Content brought to you by Norwood.
Amidst the devastation Covid-19 brought with it in 2020, New Zealand's primary industries became a shining light - a glimmer of hope in a bleak economic landscape - as they navigated border closures, physical distancing and a constantly evolving landscape throwing up unending challenges. Those reliant on such industries watched with trepidation as first the rock lobster and forestry industries felt the pinch; then a growing sense of both reassurance and pride as the sectors worked together to forge ahead. When one industry pressed pause, another raised their hand to take on willing workers. All the while, industry leaders continued adapting, rewriting their operational guidelines ahead of a return to full operation. Tim Myers, CEO of New Zealand's largest farm machinery company, Norwood, sat down with reporter Rowena Duncum.
Despite emerging in a position of strength, there's no denying the impact Covid-19 has made on the primary export sector is as significant as it was swift.
According to Myers, this initial impact forced an inward-looking audit.
"Are we really as good as we think we are?"
He attributes this collective come-to-Jesus moment as leading to a further realisation around the opportunity to leverage the "brand NZ" values "that we've pushed for a long time but haven't necessarily lived in practice."
"Thankfully most in the agricultural sector have made huge strides forward. We have an amazing platform to springboard from, but it's critical we use Covid as the excuse to unashamedly be the cleanest, most ethical, most safety conscious food producing nation on earth. The global consumer will reward us for it."
For Norwood, ensuring sustainability inevitably led to the narrowing of the organisation's focus. As an essential service, Tim and the management team "practically had to reinvent our business several times over as the country transitioned through the alert levels."
Fundamentally it came down to asking "how we can become an even more integral partner for NZ farmers? Which is then about 'lifetime value'."
And while the impact is undeniable, from a performance perspective, Norwood has found itself in a significantly better position than initial modelling suggested.
"Thankfully we decided very early on that our focus was going to be our people, and looking after them. We were utterly committed to preserving jobs and cash, and that meant planning for the absolute worst case. We're actually realising what we were hoping for – we're busy, and our outlook, whilst cautious, is much better than we thought it would be. For many of our customers the worst drought in decades is having more of an impact. It's important we don't lose sight of that."
Myers readily acknowledges the importance the entire Norwood team play in the organisation's ongoing reputation and success and talks easily about his pride "in each and every one of them."
"Like the old rugby term, it was 'hand up, not hand out' - our team put everyone other than themselves first starting with our customer. I was truly inspired."
So how are things in the tractor sales market?
"Not bad" says Myers.
The tractor market is the only market he has robust data for. This has been contracting for the last 18 months which, he explains, was expected.
"Covid hasn't accelerated the contraction, it's just created more uncertainty. Our outlook for 2021 is actually pretty similar for 2020, which is stable at relatively low levels."
Interestingly, the equipment market (demand for other machinery), is not necessarily pegged to the fortunes of the tractor market, and often reflects a willingness to invest in more efficient or effective machine with a focus on the outcomes. This is heavily impacted by confidence.
"Despite the headwind we're actually expecting a slight uplift. The life cycle for machinery is also quite well known – we have insight into the age of the equipment fleet, and it is getting up there. On-farm trends are also very influential. For example, maize is a crop of preference because farmers are moving away from imported supplements. It follows that the associated machinery is in strong demand."
While on the topic of farmer confidence, Myers believes, when compared to almost every other sector, this "speaks to relative strength and optimism" which "will be vital in the fight to rebuild New Zealand's economy."
"Agriculture, just from a straight earnings perspective, will be the engine room that tourism has been. Over the medium to long term, our agricultural industry has the potential to reinforce or even reset the values that the global consumer will pay a premium for. That will take a combined effort – political, public, and private."
That being said, maintaining robust trade relations, ideally supported by trade agreements, "will also be absolutely vital."
"Our large international markets are in a protectionist cycle, and the end is yet to play out. Protectionist economies can be beneficial for the larger economies over the short term, but without fair and equitable access there are major risks for small, export dependent economies like NZ. We need to appeal to the changing values of the global consumer and use the demand for NZ products as a lever."
Moving forward, Myers hopes New Zealand will continue "to leverage our emerging differences."
"In areas where we have been leveraging the global perception of 'clean, green and secure' we must become even more assertive. But it absolutely has to be genuine. History is full of false claims, and the violent market response that follows being 'found out.' "
"Covid presents a once-in-a-life-time opportunity to appeal to the new-found interests and insecurities of the global market. New Zealand agriculture has an enviable opportunity to create a consumer-connected, highly secure 'farmer's market' for the world."
And Norwood – how will they remain viable and continue to serve farmers for the long-haul?
Despite new cases this month, and the likelihood that they will continue to sporadically appear, Myers acknowledges that the infection has receded. But equally he's keen to ensure that some of the pre-Covid thinking doesn't stifle new-found innovative thinking at Norwood.
"As we contemplate our future without the old perceived constraints, we are identifying opportunities that I don't think we would have seen pre-Covid.
"We have an awesome team that believe in our values, we are well resourced, and we're optimists; this doesn't mean that we put our head in the sand and ignore the very obvious and painful realities of the near term, but it does mean that we will be absolutely dedicated to bringing our customers the most value enhancing solutions in the market.
"And much of this focus will be technology related. The most technologically advanced machines and devices, supported by expert advice will deliver tangible benefit for the Norwood – customer partnership.