using these in conjunction with the powerful rest area machining options reduces both fresh air machining and programming time.” Alex Hill concludes by saying integration between the VISI modules also aids efficiency. “We know there can’t be any data input error as there’s just the one system handling all aspects of analysis, design and machining, including electrode production. After installing VISI we realised we could benefit from using VISI Electrode, so invested in a Mitsubishi EX spark eroder with tool changer. It’s invaluable for creating and managing electrodes and their holders for manufacturing the detailed and hard to machine features on our mould tools. And the comprehensive holder design, simulation and collision checking ensures our electrodes will operate correctly first time.” For information on VISI CAM software contact the NZ agent RPMcnc. sales&rpmcnc.co.nz Ph Auckland 265 0380 Christchurch 960 0892
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18
NZ Manufacturer December 2014
LIFE CYCLE ENGINEERING
Happiness is not something you postpone for the future; it is something you design for the present. -Jim Rohn
How Life Cycle Engineering can make manufacturing more competitive By Professor Sami Kara, Director of Postgraduate Research, Faculty of Engineering, University of New South Wales Manufacturers in New Zealand and Australia are hearing a constant refrain: to remain competitive in the global manufacturing marketplace, companies must become more productive with fewer resources and must find ways to differentiate themselves from the competition. As well as becoming more ‘lean’ there is increasing pressure to become more environmentally sound. The answer, according to our research at the University of New South Wales (UNSW), School of Mechanical and Manufacturing Engineering, could be Life Cycle Engineering (LCE). LCE is an approach to product design and manufacture that takes into account the entire product life cycle from beginning to end. With increased resource scarcity there is an opportunity for manufacturers to minimise their environmental impact and improve return, by controlling the entire product life cycle. This is a dramatic departure from the traditional manufacturing approach, which generally concerns itself with the product’s life cycle only up until the end of its warranty period, which has resulted in a disposable society, where many products are simply sent to landfill. The world has limited resources to sustain production. Approximately 89 million barrels of oil and liquid fuels were consumed per day worldwide in 2011 . By 2030 China alone is expected to consume 17.5 million barrels per day . Limited copper resources will cause similar issues. With this increased pressure on resources, manufacturers will eventually have to find alternatives to using high levels of raw materials. If products were designed from the beginning to be dismantled at the end of their lifespan, it would make the recycling process much easier and more cost-effective, and significant
resources would not be wasted. LCE would go some way to addressing this issue but to be truly viable it must also provide a tangible return for manufacturers, rather than simply using up more time and resources. Some companies have already found this balance and are reaping the rewards of LCE by changing their business model to a product service system approach. Life Cycle Engineering manufacturers money
can
save
Companies such as Fuji Xerox have been leasing rather than selling product for years and the model is now being adopted in other industries. Rolls Royce, for example, no longer mass-produces jet engines. Instead they are leased to airlines for a fixed period of time. When they reach the end of their life Rolls Royce collects the engines and re-manufactures them before leasing them out again. This minimises the need for raw materials, improves their cash flow and keeps production costs low. The benefits to the airline are lower up-front costs and reduced risk, due to service agreements being in place. Even for those companies that cannot lease their products, LCE can provide cost benefits. Many commodities that are sent to landfill still hold value in terms of re-manufacturing. LCE takes into account not only the raw materials used in creating products
but also the processes used. Changing certain processes can deliver significant cost savings to manufacturers without compromising efficiency or quality. For example, energy consumption is one of the most significant cost centres for any manufacturing organisation. Energy consumption has increased by approximately 30 per cent in the last decade and is likely to continue to do so unless manufacturers find ways to reduce it. This can be achieved via an incremental approach. For example, UNSW researchers conducted an efficiency audit that revealed an aluminium factory was leaving its energy-intensive ceiling fans running continuously. By implementing a control system that simply turns the fans off when they are not needed, that factory achieved a net saving of more than $100,000 and reduced its environmental impact. When it comes to product design, manufacturers must work with the designers to consider: what materials will be used; where they come from; how they will be delivered; what processes are required to make the product; how the product will be transported to the marketplace; how it will be used; and how it will be returned and recycled. Logistical changes also offer an opportunity for savings. Many products are made with materials sourced overseas. They are shipped here and transformed into products,
many of which are then shipped back overseas for sale. Sourcing material locally could be a more efficient option. Local materials may have a higher per-unit cost but do not attract a freight charge. Routes and schedules can be re-examined to make them more efficient. Ultimately, manufacturers and designers must work together to achieve a ‘cradle-to-cradle’ approach that results in products that are designed from the ground up to be efficient to manufacture, use and dispose of. How to make LCE a reality Because New Zealand is a free market, the impetus may need to come first from short-term legislation. This will only be a short-term catalyst however and, ultimately, LCE will only be successful if there is sufficient customer demand. In places like Europe and Japan LCE has gained momentum because there is simply no space for landfill, so products must be designed with their end-of-life disposal in mind. New Zealand does not face the same space issue, so there is less demand for LCE processes. However, the fact that manufacturing organisations can achieve significant cost savings and improved efficiencies means that adopting LCE processes is likely to keep the manufacturing industry alive even as competition from global players increases. LCE takes an incremental, iterative approach so small changes can be made and benefits can be realised immediately. The process of becoming fully LCE-ready can take as long as necessary to avoid unsustainable disruption in the organisation. The biggest barrier to unleashing the benefits of LCE is a lack of understanding. While environmental sustainability is a feature of LCE approaches, manufacturing companies stand to achieve cost savings and efficiency gains that can secure the future of the industry and the success of individual organisations. When manufacturers can look beyond just the four walls of the factory and begin to take small steps towards LCE, the benefits will quickly add up.
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NZ Manufacturer December 2014
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People inspire you or they drain you - pick them wisely. -Hans F. Hansen
Okuma machines provide accurate and reliable production Offering world class technically sophisticated solutions for defence and civil areas, Thales Australia has further advanced its precision capability with the addition of technically advanced Okuma Multi-tasking CNC Lathes and Vertical Machine Centres into its Lithgow Arms Factory. The new machines include two MB56 Vertical Machining Centres, two Twin Star LT2000 Horizontal Multi-tasking Machines plus one LU3000EX 2-Saddle CNC Lathe, complementing a number of other Okuma machines in this sophisticated plant. Used in the manufacture of complex components in bolt action civilian firearms, the new machines provide greatly enhanced efficiency, reducing the use of 3 – 4 machine operations to just one, with dramatic savings in production time with world-class precision output. Okuma machines were primarily selected for their advanced technology and capability however, Okuma’s high levels of after sales service, experience, knowledgeable personnel plus the reach back to the parent company in Japan through the Australian run company, were all major factors in the selection process, said Bruce Hutton
Thales Manufacturing Operations Manager. He also commented on the excellent relationship his company had with this outstanding high technology machinery supplier in Australia. Building on more than a century of Thales military manufacturing expertise in Lithgow, NSW, the new LA101 CrossOver rifle was released earlier in the year. It is the first civilian rifle to be designed and built in Lithgow for over 40 years, and is the only mass produced civilian rifle currently being manufactured in Australia. Aimed at the Hunting / Target domestic and international markets with strong export potential, the manufacture of this rifle is in many ways further enhancing Australian manufacturing capabilities with its modern tactical styling, high accuracy and extreme reliability. The LA101 CrossOver firearm is Australian designed, developed and manufactured with more than 92% Australian manufacturing content. The stock includes an integral moulded trigger guard and butt hook for improved prone hold and is made from the same advanced injection moulded nylon as used in rifles developed for the Australian Defence Force. Each military grade steel barrel is
cold forged and manufactured to the same high standards as barrels used in military rifles, ensuring the finished CrossOver Hunting / Varmint / Target rifle with modern tactical styling, has outstanding accuracy and reliability. Okuma’s Applications Engineer, Karl Corry, has a competitive shooting background and therefore a comprehensive understanding of the working of most firearms. As part of the turnkey project, this background helped with his understanding of the complex parts Okuma was tasked with setting up and machining on the LT2000 machine. “The parts in this project were some of the most dimensionally complex I have been involved in during my machining career and to see these coming off the machine completely finished and to the exacting tolerances was a great testament to the machines capability and the experience within Okuma to achieve this outcome,” he said.
