SUNBIZ

A Quiet Manufacturing Hub Revolution

Ten years ago Fiji had a thriving business in clothing and footware manufacturing but in almost everything else the majority of manufacturing was taking place overseas. Today, the clothing industry
02 Jun 2018 10:00
A Quiet Manufacturing Hub Revolution

Ten years ago Fiji had a thriving business in clothing and footware manufacturing but in almost everything else the majority of manufacturing was taking place overseas.

Today, the clothing industry is doing alright, in spite of a number of challenges over the years from countries with either lower basic labour costs or significantly advanced technology.

The tariff advantages that the local industry enjoyed for many years from Australia and New Zealand (and to some extent from the United States) were slowly stripped away, but the industry found ways to remain competitive, so the status quo was maintained.

But over the last 10 years there has been a very slow shift in the manufacturing industries that are successfully expanding in Fiji and are servicing the whole of the South Pacific.

Growth driver

One of the main drivers for this growth has been the changing political environment in the region.

Under the current Government the influence Fiji has in the main international political arenas has grown substantially, making it possible for Fiji to broker much better trade deals between the countries of the South Pacific and markets further afield.

Probably one of the most useful agreements that has been brokered is the Melanesian Spearhead Group (MSG) agreement which encourage inter-country trading through the offer of better tariffs and simpler compliance conditions.

Because of these opportunities there has been a significant move by offshore manufacturing operations to investigate the possibility of shifting to Fiji, either totally or as part of the processing being bought into the country.

Already there are examples of this in a number of industries.

For example, a large oral health company brings in toothpaste in large volume containers and uses these to fill the small retail tubes ready for the market.

In this way the high volume manufacturing work is done where the economies of volume are available and the more time consuming parts of the process are done locally.

In this way a significant amount of the manufacturing part of the process is carried out inside the tariff barriers making the product competitive locally and providing a boost to the economy by creating jobs and paying taxes locally.

Because the product has sufficient local manufacturing content it also gains from the MSG incentives.

Steel

Another industry that has found it beneficial to do a lot of the work in Fiji using imported base is steel architectural manufacturing.

In this instance flat rolled steel is imported and the profiling and roll forming is done in Fiji.

The steel can either be imported pre-painted of the paint finish can be applied locally.

There is a huge duty advantage in bringing in the base steel and doing all the forming and finishing locally as the significantly higher percentage of cost of manufacture is in the finishing work.

Again, with the MSG rules in place the cost savings against rolled and formed steel from Australian and New Zealand is significant.

There has been a huge increase in the number of boats manufactured in Fiji over the same period and the focus is on aluminium as the material of choice.

One builder in particular is filling some serious orders for overseas buyers, but more importantly the local resort industry has moved strongly away from imported vessels to those manufactured locally because they continue to demonstrate the quality and design that make them ideal for the conditions in Fiji and the type of work they have to do here.

Biscuit

One of the stars of the local manufacturing industry over the past few years has been biscuit production with the two largest players fighting it out in the overseas markets with remarkable success.

The large scale of production made possible by good penetration into offshore markets, especially Australia and New Zealand combined with improved transport connectivity and lower costs of production in Fiji have all helped in the excellent growth achieved.

FIJI Water has been an outstanding case history for marketing with growth in the USA first, followed by expansion of the successful brand plan there to many other markets worldwide.

The parent company of FIJI Water, the Wonderful Company, is reported to be seriously considering large scale fruit farming in Fiji for export markets around the world, with emphasis on some of the more exotic varieties.

Automobile batteries

The Pacific Battery Company, part of the CJ Patel Group has been manufacturing automobile batteries in Fiji for many years and has the prime market share in the South Pacific and a dominant position in Australia under a variety of different brands.

They have been successful not only for the quality of their batteries, but because they have followed a strict environmental programme in what is a difficult to manage environmental area.

Noodles

CJ Patel also went into an alliance to manufacture and market packaged noodles under the Nestle brand in Fiji. It has been so successful in the development of their production facilities that Fiji is no longer their biggest market.

There are many examples of successful manufacturing in Fiji, both for the local market and, more importantly for the Fijian economy, successfully entering large overseas markets and competing with international companies on their home ground.

Manufacturing hub

There is also no doubt that Fiji, as a manufacturing hub, will continue to grow at an exciting rate in the future.

The Fijian Government has a number of incentives in place and provides support to the industry. This is because they understand that manufacturing will help Fiji maintain the enviable growth of the economy that has been enjoyed over the past 10 years of unbroken growth.

Feedback: maraia.vula@fijisun.com.fj

Fiji Sun Instagram
Subscribe-to-Newspaper
error: