BUSINESS ADVOCATE ARTICLE JANUARY 2011
The start of the new year may well herald in the first tangible signs of change in Northland’s economic environment. Treasury is predicting growth in excess of three per cent, together with higher wages and a reduction unemployment numbers. This is not to say that many businesses are still experiencing difficult times but this news is accompanied by anecdotal evidence that things are finally beginning to improve.
This differs from last year where many businesses felt there was little correlation between what they were hearing from economic analysts in regards to positive growth and what they were seeing in their own operations. This lack of correlation was reflected in the low level of confidence shown in the Chamber of Commerce 2010 last quarterly Business Confidence Survey
As well as a slow return to positive growth there is also the Rugby World Cup which presents an opportunity for Northland businesses to market Northland to the world market as a place to visit, live or do business with. NZ 2011 Business Club has been created by the government to assist those businesses that do not have the resources to leverage business during this event. Local and overseas business-people can join the Club for no cost and then have the opportunity to be put in touch with each other at events showcasing local business.
However while the Rugby World Cup presents an opportunity for Northland business in the short-term, the region needs to look carefully as to what our long-term economic future is. If recent times have taught us anything it is the need to develop a robust and diverse regional economy based on well governed, sustainable businesses. This will require us to examine our existing economic profile and to identify those sectors that present opportunity for real growth.
One such area is manufacturing which is already a significant contributor to the regional GDP. More importantly in Whangarei almost 300 of these businesses have either the Regional or District Council as their landlords. If the councils believe that being landlords of large parcels of non-strategic (whatever this means) land is part of their core business then this provides these councils an opportunity to assist, or at the very least no hinder the development of those businesses.
Encouraging inward investment and new business to Northland is an admirable aspiration but ensuring existing enterprises have an environment in which they can prosper and grow our regional economy is equally important.
16 February 2011
ADVOCATE COLUMN 3rd WEEK FEBRUARY 2011
Having someone to listen to you, occasionally challenge the way you do things and offer guidance based on their own experience can give a business owner the confidence that they are doing things the right way or at the very least are not missing out on potential opportunities to develop. Business Mentors New Zealand ( www.businessmentors.org.nz ) provides a mentoring service to businesses that have been operating for at least six months and is the owner’s main source of income. A registration fee of $100 + GST applies, which entitles you to use the mentoring service for two years. This is the only cost to you.
When a business is struggling they need all the help they can get. Using a mentor allows an independent perspective that may not be apparent to the owner. Many people do not engage a mentor until they notice things starting to go wrong with their business. There is merit in getting a mentor or outside assistance before you think you need it. Early involvement helps avoid pitfalls and gives the business the best chance of succeeding from the start.
Whangarei is blessed with a wide range of skilled and experienced accountants, lawyers, bankers and other business consultants that can offer assistance to businesses owners. Government departments also are a valuable resource for a struggling enterprise and the support they can provide should not be overlooked. The Northland Chamber of Commerce assists businesses in a number ways including on occasions using its network of members to help operators who may not meet the registration criteria of Business Mentors New Zealand.
Mentors may have many different reasons for giving up their time to assist struggling businesses. Apart from a desire to help Northland’s economic development it provides the opportunity for people who may are no longer be active in the business community to stay in contact with an environment that has been a large part of their life. Although all find the experience rewarding, the Northland Chamber of Commerce is always in search of new mentors to reduce the burden on these volunteers to assist new clients.
Growing Northland business is as much about ensuring existing businesses succeed and flourish as it is about encouraging inward investment and new business. The trickle-down effects from a business failing, impact on the entire community. Equally all Northlanders benefit from the presence of robust and sustainable local companies consistently providing quality service and products.
Having someone to listen to you, occasionally challenge the way you do things and offer guidance based on their own experience can give a business owner the confidence that they are doing things the right way or at the very least are not missing out on potential opportunities to develop. Business Mentors New Zealand ( www.businessmentors.org.nz ) provides a mentoring service to businesses that have been operating for at least six months and is the owner’s main source of income. A registration fee of $100 + GST applies, which entitles you to use the mentoring service for two years. This is the only cost to you.