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NZ Manufacturer December 2014
WORKSHOP TOOLS
The Pessimist complains about the wind. The optimist expects it to change. The leader adjusts the sails. -John Maxwell
A basic approach to machine tool utilisation Achieving maximum productivity and profitability in machining operations results from optimisation of the entire metalcutting process. The foundation of that effort is intelligent application of cutting tool parameters in combination with full utilisation of machine tool capabilities. There are two main components of effective machine tool utilisation. The first involves finding ways to maximise the amount of time the machine is available to cut metal, and the second includes tactics to make the most productive, reliable, and profitable use of that time.
Maximising available time Full utilisation of a machine tool must begin with maximising the time it is available to cut metal. Even though a machine is on the shop floor 365 days a year, its productive availability is much less. In the case of five-day, single shift workweeks, and counting time lost to holidays and other interruptions, there are approximately 1,300 or 1,400 machine hours per year available for production. Even so, the machine is not cutting metal during every one of those hours. Programming and setup consume a certain amount of time. To make that non-productive period as short as possible, manufacturers employ strategies that include offline programming and modular setup methods. Tool magazines and automatic tool changers expedite tool handing, another time-consuming necessity. Robotic work handling and pallet changers help reduce the time required to load raw workpieces and unload finished parts. Every hour saved via improved programming speed, faster setup methods, and streamlined tool handling and work handling is another hour that is available to machine parts.
There are common requirements when establishing initial cutting parameters for any machining operation. Depth of cut and feed rates must be chosen to avoid tool breakage, assure formation of desirable chips and limit generation of heat. Cutting speeds that are too high will cause tools to wear out too quickly, and speeds that are too low will not allow tools to function productively. Cutting faster generally will produce a workpiece in less time. But while the machining time is shorter, tool life also is shorter and tool costs will increase. More tools will be required to do the job and worn cutting edges must be indexed or replaced. The downtime resulting from tool changes boosts the costs of the operation overall. In effect, there is a tradeoff between faster and more expensive machining and slower and less costly operation. Consistent productivity and process stability lie in between the two approaches: insufficiently aggressive cutting parameters reduce costs until the tool no longer functions efficiently and productivity is lost, while increasingly higher parameters raise productivity until the tool wears too rapidly or breaks. In addition, the choice of cutting conditions depends not only on the characteristics of the cutting tools but also, in a large number of cases, on the capabilities of the machine tool. Different machine tools have differing limits of power, torque, rpm, and stability. The clearest limitation is power. Power ratings alone do not determine a machine´s capability for a specific application. A 60-kW machine tool would appear to offer more than adequate power, but if the intended manufacturing operation is, for example, producing 12 m-long, 3 m-diameter forging rolls, 60 kW is not as impressive.
Using time efficiently
The power required to cut a specific workpiece depends on the workpiece material and size, the depth of cut, feed rate and cutting speed. Power demand rises as cutting forces are multiplied by higher cutting speeds. Accordingly, high cutting speeds may require power beyond a machine´s power rating.
After implementing strategies to maximise the amount of time available to cut metal, manufacturers are challenged to use that time efficiently and produce as many parts as possible at the lowest cost. The key is to fully utilise the capabilities of the machine tool while the cutting edge is in contact with the workpiece material. Recognition of the machine tool´s limitations plays a role as well.
Additionally, extreme cutting parameters may have effects that exceed other machine tool capabilities. Excessively high depths of cut can create forces that are beyond a machine´s structural rigidity and vibration may degrade part quality. Similarly, overly high feed rates can produce large volumes of chips that may interfere with the cutting process or clog chip evacuation systems.
When planning to best use the time available, it is clear that some elements of the machining process cannot be changed. The end application of the machined part determines the choice of workpiece material, and the material´s machinability dictates initial cutting parameters.
To maximise the utilisation of a machine tool within the limits of its capabilities requires an intelligent, balanced approach in the development of cutting parameters. Generally, that involves reducing cutting speeds while proportionally increasing the feed rate and depth of cut. Utilising the largest depth of cut possible (recognising its effects on machine stability) reduces the number of cutting passes required and thereby reduces machining time. Depth of cut generally has little impact on tool life, but the effect of cutting speed is significant. Feed rate should be maximised as well, although extreme feeds rates can have negative effects on workpiece surface finish.
For example, the poor thermal conductivity of titanium alloys demands use of low cutting speeds and feed rates to minimise buildup of heat. Machine tool capabilities are also a given, because changing the machine is not usually an immediate option. Manufacturers recognise these factors when estimating production costs. However, significant differences between estimated and actual costs can result from inaccurate evaluation of machine tool characteristics and application of cutting conditions that cannot be sustained. www.nzmanufacturer.co.nz
When a manufacturer achieves a reliable combination of feed rate and depth of cut, cutting speeds can be used for final calibration of the operation. The goal is to utilise cutting conditions that offer both productive metal removal rates
NZ Manufacturer December 2014
It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change. -Charles Darwin
and process stability. The best combination of machine capabilities and cutting parameters provides a balance of tool costs, process reliability and productivity.
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WORKSHOP TOOLS
An environmentally friendly alternative for polystyrene While it is used all over the world as a light packaging and insulation material, EPS (expanded polystyrene) is a problem as waste. This is why VTT Technical Research Centre of Finland is currently developing an affordable and environmentally friendly alternative for polystyrene from PLA bioplastic, which is derived from organic sources. The annual production volume of EPS is 5–6 million tonnes per year. Usually this non-biodegradable material ends up on waste tips or is disposed of by burning, which results in compounds that are hazardous to health. PLA (polylactide) is a bioplastic made from renewable materials with the help of lactic acid. VTT is investigating methods of foaming bioplastics to make beads that are further refined into products such as insulation sheets, using methods typical of EPS manufacturing processes.
