Economic downturn signals tough times for businesses

How hard is the economic downturn hitting businesses, asks Transporting New Zealand interim chief executive Dom Kalasih.

New Zealand’s current economic downturn was predicted, but that doesn’t make things any easier for those living through it.

At Transporting New Zealand’s conference in Lower Hutt last year, independent economist Cameron Bagrie told the industry it was in for a tough time, with inflation, a recession and vast uncertainty.

Bagrie, who founded ANZ’s Truckometer Index, which measures the economy based on the amount of road freight being carried, said, “Doing business is going to get fun again.”

His version of fun was measuring yourself against your competition and seeing who would do well when times got harder. No, it’s not my version of fun either – it’s rather like the Chinese curse, “May you live in interesting times.” Most businesses would choose dull and predictable over interesting and volatile.

Almost exactly one year later, Bagrie has been proved right. Just how hard is the economic impact hitting businesses? To give an indication, we heard that there were some vacancies at a port. Usually, there would be about 10 to 15 applications for a job. The latest advertisements were getting 150 to 200 responses.

In another blow, a major transport company recently went into liquidation with absolutely no warning.

One of our Wellington members says she and the businesses she associates with are now in “survive to 25” mode.

At a recent business breakfast, a finance company manager said several big customers had asked to go interest-only on some loans.

The downturn is not just limited to the transport sector. Hospitality and retail are suffering, and even breweries are closing down.

It will be interesting to see what moves the government announces in this year’s Budget, which would have been announced by the time you read this. At a business breakfast recently, Finance Minister Nicola Willis promised the Budget would chart “a sensible middle course” and deliver “a stronger, more productive economy”.

Times are hard, operators are under extreme pressure, and anything that can be done to reduce the pressure and risks they face would be appreciated. Road transport industry representatives recently met with Waka Kotahi NZTA and the Ministry of Transport for a policy workshop. We hope this is the start of delivering some of those productivity benefits.

The need for productivity gains is one reason we are calling for Roads of National Significance (RoNS) to be put at the centre of the Fast-Track Approvals Bill.

The legislation is controversial; however, it’s critical that we build essential new infrastructure. The atrocious condition of parts of our roading network results from decades of underinvestment.

RoNS needs to be immediately referred to the fast-track’s expert panel for assessment.

Last month, Transporting New Zealand joined with Infrastructure New Zealand in backing the call for critical infrastructure investment in Northland. The same holds true for other regions. All these roading improvements are needed as a bare minimum.

Without fast-tracking, the RoNS programme risks being mired in lengthy consenting delays and impractical consent conditions, demonstrated by the East West Link and Mt Messenger Bypass projects. The RoNS programme will strengthen regional connections, improve road safety outcomes and ensure our roading network is resilient in the face of increasingly severe weather.

Let’s get things underway.

Meanwhile, the one industry that’s not letting up is the enforcement sector. Here are two recent examples of companies being pinged for things that weren’t really their fault.

One was a carrier who had a $280 job transporting some deer. Some of them were missing ear tags so the company has been fined $1200.

Technically, that is legal, but is it right? As far as we know, the farmer didn’t cop the fine, but they were the missing link in the supply chain.

In the other case we’re looking into, drivers are being warned they may be disqualified from driving in a transport service and have their heavy vehicle driver licences revoked for up to 10 years if they commit further traffic offences in any type of vehicle, including personal vehicles.

So, in effect, our members’ businesses could be impacted by something their employees are doing in their own time and in their own vehicles. On the face of it, its seems unfair and unreasonable to Transporting New Zealand, so watch this space.

So we must get smarter and more productive and ensure our members are treated fairly and justly.

We’re here to help in any way we can.