NZ still stands out on the economic stage

What a rollercoaster ride the last few months have been with our new Labour government. We’ve seen quite a bit of upheaval and discussion. Discussion is good, but it can also be unsettling and creates nervousness in the marketplace. Businesses like to know what’s around the corner as it helps them plan for the future. If doubt sets in then plans go out the window and economic development risks being put on the backburner. We’ve seen several new policies and changes come into effect that have impacted the manufacturing industry.

 

Fero - labour relations

 

Employment Relations in NZ
Perhaps the most significant change of the past few months, even years, is to employment relations. We’ve seen unprecedented industrial actions from several unions and industries, not least teachers and nurses. There are no signs that this will ease, in fact we can predict that it will increase as unions become increasingly empowered through Multi Employer Collective Agreements.

 

The increasing NZ Minimum Wage
The hard facts are that this government will increase the minimum wage by 28% within its first term, and so what about its second term? We only have to look across the Tasman to Australia to see the devastating effects of increased costs and increased legislation on the manufacturing industry.

 

Such a high leap in the minimum wage not only causes increases through all wage levels, but brings with it an inevitable compacting of wage levels from top to bottom. That leaves the more highly skilled and experienced worker feeling that there is less value placed on their abilities versus the non-skilled worker who is earning only a little less.

 

The reality for Fero
At Fero, we are significantly affected by government changes to labour relations and minimum wages. It places undue pressure on our ability to compete in the global market. This aside the changes proposed by government have forced us to think differently and a little more ‘outside the box’.

 

Luckily we saw the writing on the wall a couple of years ago and we put a great deal of effort into finding ways to absorb and mitigate these skyrocketing costs.

 

“The next 14 months alone is going to see a 15% wage increase for us. For many businesses that could mean the beginning of the end, but we’re confident we can overcome it through innovation, a unique offering and experience”
Sam Fulton, MD Fero

 

The future for Fero
We are working very hard to improve our sourcing and supply chain to remove cost through better purchasing and more effective partnerships with suppliers and or customers. Our engineering and purchasing teams have been focusing on each of our accounts and looking at ways to optimise their production and not pass on cost increases.

 

We are very pleased with our decision to establish a production plant in Samoa. This has allowed us to maintain a lot of our prices into the market, whilst at the same time providing a future for the business and some much needed jobs in Samoa. We’re proud of our involvement in Samoa and we believe strongly that it will make a significant difference to our future.

 

We have been very impressed with the speed at which our plant has been able to deliver to market and the ongoing productivity and quality that we are able to enjoy. It is a perfect synergy with our plant in NZ and together we are proud to be able to support and deliver to our international customer base.

 

Fero Samoa Production

It’s hard to believe that Fero Samoa turns one in November and I think it’s fair to say it has been a great year.

 

Back in 2017 when we heard about the closure of OE manufacturing a simple idea was sown. Who knew that this idea would grow into the success it has today. Not only are we able to offer clients offshore manufacturing, we are also able to offer assembly and sub-assembly expertise in this world class facility. This gives us the ability to offer Fero customers lower MOQs whilst delivering fast turnarounds due to the country’s proximity to both Australia and New Zealand.

 

Fero Samoa Production Plant

 

Fero now has a team of over 100 staff operating in Samoa who are trained in lean manufacturing techniques which ensures high levels of quality and productive delivery. The senior management team have over 50 years experience and are well placed to continue this growth, expecting the payroll to grow to over 500 staff in the next 4 years!

 

 

We have also been able to share expertise between factories in NZ and Samoa which is very beneficial to the company.

 

Turning one is a major milestone for Fero Samoa and we are delighted to celebrate and say thanks to everyone that has been involved. Fero Samoa would not be the success it is today if it wasn’t for the support of the staff, government, suppliers and the Samoan people.

 

We look forward to our continued growth in the Australasian manufacturing industry.

Each year we send out a survey to our customer base, which gives us a snapshot of what our customers think of Fero and the service we provide. Fero has seen some big changes over the past 2 years with the opening of the new factory in Samoa and the growth in NZ. And that’s why we feel it is important that we get some honest feedback from our customers to maintain our service levels and to see where we need to improve.