Future strategies While recognising that machine tool capabilities can impose limitations on the machining process, changing the machine is not a simple, fast or inexpensive solution. It is quicker and easier to manipulate cutting tool application parameters to achieve optimum performance with the existing machine. And even if investment in a new machine tool is feasible, the relatively long operating lifetime of the equipment is an important consideration. A company may buy a machine tool with capabilities that match or exceed its present needs, but factors such as part workpiece material, size and volume can and will change significantly over the five, 10 or more years that the machine will be in operation. To cope with the changes it will be necessary to alter cutting conditions, but that must be done in an intelligent way. After finding ways to maximise the amount of time a machine tool is available to cut metal, the preferred path is to select tools with substrate material, coatings, and cutting edge geometries that are best for the workpiece materials and operations involved. The next step is to apply the minimum cutting speeds at which the tools will work well.
The expansion of the bioplastic by foaming is carried out with consideration for the environment, using carbon dioxide. The density and heat insulation properties of the new biomaterial are similar to those of polystyrene. VTT plans to take its development work closer to industrial processing and to proceed from laboratory work to factory testing. Therefore, in order to collaborate in this development it is now looking for partners from among companies operating in the field. PLA products similar to polystyrene already exist, but their problem is their high price. In collaboration with companies operating in the field, VTT will be looking for new and more efficient production methods to enable the manufacturing of affordable products. VTT is also developing a process for PLA based on extrusion foaming, in order to replace polystyrene in traffic and packaging applications, for example.
Then, feed rates and depths of cut should be as high as possible, while recognising the power and stability characteristics of the machine tool. Mathematical formulas have been developed that can help determine the best match between machining parameters and machine capabilities. If possible, a shop may prefer to run practical tests to get similar results. Fairly often, the formulas only confirm reality. Probably more than 90 percent of time a simple, pragmatic approach of lower cutting speeds, with maximised feed rates and depth of cuts, accompanied by manipulation of cutting speeds as a calibration tool is most effective. That approach will be successful in providing reliable and productive machining as well as full utilisation of the capabilities of the machine tool at hand.
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NZ Manufacturer December 2014
THE FUTURE OF MANUFACTURING
A man is but the product of his thoughts. What he thinks, he becomes. -Mahatma Gandhi
New dynamic point-editing allows PowerSHAPE Pro users to create any shape they can imagine.
Delcam lifts the curtain on its enhanced modelling and reverse-engineering capability for 2015 Delcam lifts the curtain on its enhanced modelling and reverse-engineering capability for 2015 The latest version of PowerSHAPE Pro – including improvements in direct modelling, surface modelling and reverse-engineering, along with support for data from Creaform HandySCAN handheld scanners – received a rapturous reception form SE- Asia and Australasia’s leading manufacturers and designers at a symposium held in South Korea recently. Delcam’s Senior Applications Engineer, Charlie Jones, led off, to the delight of many, with his comment: “Designers are great at designing; that’s what they do. Unfortunately what they design is often not capable of being manufactured.” Once the comments which flew around the assembly had settled, he launched into the enhancements of one of Delcam’s almost- legendary software tools, PowerSHAPE, and its significant enhancements this coming year. A number of these improvements are built on top of the recently introduced Smart Feature Manager (SFM) and the Smart Feature Selector (SFS). SFM allows users to identify all the feature, such as fillets, slots, bosses and others, within a solid, in a single operation, so making the analysis of the imported data, that much easier and faster. The SFS then allows multiple similar features to be found and selected, using either a specific value or a range of values. Once the particular group has been selected, all the features can be edited,
simultaneously, e.g. all holes with a diameter of 5mm can have their diameter increased to 10mm – in one operation. “This new functionality,” says Jones, “will speed the preparation of models for manufacturing significantly, e.g. a very common problem in product designs, to be moulded or cast, is fillet sizes being set so small, they restrict the flow of material. The SFS can be used to identify those fillets below the required radius, and then boost those to the desired minimum size, simultaneously.” He went on to highlight another potential application, for tidying-up models created by reverse engineering, where features intended to be identical – such as a series of holes – will often show small variations. “Again, all the items within a specified tolerance band can be selected and then all adjusted together to be the same, precise size.”
“Designers are great at designing; that’s what they do. Unfortunately what they design is often not capable of being manufactured.” One of the acclaimed strengths of PowerSHAPE Pro has always been its surface modelling capability, literally giving the user the “ability to create any shape they can imagine”. This strong suit has been further improved with the addition of new, dynamic point-editing capabilities. “Multiple points, either along a single curve, or picked from multiple curves, can now be selected and moved – with real-time updating of the model – making styling of free-form shapes easier and quicker,” Jones says. “It also speeds up modelling-for-manufacture
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tasks, such as removing undercuts from tooling designs.” A further PowerSHAPE Pro area of strength made faster and easier is the ability to morph a complete model into a new shape. Jones again: “One key application for this option is in compensating for spring-back in press tools or ‘warpage’ in moulded products. The user can alter CAD directly, based on scan data from a sample part, collected as a point cloud or as a triangle mesh. That gives you the choice between either updating the CAD model of the part, to match the as-produced item or adjusting the tooling design, so that it produces parts matching the original CAD data.” Morphing also allows the updating of parts which need to be repaired, but have changed shape during usage. A typical example of this is turbine blades which have been distorted by heat so that their shape no longer equates the CAD data used to manufacture them originally. Again, the original CAD data can be adjusted to match scan data captured from the actual part. “The major enhancement to PowerSHAPE Pro’s reverse-engineering functionality is a more automated method for capturing cross-sections through a mesh. The software now fits lines and fillets to the cross-section, where it can with the user able to control the tolerance used. “This method uses the mesh as a guide, instead of treating it as exact geometry, with the priority of capturing the design intent, rather than ensuring a precise fit to the scan data.”
Being held in South Korea, drawing in innovators and many household brand names in the electronics’ field both at home and in the greater SE-Asia region, electrode design along with tool design drew a good deal of interest, along with the massive growing market for shoe design. Jones concluded his presentation and question session by highlighting the aspects in which Delcam enjoyed what he described as “a USP advantage over the competitive offerings available”: Electrode Design • Extract perfect electrode geometry quickly and easily • Colour code regions for automated machining • Export EDM(electrical machining) scripts to errors
discharge eliminate
• Use your own custom blanks and holders Tool Design • Die Wizard to extract cavity/core with split surfaces • Use standard parts from HASCO, DME, Futaba and many more • Use PowerFeatures for automatic fitting of parts • Check tool operation with simple animation tools Packaging and Shoe Design • Create surfaces with Smart Surfacer • Combine solids and surfaces to create mechanical parts • Add textures with ArtCAM • Create stunning, rendered images in minutes
NZ Manufacturer December 2014
The problem with the rat race is that even if you win, you’re still a rat. -Lily Tomlin
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THE FUTURE OF MANUFACTURING
Taking self-assembly to the limits Gold nanoparticles smaller than 10 nanometers spontaneously self-organise in entirely new ways when trapped inside channel-like templates. A new study shows that this feature could facilitate easier nanoscale manufacturing of biosensors and plasmonic devices with intricate, high-density surface structures. Generating surface patterns at scales of 10 nanometers and below is difficult with current technology. An international team, led by Joel Yang from the A*STAR Institute of Materials Research and Engineering in Singapore, is helping to circumvent this limitation using a technique known as ‘directed self-assembly of nanoparticles’ (DSA-n). This approach takes spherical nanoparticles that spontaneously organise into ordered, two-dimensional films when inserted into lithographically defined templates. The templates impose geometric constraints that force the films to organise into specific nanoscale patterns. Most patterns produced by DSA-n, however, are simple periodic arrangements. To broaden this technique’s capabilities, researchers are exploring ‘structure transitions’ that occur when template constraints become comparable to the size of the nanoparticles. At these dimensions, the small spheres can dislocate from typical periodic positions and reorient into unpredictable new geometries.
