The outlook for the machinery and equipment manufacturing sector is positive, especially for firms about to adapt to future challenges.
An industry report by Westpac Bank suggests the sector's 6000 firms need to recruit skilled staff, secure an efficient supply chain, and innovate in order to compete at home and overseas.
Westpac industry economist Paul Clark said: "For those that can make the necessary investment in research and development as well as offshore acquisitions, the future looks a lot brighter".
He expected business investment start to improve this year and gather pace in 2022, although some firms would have a drop in sales as restrictions associated with the pandemic eased.
"Firms that manufacture consumer electronics and household appliances, as well as respiratory and other medical equipment, may struggle post-Covid-19," Clark said.
"If we look in the longer term, the demand for machinery equipment will settle into a more normal pattern, but it will also have some challenges and those challenges are going to be driven by changes in technology, increasing consumer awareness around environmental issues."
The report said the global machinery and equipment manufacturing sector had worldwide sales of manufactured mechanical machinery valued at $2.7 trillion in 2019, and electronic equipment sales around US$3.8tn.
In comparison, the net value of New Zealand machinery and equipment sectors' was about $31 billion.
New Zealand's industry was made up of relatively small operators, with the largest firms involved in development and design of appliances, as well as the manufacture of medical and surgical equipment, Clark said.
The sector would benefit from digitisation, however, competitive pressures from consumer demands, might result in some closing or being taken over, he said.
"We have customers basically becoming increasingly aware ... of products that are part of the circular economy," he said.