Hope for the Best, Plan for the Worst

October 13, 2021

Hope for the Best, Plan for the Worst

I hope that we are going to have an easy ride and an open summer with lots of fun in the sun with family and friends. I hope that we will have freedom to go where we want and see who we want. I hope that I don’t know anyone that gets very sick, or dies, from some new disease. I hope my kids can play on a jungle gym, visit their grandparents and eat ice cream from a cone. I hope Santa comes.

What I am planning for is that Delta is here to stay. That we are going to have community infection in every part of the country and that we are going to be facing a summer of high infection and huge disruption to our way of life. I am planning for a Christmas where the whole country is locked down, not because we have been instructed to during a 1pm briefing, but because the unvaccinated are sick and our health system is on its knees, which will impact our way of life more than we have ever experienced.

We can’t get rid of it, so now we have to get through it.

I am not wanting to drive fear or make a political statement, I am only wanting to look at what could impact our businesses and present some practical solutions to help get through and ensure we all come out the other side in the strongest possible position.

Our role in your future.

Fero’s purpose is to support local manufacturing and ensure that New Zealand manufactures can operate and compete on the world stage. In order to live to this, we must look forward and see what we can do to help our industry get through.

I expect that we are going to face an impact on our capacity, as an industry and country, to maintain our productivity. We have done a fantastic job until now, but it has mostly been theoretical. The next few months are going to see us face Covid-19 in the same way as every other country has had to.

The good news is we are facing this period of infection with the vaccine as a tool to minimise the impact. There is no doubt that this will shorten the period that we have to get through and will see us coming out the other side with less societal impact and faster than if we did not have it.

The other good news is, we will see a return to normal life by the end of this summer and, 12 months from now, will be preparing for the end of 2022 in a much more normal way. Soon Covid will be a thing of the past. Until then we need to get through the best that we can.

What have we done in the last few months?

  • We have increased our stock holding by about 40% since April in preparation for disruption.
  • We have worked with our customers to understand better the future demand on our resources.
  • We have increased our capacity, and now we are wanting to get ahead of production in order to buffer against any productivity reduction that we see impacting us or our customers.

We have found some additional solutions with some customers.

One customer has filled a warehouse with 8 weeks of All stock that they need for their production. This buffer is to protect against any supply chain issues and already has allowed them to continue manufacturing whilst some of their suppliers struggle to deliver.

Another customer has provided us with orders for all their expected demand out to January. We have produced this and are confident that no matter what happens we will be able to dispatch to their required dates for the next 4 months. We also understand that under the model, there will still be some unforeseen demand, but we have capacity for this and it is much easier to achieve.

Our recommendation to you.

I strongly recommend getting orders placed with us as far out as possible. Please communicate to us that you would like us to make this and to deliver to the future dates. It helps us to ensure that we have product ready to go a long time in advance of when it is needed and it does not impact your cash flow at all.

I encourage anyone that is wanting to plan for the worst to get in touch and look at what Fero can do to help you ensure that your supply chain is as strong as possible and that if you have demand and capacity, you will be able to continue to supply you customers and maintain your productivity.

This is a call to all to protect our capacity, productivity and business continuity and ensure that you have orders in to see you at least until the new year. We are working frantically to get as far ahead as possible and ensure that we have finished product that we will be able to send.

We will get through this and those of us that have planned and taken steps to do so and allow our businesses to continue will come out the strongest. Please get in touch to discuss how we can help to ensure continuity and the best outcome for your recovery.

I hope our health system can cope and that our vaccine rates mean we will be able to live without restrictions, however if this is not to be, we want to be ready for it.

December 18, 2020

Important Update

The tsunami that we have been holding our breaths for all year now seems to be hitting.  We are potentially looking at the perfect storm of Xmas, CNY, an increase in worldwide demand, and the effects of almost a year of reduced worldwide production.

We have already updated you all on the freight and container issues we are seeing in both foreign and domestic ports. These are impacting the manufacturing sector and giving us lots of challenges to deal with.

 

Supply Chain Focus

All of these challenges focus our attention on our supply chains. It is those that have developed or are developing local capabilities that are making big gains at the moment. Fero has a strategy to focus on our local manufacturing capabilities and to ensure that we have as much local sourcing as we can achieve.

The attached is an example of what is becoming a very common communication from suppliers.  I am sure it is not a surprise to many and further underlines the need for good forward planning going into 2021.

 

Forecasting

We have seen this coming for some time now and have been focussing on forecasting and working with our customers to make sure that we have planning in place to ensure that we can supply on time.

For those customers that are forecasting monthly and have a reasonable level of accuracy, we are able to deliver mostly on time.  Unfortunately, there are still a few issues that are hitting us, but these are also mitigated by a planning strategy.  Our feeling now is that we are not safe until we have the materials in our plant ready to go.