When a business is struggling they need all the help they can get. Using a mentor allows an independent perspective that may not be apparent to the owner. Many people do not engage a mentor until they notice things starting to go wrong with their business. There is merit in getting a mentor or outside assistance before you think you need it. Early involvement helps avoid pitfalls and gives the business the best chance of succeeding from the start.
Whangarei is blessed with a wide range of skilled and experienced accountants, lawyers, bankers and other business consultants that can offer assistance to businesses owners. Government departments also are a valuable resource for a struggling enterprise and the support they can provide should not be overlooked. The Northland Chamber of Commerce assists businesses in a number ways including on occasions using its network of members to help operators who may not meet the registration criteria of Business Mentors New Zealand.
Mentors may have many different reasons for giving up their time to assist struggling businesses. Apart from a desire to help Northland’s economic development it provides the opportunity for people who may are no longer be active in the business community to stay in contact with an environment that has been a large part of their life. Although all find the experience rewarding, the Northland Chamber of Commerce is always in search of new mentors to reduce the burden on these volunteers to assist new clients.
Growing Northland business is as much about ensuring existing businesses succeed and flourish as it is about encouraging inward investment and new business. The trickle-down effects from a business failing, impact on the entire community. Equally all Northlanders benefit from the presence of robust and sustainable local companies consistently providing quality service and products.
LEADER COLUMN FEBRUARY 2011
Who would want to be a local body politician? Having a relatively high level of debt and needing to make some significant investment in infrastructure has created classic economic dilemma. There will only ever be a limit number of sources of income for a council and not all of these will be popular with all sectors of the community.
Obviously increased rates will always result in robust debate over the equity or otherwise of the existing rating system and to the Whangarei District Council’s credit they have recognised the need to re-examine current policy used to determine rates. Increasing the base from which rates are collected is another option and any initiative to grow the number of ratepayers has benefit. However r is currently little or no desire among developers to create new subdivisions particularly in light of policy regarding developer contributions (which are another revenue source).
Borrowing to invest in trans-generational infrastructure has its place if existing debt levels are sustainable. This still requires the capacity at some stage to generate sufficient income to repay the debt. If not this is just a further burden to be met by future generations due to the past and present generation’s lack of financial prudence.
Another option is selling existing non-essential assets (say land) and use funds from those sales to reinvest in essential assets (such as infrastructure). This is a valid approach but difficulty arises where the assets sold are also a source of income (leasehold land). In these instances there may be a desire to compensate for this loss of income by demanding a high premium.
This premium when attached to land sales is problematic. In a free market there will always be someone who may have their reasons to pay above market price. However given that recent economic difficulties arose out of global businesses having debt in excess of the value of the assets they were secured against, what banker, accountant or financial adviser would counsel their client to become encumbered with such debt? I am sure there is an argument regarding appreciation of property over time but this is more about property speculation than business development.
None of these courses of action may be particularly palatable, but this is a conversation that all ratepayers need to participate in and one that will require a high level of understanding if our counsels are to come to a satisfactory solution to the allocation of these scarce resources.
Who would want to be a local body politician? Having a relatively high level of debt and needing to make some significant investment in infrastructure has created classic economic dilemma. There will only ever be a limit number of sources of income for a council and not all of these will be popular with all sectors of the community.
Obviously increased rates will always result in robust debate over the equity or otherwise of the existing rating system and to the Whangarei District Council’s credit they have recognised the need to re-examine current policy used to determine rates. Increasing the base from which rates are collected is another option and any initiative to grow the number of ratepayers has benefit. However r is currently little or no desire among developers to create new subdivisions particularly in light of policy regarding developer contributions (which are another revenue source).
Borrowing to invest in trans-generational infrastructure has its place if existing debt levels are sustainable. This still requires the capacity at some stage to generate sufficient income to repay the debt. If not this is just a further burden to be met by future generations due to the past and present generation’s lack of financial prudence.
Another option is selling existing non-essential assets (say land) and use funds from those sales to reinvest in essential assets (such as infrastructure). This is a valid approach but difficulty arises where the assets sold are also a source of income (leasehold land). In these instances there may be a desire to compensate for this loss of income by demanding a high premium.
