Industry 4.0 key focus for businesses
Capital formation by New Zealand businesses is forecast to reach NZD$65 billion in the 2017 financial year and is expected to set a new record of NZD$70 billion in 2018, according to the latest round of Maia Financial’s Equipment Demand Index (the Index).
The Index found that 42.8 per cent of New Zealand businesses plan to increase their capital expenditure in the next 12 months, by an average of 22.0 per cent on the previous year, with a continued increase to adopt Industry 4.0 technology.
Of those businesses looking to increase their capex, 31.6 per cent are doing so as a result of ‘expanding their operations’, while 26.6 per cent cite ‘confidence in the domestic economy’.
According to data from StatisticsNZ, capital formation by New Zealand businesses for the first two quarters of the 2017 financial year reached NZD$32.4 billion, pointing to a full year (FY17) figure of around NZD$65 billion.
When applying the Index capex forecasts to the StatisticsNZ data, the results suggest that the capital formation figure for the 2018 financial year should top NZD$70 billion, which would be a new record and could see a range of industries across the country grow exponentially.
Daniel Blizzard, chief executive of Maia Financial, said the Index results showed that New Zealand’s growth story would continue, and corroborated OECD forecasts of more than 3.0 per cent GDP growth for 2018.
“Index data shows that New Zealand businesses continue to transform as they focus on implementing Industry 4.0 technologies, particularly, automation and big data services. Export remains a strong focus with many opportunities continuing to arise within the agriculture industry,” stated Mr. Blizzard.
Mr. Blizzard noted that the Index data showed a “renaissance” for the New Zealand manufacturing sector, where more than half (51.7 per cent) are planning to acquire new assets over the next 12 months, and 44.8 per cent of which intend to increase their 2018 capex budgets.
“Manufacturing and agriculture are taking the lead in terms of increasing their capex spend and asset base, with the view to continue implementing Industry 4.0 technologies,” stated Mr. Blizzard.
“New Zealand manufacturers are focusing on automation in what appears to be a bid to compete with overseas competitors. The number of manufacturers looking to adopt automation has almost doubled from 11.8 per cent in the March 2017 quarter to 21.4 per cent today,” said Mr.Blizzard.
Capex intentions in the agricultural sector are also higher than the national average, with 47.3 per cent planning capex increases.
“The number of agribusinesses looking to drones as a way to manage their farms and collate data on their crops, has almost tripled from 5.3 per cent last year to 15.0 per cent this year. Should a revised version of the Trans-Pacific Partnership come to fruition, we would expect this figure to rise as farm operators keep up with demand,” cited Mr. Blizzard.
“Index results point to an ambitious time for businesses across the country which could see major transformation for some time to come.”
Download the New Zealand Equipment Demand Index and the special technology edition, Index Insights: New Zealand and the Industry 4.0 Era.
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About Maia Financial
Equipment Demand Index is a bi-annual report which interviews circa 250 New Zealand businesses turning over between $5 million and $250 million per year.
The research consists of three business segments which includes: SME’s turning over $5-$2OM, Lower Corporates ($2O-$1OOM), and Upper Corporates ($1OO-$25OM).
Maia Financial is a leading, independent provider of capital solutions. Established more than 25 years ago, we have financed billions of dollars’ worth of assets, supporting the capital needs of government entitles and corporations across Australia and New Zealand.