BusinessPlus November 2015 by EMA

Issue 131 – November 2015

News and commentary for EMA members

Delicious plans for pre-blended drinks - p30

INSIDE · TPP, the deal of the century… - p5, 26 · Bruce G clocks out after 40 years – p12 · CEO pay in the new world – p14 · Iron that crease – p16 · Summer Briefings Schedule – p31 …and much more!

On the cover... is published by The Employers and Manufacturers Association

Exports provide a third of revenue to Bon Accord Products that sells pre-blended drinks to cafes for people wanting an alternative to coffee, says founder/owner Paul L’Amie (pictured).

See full story, p30.

(Northern) Inc (EMA)

Photo credit: Garry Brandon of Garry Brandon Photography

EMA is the major shareholder of national lobby group, BusinessNZ. EMA head office: 159 Khyber Pass Rd, Grafton, Auckland, New Zealand Private Bag 92066, Victoria Street West, Auckland 1142, NZ Ph: +64-9-367 0900 Email: ema@ema.co.nz In Hamilton:

CONTENTS Commentary 5

EMA’s CEO Kim Campbell on: why the Trans Pacific Partnership matters

Planning headaches to get the treatment

BusinessNZ CEO Phil O’Reilly on: making health and safety regulations work

Smart Business Centre, 65 Chapel Street, Bay Central, Tauranga, 3110.

Sustainability: An energy efficient future looks like this

PO Box 13202, Tauranga Central, Tauranga 3141.

Technology: Planning for the coming workplace UFB – A smarter way of doing business

Final words: Retirement for Bruce Goldsworthy

EMA/ExportNZ Waikato 103 Tristram Street, Hamilton. PO Box 490 Waikato Mail Centre, Hamilton 3240. Ph: +64-7-839 2713 In Tauranga: ExportNZ Bay of Plenty

Ph: +64-7-571 0600 AdviceLine: 0800 300 362 (in NZ) or 1800 300 362 (from AUS) or advice@ema.co.nz Phone 8am-8pm weekdays for information about employment and

Employment

more, plus referrals to EMA Legal lawyers and your local EMA consultant

Critical end-of-year communication

in employment relations and/or occupational health and safety.

Remuneration: Changing world, new provisions for chief executives

Hijinks and humour onstage at OSH conference

services, media statements and submissions, export development and more

We are all responsible: overview of health and safety law

EMA contacts

Employment Chat - Q and A: Getting to grips with uniform policy and annual leave calculations

Graduating as work-ready

Visit www.ema.co.nz for owner and staff training programmes, conferences and other events, employer guides and templates, manufacturer

Chief executive: Kim Campbell Membership manager: Roger Carson External Relations manager: Val Hayes Advocacy and Industry Relations manager: Mark Champion

In business

EMA Learning manager: David Foley

Tax: Complex property tax could catch you out

Enterprises and Strategy manager: Mauro Barsi

Governance: Summer here we come

Managing Solicitor, EMA Legal: Charlotte Hatlauf

Marketing: Essentials when customers are businesses

Capital raising: Pitching to angel investors

Industrial Relations and Safety manager: Paul Jarvie Finance and Technology manager: Paul Yeo Corporate and Building Services manager: Sheree Alcock ExportNZ manager: Catherine Lye

International trade 25

Building trust internationally in NZ business

Editor: Mary MacKinven, +64-9-367 0939, mob +21 636 089,

Done deal: TPP will be transformative for NZ

email mary.mackinven@ema.co.nz

Exporters overcome barriers in foreign markets

Contributor: Gilbert Peterson Designer: Ripeka Mikaere | Printer: MHP | Distributor: Rocket Mail

Member profiles

Advertising sales: Colin Gestro, Affinity Ads,

Comvita: Finalist in the Best Workplace Awards

mob + 27 256 8014, colin@affinityads.com

Bon Accord Products: Delicious plans for pre-blended drinks

Briton Infrared: Heat finds faults fast

Member Briefings Summer 2015: register now

ISSN No. 1176-4953

+ Inside: TrainingPlus insert detailing November training courses, and more BusinessPlus November 2015

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Training & Development

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*2012 analysis of personal grievances determinations from the Employment Relations Authority.

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CEO By Kim Campbell

The TPP deal matters in a connected world Agreement among the 12 parties to the Trans-Pacific Partnership (TPP) deal, reached in October, was a monumental achievement. We have welcomed this as a progressive step forward for businesses in New Zealand, in particular our manufacturing and exporting sectors. This is one of the most significant trade deals for these areas in some time. Naturally, there are some areas we have had to compromise on. However, I am sure the long term benefits that the TPP will deliver will overcome these concerns. For me there are several broader questions for our members to consider in regards to why the TPP matters to businesses in New Zealand. These are: 1.

Where will employment growth come from in the future?

Who will be the participants in the global economy going forward?