 

Looking back over the past few years it’s been great to see that the whole manufacturing industry has seen positive growth and this has been backed up in our survey with 67% of our customers expecting to see more growth within the next 18 months.

 

The overall survey results were once again positive with the majority of customers being very happy with their relationship with Fero and 100% of customers being satisfied using Fero as a supplier for their business.

 

We are very proud of the fact that over 60% of our customers have been doing business with Fero for over 5 years and all of our customers believe they have a good professional relationship with us. When we asked them what the major advantages were when working with us, they said that they had seen a reduction in costs, lead times and assembly times and that Fero were a reliable source for components.

 

Fero Results 2018Our customers also thought that we were extremely responsive (87.5%), friendly and that our quality was better than most of the competitors. This is all great news and something we are very proud of both here in NZ and Samoa.

 

But of course it can’t be all good stuff and to be honest what we find really important is the ‘other’ stuff. The ‘other’ stuff is not necessarily what you want to hear but it’s the stuff that will make us a better company in the long run.

 

 

 

So here’s the stuff that you thought we could improve on…

Warehouse and dispatch – this is always a problematic area and one that we aim to continuously improve. We understand that we don’t get it right every time but despite all this it was great to see that 100% of customers did receive their orders in a timely fashion and 38% are on time evertime.

General Professionalism and Consistency – although 75% of customers see Fero as being very or extremely professional we did see a 14% decrease in this figure. This is something we will strive to pull back throughout the coming year. We also noticed that although our consistency has been increasing over the past few years we still need to be mindful of in our assembly and production.

Added Value – We saw a reduction in the amount of added value Fero was seen to be giving clients dropping to 62.5%. We see this as an important benefit to our customers and we will address this with our staff.

 

How Can Fero Improve

 

And here are some fun facts to finish off with:Fero Smiles

100% of customers believed that Feros’ communication was excellent.

60% of customers when asked what Fero could improve on said ‘NOTHING’

88% of customers would likely recommend Fero to a friend or colleague

 

Thankyou to everyone that took the time to complete the survey and we look forward to continuing to improve our service to you.

Although much of our core business is in the production of wiring looms, it would be a mistake to think that this is all we do. As a business we see ourselves as providing assembly services for manufacturers. Often this involves the assembly of wiring looms to streamline the manufacturing process, but at other times we use our teams to assemble other elements as part of a sub-assembly process.

 

Sub assembly solutions

 

We use our resources, plant and systems to run sub assembly projects for various clients, combining our electrical experience with other materials. Often these types of projects start with a conversation about wiring but then develop into an understanding that we can provide more solutions and take on more sub assembly.

 

Due to our very strong relationships with Chinese suppliers we’re winning business in Australia and even Europe. We’re using our connections to source a whole variety of materials, and moving beyond simply wiring solutions.

 

As we take on more sub assembly tasks, we’re proving ourselves to be more efficient in speed of turnaround, more consistent in quality and often much more economical for smaller businesses that don’t want to tie up capital in staff costs.

Let’s Talk

If you’re interested in outsourcing more of your sub assembly to free up staff for other roles, or to reduce your capital outlay and/or inventory costs, we would love to talk to you. We have built up some excellent case studies recently that demonstrate our ability and prove the business for outsourced sub assembly.

Heading to China

In the next few weeks we’re heading back over to China and talking to our partners about a variety of materials, including aluminium extrusions for an upcoming project.

 

Call Sam on 09 274 0104, and discover more.

No matter what industry you are in, no matter what products you make, the key to good business is to understand your customers.

 

Without these customers Fero would not have a business and that’s why we feel it is important once a year to get some honest feedback. Of course it’s always nice to hear the good stuff but what we find really important is the ‘other’ stuff. The ‘other’ stuff is not necessarily what you want to hear but it’s the stuff that will make us a better company in the long run.

 

This year our account managers contacted a range of customers and invited them to complete an online survey. (Thanks to all those that completed this!) We had a great response and are happy that the results received give a fair indication of how Fero is seen and what we need to improve on.

