Labour shortages in the kiwifruit industry has dampened economic confidence but the housing market and forestry sectors could lift spirits. Photo / File
Labour shortages in the kiwifruit industry has dampened economic confidence but the housing market and forestry sectors could lift spirits. Photo / File
Labour shortages in the Bay of Plenty's kiwifruit industry and the closure of the Whakatāne Mill have dampened the region's economic confidence, a new report says.
However, a "red-hot" housing market and strong forestry and horticulture sectors could lift spirits.
Only a net 7 per cent of Bay households expectedthe region's economy to improve in the next year, according to the latest Westpac-McDermott Miller Regional Economic Confidence survey.
That was down from a net 13 per cent of households that reported feeling optimistic about their region's economic prospects in the December quarter.
Westpac acting chief economist Michael Gordon said the drop in confidence was likely to reflect labour shortages in the kiwifruit industry.
"The proposed closure of the paper and packaging manufacturer, Whakatāne Mill, which has now been confirmed for the end of June, will also have dampened spirits in the region."
It was announced last month the Whakatāne Mill will close and just over 210 staff would be made redundant, most by the end of June.
The mill is Whakatane's largest private employer and has for more than 80 years produced paper and packaging products, mostly for export.
"That said, a red-hot housing market, which continues to see strong sales volumes and escalating prices, coupled with strong export incomes from forestry and horticulture will have provided some cause for cheer," Gordon said.
New Zealand Kiwifruit Growers Inc communications manager Mike Murphy said the industry contributed $1.5 billion to the region in 2020.
A 2017 University of Waikato report forecast the industry would add more than 14,000 jobs to the region's economy by 2030, he said.
"Over 80 per cent of New Zealand's kiwifruit are grown in the Bay of Plenty across 10,000 hectares of orchards.
"Sourcing seasonal labour to harvest these crops is a significant challenge for the kiwifruit industry."
Murphy said with border closures reducing the number of backpackers and RSE workers, the industry wanted more Kiwis to work in the industry.
"This year around 20,000 seasonal workers will be required to pick and pack the crop in the Bay, which peaks in mid to late April and runs through until June.
"Accordingly, it is too early yet to comment on the extent of any labour shortages for this year's harvest.
"NZKGI is working to attract labour by communicating on the opportunities available for potential employees."
Priority One chief executive Nigel Tutt. Photo / Supplied
Priority One chief executive Nigel Tutt said the feedback they had received suggested business confidence was strong.
"I suspect that some of the reduced confidence from last quarter comes from slightly softer retail spend numbers, and increasing difficulty getting talent for businesses."
Tauranga Chamber of Commerce chief executive Matt Cowley said the region's strong export sector would continue to boost the economy over winter.
"Our long-term population growth trends appear to be boosted by last year's Covid-19 lockdowns.
"There are still turbulent waters ahead with uncertainties around the housing sector, labour supply, travel bubble, and continued supply chain interruptions."
Tauranga Chamber of Commerce chief executive Matt Cowley. Photo / File
Rotorua Chamber of Commerce chief executive Bryce Heard said the figures made "perfect sense".
"The high level of confidence in the rural regions reflects the primary sector and exposed to major 'Covid-free' trading partners like China and Australia.
"Farming, forestry, horticulture and wine, for example, are all performing strongly. "
Heard said there was a more pessimistic level of confidence at the opposite end of the spectrum where there was high exposure to international tourism and travel to the likes of Rotorua and Queenstown.
"Bay of Plenty is exposed to both spectrums, so as a region, it logically sits in the middle of the spectrum.
"The dangers in this are that there will be big variations within regions that the survey will not necessarily show, and also politicians will also have varying 'takes' on business confidence, depending on their own regional exposure.
"One cap does not fit all at times like this."
Rotorua Chamber of Commerce CEO Bryce Heard. Photo / File
Red Stag chief executive Marty Verry said there was record global and domestic demand for logs and timber.
But Verry said coming to the end of summer without a transtasman bubble in place would be weighing on the tourism sector's confidence.
"Having said that, we have seen domestic tourism more than fill the hole left by foreign tourists in the Waipa mountain bike precinct at Rotorua.
"As these are more likely to become repeat visitors in the years to come, they are more valuable long-term than foreign tourists."
Rotorua Economic Development interim chief executive Andrew Wilson. Photo / File
Rotorua Economic Development interim chief executive Andrew Wilson said it was great to see the positives highlighted in the report.
"We know that forestry continues to be a significant strength for Rotorua and this report reflects the strong contribution the forestry sector makes to our region."
The survey was conducted between March 1 - 11, 2021.