Previous studies have used real-time video microscopy to capture structure transitions in microscale colloids, but direct imaging of sub-10-nanometer particles is nearly impossible. “That’s where we came up with the idea of using templates based on channels with gradually varying widths,” says co-author Mohamed Asbahi. “With this system, we can track the self-assembly of the nanoparticles according to the space accessible to them.” Using electron-beam lithography techniques, the team carved out an array of inward tapering trenches designed to fit 1 to 3 rows of gold nanoparticles. After depositing a monolayer of 8-nanometer particles in the template, they used scanning electron microscopy to identify any emergent width-dependent patterns. Between periodically ordered rows, the researchers saw clear evidence of transition state zones — regions where the tiny spheres buckle out of alignment and gradually take on new, triangular packing patterns. After analysing the transition states with computational Monte Carlo simulations, Yang and co-workers identified several dominant recurrent patterns with different geometries from typical DSA-n depositions. Because the conditions needed to generate these patterns can be predicted mathematically, the team is confident these findings can have practical surface engineering applications. “The success of DSA-n depends on the positioning accuracy of the particles,” says Yang. “By exploiting the rich set of structural geometries that exist between ordered states, we can design templates that guide particles into complex periodic and nonperiodic structures.” The A*STAR-affiliated researchers contributing to this research are from the Institute of Materials Research and Engineering.
Major feat of engineering The first tenants have moved their belongings into the newly built One World Trade Centre which has arisen from the 9/11 attacks all those years ago. The first tenants for America’s tallest building are from the publisher Conde Nast. 3,400 company staffers will occupy floors 20-44 of the 104-story gleaming tower in Lower Manhattan.
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NZ Manufacturer December 2014
FOOD MANUFACTURING
There are two primary choices in life: to accept conditions as they exist, or accept the responsibility for changing them. -Denis Waitley
Industry partnerships behind move for new agribusiness Success in creating a large-scale public-private partnership with the New Zealand primary industries is likely to see a new agribusiness secondary school subject created. The brainchild of St Paul’s Collegiate School in Hamilton, agribusiness in secondary schools is being lauded as an obvious gap that once filled could have massive economic and employment benefits for New Zealand. The new secondary school agribusiness programme was launched in November by the Minister for Primary Industries, Nathan Guy. The programme has been made possible thanks to a public-private partnership. Led by St Paul’s Collegiate School, Dairy NZ and Beef + Lamb.
The agribusiness education partnership is crucial for the future of the industry. St Paul’s has had 48 students trial a pilot curriculum this year with another 85 signed up for next year. In addition there are now seven other schools formally involved in the project and will offering the new subject in 2016. These are: Southland Boys (Southland); Southland Girls (Southland); John McGlashan College (Otago); Christchurch Boys (Christchurch); Feilding High School (Manawatu); Lindisfarne College (Hawkes Bay) and Mt Albert Grammar School (Auckland). Following the pilot, and the Ministry of Education approval, it is hoped to offer Year 12 and 13 students at participating schools an NCEA qualification in agribusiness. The agriculture industry employs an estimated 11.4% of New Zealand’s workforce while the number of university graduates in agriculture
related fields has been dropping in recent years. The curriculum development has been possible through a $2 million dollar partnership investment with principal support from DairyNZ and Beef + Lamb New Zealand. Other business partners include: BNZ, LIC, Zoetis, AGMARDT, NZ National Fieldays Society,Greenlea Premier Meats, Waikato Milking Systems, Waitomo Petroleum and Campbell Tyson. Strategy and Investment Leader for People and Business at DairyNZ, Mark Paine, says the agribusiness education partnership is crucial for the future of the industry. “We have forecast employment needs, and at graduate level alone we need 1000 people a year coming into the industry. Currently we are nowhere near this figure,” he says. For the sheep and beef sector it’s important that the best and brightest students have the opportunity to choose agribusiness as part of their studies, as they will have an important role to play in the sector going forward, said Beef + Lamb New Zealand’s Project Manager Sector Capability, Doug Macredie. As part of the new curriculum development, St Paul’s Collegiate School is hosting the Minister of Primary Industries, Nathan Guy, to officially launch its Centre of Excellence for Agriculture Science and Business on 28 November in Hamilton. St Paul’s Collegiate School’s Headmaster Grant Lander says the new curriculum has been industry driven. “A large part of the effort in developing the agribusiness curriculum has been partnering with agricultural industry organisations, universities and business. Everyone is excited at the prospect of what we have done so far and what we can still achieve.
All involved with this initiative believe we are helping create something of national significance and it is genuinely innovative and ground breaking,” says Mr Lander. Mr Lander says although there is already some emphasis to encourage young people into agricultural industry careers at a national level, there is no structured programme for secondary schools to encourage students to take up careers in agricultural science and
He says one of the main reasons the school was able to secure agricultural industry-good organisations DairyNZ and Beef + Lamb as principal partners for the development of the curriculum is due to a gap in the current educational system for agribusiness and the impact that gap has on our primary industries.
Landcorp executive to drive market-led approach Landcorp Farming Ltd has appointed marketing and business development expert Sarah Risell as its General Manager of Marketing. The new position has been created to lead Landcorp’s drive to differentiate and improve the value of its products sold to global customers.
“She will work closely with our meat, milk and fibre partners to stimulate and meet demand for our products in global niche markets. This work is key to our strategic drive to take a more active and market-led role in the value chain with a view to getting closer to end customers.
Ms Risell was previously Marketing Director of Advanced Nutrition in Fonterra’s Global Brands and Nutrition division.
“Sarah’s knowledge of emerging markets and specialty products will help Landcorp identify niche customers internationally who are prepared to pay more for the novelty of what Landcorp offers.”
Landcorp chief executive Steven Carden said Ms Risell was an exceptional addition to the company’s commercial team. “This is a new and important role for Landcorp and we’re delighted to have someone of Sarah’s calibre on board.
Ms Risell is experienced in developing and growing premium value dairy categories in major and emerging global markets including Asia, Latin America, Europe and Australasia.
Food Security Governance: Empowering Communities, Regulating Corporations By Nora McKeon This book fills a gap in the literature by setting food security in the context of evolving global food governance. Today’s food system generates hunger alongside of food waste, burgeoning health problems, massive greenhouse gas emissions. Applying food system analysis to review how the international community has addressed food issues since WWII, this book proceeds to explain how actors link up in corporate global food chains and in the local food systems that feed most of the world’s population. It unpacks relevant paradigms – from productivism to food sovereignty – and highlights the significance of adopting a rights-based approach to solving food problems.
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business in preparation for tertiary study.
The author describes how communities around the world are protecting their access to resources and building better ways of producing and accessing food, and discusses the reformed Committee on World Food Security, a uniquely inclusive global policy forum, and how it could be supportive of efforts from the base. The book concludes by identifying terrains on which work is needed to adapt the practice of the democratic public sphere and accountable governance to a global dimension and extend its authority to the world of markets and corporations. This book will be of interest to students of food security, global governance, development studies and critical security studies in general.
