Category Archives: Business

Cooking up trouble

I’m having problems finding the ingredients for my cooking.  Having taken up doing occasional meals in the slow cooker I am enjoying trying out the various menus and making my small contribution to the running of the household.  But finding the right ingredients is a challenge.  I need a tin of whole tomatoes but the nearest supermarket doesn’t stock any, well not NZ made ones.  Plenty made in Asia and even the Watties ones, which I expected to be locally produced given HB’s agricultural base, were imported (from Italy).

I don’t go shopping at the supermarket with my wife very often because I used to be a grab the cheapest and run shopper.  Not the lady of the house though; she inspects everything and makes a real effort to buy NZ made wherever possible.  Now I’m all in favour of this and its good to know that the food on the table is not likely to be plagued (literally I suppose) with contaminants of some sort, but its a real challenge.

So where is this leading?  Down in Dunedin the forces are mobilising in support of the railway workshop people in an effort to retain their jobs.  The Hillside site was established in 1875 and has been responsible for making some of NZ’s iconic railway stuff but the proposed axing of jobs comes about because of the move to maintaining foreign built rolling stock.

Throughout the country we’ve seen the loss of jobs as companies have either moved their businesses overseas in search of lower cost manufacturing opportunities or they have closed up shop in the face of competition from cheap imports.  Some NZ businesses have managed to find a way to keep going and all power to them I say.

The people of Dunedin have the right to take up this cause on behalf of the people who face job losses and I wish them good luck in trying to achieve a good outcome.  But I wonder how many of them will, once they’ve been on the protest line for the day, hop in their foreign built car and drive to the foreign owned supermarket and buy imported food without even looking at the labels.  Every can or box of food made in China or Malaysia or Italy that they put in their supermarket trolley threatens the job of some other Kiwi.  But then we all want the cheapest don’t we, at least until its our jobs that are threatened.

It seems to me that this is another case of NZ’ers wanting it both ways (a subject I’ve blogged about before).  If we were really serious about keeping NZ jobs in NZ then we’d all be inspecting the label on everything we buy and wherever possible buying the one that says Made in New Zealand.  Unless we all do that then the situation in Dunedin will just be repeated elsewhere many more times.

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Do we need an NZERA?

The appointment of Roger Sutton as Chief Executive of the Canterbury Earthquake Recovery Authority has been widely welcomed as a good move and in the best interests of the region.  From the little I’ve seen of him on telly I would tend to agree.  He has the communication and leadership skills to bring great vision and drive to a very important organisation.

What a pity that our politicians don’t have the same skills.  Words like self-serving, poll-driven and short-term thinking spring to mind when I hear a politician speak.  The drive to retain power in a system that sees them facing the risk of being sacked every tthree years stunts their ability to think and act in the best interests of the country and its people.

I am of the view that New Zealand faces a disastrous economic future unless something drastic is done to sort out our problems.  I’ve posted before about the economic impact of the leaky home crisis, the Christchurch earthquake and the meltdown of finance companies.  These things, along with world economic conditions, will make life very hard for us all.  But what are those responsible for managing all this doing?  Making minor adjustments to things like student loans schemes and Kiwi Saver (but not their own super scheme I note somewhat cynically).

Perhaps we need to sideline the politicians and appoint a New Zealand Economic Recover Agency headed by someone like Roger Sutton?

Someone able to assess the situation, get a handle on the key factors plaguing this country and then make the hard decisions,not just short term, to help us make progress and get back to a reasonable standard of living.  Not a political appointment, subject to three yearly changes of governments, but an enduring appointment (obviously with safeguards) of someone with vision and leadership skills to sort us out.

So bring on an NZERA.  I’ll vote for that.

It’s a risky world out there

Directors and senior executives will be nervous.  In the wake of the February 22 Christchurch earthquake and the more recent Japanese earthquake and tsunami I would expect many organisations to be taking a long hard look at their risk management strategies.

Risk management (RM) has long been an agenda item for directors who are expected to have an oversight of risk management in their organisation and to satisfy themselves that risk management policies and procedures designed and implemented by executives are consistent with corporate strategies.  Part of this assessment is the risk appetite of the organisation but the events of Christchurch will be changing both risk profiles and appetites making many directors nervous.

