'Thin' economy needs local help

By Ingrid Tiriana


NEED FOR CHANGE: Creating "clusters" of like businesses and upskilling workers will help boost business growth in Tauranga. PHOTO/FILE

Max Mason CLOSE TO HOME: People should shop locally to support regional businesses, which will lead to demand and job creation.

RELYING too much on certain sectors in the Western Bay of Plenty has created a "thin" economy which is restricting growth although business confidence is on the rise, says the Tauranga Chamber of Commerce.

And its latest business confidence survey has found that many local businesses expect their situation to improve in the next six months.

Completed by 178 firms, it shows more than half of respondents (55 per cent) expect things to get better in the first half of this year, which is an improvement on the last quarterly survey results.

Meanwhile, 34 per cent of respondents think their situation will remain the same while 11 per cent expect it to get worse.

In terms of their forecast for the general business situation in New Zealand, 34 per cent think it will improve, 53 per cent expect it to stay the same and 12 per cent believe it will deteriorate.

Again, this is an improvement on the last quarterly results.

However, many businesses are having trouble recruiting skilled staff which Tauranga Chamber of Commerce chief executive Max Mason says highlights areas that need changing.

Twenty-four per cent of survey respondents said they were finding it difficult to employ skilled staff, which is more than the previous quarterly survey.

"This is a concern as our local economy is likely to be held back from growing as it was pre-global financial crisis due to skills shortages," says Mr Mason.

He describes Tauranga as having a "rather thin" economy. Whereas larger centres have clusters of like businesses, in Tauranga there may only be one of a certain type of business. That means skilled people often have to move elsewhere in order to advance their careers, he says.

"Capacity for career growth can be an issue here."

The size of businesses in Tauranga also tends to be smaller than in larger centres, which also impacts on career prospects.

"We've been too reliant on population growth and industries like building, real estate, service sectors and kiwifruit. What we need to do as a city is to have more different types of industries, like specialist technical businesses and manufacturing - particularly those with export markets because businesses are constrained by the size of the market.

"Exporting creates opportunity for growth and the capacity for [export] growth is infinite."

Increasing the size and types of industries operating in Tauranga will create a deeper economy, providing better career-advancement opportunities to help retain skilled workers.

Organisations such as Priority One and Bay of Connections are working towards creating a deeper economy, Mr Mason says.

While Priority One is attempting to get good businesses to move to the region, Bay of Connections is focusing on specialist, high-growth sectors to create jobs and wealth.

Mr Mason says everyone in the community can play a role in encouraging business growth.

"Sometimes there's a degree of negativity [around efforts to grow the local economy] because people think it's all about making money. In fact, business owners almost always have very strong community roots and support local causes, as well as creating jobs.

"As a community, if we support business owners and entrepreneurs and if the likes of councils, the education and government sectors all support them, and we can grow the economy, everyone benefits."

Supporting local business can be done in various ways, says Mr Mason, including staff working hard to increase productivity, which will ultimately benefit the staff because they can demand higher wages.

Support for local businesses should also include shopping locally before going elsewhere to purchase goods and services, he says.

"Also significant is that 43 per cent of businesses identified demand as the main limiting factor to growth, with 25 per cent saying finance is their key growth constraint."

Local businesses tend to stand by their loyal customers and go the extra mile, so there's benefit for consumers as well as the fact it increases demand, which eventually leads to growth and job creation, Mr Mason says.

There also needs to be more emphasis on people upskilling themselves to help fill a shortage in skilled workers, and the tertiary-education sector has a part to play in that, he says.

Nearly a quarter of respondents in the latest business-confidence survey said they were having difficulty finding skilled staff.

The majority of local job vacancies are in skilled areas like logistics and warehousing, health, accounting, specialist IT services, production and engineering and specialised retail and sales.

"People becoming more skilled means they will be more productive, which means businesses make more money, which is good for the economy and will see demand for goods and services increase," says Mr Mason.

"All of that is good for the community as a whole."

Quarterly Tauranga business confidence survey

  • 90 per cent of respondents expect their situation to improve (55 per cent) or stay the same (34 per cent) in the next six months

  • 11 per cent believe it will get worse

  • 27 per cent intend to spend more on machinery/equipment than in the past year

  • 17 per cent expect more new investment in buildings to be approved by their firms than last year

  • 24 per cent say finding skilled staff is difficult

  • 43 per cent say demand is the main limiting factor to growth

  • 25 per cent say finance is their main growth constraint

  • 34 per cent expect the general business situation in New Zealand to improve

  • 12 per cent expect the national business situation to deteriorate

Source: Tauranga Chamber of Commerce

- Bay of Plenty Times

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