NZ Manufacturer December 2014
Those who say it can not be done, should not interrupt those doing it. -Chinese Proverb
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FOOD MANUFACTURING
Primary industry export forecasts revised Dairy export revenue will be down this year, but the drop will be partly offset by better-than-expected growth in other primary sectors, according to revised forecasts from the Ministry for Primary Industries (MPI). MPI has released a mid-year update on forecasts from its Situation and Outlook for Primary Industries 2014 (SOPI 2014). The update revises the forecast for total primary industry export earnings
to $34.6 billion for July 2014 to July 2015, a drop of 9.5 percent from record earnings of $38.2 billion in the previous year. The main reason for the fall is a $4.2 billion drop in dairy export revenue, due largely to reduced demand as a result of Russian trade sanctions and high inventory levels in China. Off-setting the dairy fall, market conditions for beef are likely to be strong for the next two years, says
Jarred Mair, Director Sector Policy. “A combination of strong US demand and drought conditions in Australia means that we have seen record lean beef prices this year. MPI forecasts that meat and wool export revenue will rise by $518 million this year.” Mr Mair also expects to see increases in export revenue from seafood, horticulture, arable, live animals, other agricultural and food products.
“We’re seeing improved demand for New Zealand’s top earning seafoods such as rock lobster, mussels and salmon. “Another positive is Psa disease has had less impact on the Gold3 kiwifruit cultivar than initially thought, which has pushed up export volumes,” says Mr Mair. Forestry sector export revenues are expected to return to growth in 2015/14 as demand for logs increases.
Meat and wool production calculator launched Beef + Lamb New Zealand (B+LNZ) has launched a new online tool to encourage farmers to think about production in a different way.
By aligning our production values with our pricing values, we can think more directly about the impact on gross farm revenue.
“The meat and wool production calculator begins the process of getting farmers to think about the real production volumes coming off their farms,” says B+LNZ chief economist, Andrew Burtt.
• Sheep and beef farmers often trade livestock. This means that the volume we sell may be substantially greater than the volume we produce. If we purchase a mob of 1,000 lambs and finish them, our production is the aggregate weight gain across the mob rather than the total weight of lambs we eventually sell. In other words, we need to account for the weight of lambs brought in to our farming system.
There are several reasons for this, he added: • Our products are priced on a per kilogram basis, but we tend to think of our production in terms of head.
• Sheep and beef farmers are increasingly grazing animals for other farmers. Therefore, we don’t get a direct measure of production in our sales figures, but we should count the weight gain of those grazing animals. The meat and wool production calculator is in its first phase of development. “We’ve tried to keep it simple enough to use quickly, but flexible enough to allow for more detailed information that you have about your farm,” Burtt said. He encouraged farmers to try the tool and provide feedback to inform phase two.
“In future, we expect to add another tool to our website that will let you benchmark your farm’s production against the range of sheep and beef production values in the industry (similar to the existing lambing percentage calculator). Look out for that in the New Year.” Beef + Lamb New Zealand’s interactive tools have been developed to help lift the performance and profitability of New Zealand sheep and beef farmers. All interactive tools including the new meat and wool production calculator can be accessed via the B+LNZ website: beeflambnz.com/interactive-tools
continued from page 1
Positive year for manufacturers Trade between New Zealand and China continues to grow. However we have seen the start of a potential slow down in China’s growth, which could see lower growth rates in the future – this is a greater risk going forward as we become more reliant on trade with China. The U.S market has improved during 2014, and the Federal Reserve finished their tapering, marking an end of their massive bond purchasing programme for now. The recovery of the U.S economy and their monetary policy decisions will have an impact on the level of our currency in the coming years, as will our own domestic policy decisions. In March of 2014 we saw the first increase in the OCR by the Reserve Bank of New Zealand (RBNZ), making us one of the first advanced economies to start raising interest rates. The RBNZ enacted four such increases in 2014, moving the OCR from 2.5% to 3.5%, and then stopping for a period of assessment. In hindsight, it appears that the final 25 basis point increase
may have been premature, particularly with recent inflation reporting lower than expected. The RBNZ also ramped up their efforts to talk down our currency, repeatedly expressing concern over its high value, even describing it as “unjustified and unsustainable”. RBNZ Governor Graeme Wheeler has expressed similar sentiment at nearly every OCR decision since he was appointed in late 2012; although his wording became increasingly strong as our currency failed to significantly respond to the large falls in dairy prices, which fell around 50% since November 2013. This led to the RBNZ intervening in the currency market during August to bring down the currency. This intervention, paired with the end of the Federal Reserve bond buying programme, as well as slightly more negative New Zealand economic data has seen the dollar fall back from its 2014 highs back to the “taper tantrum” levels seen in mid 2013.
Even so our currency remains overvalued and still has a long way to move to reach a sustainable fair value that pushes the right investment signals into our economy, as well as giving exporters a reasonable return on investment.
The past year has generally been more positive for manufacturers and exporters than we have seen for a while. In the past year investment in the dairy sector has been a significant source of growth for manufacturers supplying and connected to the industry. However the low dairy prices could be
a significant drag on our economy if they continue into next season. Bill English has recently warned that this, along with low inflation, is putting the planned Government surplus in question. The buffer provided by record high payouts last season will help farmers, although it has been indicated the 2014/2015 farm gate price may fall below the cost of production for many. Looking forward to next year, manufacturers and exporters will continue to innovate and succeed in tough times. There are still risks, particularly around the currency, the effect of low dairy prices on our economy, and the health of our export markets, but many manufacturers are reporting positive expectations, seeing opportunities for growth. Finding skilled staff remains an issue for many; however manufacturers continue their own on and off the job training and apprenticeship programmes in order to up-skill and retain their staff. www.nzmanufacturer.co.nz
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NZ Manufacturer December 2014
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NZ Manufacturer December 2014
Instead of wondering when your next vacation is, you ought to set up a life you don’t need to escape from. -Seth Godin
One business for every nine NZers There is an all-time high of nearly half a million businesses in New Zealand with the highest rate of growth being in construction, according to Statistics New Zealand said today. One business for every nine New Zealanders as business numbers grows to a new high. Overall, there are 487,900 businesses in New Zealand, up 2.5 percent on 2013, and surpassing the previous peak of 480,900 reached in 2009, according to the annual business demography statistics.
One business for every nine New Zealanders as business numbers grows to a new high. The number of high-growth enterprises in New Zealand exceeded 1,000 for the first time since 2008, with 15 percent of the current high-growth enterprises being in the construction industry. “What that means is we’ve got over 1,000 enterprises that had employment growth averaging at least 20 percent a year over the last three years, and had at least 10 paid employees at February 2011,” platform operations manager Kathy Connolly said.
