An interesting article here that came out of the Better By Design conference last week. The gist of the argument was that, in order to remain globally competitive, NZ manufacturers have no option but to move production offshore.
Now we need to qualify this argument – if we want to remain price competitive then, yes, we have no option but to move to locations with a labour cost that is less than ours. But in stating this aren’t we missing the main point about our ability to compete? Should we not be trying to compete on price but creating world class products that are sufficiently differentiated that they command a premium?
An example I like to use is the Danish design houses – Danish Design is, of itself, such a well known and respected brand that Danish companies can still produce products like this, make them in Denmark (where labour costs substantially more than in New Zealand) and sell them to the world – surely this is the model we want to follow and not the low cost/low margin one?
It seems that Better By Design – while articulating a value added, high margin strategy, is in fact being a proponent of competition by price – a dangerous and unsustainable strategy for New Zealand