What it will take to align the goals of local businesses and the agendas of disparate groups tasked with growing the economy and creating new jobs?
Job growth remains a distant blip on the radar as Hawke’s Bay continues its economic backslide and the various bodies tasked with growing the region struggle to get around the same table or even agree on a common agenda.
While there’s a raft of work going on to improve education and workforce training, the business community seems distant from the discussion, perhaps expecting some other economic miracle will save the day for the Bay.
Apart from the 5,000 or so involved in seasonal or part-time work and those already creaming it or comfortable with the status quo, it seems we’re badly in need of better work stories.
For many, the big pie in the sky when it gets dry is Hawke’s Bay Regional Council’s Ruataniwha Dam project, designed to reinvigorate the rural economy and allegedly create thousands of jobs.
HBRC’s February 2014 Butcher Partners Report suggests the creation of up to 4,700 job-years of work over 12 years in the construction side. 1,310 ongoing jobs are projected on farms, orchards, vineyards and support roles, as well as 1,210 in processing and support, altogether injecting an estimated $250 million annually into the local economy.
Without a full work up it’s impossible to determine specifics as horticulture and other diversification doesn’t stack up as well against more intensive dairying to pay for what’s likely to be the most expensive water in the country.
The downstream numbers including processing are a moving feast. Watties in its HBRC dam submission didn’t expect significant benefits as most of its producers were on the Heretaunga Plains.
Oil and gas is touted as another big employer, but no commitment has been made, there’s strong opposition, and uncertainty around how many jobs would actually be available for locals.
Call centre needs answers
Hawke’s Bay’s thought leaders who continue to talk up the “possibilities” and “potential” for economic development and job creation were no doubt relieved by Kiwibank’s decision to relocate from earthquake prone premises in Wellington to the old Farmers building in central Hastings.
The prospect of 100 jobs and the potential to double that was a positive adjustment to the employment swings and roundabouts which concurrently saw 23 jobs go on the closure of Napier’s Bunnings Warehouse, 15 from the Hastings Opera House and losses at Postie Plus and other retailers.
Once we’ve proven we have the infrastructure and job candidates with the right skills, it’s hoped other government departments and large corporates might follow Kiwibank in decentralising their core infrastructure and services to the region.
There’s even talk of creating a cluster of call centres, but in some quarters concern about why Hastings and Napier made separate bids for Kiwibank rather than working together to promote the potential of the region.
And while Business Hawke’s Bay, EIT, Hastings Council and others are working to prequalify potential candidates, Leanne Welsh of Boss Recruitment and others wonder how many Kiwibank jobs will actually go to locals?
“You may find general telephone answerers, but it’ll be minimum wage … they’re going to have to import call centre managers.”
Beyond the comfort zone
Rather than waiting on new business to come to the Bay, there’s huge scope to improve what we already have, says business improvement specialist Glenn Manahi, as the region has everything at its fingertips for job creation and value.
We have a port, infrastructure, rail, a learning institute, lifestyle and a labour force — all that’s needed is to connect the dots. That starts with a willingness to change, to “work smarter”, ditch out-dated systems, remove waste from processes and look at synergies with other businesses.
Asked what his priorities would be if Hawke’s Bay was a client looking to create employment, Manahi says leadership would be top of the pops. “There’s a lack of really good proactive, productive, focused leaders and managers. They’re very few and far between.”
The tick list includes a good grasp of the business numbers; profit and loss and performance measures, along with an awareness of staff skills, capability and attitude, and the ability to think creatively.
The biggest obstacle to growth, innovation and jobs, he says, is getting access to knowledge, knowing how to use it, and the “fear of giving it a crack”.
According to the 2013 McGredy Winder report there are 18,000 businesses in Hawke’s Bay, 62% run by self-employed shareholders with only 234 employing more than 50 staff.
While some businesses are in recovery, others continue to struggle. Job growth overall is slow and patchy with many employers simply happy to take a wage, says Boss Recruitment chief, Leanne Welsh.
