Kiwi man­u­fac­turer takes in­no­va­tive off­shoring ap­proach to

DEMM Engineering & Manufacturing - - NEWS -

New Zealand’s lead­ing wiring and as­sem­bly so­lu­tions man­u­fac­turer says it hopes to be set­ting a trend by shift­ing its off­shore op­er­a­tions away from China, to Samoa.

Fero is an Auck­land- based fam­ily- owned busi­ness that man­u­fac­tures wiring looms for lo­cal tech­nol­ogy man­u­fac­tur­ers, rang­ing from au­to­mo­tive and marine light­ing, to air con­di­tion­ing units, air qual­ity sen­sors and aero­nau­ti­cal units.

It is in the process of set­ting up op­er­a­tions in premises near Apia that un­til late last week housed Yazaki EDS. The Ja­panese-owned au­to­mo­tive com­po­nent man­u­fac­turer was one of the coun­try’s largest em­ploy­ers and its clo­sure put more than 700 peo­ple out of work.

Fero has al­ready signed up 60 Yazaki em­ploy­ees and plans to em­ploy more once its Samoan op­er­a­tions be­gin later in the year. The com­pany in­tends to ex­pand to 200 peo­ple over the com­ing two years.

Gen­eral Man­ager Sam Ful­ton says the de­ci­sion to re­lo­cate Fero’s off­shore op­er­a­tions from China to Samoa came about after the com­pany an­a­lysed its longterm prospects.

“Our busi­ness is go­ing very well but most of our cus­tomer base is in New Zealand, which pro­vides lim­ited op­por­tu­ni­ties for on­go­ing growth. We are in the process of ex­pand­ing to Aus­tralia and our cur­rent man­u­fac­tur­ing model needed to evolve ac­cord­ingly,” he says. At present, around 25 per­cent of the com­pany’s fin­ished prod­uct is sourced from China. Ful­ton says although its Chi­nese op­er­a­tions have been very suc­cess­ful for Fero, the chal­lenges of dis­tance from its Aus­tralasian mar­kets, length­en­ing lead times, re­quire­ment for large batches and ris­ing labour costs were mak­ing it in­creas­ingly dif­fi­cult to keep con­trol over this as­pect of their op­er­a­tions.

“We are al­ways look­ing for ways of do­ing things bet­ter, faster, cheaper for cus­tomers and we want to be known for be­ing re­lied on to de­liver – no mat­ter what the time­frame, quan­tity or spec­i­fi­ca­tion. Grow­ing chal­lenges with China were mak­ing it in­creas­ingly dif­fi­cult to live up to those prom­ises.”

Fero in­ves­ti­gated sev­eral al­ter­na­tive off-shore op­tions be­fore learn­ing of Yazaki’s in­tended de­par­ture from Samoa. It pre­sented the per­fect op­por­tu­nity be­cause, like Fero, Yazaki man­u­fac­tured wiring looms and also had very high- qual­ity stan­dards and skilled em­ploy­ees.

Mr Ful­ton says Fero had three ma­jor re­quire­ments of its new off-shore op­er­a­tion: qual­ity, pro­duc­tiv­ity and min­i­mal im­pact on its New Zealand man­age­ment re­sources.

“Yazaki’s premises are per­fect for our needs and its em­ploy­ees ticked all three boxes in abun­dance. Their qual­ity stan­dards were so high that they had gone four years run­ning with zero pro­duc­tion de­fects. Its for­mer em­ploy­ees are there­fore ex­tremely knowl­edge­able, skilled and pro­duc­tive – so much so that I’d be pushed to find any bet­ter here in New Zealand. It was a very well-run op­er­a­tion.”

Ful­ton has is­sued a chal­lenge to other New Zealand busi­nesses, say­ing many would ben­e­fit from shift­ing their man­u­fac­tur­ing from China to Samoa.

“It’s the same time zone, English is widely spo­ken, many Kiwi busi­nesses are al­ready fa­mil­iar with Pasi­fika cul­tures, tran­sit times are a frac­tion of those from China and it is eas­ily ac­ces­si­ble to New Zealand and Aus­tralian mar­kets. Fur­ther­more, the Samoan gov­ern­ment has been in­cred­i­bly easy to deal with.”

Fero’s planned move into Samoa has al­ready caught the at­ten­tion of other man­u­fac­tur­ers around the world, with com­pa­nies from South Africa, Den­mark, Ger­many and the USA show­ing in­ter­est. Ful­ton an­tic­i­pates that other New Zealand com­pa­nies could fol­low suit. “For years Kiwi busi­nesses have been look­ing past the Pa­cific, to Asian off­shore op­por­tu­ni­ties and in do­ing so have failed to no­tice a highly-skilled and welle­d­u­cated re­source right on our own doorstep. It’s a re­ally ex­cit­ing op­por­tu­nity, for Fero, for Samoa and for other New Zealand busi­nesses too.”

Fero’s New Zealand op­er­a­tions are based in Mt Welling­ton, Auck­land and cur­rently em­ploys 70 peo­ple. Es­tab­lish­ing the Samoan op­er­a­tions will not re­sult in any New Zealand job losses.

The com­pany is plan­ning to ini­ti­ate a mu­tu­ally ben­e­fi­cial ap­proach for its op­er­a­tions in both coun­tries, for ex­am­ple by plan­ning to es­tab­lish an ex­change pro­gramme whereby em­ploy­ees from its Samoan and New Zealand op­er­a­tions can have the op­por­tu­nity to gain new skills in each other’s work­place.

Fero will con­tinue to source some ma­te­ri­als from China and will main­tain some op­er­a­tional ca­pac­ity there, al­beit on a much-re­duced scale.

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