Why local manufacturing makes for better business
By Scope Media
By Scope Media
Humans often need to be shocked into paying attention - and eventually taking action. An earthquake somewhere close by might force us to finally sort out that emergency kit. A health scare might lead us to book an appointment with the doctor. And a global pandemic that closes borders or a brutal war that affects commodity prices might show us how vulnerable we are to the vagaries of international supply chains.
Globalisation has been one of the major economic trends of the past few decades, right alongside digitisation. A huge proportion of manufacturing has been outsourced to China and other developing nations and, in most cases, the decision was based on cost savings.
Many companies - and many countries - knew they had become too reliant on offshore manufacturing and Covid-19 well and truly cemented it. Since then, the fear that other geopolitical tensions could disrupt trade has become even more intense and having some manufacturing capacity in your home country - even if it was deemed to be more expensive - came to be seen as crucial for resilience, certainty of supply and job creation.
At Te Pari, we’re proud to say that we’ve been ahead of the curve in this regard. We’ve always manufactured in New Zealand, we prioritise local suppliers and the bulk of the materials we need are produced close by - whether it’s the steel for our sheep and cattle handling equipment, or circuit boards for our automatic animal management systems.
We’ve also long fought against the assumption that it’s too expensive to manufacture in New Zealand. We have shown that it can be done. You just need to do it right - and when you do, it brings a range of benefits.
Pictured above: Nick, Cassidy and Doug Blampied - Te Pari is a family-owned and operated business with 3 generations of the Blampied family now working in the business.
When you go into a hardware store and pick out the cheapest shovel, you shouldn’t really be surprised if it breaks within six months. The same is true when it comes to agricultural equipment. We’ve noticed a number of imported steel products flooding the markets we operate in, like Australia, New Zealand, the UK and the US. And they’re cheap for a reason. We’ve also noticed an uptick in the number of farmers who have had bad experiences with these poor-quality products and are now looking to buy something from us that they know will work for years to come.
Getting access to great service is also an important part of buying local, especially for such a large purchase, and it’s something that our proximity to customers allows us to offer. On the farm, we know that time is money and with worker shortages in the rural sector becoming increasingly common, our installers spend time setting everything up and giving customers a rundown on the technology. If there are any issues after installation, we have tech support teams available. That kind of care is just not available if you decide to buy a cheap imported product, which can take days for farmers to set up and, once in place, may not be of good enough quality to withstand the difficult conditions.
Whenever I see a farmer choosing the cheaper option, I’m reminded of the line ‘if you think a professional is expensive, wait until you see what an amateur costs’. Sometimes you have to spend money to save money. Te Pari is an unashamedly premium product and we’re in the business of helping farmers improve their profitability by providing them with better technology. But we also take our own medicine and apply that thinking to our own business.
Pictured above: The Te Pari factory in Oamaru, NZ has 10 robotic welders that help to improve manufacturing efficiency.
After a trip to visit some European factories in 2008, we made the decision to invest in manufacturing automation so we could keep production in New Zealand and stay ahead of all the low-cost imported products.
In 2008, when everyone was hunkering down as a result of the GFC, we put in our first robot welder. Now we have 10 of them, along with a number of other multi-million-dollar machines designed for handling and welding steel more efficiently (and safely). This technology ensures we produce the best quality products, allows us to have less inventory, and speeds up our innovation processes because we can easily trial new products or processes.
While there are still plenty of examples of international ownership leading to offshoring of manufacturing (for example, the Swiss company Datamars, which is owned by an equity fund, purchased New Zealand’s Tru-Test in 2018 and some manufacturing was shifted to its factory in Thailand), we’ve seen some other New Zealand companies start to follow our lead. Gallagher, for example, is a competitor of ours, but also a supplier, and it’s recently decided to move some of its manufacturing back to New Zealand from Asia.
Pictured above: One of the Te Pari Delivery trucks loaded up and ready to leave the Te Pari factory in Oamaru.
Keeping things local is not all about advancing our own business, however. In the book The Man Who Broke Capitalism, David Gelles talks about how GE’s CEO Jack Welch “gutted the heartland and crushed the soul of corporate America”. That’s a bold claim, but the outsourcing of manufacturing - as well as the outsourcing of ‘externalities’ like pollution or poor worker rights - was a hallmark of this era.
Prior to that, Gelles writes that companies regularly referenced the social role they played in the communities they operated in. Businesses took a more holistic approach back then and prided themselves on offering employees a chance to get ahead, while also helping towns to sustain themselves. That was especially true in smaller towns that were reliant on one or two big companies.
When our family purchased Te Pari in 1997, the factory was based in West Auckland. That’s where our family grew up, but we eventually made the decision to relocate the factory to Ōamaru - population approximately 12,000 - so that we could be closer to the bulk of customers.
We’re a company that values loyalty, and that loyalty flows in many directions. We’re loyal to the region and we support a huge number of local businesses and families that are loyal to us (we have around 120 staff, some of who have been with us for over 20 years). And the quality of the products we produce means we have very loyal customers who know they’re buying the best (one of our first customers recently bought another cattle yard system from us for his new farm, 20 years after buying the first one, which is still going strong).
Pictured above: Jeremy Blampied, Global Sales & Marketing Manager, Te Pari Products.
Loyalty is also valuable when it comes to suppliers and, again, this flows both ways. For years, we used steel from the Glenbrook mill in Auckland, but a change to the kind of steel it produced meant we had to start using steel from an Australian mill that was run by the same company. Last year, during the Queensland floods, they had to reduce capacity and told customers they could get half of what they normally ordered. But customers that did 100% of their business with that mill were prioritised and given more steel, which meant we were able to get enough to fulfil all our orders.
Reducing costs by sending manufacturing offshore sounds like smart business. So does saving money by buying a cheaper product. But not everything that counts can be counted. And over the past couple of years, we believe our strategy has well and truly paid off. By investing in automation to maintain local manufacturing and prioritising local suppliers, we believe we have created more innovative products, more jobs, more robust communities, and more loyal customers. Talk about a win-win-win-win.