Hawke’s Bay’s ‘non-essential’ businesses should use downtime to re-evaluate distribution and supply chain capability, ways to spread business risk, and at buying and manufacturing locally if they want to survive the post-lock down blues.
Business HB CEO Carolyn Neville is confident the region is resilient enough, with its strong primary sector, to get through Covid-19, which she insists is “a health crisis not an economic crisis”.
However, while most larger organisations have continuity and resilience planning in place, it’ll be more difficult for smaller businesses to survive.
There are suggestions 30% of the country’s business could fail to rally after the curtain comes up.
Neville says those who are ‘non-essential’ and unable to trade, are carrying a lot of debt, or struggling with cashflow problems will feel the worst of the pain. “A number of factors will impact on how you are positioned to invest in the future.”
Business HB is currently working with Infometrics on more helpful financial modelling to help gauge the overall financial impact on Hawke’s Bay.
“They normally only deliver quarterly; the March quarter figures aren’t usually released until late April/early May, so we want them to break things down further so we can see a month by month impact.”
Strategies for recovery
While Neville admires the wider business community for its ability to remain flexible, innovate and make adjustments when things changed so rapidly pre-lock down and over the past two weeks, the challenge now is recovery.
Most people have their sights set on moving from level 4 back down to level 3 or some version of that. “We’re all talking now ‘at least’ four weeks.”
Having the right Government-led pandemic planning in place will drive the next stage, with businesses now trying to assess how to move out of what she expects will be a V-shaped crisis rather than U-shaped one.
“We’ve gone down into the decline very quickly, but there’s hope we can climb out quite quickly, rather than what happened with the global financial crisis which was a long slow dip into a U-shape where we stayed in the bottom for some time.”
As a regional economic development agency, BusinessHB is working overtime using Zoom and engaging in phone conversations with Economic Development New Zealand, local authorities, the HB Business Hub, partners in the Matariki regional strategy and local businesses.
She says there’s a general sense of resilience. “We have a strong primary sector base with food processing, manufacturing and growing, a strength we’re able to lean on at the moment.”
On-line now essential
Neville says MBIE has been working with a range of businesses to help them look at potential opportunities to work in different ways and to adapt their model to trade online through websites and use the flexibility provided by social media.
A lot of artisans and smaller food producers in particular have in the past relied on face-to-face interaction. Now, some who’re involved in the Farmers Markets, for example, have banded together in a cooperative, packaging up fruit, vegetables and condiments based on customer needs.
We’ve had a top harvest season; the grapes are mostly in, apples are still being picked and are flowing through the packhouses and into the supply chain.
One impediment has been the constrains imposed by social distancing, which have made work in the region’s packhouses less efficient and in some cases unable to keep pace with the bumper crops.
“Productivity has been slowed by social distancing, hand overs between shifts requiring full sterilisation of processes, distancing with customers, and staffing issues, but most have been able to keep trading,” says Neville.
She says the lockdown is forcing many businesses to re-evaluate their financial projections and look at things differently, including how they can work more co-operatively.
“We need to shore up existing markets and look at new markets. If an exporter is unable to get their goods out into the international market there’s always the risk someone else will pick that up.”
Watch big picture
She says it’s important for businesses to look at their sector, their supply chain, distributors, customers, their relationships with banks and accountants and monitor the bigger picture.
That means keeping an eye on what’s happening across New Zealand and worldwide; and rather than being too reliant on one party, spreading their risk.
“Even small things can cause a disruption to the supply chain. Someone may have really good forward orders, but because one component is missing they may not be able to fulfil those.”
Of course there have been glitches in some supply chains where ‘essential services’ have found parts of their process deemed non-essential and therefore unable to operate.
Neville says we need to look again at our own manufacturing capability and what we can produce for ourselves and back New Zealand and regional businesses. “Supporting each other has a lot of strength and we need to keep that going.”
‘Buy local’ is going to become a strong campaign while there are restrictions on international trade, as well as looking at ways of manufacturing equipment — for example the push to make facemasks and visors and PPE.
The biggest concern right now is how long this might run for, even beyond lockdown, says Neville. “Until there’s a vaccine we are looking at border restrictions and potential of further lock downs. This will have a big impact on mental and economic resilience.”
NB: Business Hawke’s Bay and the Hawke’s Bay Business Hub are offering a full range of fully funded virtual support options, from one-on-one coaching to small group workshops to help businesses through this time. Contact: www.hbbusinesshub.nz