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CONGRATULATIONS WESTPAC BUSINESS OF THE YEAR IS ...
Manufacturing and Trade Business Award Orca Engineering & Marine
I would first like to thank the Chamber of Commerce, the sponsors and the judges involved. The generous sacrifice of their time and their efforts are no small thing. They helped to make and keep the process interesting and in many ways beneficial to Orca and to me.
When asked: “How was it?” I can best reply with the words of our new General Manager, Bob Reed: “The entertainment was world class, from top to bottom. The food was outstanding and the venue from soup to nuts was over the top.”
On the night the majority of our team was in attendance and anticipation was high. We had put in the hard yards and were cautiously confident but you never know.
After many years in business here in Rotorua, I knew the other contenders had very strong abilities and talents worthy of recognition. We were confident that we had done our best, and regardless of what happened, the things we had learned would take us forward in our business. The help we received from staff, customers and friends was indispensible in gathering supporting documentation for our entry.
The very generous letters of praise from our prestigious line of loyal customers and suppliers brought it all together for us and was confirmed by what one of the judges shared with us on the night.
Prior to the Awards efforts we were in progress with upgrading and moving the business forward. Engaging in the entry process moved us along at a much quicker pace. As to the results, we find the more you define the workings of your business, its nature and goals, the clearer it becomes for all involved in the business.
Each business has a persona and a life of its own. It is viewed differently by its staff, customers and the general public. Going through this presentation process directed us to examine all perspectives and how they impact upon our past, present and future business decisions.
The endless stream of well wishers who have emailed, called or stopped-in to congratulate, speaks well of the impact winning such an award brings. For me, the sense of recognition for efforts and ideas has been humbling. For the staff, a true sense of pride can be felt all around our workshop. And for the business, it is a wonderful thing to have your friends, peers, customers and even the competition wish you well.
I would once again like to thank all those involved and also thank you for this opportunity to express and share my thoughts. I hope they may be of some use to the Tabloid readers.
Andre Verdonk
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CATEGORY: Pukeroa Oruawhata Holdings Retail Business Award
WINNER: Westend New World
For Westend New World to win the Retail Business category of the Rotorua Business Excellence Awards is just fantastic. All of the staff are so proud of our store and we are all walking around holding our heads high and feeling great. For us to be recognised and chosen as the best retail outlet in the city makes us all feel that the hard work and effort we all put in every day to strive to be the very best is worthwhile. It is worthwhile because independent business people from outside of our industry have looked through our operation and looked at what we do and why we do it, and they believe we are running a good business. We have always believed in what we are doing, and to be the recipients of this award just cements this.
The reason I wanted to enter the event in 2007 was to receive some external feedback on the business and to use it as a tool to improve what we were doing. During the application and interview process there were questions asked that forced me to look into areas of the operation that we had not addressed, and the feedback from the judges highlighted this. We took the feedback on board and spent the next two years improving on areas that let us down. So when we entered this year we were confident we had sorted out the things that had let us down two years ago. The main motivation this year was to win something prestigious for the team; to give each staff member something they could be proud of; and the recognition I believe they deserve. I think it is just so wonderful that my staff can say “I work at the best retail outlet in Rotorua, and I have contributed in some way toward this.”
The staff morale since being announced the winner has sky-rocketed. What was a nice place to work is now an enviable place to work. To be able to advertise the award must be good for business too and we are taking full advantage of this privilege through several different media. I have had many customers congratulate me personally and I know the same has happened for plenty of other staff members.
We all thoroughly enjoyed the entry process and we all shared the work load amongst the management team. I felt both judges, David Martin and Mijo Katavic, conducted themselves very professionally, asked great questions and were genuinely interested in our answers. The team that put together the entry and did our presentation got a huge kick out of the challenge and enjoyed doing something very different from their day-to-day jobs. The entire process was challenging and rewarding.
On behalf of all of the management team at Westend New World we would like to thank the Chamber of Commerce, the judges and sponsors for putting together such a great competition.
