A Shot In The Arm

Canterbury Manufacturers Association
chief executive John Walley reckons the region’s business people could do with good dose of Prozac.
Despite period of strong growth over the last year, the mood is bleak. The latest survey of business opinion by the Canterbury Employers’ Chamber of Commerce shows the biggest fall in confidence since 1993, with 41 percent expecting business conditions to worsen over the next six months and 40 percent expecting costs to rise.
A similar picture is painted by the latest Canterbury Manufacturers Association survey, which shows confidence fell six percentage points in the year to March, even though sales figures were similar to April 1999 and exports were up slightly.
“Most people are doing OK, but they think it’s bad for everyone else,” says Walley. There’s danger, he believes, that the prevailing feeling of gloom will become self-fulfilling.
What is driving the mood down, it seems, is fear, resentment and anger. Fear of the Employment Relations Bill and how the unions will use their increased muscle. Resentment at the renationalisation of ACC, despite strong indications from business that the competitive model had saved them money. Anger at policy moves such as the canning of native logging on West Coast Crown land, threatening the supply chain of as many as 60 small businesses in Canterbury, and which, according to Employers’ Chambers of Commerce chief executive Peter Townsend, sends message to business that the Government is prepared to interfere with due process.
But, despite the sullen mood, the fundamentals for Canterbury look reasonably good. Year on year economic growth to March was four percent. International tourist numbers were up 12.2 percent. The dollar is down. Unemployment is lower than the national average, at 5.9 percent. Farm commodity prices have recovered. Retail sales to February were up 9.5 percent. Building consents were up 18.4 percent. Christchurch’s population is growing and indications are that it will overtake Wellington as the nation’s second biggest city by the year 2004.
However, there are signs that the pace of growth has fallen away. The National Bank’s latest quarterly analysis of regional economic trends shows Canterbury had 0.8 percent fall in activity in the March 2000 quarter, the largest quarterly decline since 1991. For the first time since 1981, the region was at the bottom of the regional growth rankings.
With its diverse economic base, including significant manufacturing sector and strong export focus, Canterbury has traditionally been seen as barometer for the rest of New Zealand, leading the nation into both economic troughs and booms.
Whether the latest quarterly figures from the National Bank are just temporary blip or sign that the mood of despair provoked by government policy has already become self-fulfilling remains to be seen.
But what is clear is that the economic challenge for Canterbury is to focus on its inherent strengths, and do the things it already does well even better.
On an operational level, those strengths are numerous. The region is served by two sea ports (Lyttelton and Timaru), and third (Marlborough) is snapping at their heels, ensuring highly competitive waterfront sector. Christchurch International Airport has completed $72 million upgrade and seen seven percent increase in international passenger movements, an eight percent increase in domestic passenger movements, and an 11 percent increase in international aircraft movements. The electricity reticulation system is secure, and lines company Orion is improving it further by installing $13 million upgraded cable for the CBD. And the city is set to see improved service and competition in telecommunications with $200 million investment by Telstra-Saturn in new cable network.
The infrastructure, say local business leaders, is humming.
Townsend believes Canterbury’s future rests on three key planks: tourism; diversified, technology-rich primary production sector; and education. Infiltrating each of those layers, he says, are the light manufacturing companies that Canterbury has already produced so many stunning examples of, such as Tait Electronics and Macpac.
Townsend says an important advance towards capturing the potential benefits of tourism was made last year when the Canterbury Tourism Council was disbanded and new body, Christchurch and Canterbury Marketing, set up to drive the marketing of the region as destination.
CCM marketing manager John McKenzie says the organisation has worked on selling the region from Kaikoura to Mt Cook under the brand “Fresh each day”. It is too early to judge the success of the new structure, but it has coincided with 12.2 percent lift in international visitors over the past year. CCM has also been rewarded for its efforts with place in the finals of this year’s New Zealand Tourism Awards.
In the primary production sector, Townsend believes it’s case of doing what we already do well, but using technology to leverage greater returns.
He cites as an example of what technology can do for traditional primary industries the development of new high-tech wool classing system for Merino New Zealand by Timaru wool scour manufacturer Andar, in conjunction with Christchurch company Streat Group. The system can class wool on several characteristics, including micron and curvature, allowing wool to be packed and targeted more specifically at end users.
The third plank, education, is vital both to the infrastructure of knowledge based economy, and for its role as cash flow business in attracting foreign fee paying students. Served by two universities, two teacher training institutes, polytechnic and variety of private training providers, Canterbury is again well placed. Increasingly, the tertiary institutes are focusing on better ways of working with industry to help bridge the gap between the researchers and the market place. For example Christchurch Polytechnic Institute of Technology offers wide range of technology-oriented programmes, including degree in business computing and engineering technology and the Cisco diploma in computer networking. CPIT has also forged strong overseas links, with international students making up seven percent of its enrolments this year.
Private training company Lukey Training Resources has taken key role in encouraging companies to reposition themselves for the knowledge age, initiating the highly successful SmartNet conferences in 1997. Marketing manager Sandra Lukey says SmartNet is held every year in Christchurch, with upwards of 1000 people participating. The annual two day conference is supported by raft of smaller workshops, an online discussion group, and fortnightly update on innovation and good business practice. Lukey says key objectives are to encourage people and industry to talk to each other about ideas and innovation, to act as bridge between the private and public sectors, and stimulate culture of innovation and entrepreneurship.
Initiatives like SmartNet dovetail well with work being done by the Canterbury Development Corporation to establish high-tech business incubation centre for Canterbury. CDC science and technology adviser Larry Podmore says New Zealand is long way behind its global competitors in addressing the need to nurture start-up businesses. He says the proposed centre will house research organisations and fledgling businesses, and be conduit for training, business support and advice.

It’s not easy being southern city these days.
The magnetic lure of the bright lights of Christchurch, Wellington and Auckland makes it tough to retain people and companies. Dunedin, once the commercial powerhouse of New Zealand, has had to come to terms over the decades with its new status as relatively minor provincial centre, as the northern cities have gutted it of its head offices and standing in the corporate world. <

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