Recovery eludes smaller firms

Just when local small- and medium-sized businesses thought they were getting over the economic hump, they are finding it harder than ever.
The latest Tauranga Chamber of Commerce survey shows business confidence is at its lowest level for more than a decade.
Only 23 per cent of respondents in Tauranga believe business conditions will improve over the next six months - and, in the wider area from Northland to Taupo, excluding Auckland, the response fell to 15 per cent (Auckland recorded 18 per cent).
Chamber chief executive Max Mason said many businesses had expected to deal with a downturn over a period of about one year but this had now turned into two years.
Many businesses had battened down the hatches and gone into survival mode - "expect more casualties in the New Year", Mr Mason said.
Robbie Neilson, a director with RHB Chartered Accountants, said: "If you had mentioned that three weeks ago, I would have disagreed. Businesses really thought there was an upswing but it's all changed in the past two to three weeks.
"We are getting more calls for help and some are going over the line into receivership or liquidation.
"Business is weird. Our insolvency division went reasonably quiet over September/October/November and our advisory team was flat out.
"People were starting to do transactions and maybe the economic situation had turned."
Now, the firm's insolvency staff are busy and will be working over the Christmas/New Year period. They will be dealing with at least three major receiverships.
"Some people were hanging on until the end of the recession cycle but it hasn't got any better and they can't hang on any longer," Mr Neilson said.
"They use up all their capital, they don't get the sales and contracts they need to carry on and the banks will only support them for so long.
"I think we've got a two-tier economy at present. Some businesses are still spending money while some are simply surviving.
"I think the economic times will be difficult for the next two years."
Mr Mason said small- and medium-sized businesses were experiencing strong consumer reluctance to spend or make decisions.
He said respondents in the survey commented that in spite of the strong profit performance from the banking sector, it was hard to get bank support in difficult times.
The respondents expected to benefit from the 85,000 credit cards the Rugby World Cup (RWC) will bring to New Zealand next year but they also accepted that much of the infrastructure spend had already been made, and post-RWC there was little on the horizon domestically, Mr Mason said.
The ANZ December Quarterly Economic Forecast said the near-term outlook weakened compared with September and the recovery continued to be a hard slog.
"We expect strong growth to emerge in the second half of 2011, but off such a low base that times still won't feel great, with the level of total output not returning to its late-2007 peak until the end of next year," the ANZ economists said.
"No wonder people are grumpy. The five-year picture remains one of only modest growth, which reflects a sustained period of debt reduction and structural changes across the economy."