Power and responsibility

The Cadbury complex. Photo: Stephen Jaquiery.
The Cadbury complex. Photo: Stephen Jaquiery.
Mayor Dave Cull’s comments after the plan to close Cadbury’s manufacturing in Dunedin was announced last Thursday were uninformed and unconsidered, writes Rob Hamlin.

Two views were expressed in last Friday’s Otago Daily Times about Dunedin and its suitability for manufacturing exports.  In the first,  "Mr Cull said the planned closure of the Cadbury factory was another reminder Dunedin was ‘geographically poorly placed’ to manufacture for overseas markets. He did not blame Mondelez for putting profits first."

In the second,  the Otago-Southland Employers Association chief executive, said this: "The high cost of manufacturing in Australia, along with a more regulated environment, meant the decision to close the Cadbury factory in Dunedin went against international trends. 

Dunedin had a high quality local milk supply and a port with easy access to international markets, making the decision to move to a more regulated environment in Australia surprising."

The statements from these two city leaders are contradictory on several points, with the leading contradiction, highlighted in italics.  One would suspect that when it comes to business conditions, the Employers Association chief executive would be better informed. The Mayor’s statement is therefore particularly disappointing. With statements like this, Mr Cull not only damns the local Cadbury’s operation, but every other company trying to make a crust in Dunedin by manufacturing and exporting. These are companies  he should be helping, rather than out of town "fly-ins" who want to run events of highly dubious profitability at the Forsyth Barr Stadium.  Most companies  you speak to generally say  Dunedin is an easier and cheaper town to operate in and export from than any other in this country, and certainly easier and cheaper than this country’s three biggest centres.

What Dunedin lacks is the job-hopping, iPhone-yakking, head-hunting merry-go-round  many company executives/managers now consider to be  essential to their professional progress in life. 

Sadly, these managers appear to be right in this belief. For this reason, Dunedin is only likely to attract and retain companies that are very closely held and managed by individuals or families to whom such a merry-go-round is at best irrelevant. My suspicion is that eliminating the merry-go-round also increases the stability and quality of the management teams  they would recruit in cities such as Dunedin.

If the importance of the managerial merry-go-round is eliminated,  the advantages of Dunedin become more immediately apparent to individuals to whom the company’s and their own bottom line are inseparable.

Thus, what companies do in this town, manufacturing or otherwise, is of less relevance than who their owners are, and how they are managed.

Companies  more reliant on overseas markets are more likely to be attracted to Dunedin than those relying on the North Island population centres.

A couple of years ago, I was talking to a senior marketing manager of one of our leading Auckland-based (inevitably) fast-moving-consumer-goods companies.  In the conversation, the manager revealed the jaw-dropping statistic that, at 11 months tenure, she was the longest-serving manager in the company’s 20-plus-strong marketing department. 

This situation might be extreme, but management turnover of about three years is apparently not atypical in the major centres. Such a situation can only lead to a state of ongoing pandemonium, memory loss to the company and memory leakage to its competitors that would surely be ripely exploitable by a more stable management team based in, say, Dunedin or Porirua.  Perhaps that’s why Whittakers does so well, despite its lack of "global leverage"?

However, I return to Mr Cull’s comments. 

With power comes responsibility, and this apparently "knee-jerk" comment inferring  Dunedin’s blanket unsuitability for manufacturing and exporting in my view breaches that duty of responsibility, given that it is so global in its nature, comes from the highest official level within the city’s administration and seems to be in direct contradiction to more informed local business sources who could (and should) have been consulted before going public in such a damaging manner.

- Rob Hamlin is a senior lecturer in the marketing department at the University of Otago.

Comments

Mr Hamlin doesn't seem to realise that having good access to markets does not equate to having low cost access to markets.

On this occasion, Mayor Cull is right. Dunedin is just about the worst placed city on the planet for distance to major markets. For products where transport makes up a significant part of the price, we are at a huge disadvantage.

As Mr Cull says, we should concentrate on any niche products where transport cost does not have a major effect on price and/or sale-ability.

Which makes a lie of Mr Hamlin's claim that the mayor made a blanket claim that Dunedin is unsuitable for manufacturing.

Photonz,

If we assume (generously that the family bar of Cadbury's Dairy Milk is 1cm x 10cm x 20cm, and we assume a shipping container packing efficiency of 80%, then the standard 40 foot container will take 308,000 of these bars.

If we assume (pessimistically) that the best price that Mondelez can get to ship said container to the UK on the other side of the world is $NZ2000, then this gives a long-distance shipping cost ex-Dunedin and landed in Milford Haven to be just under half a cent a bar - or about one sixth of one percent of its current retail price. This is not significant -and it is this that underpins the whole process of 'globalisation'.

The vast bulk of product distribution costs is now incurred in the local distribution of small amounts in the last few miles at the other end of the line.

Just because zapping calendar photographs down the line to clients in Oz, say, is pretty much free does not mean that shipping real products around the world costs a lot more. That's why supermarkets in the UK offer for sale ready-made salads that are packed in places like Ethiopia and AIRFREIGHTED in daily.

I am sure that all partners in our wonderful city would agree, that the city that our forefathers built is what we must rely on for the city to move forward.
Our strengths are an established export port, a steadfast and loyal workforce, specialised and innovative tradespeople, a renowned university and a city set up to export all manner of goods.
Yes manufacturing is part of our city's fabric, and for this sector to collapse then unemployment will rise even further and the city will start losing the very people that make the city work. High tech industries may sound like a niche area to be in, but for a city of our size we need companies that employ large numbers of people.

The three areas that the DCC needs to commit to is: 1. the hospital rebuild, which will help to cement the university's position globally; and 2. to provide incentives to start up companies and companies wishing to move here, who will employ locals, and 3. to support projects (like the Mornington cable car, twin tunnel cycle way, etc) that will attract visitors to our centre.

drivesouth-pow-generic-1.png

 

Advertisement

postanote_header_620_x_80.png

postanote_620_x_25.jpg

Our journalists are your neighbours

We are the South's eyes and ears in crucial council meetings, at court hearings, on the sidelines of sporting events and on the frontline of breaking news.

As our region faces uncharted waters in the wake of a global pandemic, Otago Daily Times continues to bring you local stories that matter.

We employ local journalists and photographers to tell your stories, as other outlets cut local coverage in favour of stories told out of Auckland, Wellington and Christchurch.

You can help us continue to bring you local news you can trust by becoming a supporter.

Become a Supporter