There’s “a real sense of complacency” and many are only in business to pay themselves a wage. To even get a foot in the door, those pushing for economic innovation and job creation schemes have to get past the “Oh no, we’re okay … We don’t need to … We’re doing just fine” syndrome.
A shake-up might be needed, suggests Welsh, perhaps a series of “mergers and takeovers to promote growth and fundamentally change the way businesses and the economy operate.”
Headlights to high beam
To spur growth and employment, Business Hawke’s Bay CEO Susan White says, owner-operators may need an outside perspective, “people in the governance space who can act as advisors; people with their headlights on high beam.”
Growing small to medium businesses into bigger ones has been Business HB’s objective in hosting the High Performance Work (HPW) programme for the past two years and urging mentoring group The Icehouse to locate here.
Both groups focus on aspects of getting companies match-fit for growth. Having worked with 175 local companies in its first year, Icehouse Hawke’s Bay regional manager Michaela Vodanovich, says 65% have taken on one or more full-time staff.
One company had planned to lay off six staff, but ended up employing an extra two after exploring growth opportunities; another took on six during July and one is looking to add up to 40 local staff through expansion of its services beyond Hawke’s Bay.
HPW is engaged in improving the processes, capabilities and efficiencies of local manufacturing, engineering and now food and beverage businesses.
Project manager, Glenn Manahi, says growing the economy and jobs is not just about putting more cattle on the field, more sheep in the paddock or more fruit in the orchards.
“It’s doing those things but a hell of a lot smarter and it starts with knowing who the customers are, where the value is in our products and services and making that flow through the business.”
He says we need to stop talking about the seasonal nature of the economy as a problem. “Some larger operations are realising core activities can be controlled and improved through being proactive rather than reactive so there’s no real off-season.”
By working smarter there are new opportunities to be busy all year round. “Instead of letting go of temporary staff, other markets can be developed, for example using different waste streams.”
Manahi describes the region as having “a lot of small fish, who feed middle-sized businesses, who feed big businesses … it’s that whole supply chain thing.”
He suggests there’s plenty of scope for businesses to cooperate around common goals or contracts, to win and service export opportunities, and even for those who are technically competitors to be part of a supply chain.
“If you think about some of the contracts that are coming from China, one small business can’t effectively supply that market, but three or five together with some specialist skills, could make a big impact.”
If Hawke’s Bay was a company, the waste would be huge, with much to be gained by reducing errors and duplication and getting the right information to where it is needed at the right time, whether that’s reporting, planning, project management, compliance or communication.
Re-examining these processes to focus on what customers actually want and reallocating people where they’re actually needed, opens up new opportunities for employment, says Manahi.
He claims local bodies in Hawke’s Bay are now realising their customers are local businesses and without sharp processes they become frustrated. While they may have been slow to the game, he says local businesses have also been reluctant to change until the past three years.
To ensure we have the right skills to support growth he says things need to be “co-ordinated a bit better”. Like others spoken to by BayBuzz, he observes that “some projects that have been racing around for the past 10-15 years need to come together and unite.”
Training for uncertainty
The education and training sector is among the largest employers in Hawke’s Bay having grown 15% to around 5,673 since 2013, although aligning outputs with actual jobs remains a challenge.
EIT’s business relationship manager, Paul Hursthouse, is tasked with making sense of that precarious balancing act, and like others believes employers need to take more responsibility and “broaden their horizons” about who they will and won’t take on board.
EIT sees itself simply as a service provider working through its Trades Academy in partnership with 14 secondary schools and programmes, and alongside local councils, government agencies and other initiatives to boost regional capability.
It’s doing what it can within its budget and capabilities to offer relevant courses, currently training 3,500 students and offering twelve degree and Masters programmes, and examining every opportunity to meet market needs.
Ultimately, however, says Hursthouse, “industry has to be in a position to employ them.”
Local Careers NZ manager, Leslie Leech, agrees there’s “a disconnect” between training and job availability and a need to generate “genuine employment opportunities” so people want to stay and work, or come back if they’ve been away.
One of the challenges is to get beyond the personal or organisational agendas for greater sharing of resources and to have accurate information about the market, industry needs, job opportunities and training requirements.
