British dominance of trade
From the 1850s until the end of the 1960s the majority of New Zealand’s exports – often more than 80% – went directly to Britain, except for a brief period in the 1860s when New Zealand supplied the Australian goldfields, and shipped indirectly to Britain through Sydney. While import sources were more diversified, Britain was the largest. Britain’s economic dominance arose in part because of political, cultural and kinship links, but also because after the repeal of the protectionist Corn Laws in 1846, the British food market was open to world suppliers. Most other potential markets protected their farmers from outside competition.
The Ottawa Agreement, signed in 1932 during the depths of the great depression, continued access for New Zealand exports to Britain, in exchange for preferential access to the local market by British imports.
The 1930s depression drew attention to New Zealand’s economic vulnerability. Specialisation in a few export products and one main market made the economy vulnerable to international fluctuations. This led to the promotion of local manufacturing as an alternative to imports, although often New Zealand production depended on imports of materials and components. The government had made some efforts to encourage manufacturing in the 19th century, but the introduction of import controls from 1938 was a more drastic step to privilege domestic production over imports. By the early 1960s people were even suggesting that there was potential for some industrial exports.
New Zealand’s earliest factories were in the quarries of greenstone and argillite, where Māori workers shaped stone for tools and ornaments. The first European factories were on whaling ships, although onshore preparation of whale oil soon proved more efficient. Later, people made clothes or wooden objects at home, or in establishments too small to be formally considered factories.
Nature of manufacturing
The structure of New Zealand manufacturing was different from that in Western Europe and North America. As a general rule New Zealand factories were small.
However the pastoral processing plants which began from 1882 as a part of refrigerated exporting were exceptions. New Zealand’s dairy factories and freezing works were large in international terms.
The processing of resources – including aluminium based on electricity, the exploitation of hydrocarbons, steel based on iron sands, and wood products – also involved larger-scale manufacture. Most processing was established after 1945 and was not large in international terms. The biggest industrial plant produced pulp and paper at Kawerau.
Relative decline of manufacturing
Government support for industry began to be withdrawn from the 1970s, and was almost all terminated by 1990. This is one reason the proportion of the population employed in manufacturing declined at the end of the 20th century. The increasing demand for services was another reason. In 2009 a larger share of manufacturing was related to resource-based industries than 30 years before.