Brendon Good
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CATEGORY: The Daily Post Thermal Air Hospitality and Attractions Business Award
WINNER: Agroventures
Dynamic, passionate, fun-loving – and service orientated; those are the criteria required to be part of the Agroventures team. So when it came to putting an entry together for the 2009 Westpac Rotorua Business Excellence Awards, it was only natural that it was driven by staff as a way to recognise team effort.
All 25 of Agroventures management and staff were involved in the process; from writing the entry document to proof reading, coming up with concepts for the judging panel to taking photographs for the Awards night.
Simon Short, one of four Agroventures directors (and owner of Agrojet) said, although he was aware the team were really excited about being at the Business Awards gala evening, it wasn't until it came time to announce the winner of the Hospitality and Tourism Award that he realised how much winning their category meant to Agroventures staff.
“There were some very nervous expressions beforehand. Of course, this was followed by some serious cheering when we all grasped the fact that we had won.”
Agroventures General Manager Melissa Mills wasn't able to be present on Awards night but still felt part of the proceedings. “Although I was Australia attending a travel trade show, I received half a dozen phone calls from various members of the team within minutes of our win,” she said.
Simon said the calls underscored how much work Melissa had put into the project, and how the 12 staff present on Awards night understood what it meant for them as a team to be recognised in this way.
It's the second time the Rotorua adventure business, consisting of five leading adventure products – Agrojet, Swoop, Rotorua Bungy, Shweeb and Freefall Xtreme, has entered the Rotorua Business Excellence Awards. They were finalists in the Hospitality and Tourism category in 2008.
Following last year's experience, Agroventures made some minor adjustments to their business model whilst reviews to identify improvements are ongoing as part of their business plan. This year the team chose to go for a more interactive approach to their 20-minute presentation; setting up frontline staff, operations managers' and directors' meetings with a fun element to showcase how the team pull together. The meetings neatly tied together the entry document, the Award and their business plan.
Formed in 2006, Agroventures' five adventure products formerly operated as four separate entities. Operating the five products under one name has allowed them to consolidate, share resources and streamline administration processes. Melissa says overall the company has benefited from a more corporate structure behind the scenes. “It has strengthened the fun and family environment and made Agroventures' products more seamless and less confusing for visitors as well as suppliers.”
The Team at Agroventures
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CATEGORY: Emerging Destination Rotorua Economic Development Emerging Business Award
WINNER: FIX
The application for the Westpac Business Excellence Awards was a fantastic process to put our business through and we would encourage all businesses to consider entering. It helped ensure we had an in-depth look at all of our processes, systems and plans. The process allowed us to demonstrate how our vision is embedded in practice and alerted us to areas needing attention.
We have worked extremely hard on creating an excellent business and were absolutely thrilled when we heard Fix being announced as the winner of the 2009 Destination Rotorua Economic Development Emerging Business Award.
The presentation which we gave to the full panel of judges was an enjoyable time for our team. This allowed us the opportunity to demonstrate the passion and innovation we use daily in our business. We involved the judges in our presentation and were able to showcase our commitment to quality.
Fix has become the convenient place for Rotorua shoppers and workers to stop off and order great coffee and locally prepared homemade baking while on-the-go. Our consistent quality and passion for excellence are allowing our reputation to expand.
Fix's vision is to “provide people with the fix they need today”, whether that be a fast, quality coffee, a yummy snack, chocolate or just a friendly smile.
The future is one of growth and expansion for Fix. We are in the final stages of franchising our business and are looking at several cities in the Bay and Waikato. Winning the Emerging Business Award is a fantastic endorsement for our business model and operation. It provides that assurance to potential franchisees that they are purchasing an award-winning, quality business that has sound systems and the backing to ensure they also can succeed.
Our sincere thanks go to all our loyal customers, staff, family and friends for all their support. Also to the judges for investing their time and energy into our business. The feedback we have received from them is invaluable and will greatly assist us in our future growth.
Rob and Joanna Blaikie
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CATEGORY: Newstalk ZB Community Organisation Business Award
WINNER: Waiariki Institute of Technology
The excitement of the 2009 Business Awards has well and truly dissipated, the Christmas holidays have been and gone and January seems an excellent time to reflect on business.