The process of developing a RM response is to review all the potential risks and then rate them for probability (likelihood) and impact.  These likelihood and impact scores can be three or five or ten point scales or percentages based on subjective scales.  The scores are then typically multiplied to produce a numerical rating for the overall risk.  This quantification of risk provides a tool which is used to allocate priorities (management attention?) and resources to dealing with the different types of risk.

The problem with this methodology is that applying a mathematical approach to risk is meaningless when the unexpected happens.  From my experience the likelihood of earthquake was rated low throughout the country and the impact was never considered to be as catastrophic as has happened.  How many managers compiling risk profiles have researched the likelihood and impact of tsunamis in New Zealand?  The result has been risk profiles that focus on employee theft, plant breakdown, bad publicity and quality control lapses.

Directors and executives will need to revisit their risk management plans.  An assessment of the adequacy of insurance cover is an obvious starting point, but strategies for dealing with an inability to access business premises, the loss of vital records (and the backups which are typically stored in the same business district) and the personal impact on staff of a major event will all have to be revisited.

Many businesses are finding that suppliers affected by the earthquake are not able to meet their commitments or that the affect of the catastrophe on customers is having a direct impact on production, sales and credit collection.

Having realistic mitigation strategies in place and tested for such circumstances is now an important objective for all Chief Executives and senior managers, and directors will be putting pressure on them to ensure that these strategies (policies and procedures) are realistic, sustainable and effective in light of recent events here in New Zealand and around the world.

Less Government In Our Lives?

“I want it both ways”.  That’s what many people in New Zealand seem to want.  We are constantly berated by some about getting Government out of their lives or business.  On the web site of one NZ political party is the comment “New Zealanders know best how to spend their own money, not the government”.  In the NZ Herald on Wed 26 Jan the headline reads “Business leaders support partial privatisation of state assets”.

At the last election New Zealanders voted the National party into power to govern based in part by promises of reducing taxes and that has been implemented but any gain has been offset by the increase in GST.

But as soon as something goes wrong we hear these very same people holding their hands out and expecting Government to come to the party.  While not decrying the enormous tragedy of the Christchurch earthquake, the first reaction of business has been to turn to government and ask for handouts, the very same business that wants lower taxes and less Government.

Excuse me – if you reduce taxes and cut back on government expenditure for the armed forces and you decrease the capacity of Government Departments like DoL or Civil Defense or agencies such as hospitals, how can you then expect them to respond adequately in the event of a disaster?

Government is facing huge bills from recent catastrophes – last year’s Canterbury earthquake, the leaky building situation, the Pike River tragedy, the bail out of financial institutions.  In addition the GFC (Global Financial Crisis) has seen a significant slump in tax revenue as the economy has contracted.  Now everyone expects the Government to step in and provide handouts for businesses that can’t operate in Christchurch and to support people with grants.

A simple example to illustrate the point I am making.  People in suburbs are complaining that after ten days they still haven’t got toilet facilities.  The city’s infrastructure has been severely damaged and a quick fix isn’t possible.  So the sight of thousands of portable chemical toilets being delivered is a relief (excuse the pun) for everyone.  But why aren’t there stock piled supplies of such essential items – toilets, tents, food, water etc at strategic places around the country?  Because we don’t want Government in our lives, we want to rely on private enterprise.  But private enterprise is never going to plan for an emergency.  Its never going to carry excess capacity for contingencies.  It can never supplant the work that Government does and must do as a back stop for our society.

Another example:  there’s been a push by some in Government to cut back the scope of fire fighter’s duties to focus solely on fire fighting.  Fortunately, senior people in the service have fought to keep the broader scope of the fire service and we’ve seen the result in recent days in Christchurch.  Superbly trained and committed fire fighters doing what private enterprise could never do.

“New Zealanders know best how to spend their own money, not the government”; Yeah right.  We can spend it on TVs or cars or lattes and don’t worry about tomorrow, Government will step in and pick up the remains of our lives when things go so terribly wrong.  When will we wake up?