 

Planning for 2021

With this in mind, I continue to urge everyone to plan well ahead for demand in the coming year.  The more that we can understand upcoming demand and ensure that we have the materials on-shore the better.  I see that there is going to be huge competition in 2021 for components and those of us that are ahead of the game are going to win.

 

Thank You

Finally, though, let’s celebrate the good.  Nine months ago I did not foresee that we would be shortening our Xmas holiday in order to cope with the huge demand that all sectors seem to be seeing. Our economy seems to be very buoyant and, although this may be unsustainable, it seems that this is carrying on into the early part of next year.

I would lie to take this opportunity to thank you for your business and support in 2020. I wish everyone a Merry Christmas and a well deserved break, and look forward to catching up for an exciting 2021!!!

 

Regards

Sam

November 2, 2020

Shipping Delays Hitting NZ Hard.

Stuck in traffic the other day and listening to Mike Hosking on ZM Newstalk, I heard Shippers’ Council chairman Simon Beale talk about the difficult times faced by our ports and those importing goods into NZ.

 

Plan Ahead

It echoed the situation that we at Fero have been dealing with over the past few months. And the situation is certainly not improving any time soon! Supply and Delivery lead times are coming under increasing pressure – worse than at any time I can remember.

 

Simon talks about the importance of companies planning ahead, forecasting more effectively and placing orders early. Here’s a link to that interview and I encourage you to take a few minutes to listen to it:

 

https://www.newstalkzb.co.nz/on-air/mike-hosking-breakfast/audio/simon-beale-shipping-lines-bypassing-new-zealands-ports/

 

China is very busy with internal demand as a result of them re-emerging from COVID. Production lead times are being pushed out further and further as they put their domestic needs before their export needs.

 

 

Chinese New Year

Next year Chinese New Year falls in mid-February and therefore we need to plan for this disruption now. In previous years this has not been an issue until 6-8 weeks from the holiday. Increased demand internally, the need to quarantine for inter-regional travel and shipping disruptions are all contributing to potential disruption.

 

Without a doubt, orders need to be placed by mid-November to avoid any CNY disruption.

 

Here’s an example of the struggle we face. We have received communication from our shipping agents today explaining a delay on a shipment from China.

 

● The ship is scheduled to arrive in Auckland on 8 Nov and is required to anchor until 15 Nov, when a berth has been secured for it at the port.

 

● In addition to this, recent heath and safety measures introduced at all ports means it is taking approximately 4 days for the container to be offloaded from the vessel.

 

● Processing and delivery to site can then take another two days!! So for a ship that is arriving on the 8th Nov, we are not expecting to see the goods until two weeks later!!!

 

 

Not just China

There are also huge delays at overseas ports throughout the World, but particularly in Australia. This means we are seeing delays in on-shipping to NZ which is also having a knock-on effect with a significant impact on airfreight.

 

 

Working Hard to Maintain Supply

We are working hard to mitigate these issues and ensure a secure supply chain for our raw materials.  This is hugely helped by those customers that can accurately forecast into next year and work with us to ensure that we can mitigate the impact of COVID on shipping and production around the world.

 

 

For more commentary, take a look at this recent article on NewsHub where Matt Ball, Ports of Auckland General Manager had this to say

 

 

“2020 has been the year when everything that could go wrong did go wrong. “

 

 

Our processes and planning have given us the ability to buffer against some of the delays that we are seeing and we are proud to continue to deliver, mostly as normal.  I feel that over the coming months we are going to have to work even harder on this and more collaboratively with our customers to ensure that we can continue to deliver in full on time.

 

 

Reaching Out

Over the next few weeks, the Fero team will be proactively reaching out to all our customers in an effort to get your requirements forecasting. This isn’t to try to up-sell you or create sales opportunities. More, to secure consistent supply and work with you effectively so you can continue unhindered production.

 

In the meantime, if you would like to discuss the shipping situation in NZ, please contact me.

 

 

March 6, 2020

Coronavirus

I have been getting a huge amount of enquiry into how Coronavirus is going to impact our production. As you all know, it is very hard to predict. We are now starting to see some feedback from suppliers on materials that are disrupted and we are working to understand if our buffers will cover these delays.


For the most part, we are covered and are not seeing much delay yet… However, I am sure that there will be a significant impact on all industries and that the longer the quarantining of people in China, and therefore reduced production, the more impact we will see in associated sectors.


For instance, we are starting to see delays in shipping and increased costs due to this. There has also been an increase in costs for materials and so we are looking for alternative products to substitute where we can.


At Fero, we can only work with the demand that we have in our system, so my advise is to get orders in to cover some extra demand in your business. We are working hard to ensure that we can continue to deliver to all of our customers but, as we know, it only takes one component to severely impact production. NOW IS NOT THE TIME FOR JUST IN TIME MODELS.


Please don’t hesitate to get in touch if you would like to discuss further how we are minimising the impacts of Coronavirus and putting plans in place to ensure continuity of supply.