Personally, I have enjoyed some time to reflect on Waiâriki Institute of Technology Whare Takiura (Waiâriki) winning the “Best Community Organisation 2009”. There were reasons why we won this award, and reasons why we did not win the overall award (reflection on the highlights and disappointments, is important, although at times challenging, I find).
Reflection #1 - the reasons we won “Best Community Organisation”: As all the winners waited to be photographed on the award evening, it struck me how far Waiâriki has come since 2006. Massive change has occurred throughout the organisation. The team at Waiâriki has worked hard, had a clear purpose, developed a shared “reason for being” and has “met” the market with appropriate educational offerings. This change has taken time, energy, perseverance and planning.
Below is an excerpt from our strategic plan 2009 – 2013 highlighting some key elements of our passage of change for the organisation.
We know that the business awards are not easy to win – Waiâriki tried in 2007, but we were simply not ready to be winners then. The change process, while having started, was still in its infancy. In the intervening years we continued to examine, improve and implement changes to our networks, our educational quality, the physical learning environment and our financial sustainability.
It was no surprise to me therefore that, in 2008, our council adopted the following four pillars on which to build the organisations strategic plan;
- Partnership and Collaboration
- Quality Provision
- Vibrant Learning Environment
- Economically Viable and Sustainable
Reflection # 2 - the reasons we missed the top prize: While the category award means a lot to all of us here at Waiâriki – we know that our mission has yet to be achieved. We know that education is one of the few ways to transform an economy and a society. We know that our local economy and society need urgent transformation and therefore we know that we need to be the best performing community organisation, not just in the region, but in the entire country. I believe we missed the top prize because we can still be better, and we need to be better. I find the fact that we are going to “raise the bar” again exciting.
Winning the category award offered by the Rotorua Chamber of Commerce at their annual Award Gala, was an important step towards confirming that we are on our way to being the best, to making a real difference. However, we are planning to be the very best vocational tertiary institution in the country, this is our passion, this is our reason to get out of bed in the morning and we are committed to doing it in partnership with you, the community.
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CATEGORY: Unison - The Powerlines People Service Provider Business Award
WINNER: Property Conveyancing Services
What can we say! It was an absolutely fantastic night put on by everyone. It was totally awesome.
From the set-up of the Energy Event Centre, the food, entertainment, greeting, MC, judges, the businesses and the crowd walking the red carpet we commend everyone.
We felt a bit nervous leading up to the announcement for our category, but when they called Property Conveyancing Services we were ecstatic. It is still sinking in.
Our whole team was there on the night which made it all the more wonderful. The team participated in the entry right from the beginning, and it was a great exercise to undertake together. It seemed a daunting task at first but once the wheels were in motion it was an opportunity to review ourselves. It was like undertaking an audit.
We learnt a lot from the exercise. At the time of putting the process together to enter the Awards it brought us back to the name of our business and what we do. Our previous name did not reflect what we did hence the change of name to Property Conveyancing Services. It tells the public exactly what we do.
There are always improvements that need to be made to business and this is something entrepreneurs continually strive for.
The judges that visited asked great questions and I am glad we were prepared.
Putting the presentation together for the Judges weekend was loads of fun, and we included our children. We wanted something that is the theme and culture in our company. As can be expected, we were a bit nervous - nothing like a bit of pressure. Overall we relaxed and put our best feet forward, one leg after the other.
Winning this award highlights we are good at what we do. It is especially nice for everyone in our business to be recognised. Going forward it is an achievement in the Rotorua community and this will assist the growth of our business and our clients' expectations.
We will market our achievement and shout it from the mountain tops.
We congratulate all the finalists and winners. Well done and well deserved.
The team at Property Conveyancing Services.
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CATEGORY: Rotorua Energy Charitable Trust Social Responsibility Award
WINNER: McDonalds
Rob and Linley Parry and the team from McDonald's Rotorua were blown away to receive the coveted Rotorua Energy Charitable Trust Social Responsibility Award at this year's Westpac Business Excellence Awards.
The interview for the Award was conducted by Graham Hall and Jo-Anne La Grouw - two people who have greatly inspired Rob and Linley over the years for their down to earth natures and generosity across many community projects and groups.
