Business – but not as we know it
New Zealand’s lockdown economy is hardly business as usual. But at least it’s business, writes Stephanie Ockhuysen. The next 12 months could be the rougher ride.
Finally, there is light at the end of the tunnel and from next week most of us should be back at work and back spending time with our family and friends.
It is a fair bet many of us will celebrate the expected level 2 freedom by heading straight to the hairdresser. After nearly two months of lockdown, the national hairstyle is decidedly overgrown.
The expected groom boom can’t come soon enough for the country’s hairdressers, barbers, tattooists and beauty therapists.
Since March 25, they have been unable to operate. They are struggling to stay afloat.
Michelle Gray, owner of Urban Beauty Spa in New Plymouth, is expecting to be swamped when she returns to work.
The wage subsidy has helped her keep her five beauty therapists on the books, but paying customers is what she needs.
To make sure they are there when the lockdown restrictions lift they have used the customer-free time to upskill and offer virtual consultations.
‘‘We have had to think of more ways to get ourselves out there online. Our online presence has been quite important, doing regular Facebook and Instagram posts, more so than what I normally do.’’
Gray is one of hundreds of Taranaki business owners and workers whose future is rosier now than a few days ago, but still far from certain even if restrictions lift next week.
As the country looks to move down the Government’s alert level system and into a different way of operating in the Covid-19 world, a new report predicts the coronavirus crisis will send unemployment in Taranaki skyrocketing.
Commissioned by Venture Taranaki and the New Plymouth District Council, the report, released last Thursday by economists Infometrics, estimates 5500 jobs will be lost during the next 12 months – more than 9 per cent of the workforce – resulting in an absence of $312 million in wages in the region, with unemployment forecast to reach more than 10 per cent.
It’s grim reading but Massey University economist Hamish Gow argues Taranaki’s economy is better placed than the rest of the country.
The region’s three key industries – energy, food processing, and primary industries – aren’t going anywhere, he says. And that is vital.
Despite that, he says the ‘‘direction’’ of the report is ‘‘fairly correct’’.
‘‘Accommodation, food service, retail, trade will be impacted but other parts of your economy are particularly robust and those will carry on trucking along quite comfortably.’’
Gow says accommodation will be affected but Taranaki’s tourism industry is mainly from domestic travellers coming to town for business or to visit family and friends.
So, although increasing tourism has long been a goal of the region’s various economic leaders, the fact the industry is so underdeveloped means Taranaki is nowhere near as vulnerable as Queenstown and Rotorua are to the ups and downs of tourism.
‘‘Taranaki is better insulated than the rest of the country and I would argue you are probably better off.
‘‘Because you’ve dealt with the potential oil downturn you’re probably way better prepared with a group of leaders to lead through this because you’ve already been doing so for two years, whereas other regions have a cold start.’’
Since lockdown began, Arun Chaudhari, chief executive of the Taranaki Chamber of Commerce, has both sounded the economic alarm bells and tirelessly championed the region’s businesses.
Chaudhari says the report had some alarming figures but also believed the region will do much better than its predictions.
‘‘The future is not going to be like the past was. We have to change our mindset to doing different things. ‘‘Adaptation is key.’’ Chaudhari says level 3 has been a welcome change to get money going around the region again and yet it is far from enough. Level 2, he says, can’t come soon enough.
‘‘It’s a flow-on effect. The moment one business opens, the whole supply chain behind it starts opening. We need that catalyst pretty quickly.’’
There’s no doubt some businesses will close, some will need to refocus, and people will need to reinvent themselves, he says.
The lockdown hasn’t been without cost already.
Two weeks ago, members of the chamber were asked if they had had to lay off staff. Five per cent of members responded they had. This week it was 12 per cent.
‘‘It will take a toll on mental health and we just need to look out for each other. The chamber is there to assist in replanning and help with whatever people’s business needs are.’’
Despite CBDs being relatively quiet, with most office workers clocking in remotely, most businesses in Taranaki are already open in level 3. In some form, at least.
Figures from Venture Taranaki, the region’s economic development agency, show around 78 per cent of the region’s workforce were back at work in level 3.
‘‘This is immediately evident when you look at the traffic on the roads, activity at building sites, and lights on in enterprises throughout the region,’’ chief executive Justine Gilliland says.
‘‘Many of our businesses have responded comprehensively to the opportunities available under level 3, and the number will continue to grow as we move to alert level 2.’’
As more businesses open, Gilliland says it is key to buy local to soften the economic impacts of Covid-19.
‘‘Buy from your local cafe, buy locally produced food in our supermarkets, and support other local businesses.’’
‘‘Taranaki is better insulated than the rest of the country and I would argue you are probably better off.’’
Hamish Gow, Massey University economist
‘‘The future is not going to be like the past was. We have to change our mindset to doing different things.’’
Arun Chaudhari, Taranaki Chamber of Commerce CEO
‘‘These businesses have no cash coming in, so pay your bills quickly. It helps everybody.’’ Neil Holdom, New Plymouth mayor
‘‘I don’t see a lot changing for us at level 2 and what we’ve put in place as a company will carry on.’’ Jason Werder
Golden Homes
New Plymouth mayor Neil Holdom has reiterated the buy local message, saying people need to support the business community and put money back into the economy.
‘‘These businesses have no cash coming in, so pay your bills quickly.
‘‘It helps everybody and it could mean the difference between people losing their jobs and their livelihoods.’’
Holdom says the infometrics report was dire enough that Taranaki couldn’t feel confident or get complacent about Government Covid-19 protocols.
‘‘The risk is if we get this wrong we end up back in level 4 and more businesses will fold and more people will be out of jobs.’’
The New Plymouth District Council, which has experienced its own income loss of $5.4m, has launched the Get Us Back on Our Feet plan to help households and businesses hit by the Covid-19 economic storm.
The plan, worth about $20m, looks to reduce rates rises, choose local contractors for council jobs, drop a range of fees for businesses, help shopping centre building owners improve their buildings, and reduce commercial and community rents.
The South Taranaki District Council has similar measures in place, including no rates rises in the 2020-21 financial year.
‘‘[The] council is able to achieve the zero rates rise by taking a oneoff ($722,500) contribution from our Long Term Investment Fund to realise this proposal,’’ South Taranaki mayor Phil Nixon says.
‘‘There will be no changes in levels of service, and we will continue to meet our current and future infrastructure needs without compromising future plans or our overall financial position.’’
Building company Golden Homes is one business expecting a surge of activity and predicts Taranaki will lead the nationwide economic recovery. ‘‘Taranaki is in a unique position compared to the rest of New Zealand.
‘‘Ninety-nine per cent of my clients haven’t stopped working – they’re either essential workers or are able to continue working from home,’’ sales lead Jenny Thomson says.
‘‘We’re lucky to be surrounded by primary producers, food manufacturing facilities and other key industries such as oil and gas.
‘‘I expect we’ll shake off the effects of this lockdown much quicker than bigger urban centres.’’
Jason Werder, project construction manager for Golden Homes, says it has been great to get back on site in level 3 and see projects progress again.
New guidelines in level 3 meant construction workers had to practise social distancing while working and eating lunch, wash down tools and equipment twice daily, and log trade locations and site deliveries to allow for contact tracing.
Werder says it has changed the way they operate, but definitely for the better.
‘‘I don’t see a lot changing for us at level 2 and what we’ve put in place as a company will carry on.’’ Werder says.