We should focus more on introducing and adapting the world’s innovations using a skilled workforce.
Our so called ‘innovation policy’, which is at the heart of the government’s growth strategy – insofar as it has one – seems to be fundamentally flawed. It overemphasises the importance of the creation of new products and services in New Zealand by an elite, and underplays the importance of adapting technologies created offshore and the role of ordinary workers in using them.
New Zealand is a very small part of the world economy and its creation of new technologies. To the nearest whole number, 100 percent of our basic technologies are produced offshore. Our success is dependent upon our ability to adapt those offshore technologies to our own circumstances.
I illustrate this with a particular technology which may be transforming the world economy: 3D printing or ‘additive manufacturing’ is a process of making three-dimensional solid objects from a digital file. A printer, under the direction of a computer, lays down successive layers of material until the entire object is created. Each of these layers can be thought of as a thinly sliced horizontal cross-section of the eventual object.
Additive manufacturing is likely to revolutionise industry. 3D printing’s applications include apparel, construction, electric motors and generators, firearms, and patient-specific implants and devices for medical purposes. It is claimed that it is possible to print an entire car. New Zealanders already have crowns on their teeth which are 3D printed.
It is not a new technology; 3D printing has been around for three decades. But it appears to have reached the stage where the development of materials, software and printers has been largely resolved and the remaining issue is cost – which is rapidly falling.
Its success has a couple of important implications. First, there is the possibility of a high degree of customisation. The crown on your tooth fits that tooth alone, you may also be able to specify the particular features of your car in much greater detail than you can today. Second, instead of all manufacturing moving to East Asia, with products shipped to consumers far away, they can be made on the consumer’s doorstep with only the equipment and materials transhipped.
How is New Zealand meeting the challenge? Private enterprise is doing its bit, bringing in printers and applications designed overseas, adapting them for New Zealand. What should the public sector be doing? There is some central government funding for developing new applications, but the vast majority of our 3D printer applications will be designed offshore. The task has to be to adapt them for our purposes.
The reality is that most of those working with 3D printing will be outside the narrow scientific establishment – ordinary workers, most without degrees. So a crucial part of meeting the 3D printing challenge will be the quality of the workforce. Our record of training and upskilling is poor. Recently the Chief Executive of the New Zealand-German Business Association, Monique Surges, said many German companies setting up in New Zealand find a lack of skilled labour and have to spend extra money bringing workers up to standard. She particularly mentioned poor training in building and engineering and said we needed training programmes like there are in Germany, which are stricter and longer than those in New Zealand.
New Zealand follows the Anglo-American tradition of emphasising the elite. In contrast the Middle European tradition puts relatively more effort in at the worker level. Their workers work smarter than the Anglo-American ones. Their economies have higher labour productivity.
Our innovation policy is failing because first, we are not thinking enough about introducing and adapting overseas technologies to New Zealand; instead we pretend that promoting domestic innovation is key. Second, we dont put enough emphasis on those who will be running the technologies. Additionally, a lot of our innovation spending is on firms which pay little tax here and can easily transfer the fruits of their finding offshore without benefit to New Zealand.
Because innovation lead times are long it will take years for us to realise these failures. In the interim we shall pour billions of dollars into activities which hardly contribute to New Zealand’s economic and social development.
This is based on the third (and final) part of a presentation to the Fabian Society, 10 November.