It was an interesting process to collate all of the events and groups McDonald's Rotorua has supported over the years. When put down on paper, was quite impressive. To date they have invested nearly $600,000 into the local community through sponsorship of local sports, cultural and community groups. They are both strong believers in giving back to the community that they live in and love to be involved in positive family and youth-oriented events.
Rob and Linley also play a significant role in the running of the Ronald McDonald Family Retreat which offers free accommodation for sick children and their families. Their roles encompass a variety of responsibilities including everything from assisting with day-to-day operations, to helping raise funds to support the Retreat. A number of the staff from all three Restaurants also make weekly donations to the ongoing costs of the Retreat.
During the build-up to the winning announcement on Awards night, the team was excited and enthusiastic. This year there were two tables of staff, with some guests from McDonald's Head Office. The staff loved the opportunity to get dressed up and rub shoulders with other business people and peers. It was really nice for them to be part of the Awards night and to see what these awards mean in the wider community. They love to be part of the promise of supporting the community too.
To receive the recognition for the entire team was wonderful. It gives them something else to be proud of. McDonald's Rotorua is often the recipient of McDonald's national awards for things only McDonald's recognises. It was truly special to be recognised by local people for just doing the right thing.
Winning the Award does not mean that box has been ticked. Most definitely, it means continuing as usual, supporting as many local groups and events as we are invited to and continuing to foster the relationships we have already established within the community.
It might also mean that we try again for a couple of different Awards next year too!
Rob and Linley Parry
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CATEGORY:Red Stag Business Person of the Year
WINNER: Scott Thomson, Damar Industries
This award, established this year in memory of the late Phil Verry, past Chairman of Red Stag Timber, is to recognise an individual that has attained high levels of achievement within the Rotorua business community.
Scott Thompson, Director of Damar Industries Limited, was named as the 2009 recipient of the Award. Attending the Westpac Rotorua Business Excellence Awards to celebrate the success of other organisations and individuals, Scott was completely surprised by the announcement.
The Award is based on a peer review by Joe La Grouw, Chair of the Lockwood Group, Marty Verry Chair of Red Stag Timber, Mayor Kevin Winters, and Michelle Pleydell, President of the Rotorua Chamber of Commerce. The criteria surrounding selection look not only at the successes of the individual within their business, but also at their participation and standing within the local community. As winner of the award, Scott is inducted in to the Rotorua Business Hall of Fame and will join the selection panel for the 2010 Award.
Scott was recognised for his commercial success, and his ability to lead Damar Industries to where it is today. In doing so he has displayed many leadership traits, and a vision and commitment to succeed in business. He is viewed as a leader within the Rotorua business community.
Scott has lived and worked in Rotorua for over 38 years. Having started his career in the trades, he went on to buy his own business and develop it into a large manufacturing base that supplies to all of New Zealand. Growth was followed by acquisition and becoming one of the best in the field. He concentrated on landing national commercial contracts and developing products that meet customers' requirements. Awards soon started coming his way.
In 1996 he won the Forestry Corporation Innovation Award. In 1996 Damar Industries became Rotorua's Business of the Year and the company has twice been voted Bay of Plenty's best manufacturer.
The company outgrew its initial manufacturing premises at Koutu Corner. Scott developed the Eastgate Business Park and in 2002 Damar Industries moved into a purpose built manufacturing plant there. Acquisition of two Auckland companies meant that the staff and manufacturing of those companies relocated to Rotorua. Damar Industries has offices in Rotorua and Auckland and employs 120 staff. Its product range includes applications for the forestry, timber treatment, building, road safety, paint and decorating industries as well as commercial, domestic consumer and household products.
The customer base for Damar Industries covers New Zealand, Australia, Korea, South Africa, England, and the Philippines.
Eastgate Business Park is an innovative demonstration of the development of a light industrial business park and it was instrumental in securing the NZ Fire Service National Training Centre for Rotorua.
Not content with manufacturing, Scott was also a partner in the prestigious Parklands Estate development. This exciting development provides sizeable lifestyle estates within the heart of urban Rotorua as
In 2007, Scott's role in the Damar team changed. He stepped back from day to day management to focus on new business opportunities.
