Story: Employer and business organisations
Page 2 – The Manufacturers’ Federation
New Zealand manufacturing was farming’s poor relation through the 19th century and well into the 20th. Overwhelmed by imports and often frustrated by a lack of capital, manufacturers wanted their fledgling businesses protected. They formed local associations from the 1870s, and the national body, the Manufacturers’ Federation, was set up in 1927.
Early manufacturers bemoaned buyers’ bias against New Zealand-made goods. Auckland’s industrialists took action, organising an exhibition of locally made goods in 1887. The three-month exhibition opened with a torchlight procession up Queen St and along Karangahape Rd. Five thousand families came to see the furniture, brushware, boots, woollen cloth, soap, candles, baskets, mats, rugs, condiments, perfumes, biscuits, agricultural tools, paints, jams and preserved meats on display.
The federation went through two distinct phases. Underlying both was a concern with the promotion of manufacturing.
Until the 1980s the need for protection was the central concern. Focused on local rather than export markets, manufacturers sought government-imposed tariffs on imported goods. After the government introduced an import licensing system in the 1930s manufacturers sought to have it maintained.
In the 1970s the federation’s purpose expanded to include the development of export markets. Within a decade, the federation and the government embarked upon the dismantling of controls, which had come to be seen as supporting inefficient businesses.
Relationship with government
Conservative governments were generally unsympathetic to manufacturing until the 1960s. Before that, farmers (who earned virtually all of New Zealand’s export income), importers and British exporters who expected access to the New Zealand market all had more influence. When tariff protection was granted, it was piecemeal or limited. From the 1960s, manufacturers based in Auckland and Christchurch formed a closer relationship with the conservative National Party, and lobbied forcefully to protect their place in the domestic market.
Labour governments were more focused on manufacturing, because manufacturers were important employers. Despite this, it was a dire shortage of overseas funds and a surge in importing rather than the efforts of the Manufacturers’ Federation that persuaded the Labour government to introduce comprehensive import licensing in the late 1930s. The licensing became a form of industry protection. Its protective effect was increased by the disruption – and in some cases cessation – of imports during the Second World War.
After W. B. Sutch became head of the Department of Industries and Commerce in 1958, promotion of industry was extended. The department sought to foster industry and the export of manufactured goods. New Zealand manufacturers were protected from overseas competition through import licensing and tariffs. Later, export incentives, subsidised trade missions and a network of trade commissioners were all instituted.
The holy trinity
In the 1960s and 1970s the Manufacturers’ Federation was one of the ‘three feds’ which ran the country’.1 The others were the Federation of Labour and Federated Farmers. Both the labour and manufacturers’ federations shared a strong interest in retaining protection – it helped maintain full employment.
Manufacturers and exporting
In the 1970s manufacturers’ associations actively pursued export opportunities. With continuing strong support from government, exports of manufactured goods to Australia, Japan, the Pacific and Asia grew rapidly. In 1977 the federation set up the Auckland-based Export Institute to take over its export work.
Membership was highest in the South Island in the 19th century, then grew strongly in the upper half of the North Island as industry became concentrated around Auckland. At its height in the early 1980s, the Auckland Manufacturers’ Association had 1,800 members.
In the 1980s and 1990s, economic reforms by both Labour- and National-led governments radically altered the position of manufacturers and their organisation. Manufacturers were battered by the removal of import restrictions, reduction of tariffs, low domestic demand, and the dollar’s rise after it was floated.
In the late 1980s, the Manufacturers’ Federation represented more than 2,400 companies employing 150,000 workers and producing 85% of manufactured goods. The sector recovered in the mid-1990s, but federation membership numbers remained below the late-1980s peak.
Faced with a manufacturing boom without tariffs or licensing, the federation re-invented itself. It no longer sought protection, focusing instead on the development of manufacturing as a local and international trading sector. As part of this shift, its associations began to offer training, seminars and talks, often export-focused.