December 4, 2019

Situation at Fero Samoa regarding Measles Epidemic

Talofa all,


The situation in Samoa with regards to the Measles outbreak is one of the worst epidemics to hit the country in the last 100 years.  You will be aware from the news reporting that there have now been 55 deaths in the country and most of these have been of children under 5.  It is a very difficult disease to contain, and in a country where medical assistance is not just around the corner, and living is in a very communal manner, it has swept through the population very quickly.


At Fero Samoa, we have taken all of our staff to be vaccinated.  We have had two staff infected with the disease at this stage, but expect that due to our vaccination efforts, we are not going to see many more of our team affected.  We also feel extremely fortunate that we have not had any of the immediate families of our teams suffer from measlesrelateddeath, and we are all praying that it stays this way.  We are supporting our team and ensuring that all public health messages are communicated during daily meetings.

The government of Samoa is implementing a number of measures to contain and protect the population.  The most recent of these is to declare a state of emergency and order that all businesses, public and private, are shut down for Thursday and Friday this week.  The plan is to try to keep as much of the population as possible at home,so that mobile vaccination units can visit villages and all of the population can be immunised.  This mass MMR Vaccination plan is to be held on the 5th and 6th of December.


Fero Samoa fully supports the efforts of the Government and are assisting in any way we can to help stop the spread of this disease.  Our operations are going to be impacted by this closure, however, we have plans for such an occurrence and do not expect to see any disruption of supply to our customers.


Unfortunately, we do expect to see further disruption until the Christmas break, but we have contingency plans in place to ensure that we are able to supply all product to our customers during this time.  We will be increasing our capacity in NZ and will be able to fill any gaps with this plant. At this stage, we are not expecting to see any delays on delivery dates but will communicate any issue as soon as we are aware of it.


Good information has been a bit slow to filter through to the population.  As of yesterday, we started to receive good information on what actions to take if early symptoms present.  We have a very close and supportive team at Fero Samoa and everyone is keeping an eye on each other. We know that when the immediate danger is over the country is going to go through a period of grief and of asking what has happened.  At this stage, we will also need to support our families in Samoa. Tragedies such as this highlight the need for us all to be ensuring that we are vaccinating our children. We wish all the success to the Government in their plans to protect the population and all our support to the people of Samoa in this difficult time.

March 10, 2019

Stop the rollercoaster, we feel sick.

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

October 30, 2018

Fero Samoa Turns One!

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.

July 3, 2018

Survey Results 2018

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.

June 1, 2017

What’s Looming for Fero?

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.

March 23, 2017

Focus on Copper

Did you know?

Copper is man’s oldest metal, dating back more than 10,000 years. A copper pendant discovered in what is now northern Iraq goes back to about 8700 B.C.

 

There are 1.6 billion tons of Copper reserves known in the world – it seems a lot, but when it’s gone, it’s gone.

 

Twenty mines account for about 99% of production – that makes for 20 very influential mines!

 

Pure copper’s melting point is 1,981°F (1,083°C, 1356°K). Its most important properties include superior heat transfer, electrical conductivity and corrosion resistance.

 

Copper and Fero

An everyday metal

Copper is a mineral and an element essential to our everyday lives. It is a major industrial metal because of its high ductility, malleability, thermal and electrical conductivity and resistance to corrosion. It is an essential nutrient in our daily diet. And, its antimicrobial property is becoming increasingly important to the prevention of infection. It ranks third after iron and aluminum in terms of quantities consumed in the USA.

 

Copper wiring

Due to it’s unique conductivity properties copper is essential in electrical wiring. Copper wire price fluctuates heavily due to many different factors including the supply and demand of copper globally, the emergence of different types of wire and even seasonal conditions.

 

The price of Copper

Copper, until recently one of the worst performing commodities of the past two years, experienced a sustained spike of 33% at the end of 2016, posing several questions as to the direction of the market as we move into 2017.

 

The biggest single cause of the price rise has been a pick-up in Chinese imports, responsible for almost 50% of global copper demand. This is seen a good omen for the industry’s health.

 

There are some who claim it will be short-lived, but in my opinion this is short sighted.

Copper And Fero

In reality I, and many others, feel the market has the potential be driven higher this year and next, if not by outright supply tightness then by the perception the market is moving in that direction.

 

Put simply we’re seeing more demand from China and only 20 mines to extract it, added to the fact that it is a finite resource.

 

The general trend over the long term has been that copper prices have fallen since a high in 2011. These falling costs have helped offset a strengthening US Dollar against the RMB, and have resulted in a neutral outcome in the market.

Fero and the Copper story

Suffice to say the price of copper has a big effect on our business, with much of our wiring containing copper. We watch the London Metal Exchange with interest, and will continue to do so. As a business, have already seen some significant increases in raw material costs coming through. Our hope is that we will see a smoothing out of the pricing and that we will be able to absorb the extra cost without being forced to pass it on to our customers.

 

We will monitor the market and keep you updated on how copper performs over the next few months.