“High growth in the construction industry is not surprising when put in the context of increased building activity, particularly in Canterbury and Auckland, as shown in the March quarter GDP results.” The number of business locations increased across 14 of the 16 regions, with only Gisborne and the West Coast showing slight decreases from 2013. The number of paid employees also increased – by 2.7 percent to almost two million, with all regions except the West Coast increasing. Just under 1,000 businesses were identified as Māori enterprises. Over two-thirds of these were involved in agriculture, forestry, and fishing, either through direct operation or property rental and leasing. “We currently have a very narrow definition of Māori enterprises that relates to the collective ownership of land and other assets by a recognised Māori authority,” Ms Connolly said. “Over half the employees associated with these enterprises were in the agriculture, fishing, education, health care, and social assistance industries, highlighting the close relationship Māori authorities have with resources connected to the people, land, and sea.”
Energy forum focus for innovative technology Technology developed by Kiwi scientists and business partners proves it is possible to store renewable hydrogen gas as a fuel to power remote communities, an international energy summit hosted by Callaghan Innovation and the Ministry of Business Innovation and Employment (MBIE) heard recently. Some of the world’s top hydrogen energy researchers met in Wellington to share and analyse the results of a four-year project to assess the market readiness of distributed and community hydrogen energy technologies. This refers to applications for the production and consumption of hydrogen energy at a local level rather than a centralised industrial scale. During the summit, Callaghan Innovation researchers showcased their own HyLink system, through which they have proven the feasibility of storing renewable energy as hydrogen, which has significant potential for managing intermittent renewable energy generation. Development of this system has involved several Kiwi organisations,
including Wellington’s ESG Energy and Ventech Systems, Christchurch’s Shamrock Ltd and heating company Yunca from Invercargill. More partners are being engaged to progress and accelerate its commercialisation. Through Callaghan Innovation and MBIE, New Zealand is a signatory to the International Energy Agency’s (IEA) Hydrogen Implementation Agreement (HIA), formed in 1977 to foster collaborative R&D into hydrogen energy applications among its member countries. New Zealand is actively involved in HIA Task 29, which looks at the commercial readiness of hydrogen energy for distributed and community usage, such as by remote and island communities, which aren’t always attached to an energy grid.
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The first steps toward a viable small-scale hydrogen generator Researchers are helping to advance the development of hydrogen-powered cars by producing innovative materials that could make on-board hydrogen generators a reality. Hydrogen is a renewable resource with the potential to power everything from households to cars, but its use is currently limited by a lack of green and practical production methods. Current approaches to generating hydrogen as a power source are anything but environmentally friendly. Obtaining hydrogen through steam reforming and electrolysis of water — the splitting of water into hydrogen and oxygen by applying an electric current — requires high energy input and fossil fuels. In contrast, the process of ethanol steam reforming (ESR) uses ethanol derived from renewable biomass to produce hydrogen and other products. One drawback of ESR, however, is that it requires high reaction temperatures to proceed and therefore a catalyst is needed to spur on the reaction. Another downside of ESR is that it often produces carbon monoxide as a by-product, which is toxic and can also lead to poisoning of hydrogen fuel cells. Luwei Chen, Armando Borgna and colleagues at the A*STAR Institute of Chemical and Engineering Sciences have developed an iron-promoted rhodium-based catalyst on a calcium-modified aluminium oxide support for ESR. This catalyst enables hydrogen to be generated more efficiently with
less environmental damage as the reaction can occur at temperatures as low as 350 degrees Celsius and produce almost no carbon monoxide as a by-product. The presence of iron oxide enables carbon monoxide to be converted into carbon dioxide and hydrogen via a reaction known as the water–gas shift reaction. Thus, the iron promotion effect on the rhodium-based catalyst is the key to removing carbon monoxide — something that is exceedingly difficult to achieve on rhodium alone. Additional benefits of ESR are the commercial advantages stemming from the catalyst being quite stable and having a long active lifetime. This means that the catalyst will permit long cycle lengths, minimize the regeneration frequency and reduce the operational downtime for on-board steam reformers. Chen explains that these factors are “essential for maintaining profitable operations in reforming units. Similarly, a stable catalyst would reduce the operating cost for an on-board reformer.” Chen notes that the catalyst will enable “better operational flexibility in terms of economics and on-board reformer size (since carbon monoxide purification units can be removed),” which she says will “make a significant impact in the design of efficient and simple on-board reactors.” Hence, this research is promising for advancing the realisation of small-scale on-board reformers for hydrogen-powered cars.
At the summit, New Zealand business people and policy makers learned from United States, Japanese and New Zealand hydrogen energy experts about the significant commercial and technical progress that has been achieved in a range of key projects around the world. www.nzmanufacturer.co.nz
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NZ Manufacturer December 2014
DEVELOPMENTS
The best way to appreciate your job is to imagine yourself without one. -Oscar Wilde
Environmental credentials: strong business, strong future Customers at each level of the supply chain are looking for environmental credentials. After all, producers, distributors, and suppliers each benefit when the larger cycle is committed to reducing environmental impacts.
risks within the organisation, such as health and safety or waste impacts, but also supply risks such as material access or cost or disruption to supply. Further, as an EMS can be third-party verified against a standard, a manufacturer can state its environmental credentials with confidence.
To encourage and improve a sustainable chain, procurement and purchasing at each step must consider environmental impacts. One large distributor working with dozens of suppliers in New Zealand is OfficeMax. This office supply company is committed to responsible environmental stewardship in its own operations, knowing that “the third-party auditing and certification shows our customers that we really are walking the talk and actively making a difference.” That credible work has led to a series of improvements, such as an impressive reduction in energy consumption and therefore reduced costs. Julie explains that “in our first two years our first site achieved a 26% year-on-year reduction in electricity usage. Nationwide, since 2009 we have been able to achieve a 5% year-on-year reduction.” The company is taking additional steps
to ensure that its supply chain also benefits from the green advantage. OfficeMax conducts an annual review of suppliers, offering some suppliers mentoring and OfficeMax team support. To its own customers, it offers an EcoMax range and this range of products must have proven credible environmental qualifications. Whether your products are distributed by OfficeMax or another company, being able to demonstrate environmental credential speaks volumes about your organisation’s ethos, quality, and durability. While there are many types of credentials that might suit your organisation and sector, for many manufacturers an
environmental management system or EMS helps you manage a wide range of aspects and impacts. An EMS assures a manufacturer that they are considering their environmental processes, such as waste management, energy and fuel use, freight and transportation, or hazardous materials. These can lead to operational efficiencies and cost savings within the business, but an EMS also has advantages beyond the organisational boundaries. Because an EMS ensures that risks are anticipated and addressed before they become a problem, this provides added assurance to partners. This can include
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The myriad benefits of a credible EMS aren’t only for those with technical expertise. Programmes such as Enviro-Mark provide support and guidance for organisations wanting to develop or improve their EMS. The Enviro-Mark programme is a step-wise process with a focus on continuous improvement. And of course, independent verification each year assures you and your partners that you are doing the right work and doing it correctly. Take a stance on credible environmental management with third-party verification for your environmental credentials and become an adaptable, dynamic, forward-thinking business and a valuable partner for the long term.
NZ Manufacturer December 2014
The light at the end of the tunnel has been turned off due to budget cuts.
