Supporting lean manufacturing initiatives in New Zealand

Abstract

New Zealand has lagged significantly in the OECD tables of labour productivity in recent years, and lies at the lower end of the OECD rankings in 22nd place out of 30 OECD countries in 2008 (New Zealand Treasury, April 2008). Labour productivity is a measure of how effective labour is being utilised as a factor of production, and is defined as the ratio of real goods and services produced per hour worked. The New Zealand Government has previously set policies with the specific aim of achieving a place in the top quartile of OECD productivity rankings (see the Growth and Innovation Framework, Ministry of Economic Development, June 2005). Despite these initiatives New Zealand is still lagging behind in labour productivity terms, especially so when compared with Australia (New Zealand Treasury, April 2008). Another indication of the deteriorating economic environment is the recent release of the Bank of New Zealand’s Performance of Manufacturing Index (PMI). In October 2008 this index reached its lowest level since the survey began in 2002, and has been in decline for a record six consecutive months. BNZ chief economist Mark Walton recently stated that the manufacturing recession was widespread and entrenched (http://nz.biz.yahoo.com/081113/3/p/96t4.html). Concerning this situation, it is imperative that the manufacturing sector lifts its productivity and competitiveness. Hence, this study is timely as the results demonstrate that Lean Manufacturing systems have the potential to be a significant vehicle for increasing New Zealand’s productivity, and could potentially be the basis of a new national strategy. The findings of this study are based on the actual experiences of 22 companies who have undertaken a Lean manufacturing implementation. In addition, this study also examines Lean implementations from the consultants’ perspective, and we also review the state of Lean education in New Zealand’s eight major universities. We pay particular attention to the role of NZTE in initiating and supporting Lean manufacturing in New Zealand through various programmes.