One of the main goals of the recently formed HB Connect group is to identify barriers to job development and growth. Stakeholders include Careers NZ, Business HB, EIT, the Secondary Schools Principals’ Association, Youth Futures Trust, Ngati Kahungunu Inc, the Ministry of Social Development (MSD) and representatives from Napier, Hastings, Central Hawke’s Bay and Wairoa councils.
Its objectives align well with the McGredy Winder report recommending a 3-5 year government-led strategy as the lowest cost, highest return option to meet employment deficits and better target regional spending on raising education and skill levels.
The report claimed an “interdependence of initiatives” could establish “a virtual spiral of development” but would not succeed unless there was buy in from the business community.
Businesses needed to identify opportunities for training and labour force development including “an appropriate cultural context” for the region’s young and growing Maori population. If training wasn’t aligned with new jobs the credibility of any strategy would be undermined.
Leech, a member of HB Connect, is concerned that there’s been little employer engagement other than through The Icehouse and economic development consultancy, Game Changer.
It wants to work alongside network-based groups like the Chamber of Commerce, but finds most are socially based, profit driven and operate on a “what’s in it for them” basis.
Despite public sector groups, including Careers NZ, being driven by national targets and agendas with limited funding and resources, she’s convinced HB Connect is now achieving “a helpful degree of honesty about the real issues”.
Members are asking what difference they are making, having more open conversations and prepared to challenge one another’s national and regional agendas, which Leech says is finally breaking down the barriers of perception.
Of great assistance would be better communication between at last seven groups who appear to be working on some form of economic development or assessment for “their council…their area of interest or business sector,” says Leech.
Meanwhile HB Connect wants to make better sense of the fragmented data sets describing the job market. For example, Statistics NZ mixing Gisborne with Hawke’s Bay isn’t seen as helpful.
It’s working on a more dynamic model to better identify available jobs and skills and fill the gaps with more targeted training to assist potential employers.
Business Hawke’s Bay CEO Susan White agrees there needs to be greater clarity about who’s doing what and better regional co-operation. “Business HB has its own advisory group which meets monthly but we need more engagement at the regional governance level with the people who hold the resources.”
Business HB, charged with coordinating or being “the glue” for regional development, agrees whatever the outcome it must relate to job creation. “There is money being spent on some sort of economic development activity in each of the councils so it’s not that the resource isn’t there,” says White.
She’s only been in her role for a year but has attended numerous meetings involving local and central government and business chief executives around business attraction, economic development and job creation.
At a recent CEO Inter-sectoral Forum Group, still another strategy was being mapped out where she suggested again that everyone should be working on a single regional approach.
Perhaps that will come about through the current review of the HBRC-driven Regional Economic Development Strategy (REDS) and greater participation by a wider group of stakeholders, she suggests.
White has been greatly encouraged that Business HB, in its latest funding round has managed to double support from HBRC and Hastings councils to $100,000 annually and for the first time got Napier on board.
She sees that as a vote of confidence as she looks to add a second staff member and ramp up her liaison role to ensure parties tasked with growing the economy are more closely aligned in their goals and outputs.
In the mix is a plan for a regional business hub where matters of this magnitude might be better mediated. This shared premises, with training and meeting rooms, video conferencing and other hi-tech facilities, even a café-bar, would make it easier for businesses to engage with Business HB, each other and with clients and advisors.
Business HB would act as a catalyst for collaborative economic development and job creation efforts with advice for start-up businesses or those looking to grow, export or relocate to Hawke’s Bay.
White says employment and economic growth depends on the value proposition of the region. “If businesses are resilient and have great plans that’s a better environment for employment.”
So what’s going to incentivise businesses designing and manufacturing for the agricultural sector to move here from Auckland, for example, when they already have their supply chain sorted and an employment pool? “We have to look at the obstacles….and how to get people excited about coming here.”
Among the long-term obstacles facing this and other regions are the shrinking population, the greying of the workforce and the growing number of youth who do not have the adequate skills or literacy to take up the limited jobs that are on offer.
