HERA calculates return on investment from Welding Centre

If you’re a user of HERA’s New Zealand Welding Centre (NZWC) you’ll have a good idea of the value of this service.

HERA has done the sums and calculated that the industry levy from welding consumables gives a conservative return of investment of more than 24 times what is invested. In other words, for every industry levy dollar, $24 in value is created.

Manager Welding Centre Dr Michail Karpenko says the outcome was a conservatively estimated ratio, “The findings allow us to say with great confidence that investing in our activities directly and through the research levy pays industry back handsomely.”

The methodology used to establish NZWC’s dollar value is based on the estimated direct benefits to members and the wider industry using assessment models leveraged by international and reciprocal member organisations such as UK-based TWI (The Welding Institute), WTIA (Welding Technology Institute of Australia), and the International Institute of Welding (IIW).

“In our evaluation we limited our review to services delivered between 1 July 2017 to 30 April 2018, actively excluding several outcomes such as R&D projects and also accepting we’re yet to complete the current year.”

Dr Karpenko says that at first glance this ratio sounds optimistic especially if compared to return on investment for new machinery, for example. But in a little under a year the centre has delivered:

• More than 1200 technical enquiries, company assistance or consulting;
• Five technology forum seminars and workshops with 275 expert attendees;
• Welding supervisor and inspector courses to 85 students;
• AS 2214 Welding Supervisor certification to 41 students;
• Welding Inspector qualifications to 14 students;
• 28 SFC audits via HERA Certifications Ltd;
• Nine research papers and guidance notes;
• Four technical standard reviews;
• 1000 training modules to training providers; and
• Ongoing works for four major R&D projects.

NZWC’s role

As part of HERA, NZWC provides a wide range of services to industry and members across New Zealand. This includes technical advice, R&D, standards development, training and education, certification via HERA Certifications Ltd and support for general industry promotion and advocacy.

They are also New Zealand’s representative as one of 56 other countries of the IIW and are actively involved in numerous initiatives to improve the industry’s competitiveness.

Strategic planning has streamlined their activities to four areas: research and development; education and training; certification and verification; and technology transfer.

“To deliver valuable outcomes and continuous improvement in these spaces, it’s essential a feedback loop is established to quantify value in financial terms,” says Dr Karpenko.

“This work to measure our value not only assists us to better understand what activities give the greatest return but allows us to prioritise funding and be accountable to our members, Government, and key stakeholders.

“This is important following the recommendation from our industry member-based Welding Centre Panel and the HERA Executive approval to increase the levy on welding consumables from 5 to 10 cents per kilogram. This comes after 16 years of the levy staying static despite inflation and increasing service pressures."

The proposed levy increase is currently in the consultation phase, but Dr Karpenko believes the change will be supported, given that it will create additional annual funds of $200k – translating into $4.8 million in benefits to the industry.

“Cost and value creation are key tools to measure performance for any organisation. Having just gone through the process ourselves, the outcome confirms that investing industry money via a levy on welding consumables makes economic sense. The returns sound better than putting money in the bank or in an investment property at a 1:24 ratio!”

For more information please visit the HERA Welding Centre.