Instead of the usual line-up of finance-company flacks and failures that usually litter their pages, SST Business Editor Rob O’Neill wrote about something really positive and interesting in today’s paper. He had this to say (not on-line yet):
There is a great deal of lip-service paid to “innovation” in business. It’s become a term that is often trotted out in a knee-jerk and meaningless manner. What is not often acknowledged is how embedded innovation can be in a manufacturing. Making stuff, or being able to talk freely with the people who do, can be a source of inspiration and great ideas for companies.
He’d picked up on the fact that Google’s new Nexus tablet was made in USA – and that companies like Google and Caterpillar have decided to manufacture new hi-tech equipment at home rather than abroad. He continued:
They tentatively report increases in quality and agility by having their manufacturing close to their design and engineering teams.
That really resonated with me because on Friday I spent the day listening to a Swedish academic, Goran Roos, talk about the importance of manufacturing to a modern economy. Roos has been engaged by Jay Weatherill, Premier of South Australia, to lead their manufacturing strategy full time from next year. He is to South Australia as Sir Peter Gluckman, the PM’s science adviser is to New Zealand. I heard Sir Peter at Te Papa a couple of weeks ago as well, and in my opinion Roos was much more relevant and inspirational. Here is one taste of him talking about the difference between a commodity mindset and a value-added mindset. You can google and find more.
That is why O’Neill’s comment is important. Making things, manufacturing, drives innovation. So can science if it is applied, but the application will likely be in manufacturing.
And Roos is not talking about simple manufacturing, like drying milk and turning it into powder. 3-d printing has revolutionised the process of “additive manufacturing”, as the Economist outlined in a recent article, and increasingly it will make sense to bring the high end of manufacturing back closer to home.
Why is manufacturing important? It is the biggest spender of applied research and innovation, the key driver of productivity improvement, makes up the biggest share of world trade, is the largest driver of high value services. Manufacturing generates on average between 3 and 5 jobs in the rest of the economy.
That is why the US and Britain are desperately trying to rebuild their manufacturing sectors. Countries like Denmark and Sweden which have retained a strong manufacturing base in the key production cycle components can sustain a high standard of living and a high level of public welfare. It is why Germany is the strongest economy in the Eurozone.
New Zealanders pride themselves on their No 8 wire approach to innovation. We should be more proud of, and hear more about, the company that I sat next to that uses 3-d printing and titanium powder to make high-value components.
While he was here Roos spoke to and got a good hearing from a wide range of companies, business organisations, government departments, unions and politicians. IMHO we need to hear more from people like him and about those of our manufacturers who still do make innovative products in New Zealand, and less from the same of line-up of bank economists and traditional economic institutes all trotting out their lines from the same old dog-eared textbooks of the 1970′s.
They are where the future lies. Please keep it up Rob O’Neill.