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Embrace the cliche: Information is power

 
 
 

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Embrace the cliche: Information is power

A couple of weeks ago I spent some time looking into the BNZ-Business NZ “Performance of Manufacturing Index” (PMI). I hoped I would learn something relevant to Technology Valley. I wasn’t disappointed.

The PMI should diagnose the health and competitiveness of our advanced technology sector. I’m told it is comparable with PMI indices from many other countries.

The PMI is based on dynamic measurements of five parameters: Production, Employment, New Orders, Finished Stocks, and Deliveries. It is seasonally adjusted, and heavily weighted toward production and new orders. This makes the PMI look forward. If you’re into predicting the future, you might say something like: “We are forecasting GDP to grow 3.2% in calendar 2014 and 2.2% in 2015 but the balance of risk is heavily weighted to stronger outcomes.” Which in plain English means “We think we might be under-estimating future GDP growth but we don’t want to actually say so in case we’re wrong.”

I think the most important point for Technology Valley is the depth and breadth of coverage. The PMI is calculated monthly based on data from about 200 businesses throughout New Zealand. That’s not a bad sample for a national index, but it’s way too small to tell us anything about regional trends, nor can it tell us much about industry groups. In fact, industry coverage is horrible. Most data comes from three groupings: “ Metal Product”, “Machinery & Equipment”, and “Petroleum, Coal, Chemical, & Associated Product”. The last-mentioned includes the plastics industry, though I very much doubt it captures all the most forward-looking plastics manufacturers, such as advanced composite moulders.

Part of Technology Valley’s purpose is to boost economic growth by encouraging technologists, such as business owners and engineers, to communicate with each other. In my opinion, the PMI is an important part of that. By filling out the monthly PMI survey, a business owner is anonymously telling the rest of NZ how they are getting on. If the PMI shows everyone’s having a rough time, that says something about how we might help each other.

I suspect the patchy coverage is a symptom of our inaccurate self-image. No too long ago there was a conversation within Technology Valley about finding a synonym for “manufacturing”. The underlying message was that we’d like to pretend we aren’t really manufacturers. Like we don’t ride in airliners, not even to go to climate conferences. Get over it. Just because your studio is nothing like the Packard factory doesn’t mean you’re not a manufacturer. Business NZ publishes two indices: manufacturing and services. It’s getting hard to define the boundary between them. I remember conversations at AWA about how our customers might benefit if we put a computer in our new two-way radio. A lot of that talk moseyed around how we might exploit that embedded computer by inventing new services our customers would want, if only they knew such things existed (which they wouldn’t until we thought of them). Our new product threatened to blur the boundary between manufactured goods and services. That was twenty years ago. Now the boundary between goods and services has become so blurry I am beginning to wonder if it has any meaning at all. Perhaps in the not too distant future the BNZ and Business NZ will be forced to merge the PMI and the PSI into a single PII (performance of industry index).

If we are honest about what we do we will be better able to help each other do it better. It doesn’t matter if the product is a digital file, or a car, or a round-the-world racing yacht. It is a manufactured product. If you’re not already over that, get over it.

So, next time the Performance of Manufacturing Index questionnaire lands on your desk, for Vulcan’s sake don’t bin it. Give it to your company secretary or CFO or whomever controls the purse-strings and make sure they fill it out. It should take no more than a minute or two. If you make racing yachts one at a time, and you’ve got more work on than you had last month, tick the "more production" box.

If you make books, your data will go under “Printing, Publishing and Recorded Media.

What?

You still think making a music CD is not manufacturing?

Go back and re-read this post.

The more companies who fill out the questionnaire, every month without fail, the more useful the PMI will become. Right now, it can’t pick up trends in the “advanced manufacturing”, or “advanced technology”, or “weightless economy” industry groups. The PMI can’t diagnose the health and competitiveness of these groups, because too many people are not filling out the monthly questionnaires. The data is anonymous. It’s not perfect but I think the PMI is a pretty good tool.

Our information.

Our power.

 

Kevin Cudby is a Wellington-based Freelance Writer and Parametric Modelling Consultant who loves writing about cool new technology. Email him to discuss your requirements: hello {a} kevincudby.com

 
 
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