Hopes remain for manufacturing

Tuapeka Gold Print general manager Greg Jolly says business is booming at his Dunedin...
Tuapeka Gold Print general manager Greg Jolly says business is booming at his Dunedin manufacturing plant, which exports to buyers across New Zealand and Australia. Photo: Peter McIntosh.
Is there life after Cadbury for manufacturing in Dunedin? And, if there is, what might it look like? Chris Morris reports.

Greg Jolly can see the writing on the wall.

But, far from spelling out a warning of dark days to come, he sees positive signs as his company continues to grow in Dunedin.

Mr Jolly is the general manager of Tuapeka Gold Print, the company that shifted north from Lawrence in 2015 to ramp up production of its branded pens, drinkware and other promotional products.

Since then, the company’s workforce has more than doubled, from 67 staff to 160, and its turnover has almost tripled, he said.

And most of that success had been found by exporting to the Australian market, which now accounted for about 40% of the company’s turnover, Mr Jolly said.

It was enough to put a smile on the face of the Dunedin born-and-bred businessman, who said the city remained "a great place to set up a manufacturing company".

"I think Dunedin has a lot to offer. It’s just a matter of how you put that together.

"We’ve obviously found Dunedin works really well for us."

But it was a message that appeared to be lost in the gloom of last week’s shock announcement Dunedin’s Cadbury chocolate factory could close, with the loss of 362 jobs.

Progressive Plastics managing director Neville Chisholm shows off a stormwater junction...
Progressive Plastics managing director Neville Chisholm shows off a stormwater junction manufactured at his Dunedin plant. Photo: Stephen Jaquiery.

The factory was said to be profitable and efficient, but owner Mondelez International cited the cost of shipping nearly 70% of the Dunedin plant’s products to Australia, where it had spare production capacity, as the reason for its plan.

The proposal has caused an outcry in Dunedin, amid accusations of corporate "greed" by Mondelez and threats of a Cadbury boycott.

But it has also reignited a debate over the future of manufacturing in Dunedin, as Cadbury appeared poised to join a growing list of industrial companies which have shut their doors in the city.

The list included Fisher and Paykel Appliances, which shed 430 jobs when it closed its Mosgiel plant in 2009, and Hillside Workshops, which followed suit in 2012 with the loss of its last 90 jobs — itself a dramatic decline from a heyday of several hundred employees.

And, when Esco Dunedin confirmed the closure of its foundry in 2015, and Bradken announced a downsizing of its Dunedin operation, the redundancies contributed to a tally of 181 foundry-related jobs lost across the city in the previous four years.

The high-profile firms were just part of the story, but Otago Chamber of Commerce chief executive Dougal McGowan, speaking this week, told the Otago Daily Times the picture was a bleak one.

"When you have a look at it over a period of  time, it’s not great," he said.

Mayor Dave Cull went further, saying — on the day Cadbury’s plan was revealed — that it was another example of the challenges facing manufacturers in Dunedin.

"I think this is a reminder, again, that Dunedin is geographically poorly placed to manufacture a bulky product that needs transportation great distances, and it’s particularly vulnerable when the business is actually owned by a corporate that has other alternatives.

"Dunedin isn’t well placed, given the markets are so far away."

It was a familiar theme from Mr Cull, who has talked before about the challenges of manufacturing in the city and the need to encourage a new wave of high-tech jobs.

But that did not stop a backlash from some quarters of the city’s manufacturing industry, and a rebuttal from Labour leader Andrew Little.

Mr Little, speaking during a visit to the factory this week, insisted there was still a place for manufacturing in Dunedin, but the focus needed to be on high-tech, high-skill, niche products.

"We’ve got to remember, Cadbury is doing this not because their plant is not profitable. They just want more profit out of it.

"They are doing it for greed," Mr Little said.

Business leaders spoken to by the Otago Daily Times were divided on Mondelez’s plan — some seeing it as understandable behaviour by a large multinational, while others said it was "short-sighted" and "a huge mistake".

But some also took issue with Mr Cull’s comments about manufacturing, including Mr Jolly, who said Cadbury’s announcement, and Mr Cull’s comments, were both "really sad".

"Personally I think it’s pretty sad when the Mayor of Dunedin is writing off manufacturing.

"I think that sort of attitude is wrong."

It was a view shared by Trevor Scott, the chairman of Harraways, whose Green Island oat mill has been operating for 150 years.

"We were pretty appalled at our mayor making the statement that he did ... I happen to be chairman of a company that is manufacturing here, exports and is successful," he said.

Mr Scott also took issue with Mr Little’s focus on high-tech manufacturing, saying Harraways "would be the least high-tech business you could ever come across".

The company sourced its raw materials from the lower South Island and supplied primarily to a domestic market across New Zealand, he said.

However, exports to Asia were growing and provided the "cream on the cake", he said.

"That means more jobs, more investment, in our business."

Harraways employed about 60 staff and its success showed it could be done from Dunedin, he said.

"We’re very happy and we’ll be staying where we are, and hope to grow our export business," he said.

Farra Engineering chief executive John Whitaker had a different view, saying Cadbury’s closure would add another chapter to "the continuing of the demise of manufacturing generally" in Dunedin.

"It’s just getting tougher and tougher."

Despite that, he saw a future for manufacturing in Dunedin, including export-orientated businesses.

His company employed 110 workers in Dunedin and had just acquired a Christchurch company and its 55 staff,  increasing the total roster to 165, Mr Whitaker said.

The focus was on fabricating machinery, as well as maintenance and repair services, primarily for the New Zealand market.

However, up to 30% of Farra’s work was found offshore and Dunedin was as well placed as Auckland to be the company’s base, he believed.

"It is challenging from Dunedin, but the sorts of exports that we do would be challenging from Auckland, so that doesn’t actually matter, and your cost structure is arguably cheaper here in Dunedin than in Auckland, obviously."

Mr Cull, responding in a written statement this week, said he welcomed any enterprise choosing to base itself in the city.

However, the trend was for large-scale manufacturers supplying a global market to move their operations overseas, "particularly where the high cost of exporting has been a major factor".

That had been highlighted in Dunedin by the string of recent high-profile closures and most recently Cadbury’s proposal, he said.

The city needed to shift its focus towards high-tech, high-skill manufacturing and products, and the city’s tertiary institutions, and their graduate and research output, would be a key part of that change.

Despite that, the council would continue to support business development in the city, which included recent help for Harraways and other traditional manufacturing operations, he said.

Progressive Plastics managing director Neville Chisholm was among those drawn to Dunedin last year.

He bought the company, which manufactured packaging and other products, in May last year, and said the "very sad" news about Cadbury was not a death knell for manufacturing in the city.

His company was small, with nine staff, but growing, and Dunedin offered a cost-effective base, a skilled and stable workforce, strong support industries and "fairly competitive" freight prices for goods heading north.

And he was not alone, he said.

"It often surprises me how many businesses, especially manufacturing businesses, are just ticking away in the background.

"They aren’t in the headlines, but they seem to be operating successfully, and I suspect for the same reasons as us."

chris.morris@odt.co.nz

Comments

The common factor amongst industries which remain in Dunedin seems to be that they were locally founded and so remain committed to our City. The ones who leave are either multinational, or at least headquartered elsewhere. Coincidence or causality? Seems pretty obvious to me that supporting our hometown firms and startups is the way to go.

Mr Cull didn't seem very keen on deep sea oil exploration being based in Dunedin. Does this mean he now welcomes that potential business?
Does he ever actually talk to local business people to find out what is really happening or is he too focused on trivial stuff like cycle ways and artworks?