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DEVELOPMENTS
-David Brinkley
Manufacturers use asset optimisation to extract value For manufacturers working in a competitive global market environment, product price point is an imperative. And yet, the intelligent optimisation of assets, which can have a major impact on reducing production costs, is an area often overlooked. Aurecon’s Head of Asset Management, Clive Ross, says manufacturers can enhance their success by creating a proactive asset management culture and taking a more sophisticated approach to maintenance that optimises asset performance and value. Hardwired in the psyche of manufacturers is the constant vigilance on total production cost. Sometimes, deferring or minimising maintenance results in cost savings. However, these incremental savings are typically false economy. A strategic asset management approach can create far greater value for the business. Focusing on asset uptime availability and equipment peak operating efficiencies yields substantially more value than driving maintenance costs down. This value is at times less visible and tangible without a detailed knowledge of asset value creation.
Product price point is vital for manufacturers working in a competitive global market. Strategic asset management enables an organisation to find the optimum level of asset management and maintenance activity to meet their organisational plans as depicted in figure 2. Focussing the appropriate resources on critical assets to perform an optimum level of maintenance work has proved to reduce production costs.
Over the past two decades, the world has experienced an unprecedented demand for raw materials products and processed goods. As a result, manufacturing plant, production facilities and many ancillary infrastructure assets have been pushed to limits well beyond their initial design specifications. Our urgency to get more from less has brought many facilities to breaking point. Maintenance of the asset, a cost not directly linked to productivity or revenue generation, is often deferred or worse, ignored. Organisations will take a range of approaches to asset management with varying results: 1. Measured and controlled asset debottlenecking exercises and asset efficiency design upgrades through sustainable work capital programmes. These programmes generally result in engineering standard and legislative compliant designs and production optimised assets that will continue to deliver enhanced production throughputs in future years. 2. Fast track projects that deliver immediate returns and enable the asset owners to capitalise on the demand experienced during these years. While these programmes generally comply with the engineering design and legislative requirements, many are not optimised, and deliver suboptimal performance and efficiency.
Figure 2: Balancing costs of maintenance and asset unreliability As manufacturers move to a strategy of higher levels of automation to further reduce dependency on labour costs, this focus on intelligently optimising the asset becomes even more important. The solution, as illustrated by Figure 3, lies in working to create a proactive culture, which drives asset management improvement plans that guide the engineering, project delivery and operations activities in the plant, process, product and people, to eliminate, prevent and control functional failures and extract greater value from existing investments.
3. Increased production throughputs via existing assets, reducing access to plant for planned preventive maintenance and managing the higher rate of asset degradation through increasing breakdown maintenance. This short term action solution results in overloading, higher wear out rates and component stresses, and increased breakdowns, which ultimately leads to an increased forward maintenance log. While the development of comprehensive asset life cycle management plans and strategies may have been considered in tactic 1 above, it is unlikely they were in tactics 2 and 3. The primary consideration at the time would have been to produce as many tonnes of product as soon as physically possible. As a result, the performance of these assets is likely to be suboptimal. This operating environment created a culture resulting in an outsourced maintenance cycle. Where maintenance is an activity focussed on only restoring or maintaining functional capability in plant that has been lost through errors in the engineering, project delivery and operations cycle. Figure 1 explains this.
Figure 3: Implementing cultural improvement to drive value The solution also lies in looking at the facility, its processes and its equipment with a forensic engineering lens, identifying equipment with the highest run time hours or lowest availability rating, to find the weak point in the production chain. This type of analysis roots out the highest likely causes for breakdowns and production interruptions and eliminates them by implementing improvement plans and actions for execution by their maintenance practitioners. This entire process is even further enhanced if strategic asset management is embedded at the start of a project. If followed from the design stage, this approach incorporates asset reliability and maintainability to eliminate these as a source of breakdowns and production interruptions prior to commissioning future assets. It ensures equipment and processes are designed and selected with their long term operability and value adding potential in mind.
About Clive Ross Clive Ross is Aurecon’s Head of Asset Management. He has over 30 years of asset management experience, with an expert understanding of best practice asset management, operations and maintenance, and engineering, procurement and construction services. You can contact Clive at clive.ross@aurecongroup.com. Figure 1: Product loss cycle – The contribution of maintenance to losses
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NZ Manufacturer December 2014
BUSINESS BOOKS
A successful man is one who can lay a firm foundation with the bricks others have thrown at him. -David Brinkley
Today’s business leaders face a paradigm shift: from a market reality shaped by economic demand to one shaped by the collision of expanding human numbers and shrinking planetary limits. The new reality involves a higher order of risk than most business leaders are used to. Whatever their PR folk say, corporate leaders recognise that they and their staff are human and fallible. They accept minor tactical missteps, and even a few major strategic blunders, as a fact of business life. But the risk associated with sustainability is systemic. The old paradigm of business as usual doesn’t change, but now it threatens to overrun the ecological systems that make civilized life possible.
Lessons for Leaders
A Seismic Shift in Mind-Set
Few companies have been through the sustainability wringer to quite the same degree as Royal Dutch/Shell. According to Mark Moody-Stuart, Shell’s annus horribilis came in 1995, in the middle of his decade-long tenure as managing director, when the company was hit hard on two fronts. These were the Brent Spar oil platform controversy in Europe and the outrage that followed Nigeria’s execution of environmental activist Ken Saro-Wiwa and his colleagues.
In The Big Pivot: Radically Practical Strategies for a Hotter, Scarcer, and More Open, Andrew S. Winston, a consultant and sustainability advisor to corporations, including PwC, describes the opportunities inherent in the “three mega challenges that we now must face: (1) climate change, (2) resource constraints and rising commodity prices, and (3) technology-driven demands for more transparency.”
