Cavalier losses part of changing environment

IN WRITING a column on business I would be remiss not to make mention of the terrible news of the job losses at Cavalier in Castlecliff. While many will remain hopeful that the company's position, when finalised, will enable some jobs to be retained it is important that we as a community support those families who will either need to move away or find new employment.

While local and national media highlighted the loss for Whanganui, such closures and/or restructures are a product of the ever changing business environment. In this case the lure of low wage and high automation alternatives, often in other countries made possible through globalisation. And to an extent we as consumers are partly responsible because of our appetite for "low cost" consumer products putting pressure on margins.

Only last week I spoke with a local business who have been impacted by customers purchasing cheap Chinese made alternatives to their own product range - predominantly off the web.

The "kicker" in this case is that when the cheaper product failed those same consumers approached the local business to fix it! So we have a situation where revenue which could have resided here has gone overseas and an inferior product has caused locals grief. The epilogue to the story being that the website from which the previous product was purchased has been taken down.

Here we see one of the many drawbacks to the digital economy and the now nauseating buzzword "disruption". Like chainsaws charging into rainforest to replant palm trees, digital business is developing around us impacting on a large scale. Once digital alternatives become embedded, traditional business models are like the orangutans left behind. Don't get me wrong, the digital revolution brings opportunities and benefits. However, traditional models either need to be prepared for it or they should be strategically moving to surf the wave rather than be drowned by it.

The cases I have described are not the first cases of the one-two punch of globalisation and digital reformation. Neither will they be the last. Other "traditional" markets which enjoyed secure revenue streams in the past are under similar pressure - main street retail being one.

The challenge for communities like Whanganui is to adapt and the sooner we start the better. But it is going to be hard and challenging work and will require us to think further ahead than the current financial year - and most of all it will require a plan.

I found it interesting that commentary on Cavalier's decision was sought from rising-star economist Shamubeel Eaqub - I can imagine the reporter interviewing him was desperately thinking "please say 'zombie', please say 'zombie', please say 'zombie' ... ". Eaqub has stated that we need to "reinvent" ourselves, citing the current digital strategies as examples, and he also called for government to do more. I don't disagree in principle, but the solution starts with businesses developing their own strategic plans. This means specific and tailored plans for your business and where you can embrace the technology available to open up new markets. At a macro level, council is also doing some good work here, but the "buy local" message and communicating the benefits of this need to be stronger.

-Balance Consulting is a Wanganui consultancy and also part of the Balance Group. We provide strategic planning services and are assisting them with digital and web based approaches. Please call Russell on 021-244-2421 or John Taylor on 027 499 5872 if you are interested.