 

Last year we set ourselves some internal goals. These were:

 

  • To maintain customer satisfaction
  • To improve our delivery and despatch
  • To inform customers of all Fero’s offering

 

How did we do??
Overall, I think that we can give ourselves a pat on the back and say well done as there were lots of positive comments coming from customers that were very satisfied with Fero’s service. Infact 90% of customers said that they would happily recommend Fero to a friend. This figure is great but it has dropped by 5% on last year so we will definitely be looking into why this has happened.

How are fero?

From what you said in the surveys, Fero is seen as a very professional company that is responsive, has good communication skills and adds value to a customer’s business. We are seen as friendly and helpful and good at what we do. Our quality of product is seen as better than most competitors and our price is seen as ‘about the same’.

 

We supply most of our customers with assembly/wire harnesses (90%) but component supply has also increased over the past year with us supplying this to 38% of customers. Awareness of our other services like pressure injection moulding and offshore manufacturing are still quite low so we will be speaking to you about these next year if it’s appropriate.

 

When asked what improvements customers would like to see Fero make, there were a few clear winners. There was a few comments on the need for more visibility when it comes to pricing and there is a need to review how we confirm orders etc. so we will be looking into our processes here with the admin team.

 

Another ongoing issue that we are aware of and it was indeed one of our goals for this year, was to improve the warehouse and dispatch area. The good news is that more of you are getting your orders on time every time (23%) and 67% of customers are ‘mostly’ getting them on time but the bad news is that you are still not that happy with the process. Therefore we will be reviewing this part of the business in the new year to see how we can make this more streamlined and get your orders to you in a more timely fashion, every time!

Orders Fero

We also feel that the engineering team has a lot to offer your business whether it’s coming up with more cost effective solutions or even designing a new prototype. Therefore we will be reviewing how our engineers engage with your business and will be putting some target response times around when and how they come back to you.

 

So in summary.. We are happy with the results of the survey – from your feedback we can see that some of our service levels dropped slightly so we will work hard to maintain these better in 2017.

Fero thumbs upIn 2016 we implemented a completely new production system – it was something we had to do, but it wasn’t easy to implement and there were a few frustrations. These appear to now be ironed out and the way is clear to focus on improvement, backed up with a more efficient system.

 

Thanks
We would like to say thank you to our customers for taking the time to complete our survey. We certainly always learn from your comments and we will strive to keep your frustrations at bay and keep that smile on your face in 2017!

 

At Fero, we are not just about manufacturing.

 

It is important to us that we understand and help our partners grow within their business. A prime example of this is when PRO-FORM came to us with a request to add more functionality into their product.

 

PRO-FORM is a NZ family-run plastics moulding company that make bed liners, canopies and sports lids for a range of utes throughout the world. With the design of the new SLT sport lid came a request to modernise these products with an auto opening system which lifts the lid and activates a light. This was something our R&D team could certainly help with.

 

Prototype with Fero

At Fero we are lucky enough to have an in-house design and development team who understand vehicle looms and who can create a prototype quickly. Having an open source environment has enabled the partnership between Fero and PRO-FORM to develop quickly and it’s this understanding that has enabled the whole design process to evolve. This evolution has given us the knowledge to develop ideas and come up with solutions that make the functionality of the product second to none.

 

The PRO-FORM team understand their product very well and because more and more farmers and tradesmen are using utes they recognised a need for this modernisation. There were 3 main requirements that we needed to build into the design:

 

  1. A lid that automatically opens
  2. An automatic light which comes on when the lid is opened
  3. A central locking system that included the lid of the ute

By working together, our R&D team came up with a solution that met all requirements and has even given the PRO-FORM team the option of opening the lid by remote control or by touch button. The prototype was a big success and we started producing the looms and lights locally at our factory in Auckland.

Pro-form tray and lid with Fero

Due to this success we have begun to look into options for taking some of the production to China. For many NZ companies this would not be a feasible option but because we have such strong relationships with our chinese partners we are able to benefit from the cost downs and pass these on. Currently we are getting samples approved so manufacturing and production can begin.

 

The product has really taken the market by storm and PRO-FORM are now selling this system all over the world, they are even exhibiting at the world’s leading auto trade fair ‘Automechanika’ in Frankfurt this month.  