EIT business development manager Paul Hursthouse says because schools are measured on their high performing students – who’s going to become doctors, lawyers or a judge – that’s where they focus their resources.
“Currently only 30% of students go to university or to degree-based study and locally it’s even less than that. The Ministry of Education wants to know what’s happening to the other 70%?”
It is trying to address that imbalance by working with schools, other government agencies and EIT on Vocational Pathways. “The Hawke’s Bay Schools Trades Academy and EIT are recognised as a New Zealand leader in that initiative,” says Hursthouse.
Careers NZ local manager Leslie Leech says there’s a real need to break down the barriers that prevent young people from having careers or even being interested in one. “Those looking for employment solutions in Hawke’s Bay need to start thinking outside of the square.”
If we’re seriously interested in getting more youth into employment, she says we should look to the example set by Otorohanga mayor Dale Williams, a former motorcycle mechanic, who effectively eliminated youth unemployment by championing business-led trades training.
His flexible approach to workplace experience and apprenticeships challenged local businesses to “man-up” and take responsibility … alongside a tertiary provider he changed the way skills were developed in the community.
Leech says local councils could play a pivotal role in encouraging employers to provide work experience. “(Dale Williams) made a huge difference … and an awful lot of spin-offs came from that … He was an absolute catalyst … We could do with one of those in Hawke’s Bay.”
Slow Growth, unemployment underpin regional challenges
It’s been a rough ride for Hawke’s Bay economy. Most businesses have had to tighten the belt due to the global meltdown, with ‘recovery’ still under a shadow and key sectors typically relied on for economic growth and jobs struggling or in decline.
Hawke’s Bay’s performance in the regional growth stakes remains worryingly low, with an average growth of 0.7% over the past decade relegating us to the “economic doldrums” unless something shifts drastically in the near future.
The July report from the New Zealand Institute of Economic Research (NZIER) reiterates reports from the past two decades: our aging population, slow job growth and poor economic performance are keeping us near the bottom of the regional pile.
Sean Bevan of Economic Solutions, in breaking down the seven year Gisborne-Hawke’s Bay Household Labour Force data, overlays it with the 2006-2013 census data of employment by industry sector, then attributes 74% to Hawke’s Bay to make sense of the local numbers.
On that basis, an average of 75,000 people have been employed in the wider Hawke’s Bay region — from Waipukurau to Wairoa — over the past seven years (2006-2013), 24% of them part timers.
Total employment in the region grew steadily between 2001 and 2005 to peak at over 80,000 then headed into gradual decline. Although the five-year period to March 2014 indicated an increase of 2% or 2,000 people in employment, that’s no game changer.
Rough ride not over
Bright spots include growing demand for a mixed bag of skilled tradespeople and labourers, caregivers and administrators, teachers and tutors, creatives, and highly qualified professionals including lawyers, accountants, technicians and researchers.
While growth and decline seesaws across sectors, the largest employer is manufacturing, employing 8,787 people, followed by agriculture, forestry, fishing and primary production with 8,193 jobs, all of which shrunk around 10% over 2013 numbers.
Farming, one of the biggest regional sectors, typically employs only two or three people apart from seasonal increases like shearing and processing, and an increasing number of tasks are now highly mechanised.
Retailing, trade, wholesale, transport, postal and warehousing, essentially the supply chain and customer service industries, account for around 11,000 local jobs, an area that remains stagnant or in slow decline.
The Hawke’s Bay construction industry, typically a good indicator of wider growth, is also in serious decline. Builders, plumbers, electricians, labourers and other trades engaged in domestic, commercial and industrial building may be in less demand as consents slow here, but their skills are certainly sought after elsewhere.
Many local businesses were reliant on a pool of semi-skilled and skilled tradespeople, short-term contractors or odd-jobbers, but the pool is rapidly emptying.
“There used to be a lot of skills available in the trade market; electricians, builders and painters but that’s really dried up,” says Boss Recruitment owner Leanne Welsh.
