Facteon Group GM and Chief Optimist, John Cochrane, shares his vision for a stronger manufacturing industry following the COVID-19 pandemic with NZ Manufacturer.

Where do you see manufacturing opportunities after the virus?

I think it would be an understatement to call the COVID-19 pandemic a “wake-up call” for governments, businesses, and society in general. When looking at this in the narrower context of manufacturing one must consider that the entire surrounding ecosystem is set for disruption. And when such disruption occurs there are always opportunities for lasting beneficial change.

A few things are already becoming clear –

• Manufacturing much closer to ‘home’ makes a lot more sense now in a post-COVID economy.
• Speed to market, speed to putting the right product on the shelf (whether bricks and mortar or online) are essential advantages for a modern business.
• Advantages and benefits of proximity are increasing, both economically and for social good. 
• Fragile supply chains can no longer be tolerated. Unreliable logistics capacity and volatile cross-border pricing need to be buffered against.
• Reliance on low-cost (mainly overseas) human labour for routine low-skilled tasks is an outdated business model. With the cost of automation continually coming down and being normalised globally, there is an erosion of the historic economic advantages of manufacturing in locations where labour costs are lower.

If the virus persists, then will these opportunities still exist?

Yes, while I make no claims to be a disease expert, I believe most people watching global media are anticipating the virus will be around for some time, at least until a widely accessible vaccine is produced in volume.

Some are suggesting this will remain an evolving challenge for several months, perhaps longer. The burden resting on all leaders is to adapt and respond swiftly to a new-normal and not bury our heads in the sand waiting for things to return to the old-normal.

The emergence of the internet was a game changer for businesses around the world. Digital disrupted traditional film photography, both amateur and professional. Streaming has been a game changer for the entertainment industry. I believe we are on the verge of a shift of similar magnitude.

Shifting a manufacturing footprint, and optimising manufacturing productivity, are not stop-gap measures to be applied solely as a temporary COVID-19 response. These are long-term trends that have been building up behind the dam, so to speak, and it has taken a global event, with the COVID-19 pandemic, to highlight the pressing need for such a shift. Now the dam has broken, new norms will be formed, which means global competitive advantages are about to shift again.  

What is an example or two of areas of manufacturing opportunity?

This question reminds me of my time in the public sector. One of the things New Zealand enjoys is a strongly positive national brand around the world. Our Primary Industries have been benefitting from this for decades; tourism as well. Now is the time for our manufacturing industry to catch up and likewise leverage our positive national brand. A brand that has been enhanced by our national response to the COVID-19 crisis.

More than anything, I would love to see more New Zealand companies add value and capture value here prior to export. The often-cited example is forestry – instead of shipping essentially unprocessed logs, what’s holding us back from adding manufactured or processed value right here in our own country? We should do this prior to export. A combination of focused skills training and advanced manufacturing practices will enable that to happen.

Productivity and contract manufacturing are major concerns in NZ. If we were to manufacture more locally, how do we incentivise the workforce?

In my career I have had the privilege of visiting hundreds of factories in numerous countries across North America, Europe, Asia, and Australia/New Zealand, running the full range of rather primitive facilities in tin sheds down dirt roads to state-of-the-art factories cleaner than a hospital operating theatre. Unfortunately, the former perception carries on, leading to manufacturing being mis-branded by some as an undesirable career path. This is a grossly outdated perception. Modern advanced manufacturing must be cast in a new light. 

Latest technology and modern working conditions exist in many manufacturing environments. While our vocational education system and government policies place jobs in industries such as tourism and construction as desirable, I promote the notion that manufacturing has greater career longevity, stability, and flexibility in the longer term. What has happened during the COVID-19 crisis bears this out.

You mentioned contract manufacturing as well, and in one of my former roles we chose to outsource all our electronic assembly and plastic injection moulding rather than do this ourselves. And all that manufacturing went to local businesses, not offshore, and these local companies did a fantastic job at a fair and competitive price.  Plus, since our manufacturing partners were literally right around the corner, we could co-create new products with ease. In my personal experience there is seldom a need to look offshore for capable and reliable contract manufacturers where genuine IP is involved.

Underlying issues in NZ manufacturing are holding the country back. For Facteon, where are the new areas of growth at this time in business history?

We are observing a very encouraging trend where customers are seeking guidance on single operation automation and upgrading existing manufacturing systems, including Industrial Internet of Things (IIoT), to enhance overall plant productivity. You might say this is learning to walk before running.

Where previously the idea of adding IIoT and robotics were considered out of reach, possibly only accessible to the large wealthy multinationals, we are now enjoying discussions with customers across multiple manufacturing sectors, who are embracing advanced manufacturing technologies more enthusiastically than ever before. The “dollars and sense”, including business continuity, all add up to a very compelling case to break the chains of outdated thinking and explore modernising manufacturing in a step-by-step approach.

The Government has managed the health issues and tightened the economy during lockdown. Do you see far reaching effects on the manufacturing industry as a result of this approach?

As a result of this pandemic I believe many people, tens of thousands here in New Zealand, will re-think their education and career choices. Business leaders will also re-think their supply chains and manufacturing eco-system. I am, at heart, an optimist, and I would like to think that this mutual re-thinking of careers and supply will mean people who found themselves unemployed in one industry can be re-employed in an advanced manufacturing setting, creating more sustainable jobs in New Zealand.

How is your supply chain holding up?

We see some flows beginning to stabilise. We consider ourselves lucky because we purchase from numerous countries globally, which means we are not reliant on any one country for the majority of our supply. Prices for some goods movement remain volatile. In summary, it’s still touch and go for some items we source, but overall, we are coping well.

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