At Fero we like to think of ourselves as a company that can make things happen and we get excited about helping companies design and build a better product. It’s especially exciting when it’s a New Zealand owned, family run business like ourselves. We are proud that we can help put NZ on centre stage. We know that relationships are key and without such an open and honest environment with PRO-FORM we could never had developed something so quickly.

 

This is what Nick Smith from PRO-FORM had this to say about Fero:

 

Fero and Pro-form

“The whole team at Fero worked hard to develop this solution. They were great at simply listening, and then coming back with a sensible response, on budget, on spec and on time. That’s the beauty of working with a local NZ owned business that share the same goals as ourselves.”

 

So if you have an idea and would like some help bringing it to market then we would love to hear from you.

Fero Quality stampAt Fero we pride ourselves on offering the best service and quality we can to our customers. But as with all things, how do we know if we are hitting the mark or not and what do our customers really think of us?

 

Last year we embarked on a journey of truths and asked our customers a series of survey questions. As many of you will know the results from this were very encouraging but also outlined key areas we needed to focus on in 2015. Some of these included:

 

  • improving customer satisfaction
  • working on relationships and adding value to customers’ businesses
  • informing customers about ALL Fero’s offerings
  • reducing lead times and improving delivery schedules

 

So with this in mind we developed a strategy that would enable us to build our business and help us achieve results in the NZ manufacturing industry that we could be proud of.

 

Wiring loom manufacture

This year has seen some big changes within Fero, with machines arriving that have enabled us to increase our capacity by 50% and with the implementation of our new MRP system. With changes come frustrations and we have certainly experienced a few ‘pull your hair’ out moments but these have now been ironed out and we know that in the long run this system will be invaluable. Thank you all for being patient with us as we’ve worked through this.

 

Given the success of the survey in 2014 we wanted to see if we had improved over the year. The results from this year’s survey has once again been encouraging. Not only have we seen some real improvements in what our clients think of Fero, we have also seen a positive attitude to growth in the manufacturing industry which has increased by 10% compared to last year.

 

Some of the highlights for us are in the overall figures, and we are delighted that 97.5% of customers are satisfied with Fero as a supplier to their business, an increase of 8.5% from last year. Our clients also said that 95% would happily recommend Fero to a friend, again an improvement of 9%. These numbers provide a great benchmark that we can maintain and build on year upon year.

Fero - Customer saitisfaction survey

Interestingly, when customers were asked about Fero’s capabilities they were still not fully aware of everything Fero offers especially in Moulding and Chinese partnerships. We feel it is important that customers are aware of all our capabilities so we can assist them in a broad number of ways. Customers also expressed an interest in sharing ideas with our engineering team and we will certainly continue to offer this service throughout 2016.

 

Fero survey results 2015

Another key area we wanted to improve was our relationships with businesses and finding ways that could begin to add value to our clients. Results indicate that our reps and the company as a whole have improved on this by around 10%. Our professionalism has increased by 14%, and 96% of clients believe that they have a good relationship with us (an increase of 8% from 2014). Understanding clients needs has also increased and we look forward to continuing this on a yearly basis.

 

We are happy that 50% of you thought we were ‘extremely responsive’ (an increase of 25% from 2014) and that 60% of customers believe that Fero’s service is better than our competitors but we would like to see these figures increase next year. We know that service and consistency is very important to the industry and our customers, and we will be making this one of our goals for 2016.

 

Along with service comes the issue of quality and some customers pointed out that our quality control could be better. We know that the MRP system has contributed to some of these issues but a review into lead-time, order notes and incorrect paperwork will be reviewed in the new year.

 

Many of our clients had read and found the newsletter content useful and informative so we look forward to continuing to send these out every quarter.

 

All in all the survey has once again given us some key indicators to follow up on, and provided insights into ways to improve our service and strengthen the NZ manufacturing sector as a whole.

 

Thank you once again to all those that completed the survey. We look forward to sharing our improvements with you next year.

Fero Thank you

 

 

 

 

 

 

 

As part of the on-going LEAN work we’re carrying out here at Fero, and in answer to some of the feedback we received from customers in our survey, we’ve taken a good hard look at our customer service and made some significant changes. The aim is that the right people talk to each other on any given project that comes our way. It’s meant making more people available to our clients, throughout the company.

