Offshore action not high priority for Kiwi firms

Exporting is not high on the agenda of most established kiwi businesses, according to the 2007 PricewaterhouseCoopers Clever Companies/EMA Survey (the Clever Companies Survey).



Survey analysts concluded New Zealand’s push to create an export-led, knowledge economy appeared to be falling on plenty of deaf ears.



The 725 survey respondents* who tend to be at the leading edge of businesses throughout the country suggest kiwi firms are not yet being driven by design, ‘sustainability’ or research and development, said Employers & Manufacturers Association (Northern) chief executive Alasdair Thompson.



“Significantly while businesses recognize the utmost importance of improving their productivity they are often not sure how to measure or increase it,” Mr Thompson said.



“The biggest concerns are the supply of broadband and telecommunications, and the cost of fuel and electricity.



“Finding skilled staff and managing poor performers amongst their staff continue to be major bugbears.



“While businesses are clearly busy at developing new products they are not using formal processes to do so, relying instead on things like ideas from staff and customer feedback.



“Keeping their manufacturing in New Zealand was favoured by 75 per cent of the manufacturer respondents.



“But despite all this apparent ‘backwardness’, they are thriving and optimistic.”



From amongst the list of survey highlights some stand out issues include:

· Business has been good for most respondents in the past two years: 61 per cent described their business profitability as consistently good or getting better during that time.



· A sense of optimism was evident for 64 per cent bullish about their prospects for the next year.



· For ‘clever companies’, the introduction of innovative products and added value has reduced the emphasis on labour costs and thus the need to go offshore.



· 27 per cent of survey respondents were exporting with 62 per cent not involved and with no intention of exporting.



· Most businesses (59 per cent) did not see sustainability as ‘very important’ for their business. Most saw it as ‘making the business viable year to year’ (72 per cent). Survey analysts said this indicates the majority still see the issue as a veneer and not a genuine strategic issue. Many are not yet taking it seriously as a competitive issue. But 42 per cent of respondents did think having a sustainability policy was important.



· Only 15 per cent thought measuring and reducing emissions was a major or important aspect.



· In terms of their own business’ sustainability, major concerns were the supply of broadband (39 per cent) and telecommunications (37 per cent); while the biggest cost worries were fuel (for 65 per cent) and electricity (56 per cent).



· For 76 per cent finding skilled staff remained a key concern though most saw the solutions as local, ie, recruiting locally and upskilling staff; rather than replacing them with technology or recruiting overseas.



· Design was understood to mean in general ‘meeting client needs’ though the term has moved beyond aesthetics to processes such as the development of new products and business structures.



· Only 33 per cent saw design as a way to differentiate their businesses in the marketplace. Design and innovation were recognized as competitive drivers by 44 per cent of respondents, but were eclipsed by the importance of the product or service (91 per cent), and financial management (87 per cent).



· Most respondents (68 per cent) created new products but the primary source of new product ideas was the organisation’s own staff (81 per cent) or consumer feedback (77 per cent).



· In line with this pattern, 29 per cent spent nothing on R&D and the majority (82 per cent) spent less than 5 per cent of turnover on it.



* Behind the Walls & Inside the Minds of Kiwi Companies: The PricewaterhouseCoopers/EMA Clever Companies Survey 2007.



To go to the report on line click here.



Background and methodology:

The survey questionnaire of 61 questions was developed by PricewaterhouseCoopers in association with EMA Northern and the Business School of the University of Auckland was in the field in June 2007.
Completed by 725 people, the owners, managers and executives from businesses of all industries, sizes and parts of New Zealand.
Most had six to 50 full time employees.
Most had been operating for more than 20 years – only 10 per cent had been in business four years or less.
Responses were analysed and presented by independent firm Research Solutions Ltd.