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CATEGORY: Trust Power Customer Choice Award
WINNER: The Wedding Guy
 The awards evening, as always, was a fabulous night of catching up with industry friends, meeting new people, fine food and wine, and wonderful entertainment. Given that our company had been a finalist in the Customer Choice category of the Business Awards the previous year, we were certainly hopeful that we might win. However, we were conscious that the other finalists in our category would provide strong competition, being well-established businesses in their own right.
"...And the winner is...." is a phrase I will not forget in a hurry. As I scrambled to the podium to accept the Trust power Customer Service Award it was hard to distinguish the thrill of the win from the trepidation of the acceptance speech and the fullness of heart as I considered all of the many people, including our valued clients, who play such an important part in our winning the award!
Since our launch in Rotorua in January 2008, we have deliberately focused our attention on ensuring that the infrastructure of our business is able to sustain and efficiently manage the growth we have projected over the course of our initial 10 year plan. This has meant keeping our overheads low in every area to ensure we can confidently ride out the recession, while also ensuring we remain 'front of mind' by continuing to strategically spend our precious marketing dollar.
In Rotorua, there are many wedding celebrants, so we determined very early in the piece that in a relatively homogenous industry our point of differentiation within the celebrancy aspect of our business would be providing professional, personal, and ultimately exceptional service. Though there are not the same number of wedding planners in the Rotorua market, our need to remain at the top of our game in this field is also pivotal to our continued success.
Winning this award serves as an encouragement to what we are doing well, but also challenges us to continue in our pursuit toward ensuring our clients receive the best possible experience with us. We believe at The Wedding Guy Co that any successful business is one which constantly re-evaluates itself and is not afraid to evolve in line with the changing face of the market. This is one of the most valuable facets of the Westpac Business Awards - having an independent analysis of who we are, what we do, and how we could go about doing it better.
As with our finalist status last year, we will use our win in every way we can, and in every aspect of our marketing, including outbound email signatures, business cards, and other collateral. Winning the Customer Service Award speaks of a measure of excellence for which we are always reaching. It will re-assure prospective clients that, when engaging our services, they can be assured of receiving a standard of service and resulting experience, that is "Professional, personal, ... exceptional!"
Peter Duncan
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CATEGORY: NZCU Rotorua Employee of the Year Award
WINNER: Pauline Hapi – LDHB
Pauline Hapi was overwhelmed after being named the Employee of the Year at the Rotorua Business Excellence Awards early in November 2009. Pauline says the award is one of the biggest accolades she has ever been gifted as a worker. She says the Awards night was lovely, with close family and friends present to support her and share her celebration.
Pauline has worked as a Whai Manaaki in the Mental Health Service for 11 years. She works with adults in the community who are dealing with mental health issues.
Some five years ago Pauline set up a clothing and second hand goods bank in a room at Mental Health Services, called Aroha Whare. The need for Aroha Whare originally arose from the situation that Pauline observed many mental health clients finding themselves in, after an episode of unwellness. She was aware that often when mental health clients became unwell, they would get behind in their rent and electricity payments. The goods available through Aroha Whare would help equip a flat when the clients were recovering and enabled them to return to living in the community.
With Aroha Whare, Lakes DHB staff and others donate unwanted household goods, pots, pans, crockery, furniture and clothing. As well as going to mental health clients in need, Aroha Whare's doors are open to anyone else in need. Pauline has sent off consignments of goods to victims of natural disasters such as the Fiji flood victims, or families whose home was destroyed by fire.
She says as a member of a multi-disciplinary team, she's connected to a range of mental health professionals and likes the strong people focus of her role. She says once clients accept her and she gains their trust, she is about to connect with the wider group and help the client.
Pauline says the guiding principles of tika (being honest), pono (faith and hope) and aroha (love) have always guided her, and helped her in her work.
Lakes DHB Chief Executive Cathy Cooney says Pauline always demonstrates a “walk the talk” attitude which is respected by those who work alongside and interact with her. She says health and mental health in particular are difficult sectors and Pauline's story clearly represents the way in which someone can make a difference, in their work area and in their community.