It is about putting the right people in to the right conversations. Our customers know a huge amount about what they are requiring and we must always provide expert advice and consultation.

Engineering steps out of the darkness

In the old days we kept our engineers at arms length from our customers, preferring to let them get on with things and work hard in the back office. That’s all changed now. We need our engineers to be able to talk to customers’ engineers; talking the same language means a much quicker result. We now encourage our engineers to join us in meetings which might involve those more technical conversations. Plus they’re only a phone call away and more active, intrinsic players in project teams. The key is the Right Conversations with the Right People, resulting in getting the job done faster, issues resolved better and clients feeling happier.

Fero Engineering Team

Account Management adds value

Our account managers still are the key representative of our business to our customers and will head up project teams, ensuring that we are working constructively towards better solutions. Little has changed there, as most of you were happy with them, their professionalism and their understanding of your business. It’s this last aspect though that we want to develop, enabling them to get right inside their clients’ businesses and be proactive in suggesting improvements to manufacturing processes. They need to be adding value to your business and be seen as part of your team as well as ours. Over time, we’ve found that this partnership approach works best for all parties and it’s a relationship we’re trying to develop with all our customers.

Customer Service Reps

We’ve created a number of roles that focus on customer service, taking responsibility for and answering those more general questions around deliveries, accounts, general logistics and timings. They work with the Account Managers to ensure projects run smoothly. They cover off some of the day-to-day project details allowing our Account Managers to spend more time out and about learning about your business and adding greater value.

So, we would like to say THANKS. Without your honest feedback, these changes might not have been made. Hopefully you will all soon see the benefits to your business as we roll out this new approach to all our clients.

Businesses are returning from China to benefit local manufacturers.

You may have seen Fero hitting the news recently, with articles published in The Herald, The Sunday Star Times, NZ Manufacturing and most recently on Radio New Zealand. As you probably realise, we’re passionate about NZ manufacturing and are excited to see businesses actually coming back from China, wanting to place their business locally. So, we’ve been shouting from the roof tops over the last 3 months, explaining how sourcing products in China isn’t necessarily the cheapest option in the long-run.

 

“It is  easy to be beguiled by what on the surface appears to be a low price, but buying at the cheapest price always comes at a cost”

You get what you pay for in China so if the price too good to be true, then it is.  Many Chinese manufacturers reduce costs by compromising the quality of the raw materials in their product.  For example, copper wire costs are reduced by using recycled copper, which does not perform to specified standards.  This can result in quality problems and high mitigation costs once the component is in use.

It’s a very different way of doing business to New Zealand, so it is easy for local manufacturers to get stung.  That is why it is important to shift one’s thinking from unit-based to taking into account the overall cost of doing business.

 

Although its manufacturing is still cheap by New Zealand standards, rising labour and other costs are seeing China become more expensive to do business with.  Its manufacturers are off-setting these costs through economies of scale.  As a result, minimum run sizes are increasing beyond the reach of many New Zealand manufacturers.

 

“Even large manufacturers by New Zealand standards can be shocked to find that an order they consider huge by local standards is only a fraction of the Chinese manufacturer’s minimum”

 

Sourcing resource materials in China is also harder than most Kiwi businesses anticipate because Chinese regulations make it surprisingly difficult to access many manufacturing materials from within that country. Export and manufacturing licence constraints mean Chinese manufacturers are often unable to source raw materials that are readily available in other parts of the world.  This causes problems for New Zealand businesses that specify product materials that their Chinese manufacturer is not able to purchase, even though the material may be made literally down the road.  The New Zealand business then has to go to the hassle and expense of specifying and validating alternative parts.

Fero gets around this issue by importing the required resources itself, then re-exporting to its manufacturers in China. It has set up a dual New Zealand / China manufacturing option so that it can deliver what its customers need – no matter what the timeframe, quantity or specification.  By integrating Chinese supply with local manufacturing, its able to provide a stronger supply chain and a more comprehensive service.