This premium when attached to land sales is problematic. In a free market there will always be someone who may have their reasons to pay above market price. However given that recent economic difficulties arose out of global businesses having debt in excess of the value of the assets they were secured against, what banker, accountant or financial adviser would counsel their client to become encumbered with such debt? I am sure there is an argument regarding appreciation of property over time but this is more about property speculation than business development.
None of these courses of action may be particularly palatable, but this is a conversation that all ratepayers need to participate in and one that will require a high level of understanding if our counsels are to come to a satisfactory solution to the allocation of these scarce resources.
02 February 2011
ADVOCATE COLUMN 1st WEEK FEBRUARY 2011
Northland’s 2010 Economic Profile (Infometrics Limited) makes interesting reading. Not for our poor economic performance when compared to other regions, but rather for the potential this report identifies. Surprisingly (to me) the largest contributor to regional GDP was not the agriculture, fishing and forestry sector as many would predict but rather the manufacturing sector which accounts for 16% of our GDP.
At a more detailed level it showed that tourism still makes a significant contribution (6%) to our GDP. The tourism sector generated $196 million in economic output in Northland in 2010. Over the last decade tourism in Northland has grown at just over 2% pa which is in line with the national average.
There was a decline in the overall number of business units but there is still growth (albeit slight) on average over the last decade. The number of business units is a key indicator of the preparedness of entrepreneurs to take risk and start new business. Any real change in our comparative performance against other regions will require a major shift in our business environment to stimulate entrepreneurial activity.
Primary industry is interesting because this is one area where Northland performs significantly above the national average. Accompanying this is the fact that Northland went against the national trend and grew value adding to primary production by 16.5%. This result along with the role manufacturing plays in our regional economy reinforces the need to concentrate on developing the potential of these sectors to stimulate our economy.
By themselves the sectors discussed above may lack the growth capacity to alone to significantly lift Northland’s economic performance. We need to find ways to grow export values and volumes in new areas such as IT, clean technology and energy or high-value food products.
As far as continuing to measure our success or otherwise by comparison with other regions, the Northland Chamber of Commerce thinks it may be worth considering having some absolute targets or a range of sustainable economic, social and environmental goals that when achieved the consequences would enable our economy to grow and the living standards for all of us to be improved.
Northland needs goals that all of us can relate to and become motivated and passionate to achieve. While there is both merit and room for aspiration, the goals we choose for Northland need to be realistic and achievable by a larger tier of business across a wider front.
Northland’s 2010 Economic Profile (Infometrics Limited) makes interesting reading. Not for our poor economic performance when compared to other regions, but rather for the potential this report identifies. Surprisingly (to me) the largest contributor to regional GDP was not the agriculture, fishing and forestry sector as many would predict but rather the manufacturing sector which accounts for 16% of our GDP.
At a more detailed level it showed that tourism still makes a significant contribution (6%) to our GDP. The tourism sector generated $196 million in economic output in Northland in 2010. Over the last decade tourism in Northland has grown at just over 2% pa which is in line with the national average.
There was a decline in the overall number of business units but there is still growth (albeit slight) on average over the last decade. The number of business units is a key indicator of the preparedness of entrepreneurs to take risk and start new business. Any real change in our comparative performance against other regions will require a major shift in our business environment to stimulate entrepreneurial activity.
Primary industry is interesting because this is one area where Northland performs significantly above the national average. Accompanying this is the fact that Northland went against the national trend and grew value adding to primary production by 16.5%. This result along with the role manufacturing plays in our regional economy reinforces the need to concentrate on developing the potential of these sectors to stimulate our economy.
By themselves the sectors discussed above may lack the growth capacity to alone to significantly lift Northland’s economic performance. We need to find ways to grow export values and volumes in new areas such as IT, clean technology and energy or high-value food products.
As far as continuing to measure our success or otherwise by comparison with other regions, the Northland Chamber of Commerce thinks it may be worth considering having some absolute targets or a range of sustainable economic, social and environmental goals that when achieved the consequences would enable our economy to grow and the living standards for all of us to be improved.
Northland needs goals that all of us can relate to and become motivated and passionate to achieve. While there is both merit and room for aspiration, the goals we choose for Northland need to be realistic and achievable by a larger tier of business across a wider front.
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