The application for the Award also noted Pauline's long history of supporting community organisations such as the Child Cancer Foundation. This work grew out of her own experiences of having a young cancer sufferer in her family, and realising the need to provide support for other families.
In July 2008 Pauline received a life membership award from the Governor-General for her long service to child cancer.
The Team at Lakes District Health Board
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CATEGORY: Waiariki Institute of Technology Apprentice of the Year Award
WINNER: Richard Edwards - Farm & Garden Equipment
On 6 November 2009 all the staff of Farm and Garden Equipment and Richard Edward's parents attended the Rotorua Business Excellence Awards. They were absolutely ecstatic that one of their team members won the prestigious award of Apprentice of the Year.
Richard is a senior Apprentice Diesel Technician employed by Farm and Garden Equipment Ltd, Rotorua's John Deere Dealership. Richards's achievements in his apprenticeship have seen him grow from strength to strength. Richard has taken on the responsibility of Field Service, a position which requires him to work unsupervised in sometimes demanding conditions and deal with problems associated with field work.
Richard thrives on challenge and his skill level is significantly higher than what would be expected at this stage of his apprenticeship. He has the ability to get on with people of all ages and from different walks of life - an attribute which is rarely seen in someone of his age.
In Richard's own words “This award is a great morale and confidence boost and I feel honoured and humbled to have been nominated as the winner.”
Farm and Garden Equipment staff and management are extremely proud of Richard and agree that it has been a great morale boost for all staff. This award is also significant to the management at Farm and Garden Equipment Ltd as it is indicative of the excellence they aspire for in their staff and their business.
Mary Ann Paterson
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Positive reflections of the last three years … and … the coffee HAS improved
 The last time I was asked to write an article for the Chamber's Tabloid was over three years ago. I had only moved to Rotorua recently at that stage. I remember reflecting on the change for me, having lived in Christchurch for the previous 27 years. I remember saying that while Rotorua and surrounds are beautiful, that I was surprised at the poor quality of hospitality (coffee and service especially).
Of course the criticisms above might explain why I haven't been approached since then. Until now!
The advantage of new people coming to a region is that they can reflect on different ways of doing things and can see shortcomings which locals have grown accustomed to. It's the same with new staff in an organisation such as ours. One of the shortcomings for Waiariki four years ago was that many staff had been there for a long time with little new blood coming into the place. One reason for this was that we were shrinking, so opportunities for employing new staff were fewer.
The past three years have been a watershed for Waiariki. We have worked so hard at reconnecting with our community. And haven't they repaid us! Our enrolments have grown by 70% over the past three years and our productivity as measured by “total revenue to staff” ratio has improved by 40%. This means we can spend a great deal more on resources, both teaching and equipment. Our capital expenditure for 2010 alone is $7.5 million and this is money spent within our city and across the region.
We have been the fastest growing public tertiary education institution in New Zealand, outstripping every other university and/or polytechnic by a significant margin. Our international enrolments have quadrupled. The multiplier effects of our export sector means that these students add about $15 million to our Rotorua economy (living expenses, travel, family visits, etc).
Our success this month culminated in winning a Chamber of Commerce Westpac Business Excellence Award. It's been a great “journey of success” for Waiariki as we have supported our students in their own journeys of success.
The formula has been simple and really no different from any other business. As a “people business” the priority has essentially focused on our staff. They needed to feel valued. We needed to let some people go. Mostly though we have managed to re-energise existing staff and employ new staff who, while not always as experienced, have added a new buzz to the place and have challenged the way we used to do things. Waiariki now employs almost 500 staff. We are a big organisation. According to our “JRA Best Places to Work Survey” carried out last year, 95% are engaged and positively supporting our direction and business (compared to a sector average of three times as many disengaged staff). The culture has shifted.
The other culture change has been one of empowering our individual schools (business units) through decentralised decision making. All six schools have grown significantly. None more so that the School of Trade Training which has almost doubled in enrolments in the past three years. This is so important for our region given the aging workforce issue that we face with respect to our trades' professionals.