When it comes to more skilled trades work, some employers are forced to source offshore. The big demand is for engineers, particularly structural design engineers for building and earthquake design and testing. “There’s no point in advertising in New Zealand. Look in the engineering magazines, there’s always about 30-40 vacancies.”
Health not about wealth
One of the largest areas of employment growth is health care and social assistance with over 7,500 people. The HB District Health Board is the biggest employer. However, as economist Sean Bevan says, work in the public sector is population driven and not a generator of wealth.
The McGredy Winder report, which he contributed to, highlights our rapidly ageing population, the high average age of farmers and other professionals and the relatively low skills of a large group of school leavers as a growing issue.
With the high levels of “deep seated unemployment” and the continued “outmigration” of young people seeking higher qualifications, the report said “the region faces a potential tipping point where it … cannot attract the labour that it needs to thrive.”
Maori unemployment was a concern, giving rise to a “significant underclass of people who are not effectively engaged in the economy”.
Our ageing population and the significant workforce engaged in health and welfare support looking after the elderly, the retired and “those who can’t look after themselves” presents a real challenge.
In fact, concedes Bevan, this could be our growth industry, if we don’t counter it with something that’s a bit more entrepreneurial.
Unemployment here to stay?
In the meantime, Statistics NZ reports there are around 5,916 unemployed in Hawke’s Bay, including 2,500 on some form of the unemployment benefit, slightly less than in 2012.
For general low-skilled labouring jobs like digging holes, the Boss agency gets an average of 100 applications; for administrative roles it’s normal for 50 to 60, “a lot to weed through,” says owner Leanne Welsh.
For those with no skills, times are tough. Even a simple thing like not having a driver’s licence can severely limit your options. She feels desperately sorry for people with poor literacy, because even basic skills are required for labouring, requiring forms to be filled in.
“There’s always going to be a sector of the community that moves in and out of employment for various reasons and a core who are unemployable,” says Welsh. “If you’re stuffing around and have a poor work ethic, Hawke’s Bay is such a small place, everybody knows everybody, and you’ll soon get a reputation.”
The hard reality is that Hawke’s Bay may have to live with around 6% unemployment rate; “it’s not all that high, even in the flush economic times it’s never been lower than 4-5%,” says Welsh.
Jobs for the boys
The widely held view that the best jobs in Hawke’s Bay go to “those in the know” has negatively skewed the perception of the region as a low paid, seasonal economy with few skilled job opportunities, suggests local Careers NZ manager, Leslie Leech.
Although there are talented people looking for work, the public generally don’t get to hear about many skilled and highly paid job opportunities “filled internally, by word of mouth or through peer groups” or as “jobs for the boys”, says Leech.
This has helped create the impression that everything is low paid, seasonal or in horticulture, agriculture and elsewhere in the primary sector. “I think there’s a lot more going on, but it’s very difficult to find out if you only read the newspapers.”
Business HB CEO, Susan White, says many people hold on to their existing jobs for as long as they can and are reluctant to retire or move on, resulting in an aging employment base inhibiting new blood moving into companies and reducing opportunities for younger people.
Boss Recruitment owner Leanne Welsh confirms the impression that “it’s a merry-go-round” for some of the best jobs – when people move there’s usually someone else waiting to fill that seat.
Meanwhile, many talented people still fly out of Hawke’s Bay on Monday and return on Friday. Welsh admits she was a commuter for two years while waiting for a suitable local job.
“We have a lot of people who commute to Auckland, Wellington and Christchurch because we don’t have those high level, high paid jobs.”
To generate economic growth and improve skilled employment options, she says the complexity of jobs needs to increase. By that she means smaller companies – those with 20 or more staff – are going to need a financial controller or an HR manager to get the next level of growth.
The region’s lack of head offices for major corporates has been cited as an obstacle to high level jobs, however Smarter, Better Faster manager Glenn Manahi, believes there are plenty of opportunities for those looking to gain experience.
He says many owner-operator businesses are starting to look around for managers so they can take things to the next level, giving those aspiring to senior management a chance to cut their teeth.
“Stepping up as general manager of a small to medium sized business is good grounding for those who might eventually be seeking international experience or a large CEO position.”