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Metal Casting Technologies : September 2005
ASIAN OVERVIEW The New Zealand Foundry industry is currently facing a crisis. The number of foundries and diecasters has steadily been decreasing over the last few years and the numbers now stand at the lowest level ever. Many factors have contributed to the foundry industry demise. Firstly, foundries have been hit hard by the recent strengthening of the New Zealand dollar against all trading partners. In particular, the US dollar which is currently trading at NZ$1.43 = US$1, represents a dramatic increase in value of the New Zealand dollar. Since many business transactions are conducted in US dollars, New Zealand now faces the threat of escalating prices for products on the global market. This continues to be increasingly competitive. And, conversely, New Zealand industries can now purchase castings on the global market at more attractive prices than what is available from local manufacturers. Compounding the existing situation is that local manufacturing companies have been transferring their operations to countries where production costs are much lower but are still able to produce cheaper, quality castings. The size of the New Zealand domestic market is very limited and does not encourage product development where local sales can be used to develop and prove the product before looking at its export potential. The handling of any problems with the product is, of course, very much easier if done at home and if the product is exported before all problems are ironed out then major costs are incurred. This can involve either returning the product or sending skilled staff over to correct the problems. Further compounding the problems is a lack of capital investment resulting in many companies not having the latest equipment, thereby giving overseas competitors a distinct advantage. As New Zealand struggles to match the high production capability of their competitors who are better geared for this type of manufacturing, the realisation that New Zealand must look to niche marketing are the best means to survive this problem. Niche marketing means you have to be prepared to manufacture small quantities, even down to single items and also to take on work where there are high quality demands in areas such as chemical specification and also to look at particular analysis using special alloys to meet these specifications. Complex castings may have to be made with tight physical tolerances which will place a high demand on the skill of the work force. There may be tight delivery dates where customers cannot be let down. These conditions cannot be met without one last consideration. To produce castings in a niche market environment requires a very skilled and flexible workforce who has received the proper training in their respective fields and is therefore well equipped to supply their customer castings right, the first time, delivered on schedule and at a competitive price. It is in the area of training that the New Zealand foundry industry has not performed well and this is not limited only to foundry training but is also impacting on other industries in New Zealand as well. Other developed countries are also experiencing problems in attracting suitable candidates for the foundry industry. People are not attracted to this industry, nor do they see it as a meaningful career path. They look towards other areas of employment such as computer and engineering based jobs which offer more security with the potential to develop a career. Currently a considerable amount of money and time is being injected into training over a wide spectrum to correct the lack of skilled personnel needed to meet the requirements of various industries. The New Zealand Government is investing funds to encourage companies to take on trainees in a joint venture which is hoped will produce, in time, sufficient skilled people who will go a long way in helping companies grow and be successful in this competitive global marketplace. Over the past two months the industry has seen the demise of one of New Zealand's largest die casting companies and the closure of the only wheel plant in the country, within 12 to 18 months. Both of these companies had major problems with global competition and apparently could not overcome the obstacles they faced. At this time, New Zealand faces enormous pressure from India and South East Asia, and in particular China, who are increasing their share in the New Zealand market. With local regulations continuing to grow and the cost of implementing them the demand on New Zealand foundries is even greater. NEW ZEALAND THE NEW ZEALAND FOUNDRY INDUSTRY By Tom Russell visit: www.metals.rala.com.au www 32 www.metals.rala.com.au