We have done so many new things, it is impossible to list them all. Amongst my favourites though are the reintroduction of carpentry and electrical trades; national centre of excellence for forestry and wood industries; international partnerships with offshore institutes in China and India; Waiariki academy of sport (we now have over 60 athletes remaining here in Rotorua); computing-for-free centres; focus on young people through school leaver free fees; new business and tourism programmes; our community recreation centre; partnerships with iwi and a renewed pride in being “bicultural”; many more degree programmes; to name but a few.
What about hospitality I hear you ask? Has my viewpoint changed on coffee quality? I am pleased to say that there are a number of cafés and restaurants now where the lattes are as good as anywhere in New Zealand. And service standards are also improving, albeit slowly. I am thrilled that Waiariki is supporting the city's Kia Ora Mai project in the run-up to the Rugby World Cup. We will be the first city in New Zealand to launch this short course programme in customer service supported by the NZ government. And no doubt many of the new industry recruits who choose to stay in hospitality will carry on their studies at Waiariki. Our new degree in Hotel Management planned for next year will be the ideal landing pad!
ACKNOWLEDGEMENT
Dr Pim Borren - Chief Executive Waiariki Institute of Technology.
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Will this recovery really be that different?
Westpac is forecasting 3.5% NZ economic growth in calendar 2010. This is the highest of 16 economic forecasters by some margin. The next highest forecast is 3.0%, the mean is 2.4% and the lowest is a measly 1.3%. The RBNZ has plumped for a middle of the road 2.5%. A valid question is whether we are being realistic or delusional!
To help us answer that question we decided to go back and examine in more detail the speed of recovery from past NZ recessions. We find that recoveries from past recessions have tended to be very strong. Indeed, using data dating back to 1870, we can identify 23 recessions (prior to the current one). The average size of the economic rebound, in the year after recession, is 6.4%. Since WWII it is 4.8%. Of itself, this doesn't necessarily say a lot. NZ's economic activity used to be wildly volatile and the depth of recession influenced the strength of recovery. Nonetheless, robust recoveries - once they take hold - have been the norm, not the exception. So, why do forecasters think this time is going to be different and the recovery so timid?
There are a number of aspects of this economic cycle that people could point to as being different: the exchange rate (TWI) didn't stay low for long; we've experienced a dramatic global financial crisis (GFC); NZ Inc has a record level of indebtedness; and the secondary finance sector has been decimated, limiting availability of property and equipment finance.
However, there have been a number of offsetting factors. The exchange rate is higher because commodity prices have rebounded much more quickly than they normally do after a global downturn. The world is no longer so US-centric, with strong growth in demand from emerging markets. NZ has been in a period of substantial trade liberalisation, with numerous free trade agreements being signed. The response to the GFC has been extraordinary fiscal and monetary policy stimulus around the world. And lack of mezzanine finance may be a temporary problem: history repeatedly shows that where there is a will (and more particularly, a dollar), there is a way.
What is startling is how many factors are currently behaving similarly to precursors of past strong recoveries. Asset prices (particularly housing and equities) have rebounded strongly. We are experiencing a mini immigration boom. Forecasts of global activity continue to be revised upward. There is a dramatic shortfall of houses being built (which will be a multi-year source of economic growth in the nascent recovery). The inventory cycle is at extremely low ebb, and restocking will reinforce the economic recovery. And, finally, leading indicators are, if anything, stronger than in most other economic recoveries.
Those looking at credit, employment, mortgagee sales, and business defaults will find that they miss the first year of economic recovery: these are all classic lagging indicators. It is one of the quirks that default rates (consumer and business) tend to keep rising during an economic recovery. The reasons are two-fold: time and the level of activity. Time is the enemy in a downturn - some firms and individuals can hang on for only so long. And even when economic growth returns, the level of economic activity can still be very weak (e.g., in the June quarter, the volume of construction activity was 15% below cycle peak, manufacturing was 17% down, and trade 7% lower).
In all recessions and economic recoveries, people tend to say this time is different. In the absence of 1970s style supply shocks or late 1980s/early 1990s systemic banking problems, we'd hazard to say that this time will not be different!
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