 

“We have been doing business in China for the past 12 years and have learnt what works.  Rather than using an agent, we have Chinese employees here in New Zealand, who are invaluable for helping us to manage the relationship with manufacturers in China”

This business model means that Fero uses its Chinese partners for its New Zealand manufacturer customers who need high volume, high labour input looms and harnesses.  Alternatively, Fero manufactures at its Auckland facilities – often at a very competitive price, and a cheaper overall cost, than could be done in China.  Where possible it has automated its operations, enabling it to keep labour costs down.

Providing a local manufacturing option is proving to be increasingly popular with New Zealand manufacturers because it enables them to be more responsive and turn changes around far faster.

 

“Long lead times and distance mean that specification changes to Chinese-manufactured goods can take many months to flow through the supply chain.  This makes it difficult for the manufacturer to respond quickly to their own customers’ needs”

For example, if an appliance manufacturer wants to change a function such as adding a button to turn off the timer alarm, then the wiring loom will need to be updated.  It can take five or six months from the time that change is notified, until the new stock arrives in New Zealand and then subsequently replaces the old stock ahead of it in the supply chain.

Although there remain many advantages to getting goods manufactured in China, it is vital to do a lot of due diligence and spend a lot of time building relationships and understanding Chinese business culture before embarking on a business arrangement.

Design_Capabilities

It’s a high-risk game and there are no shortcuts.  Many New Zealand companies are finding out the hard way just how difficult it is to resolve issues from the other side of the world, and how hard it is to prevent intellectual property and other rip-offs.  This presents a lot of opportunities for Fero and other local businesses because we manage the difficulties and navigate the minefields of doing business with China, enabling our customers to benefit from the best of both worlds.

 

“Anyone trying to do this themselves without prior experience is essentially playing Russian roulette with their business”

Fero NZ - Active image

Fero NZ - Active image

May is going to be a very big month for Fero. We’re making a change that will take us one huge step forward as a business and how we operate.

 

Our mission over the past few years has been ‘to contribute to the sustainability of local Australasian manufacturing and our customers’ ability to remain competitive on a world stage’.

 To help achieve this we have set a goal to provide a 5 day lead time with 98% DIFOTIS within the next 12 months. We’ll achieve this once we have launched our… new MRP system.

 

Very soon we’re introducing a sleek new system that will integrate all of our IT functions under the one umbrella.   For a couple of years we have known that we’re fast outgrowing the systems that we have been working with. In order for us to provide the accuracy, quality and service that our customers require we have identified the need to improve the way we drive the business.   We are now at that point and the implementation of this software has come at just the right time.

 

In order to continue to increase our efficiency, accuracy and productivity we know that we need a customisable system that is developed for a high mix, low volume manufacturing business such as ours. With our goal of a 5 DAY LEADTIME WITH 98% DIFOTIS within the next 12 months, it is imperative that we have an MRP system that can help us to deliver this. We will also need to work with our customers to ensure that we have some forward planning of resource and materials required for this leadtime.

 

Scoping and researching various solutions over a number of months, we settled on Abel Solutions. We feel that it gave us the best product for our business and in turn will ensure that we are able to provide an even better service to our customers. It was our requirement that whatever we used will contribute significantly to improving our delivery to the customer and our mission of ensuring local manufacturing sustainability and competitivity on the world stage. We feel that Able will provide that and more!

 

The last 4 months have been very busy with data transfer, customisation, and training to ensure a seamless transition. In May we will go live and we are looking forward to have a host of functions that will greatly increase our internal efficiency and delivery of a superior service to our customers.

 

Your feedback please.

 

Unfortunately we are very aware that we do not live in a perfect world and that any major change to software can cause some interruption to the business. If you do see anything that is not working well please let us know. We have worked very hard to ensure that there will be no major issues, however there could be some minor oversights and we will be able to fix once we become aware of them.

 

Fero NZ - Feedback

 

You should see very little change in the way that we interact with you. There will be a slightly different look to some documents such as order confirmations etc, however we want to ensure no disruption to business as usual.

 

At Fero we are looking forward to working with a new system that will make our lives a lot simpler and will ensure that we continue to lead the market in service, quality and delivery.