Moody-Stuart’s Responsible Leadership: Lessons from the Front Line of Sustainability and Ethics, which he bills as “part memoir, part confessional, part manifesto for leadership,” provides a detailed view of these events and much more. It draws mainly on the author’s 40-year career at Shell. Moody-Stuart grew up in Antigua, where his family had lived since the 17th century and was instrumental in the development of the island’s sugar industry. He joined Shell in 1966 after earning his doctorate in geology at Cambridge, and worked for the company in 10 countries on his journey to becoming its managing director and chairman—posts he held until 2001. The book provides candid accounts of Moody-Stuart’s dealings with prime ministers and dictators, colleagues and competitors, and investors and NGOs. This is an insider’s view of the machinations within organizations as disparate as Shell and the United Nations, and it engages hot-button issues, such as top team remuneration, human rights abuses, and corruption, head-on. But Moody-Stuart delays his account of how he awoke to the corporate sustainability agenda until the book’s biographical coda. The key moment was when he first became chairman of a public company, the Shell refining company in Port Dickson, Malaysia, and attended his first shareholder meeting—the company was listed on the Kuala Lumpur Stock Exchange. This is when he fully recognised his responsibility to the thousands of people who had invested their savings in the company he led. What is most striking about Moody-Stuart is how this newfound sense of responsibility to shareholders continually expanded until it encompassed all of the stakeholders in a business, producing one of the wisest leaders I have ever come across. The themes of trust and inclusion ring through the book—not just as values to be adopted, but as core leadership attributes to be developed and exercised. Moody-Stuart calls on business leaders to “take off the ‘corporate hat’ and put on the ‘citizen hat.’” This ability is key to building the trust needed to successfully manage the kind of coordinated action necessary in addressing global issues. Moody-Stuart, two conditions must be met: First, the solutions—alternative transportation and energy—that business espouses must provide consumers with levels of utility and cost that are similar to those of conventional solutions. The author believes this will translate to “significant investment in public transport, particularly urban public transport, and work on low-carbon vehicles.” Second, a “broad regulatory framework driving efficiency…as well as a framework to establish carbon cap and trade schemes” will be needed that, in essence, place the onus for action on business. “This is a case where the market on its own will not deliver solutions,” argues Moody-Stuart, eschewing price-driven solutions—such as gasoline taxes—for their unintended side effects. The framework he proposes would include “building regulations, transport efficiency standards, industry-sector efficiency standards, and so on.” www.nzmanufacturer.co.nz
To capture these opportunities, Winston says, leaders first must elevate sustainability as a strategic priority. It can no longer be treated as a “side department or a niche conversation” within a business, he writes. “We must pivot—sometimes painfully, always purposefully—so that solving the world’s biggest challenges profitably becomes the core pursuit of business.” This pivot will require a transformation in perspective from the traditional view of business, “which a solid majority of Western executives still likely hold,” to a more evolved “clean and green” view, and then to what Winston calls Big Pivot principles “with which we can—and must—sustain the success of our businesses, economy, and species.” Leaders must elevate sustainability as a strategic priority. To illustrate the distance between the conventional strategic mind-set and the Big Pivot mind-set, Winston runs through a laundry list of corporate “views.” For instance, the operational view of a company will have to evolve from an internal “four walls” focus to a focus on the entire value chain and then a systemic focus. The corporate view of the sustainability function will need to evolve from siloed to matrixed to integrated. And when it comes to reshaping the regulatory rules of the game, the corporate view will have to evolve from hostile to defensive and finally to “guiding and leveraging.” Of course, knowing is only the first step in doing. To help leaders put the Big Pivot mind-set into action, Winston devotes the bulk of the book to describing— and offering examples and implementation advice on—10 strategies aimed at creating and executing the vision, valuation, partnerships, and resiliency needed by a sustainable company. To rebuild the corporate vision, Winston says, leaders must fight short-termism; set big, science-based goals; and pursue “heretical” innovation—that is, ideas that are disruptive enough to seem impossible. For instance, after realising that the global apparel industry uses an amount of water equivalent to the Mediterranean Sea every two years to dye clothing, Adidas sought a waterless dyeing process, which it is now piloting. To redefine valuation, leaders must change incentives and build engagement; reinvent ROI; and fully account for natural resources. Consider Puma’s “environmental profit and loss statement,” which put a monetary cost on the natural resources used in its extended value chain—and revealed that the total cost was equal to about half of the company’s annual profit. To reframe partnership, leaders must lobby for sustainable goals, collaborate with all stakeholders, and enlist customers in the cause. Coca-Cola has partnered with Pepsi and other competitors to invest in and speed the switchover from compressors that use hydrofluorocarbon refrigerants to ones that use carbon dioxide refrigerants, which are much more climate friendly in this application. Finally, to create resilient companies, Winston follows in the footsteps of Nassim Nicholas Taleb and recommends diversification, built-in redundancy and buffers, fast feedback, and rebalancing of risk. For example, oil refiner Valero installed energy meters and real-time monitoring devices to ensure optimal tank temperatures and pressures. Energy cost savings: $120 million in the first year.
NZ Manufacturer December 2014
Accomplishing the impossible means only the boss will add it to your regular duties.
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REAR VIEW
-Doug Larson
More industry needed in industry training While 140,000 people are gaining skills through industry training every year, New Zealand’s ‘skills gap’ is predicted to widen. That gap, between supply of and demand for, skilled workers could slow productivity and stall economic growth. However, industry, or work-based, training has gained momentum over recent years, with industry trainees or apprentices achieving 54,000 national qualifications annually. “There is a massive pool of talent amongst the 70% of school leavers who do not attend university, and we’d like to see even more young people choosing industry training,” says Industry Training Federation (ITF) Chief Executive Mark Oldershaw. “But to make sure that the training results in sustainable jobs, it must be based on the job market.” The ITF, which represents all 12 of New Zealand’s Industry Training Organisations (ITOs) has released an open letter asking the Government for changes to create more cohesion and efficiency in the industry training sector. “To keep up with our own growth, and with global and technological challenges, we need to be smarter, quicker and focused on the needs of industry,” says Mark. “The first step is to enable industry to guide the development of training and qualifications. Historically it has been hard to get businesses involved because of barriers such as time, cost and complexity. We need to make it easier for industry to guide us, to ensure training results in workers with the right skills at the right time.” The
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benefits of industry training for New Zealand businesses are becoming more widely recognised by employers across all sectors. Competenz, a large ITO representing the manufacturing, engineering, forestry and food and beverage industries (to name a few), receive constant feedback from employers who say on-the-job staff training is contributing to their success. Hydroponics company Bluelab says training has boosted team morale and business success considerably. “Training ensures the team has the best possible skills to meet the competitive market head on,” says Bluelab Production Manager Mandy Jarvis. Martin Beever, from Beef Jerky company Jack Links, echoes this sentiment, saying training has contributed to the increase in exports. “As we grow the business we need to learn to grow in confidence, and with confidence we build efficiency, productivity and business success,” says Martin. And wine and spirits company Pernod Ricard report that training has created a noticeable improvement in confidence and productivity. But Mark Oldershaw says although industry training success is widespread, industry experience is needed at a broader, strategic level to ensure training and qualifications remain relevant.
apprentices. If we work closer with industry and move more quickly, we can avoid these shortages.” Auckland’s ‘workforce roadmap’, aims to do just that. An alliance of tertiary education providers in the wider Auckland area (including four ITOs, the Manukau Institute of Technology and Unitec), have been working with major construction and infrastructure industry players to get ahead of the game. “The tertiary education sector has not been as well connected to industry as it should be,” says Development Manager for the Alliance Graham Hodge. “We need to ensure the qualifications are better aligned to future workforce needs and to do this we must listen closely and carefully to industry.” Fletcher; Hawkins; Naylor Love Construction; Dominion Constructors Ltd; the NZ Transport Agency; and
the Auckland Council are jointly sponsoring the roadmap, which will guide skills needed in construction and infrastructure for the next five years. “Once, we find out what the industry needs, it’s up to us to deliver the right qualifications, the right skills,” says Hodge. Auckland’s workforce roadmap sets a direction for others to follow. “This collaboration is a great example of what one sector can achieve,” says Mark. “And it’s necessary across all sectors,” says Mark. “We’re asking for a Government-Industry Task Force to ensure industry can guide and lead the future of industry training. Then we can really bridge the skills gap and make more of a difference to economic growth.” *The ITF is a voluntary membership organisation representing all of New Zealand’s Industry Training Organisations.
“Our current shortage of builders is a reminder of the need to be better prepared,” says Mark. “We’ve known for some time about the growing demand in construction, especially in Christchurch and Auckland, and we’re suddenly desperate for 5,000 building
NZ MANUFACTURER • FEBRUARY 2015 Issue • Features
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NZ Manufacturer December 2014
Work spares us from three evils: boredom, vice, and need. – Voltaire
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