Queensland's investment example worth a look

By Yoke Har Lee

A decade ago, Fisher & Paykel got the red carpet treatment from the state of Queensland when it was looking at manufacturing whiteware in Australia.

Queensland's interest has not cooled. These days, the state's investment promotion officials are still there, knocking on F&P's door and helping it get products into other export markets.

F&P's chief executive Gary Paykel told the Business Herald that, while Australia and New Zealand were not too different as manufacturing bases, where Australia excelled was in its attitude towards foreign investors.

New Zealand has its limitations - a small domestic population and distance from markets - but it has other positive factors.

Australia, however, has excelled in selling itself as an investment and manufacturing destination, he said.

Why are foreign investors slow to come to New Zealand?

"I don't know - perhaps they don't understand we have a pool of very talented young people; maybe they don't know how efficient our ports are; or they haven't done their sums on ocean freight.

"I think one of the disadvantages we do suffer is our small population. If your are manufacturing for the domestic market, you would go to Australia, which has five to six times the size.

"The attitude ... is very different. I know New Zealand is trying to attract offshore foreign investments. In Australia, there is encouragement at the front end, to come in and set up," said Mr Paykel.

"Take the Queensland state Government - it actually came calling on us not so long ago. It has a very, very effective team of extremely capable people who do nothing but look - they don't just wait for things to happen. They get out there and attract overseas investments."

He said Queensland has offices in places like Hong Kong and Taipei which were now helping F&P get products into those countries.

"They do that very well. In fact they are helping us right now, as we get into Hong Kong and look to get back into Taiwan. It is a question of attitude."

An example of how fast things could be pushed through was the way the state passed through a law to make it possible for F&P to own its site there.

"When we set up in Australia - I am going back a decade now - our land, for example, wasn't owned by the Queensland Government. It enacted an act in Parliament within 24 hours which made the land the Government's so it could on-sell the land to us.

F&P's only manufacturing facility outside New Zealand is in Cleveland, Queensland, where it makes washing machines and refrigerators.

But F&P was not penalised by manufacturing in New Zealand despite lacking some basic infrastructure to support its manufacturing, he said.

"Direct labour as a percentage of the cost of the product has come down considerably - we have automated more. Overseas, there would be more manufacturing infrastructure available to us in terms of businesses who would do injection moulding for us, for instance.

"If you go to the United States, for example, within 100 miles of the factory, there would be 20 businesses supplying all the injection moulding and you wouldn't have to take risks in having the high cost of injection moulders.

"But then the cost of the individual moulding would be higher when we buy it. You would also have had to take it in certain runs, you can't control the quality as well and you can't control the buy price of the material - so there are advantages and disadvantages in being isolated in New Zealand and having no infrastructure compared to the US, Japan or even some of the other Asian cities where there is strong supporting infrastructure.

"But we find, for our needs, a very good stream of graduates who are good at producing the goods. Our labour force is extremely loyal and proud of what they do. The unions are cooperative here," Mr Paykel said.

He is not interested in incentives. What would be more helpful for manufacturers was reducing the cost of doing business, and improving infrastructure like roads and ports, he said.

Incentives for research and development like those Australia provided would be meaningful only if they were well-structured and kept simple.