Reports of the demise of the New Zealand outdoor clothing and equipment industry have been greatly exaggerated. Locals are not only thriving, but planning to take on the big guys. David King reports.
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THE road to China is a well worn one for the Kiwi outdoor clothing industry. Kathmandu, Icebreaker, Swanndri and Macpac have all packed their bags and headed to Asia to find cheaper contract manufacturing partners, leaving what's left of the local industry to fend for itself. In their wake they've created one of the great Kiwi business myths: that you have to go to China in order to compete.
The Green Party hitched the $11.5 million Buy Kiwi-Made campaign to the wagon of Swazi, a busy Levin manufacturing business whose outdoor clothing has penetrated deep into what was once Swanndri country. The business employs 84 staff and is owned by Davey and Maggie Hughes. Mr Hughes, who likes to encourage singalongs at work and, while off on a slight conversational tangent, admits he sounds "like a socialist and a dreamer" is nonetheless a successful capitalist who has become the poster boy for Buy Kiwi-Made.
He thinks the Chinese-made Air New Zealand uniforms are a national disgrace and uses the example of a new Ministry of Social Development contract for uniforms to illustrate what's gone wrong.
The MSD -- which includes Work and Income staff -- does not require the garments to be made locally. But Mr Hughes knows that as soon as the economy slows and the dole queues grow longer in Levin it will be MSD staff, resplendent in their new Chinese-made uniforms, who will knocking on his door asking if he has space for a few more workers. "It's like, holy shit, guys, don't you know what you are doing? It's just so ironic."
By contrast the Department of Conservation has put out a similar contract and it stipulates the garments have to be New Zealand-made. He says the Buy Kiwi-Made campaign is the best way to give those left some hope. "No one left in manufacturing wants a handout, because handouts are nothing more than subsidies. "What they are doing is the best way forward."
BUT for all his patriotism, Mr Hughes praises Icebreaker founder Jeremy Moon for doing "the right thing" by quitting manufacturing in New Zealand for China. "For the company, that they want to be in the global market . . . we don't have the manufacturing base left in New Zealand."
Icebreaker has revenues in the region of $100 million and wants to take on the likes of North Face and Patagonia. Mr Hughes wishes him luck. "I don't want to be an Icebreaker but I want to see strong Icebreakers because they are good for New Zealand."
But he thinks Mr Moon could have made at least one concession. "Perhaps he could have said the Australasian markets will still be serviced by New Zealand manufacturers -- wouldn't that be a lovely compromise. "It's not too late to do it, he could be the hero who picks up the wounded mountaineer from the mountain and brings him down."
Swazi turns over about $10 million and Mr Hughes reckons he'd add a $1.5 million profit straight on to his bottom line if he shifted production to China. And surprisingly, he would not rule out some manufacturing there in the future. But "deep in his heart" he could never go to China for any Australasian-market products. Hughes says there is a wide belief that if a firm had not outsourced production to China, then it had had its day.
With just two shareholders to answer to about profitability -- he and his wife -- he is able to keep his head down and keep on working away with his business model. "I was feeling lonely there for a while but the Kiwi-Made campaign came along. "There's enough work out there for us but wouldn't it be great if we could go and build the industry. "Not everyone can be a software programmer or a designer or a journalist. Some people have to work for a living." Ultimately the power is with the consumer who has to evaluate what they buy. "Are they doing nothing more than exploiting low paid foreign workers?"
CHRISTCHURCH'S Cactus Outdoor Equipment in Lichfield St has a great claim to fame -- it is the only pack maker left in New Zealand. It is owned by four former Wellingtonians who have hit on a winning formula of making a combination of technical climbing and outdoor equipment and more prosaic products including thousands of postbags for New Zealand's legion of posties.
Co-owner Ben Kepes says Cactus is profitable and sees a good future in New Zealand. The company employs eight staff at its own manufacturing plant and contracts out work to three other manufacturers in Christchurch and Nelson. Cactus' aim is to be profitable and sustainable and put food on the table for all its stakeholders. "We don't want to be another North Face. We want to provide a good standard of living for our employees and the owners. We want to be sustainable -- financially, environmentally and socially. If that lacks ambition, then I'm happy to lack ambition."
Mr Kepes says it is hard to find skilled machinists because they have been made redundant so many times they feel they have been burned by the industry and give up on it. "It's nice to give recognition to the people who spent 40 years on sewing machines doing a fantastic job and getting very little thanks for it."
Not surprisingly, Mr Kepes likes the idea of the Buy Kiwi-Made campaign, but finds it ironic that Labour has agreed to it at the same time as trying to do reach a free trade agreement with China. Like Mr Hughes, he hopes it makes consumers think about what they are buying. "I think it's really important that people know there are businesses and brands leveraging off the New Zealand thing when they don't have a single percentage point made in New Zealand." He says the decision about where you manufacture is all about your business model. If your model puts mass market appeal and profits first, then it is off to China. "It's a failure of their business model and not a failure of New Zealand manufacturing. "They are trying to compete in a market that everyone is making offshore and they have to get their labour costs down."
He also gives credit to Icebreaker for being a success, but says Mr Moon's headquarters could just as well be in Mongolia as Wellington. What has upset him is a perception that some manufacturers have had no option but to go to China to chase better quality manufacturing. "I would challenge any Chinese factory to make better quality than we can do here. We can do anything. Our manufacturing is as good as anywhere."
Across town in the back streets of Sydenham, the sprawling Lane Walker Rudkin network of buildings is a beehive of activity. The 102-year-old textiles manufacturer is the grandfather of the New Zealand industry with a long history of providing clothing for Kiwi greats, from Peter Snell to the All Blacks. Its Jockey underwear and merino woollens have kept most of New Zealand's nether regions warm for years. LWR, which still employs 1200 staff in Australasia, is on the comeback trail. It has just launched Everest, a range of merino clothing which plays up the company's connection to Sir Edmund Hillary and Sherpa Tenzing Norgay's 1953 expedition.
Hillary wore merino supplied by LWR. Everest is about unashamedly playing the local trump card, and the results so far have been good, with the company selling between 4000 and 5000 items since its launch in the United States. LWR's general manager Mark Anderson says: "It's to claim a bit of that outdoor clothing revenue back, we don't want to roll over and see that shelf space going to Chinese made stuff."
He sees the future in making high- value raw material garments such as merino zip tops with relatively low labour time input costs. This gets around the fact that LWR has to pay workers at least $13 an hour, while a Chinese machinist would be earning about 10 cents. His favourite comparison is a business shirt with its many seams and button holes to a merino zip-up top which is much faster and relatively simple to make.
LWR does end up sourcing goods from China, but they would make up 23 per cent of what it does at most.
While he thinks the Kiwi-Made campaign is "great" and will help the cause, the businessman in him would rather see the money go on lowering ACC levies or tax. What it all comes down to it seems is picking your fights wisely. To survive, you can't try and take the Chinese head on at their own game. "Manufacturing high-quality branded products is the way to do it," Mr Anderson says. "As long as you are careful about your labour inputs you can do it. For every $100 we sell, $100 is coming back to New Zealand."
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SHOULD I STAY OR SHOULD I GO?
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Made in New Zealand
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Locals
Chalky Digits
LWR Everest
Cactus Climbing Equipment
Swazi Apparel
Ground Effect
Earth Sea Sky
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Made in China
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Kathmandu
Swanndri
Macpac
Icebreaker
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CAPTION:
Above: Swazi's Davey Hughes _ `be a hero, Mr Moon'.
Left: Cactus' Ben Kepes _ brands `leverage' off New Zealand `without a single percentage point made in New Zealand'.