How will New Zealand be placed in regards to the above?

What is the role of TPP in relation to all of this?

Employment growth This is an interesting challenge for New Zealand as a whole. The reality is, there is a growing middle class in Asia that is well educated, works for lower wages by comparison yet has a growing wealth and disposable income for consumables. For New Zealand, this will increasingly mean we will not be able to compete on a low labour cost basis. However, we will be able to compete where our workforce provides brainpower, and therefore adds value to our commodities. The weightless economy is key to driving more value. We cannot forget that everything we consume has more than likely crossed several borders in order to reach you, and

“Such mechanisms, as standards, which give firms the confidence to move around, will be crucial to being a participant in the global economy.”

has componentry sourced from several countries. When this is considered in the context of labour, it is easier to recognise we have a global workforce.

Participants in the global economy It might sound clichéd, but we are moving into a borderless world. We are already seeing this within certain sectors of the workforce – people who are agile, smart, well-educated and not bound to work in the country they reside in. The future world of employees is a seamless one. While it is nice to have commodities with no duties, it’s the institutions and processes that sit behind this transfer of value that will drive our global competitiveness. Such mechanisms, as standards, which give firms the confidence to move around, will be crucial to being a participant in the global economy.

New Zealand’s role We have the fundamentals in place. We have a freely traded capital market, a wellconnected economy and an open skies policy. Yet, there is no point in us being open for business if we do not have a

partner. Placed, as we are in the southern Pacific, it is essential we have trade partners. Deals which help us achieve this, such as the TPP, are an important part of ensuring we are well placed for the future. If we think back 30 years ago when the Closer Economic Relations deal with Australia was struck, it was all about tariffs and quotas. Yet, what CER has delivered today, is much more than the original intent.

TPP’s role As with all trade deals, we are confident that as TPP matures it will contribute positively to New Zealand’s ongoing prosperity. It has been a long time coming, and I have advocated strongly that it is much better to be part of these types of deals than not. For the reasons above, it will enable New Zealand to have access to markets that currently account for the $28 billion of our goods and services exported. We are currently the 47th largest economy in the world, and TPP gives us access to the first and third largest economies (US and Japan respectively). This is the first time we have had a free trade agreement with these trading partners, as well as with Canada, Mexico and Peru. These five trading partners account for $12bn of our exports. Naturally, this deal has created debate, with the naysayers claiming too much sovereignty is at stake. Every partner of this agreement will have political issues to work through. However, I say, as the world becomes more and more connected, and as we become used to this – either through our business supply chains or at a human level via mechanisms such as the internet and social media platforms – the place of the centrally driven economy is now over. You can read more about the detail of the TPP on page 26. • Kim Campbell is chief executive of EMA, email kim.campbell@ema.co.nz BusinessPlus November 2015

COMMENTARY By Alan McDonald

Planning headaches get the treatment “Conversations with members almost inevitably turn to some anecdote about problems with the Act itself, with slow or inconsistent turnarounds from local councils, or decisions to walk away …from projects …” 6

BusinessPlus November 2015

A constant and consistent source of irritation for EMA members is the Resource Management Act (RMA). The Act is supposed to protect the natural environment where human development is occurring, while not stymying economic development. Conversations with members almost inevitably turn to some anecdote about problems with the Act itself, with slow or inconsistent turnarounds from local councils, or decisions to walk away from or significantly modify projects that just became too hard under the Act’s requirements.

As an example, Thames-based building firm Cherrywood Homes produces a generic holiday bach that it sells to propertyowners in the Coromandel, a popular holiday region. The homes they make are identical, have the same footprint and require the same connections to power, water and sewage across four different council jurisdictions in the area. Logically you would think the paperwork required to put one of these homes in place would also be identical – but it’s not. The RMA is applied differently across all four councils and the stacks of paperwork required vary from just a couple of centimetres thick to the size of the

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COMMENTARY

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year. The 10-metre stacks of planning regulations from 78 councils made for a compelling visual, as the Minister laid out 10 major changes he’d like to see made to the Act.

The National party promised RMA reform, in its successful 2014 election campaign. But a combination of United Future’s Peter Dunne’s erratic voting record, and New Zealand First’s Winston Peters’ by-election We’re still waiting. win in Northland, means that National no nance PlannIng & numbers delIvery longer has the to guarantee the Next steps cAl government plAnning lAw reform inRMA new passing of anyAnd legislation to reform the Act. The hasZeAlAnd been in place since 1991. It has been amended more than 170 times and Peters’ success in Northland means that behind the scenes MPs of all stripes will tell National must rely on both the Maori you that it needs further change – significant Party and United Future (Dunne) - two change. of its three coalition partners - to make significant policy change. Large-scale While it was lauded as world-leading at the change to the RMA appears too hard for time of its launch, the Act is now almost the Maori Party and recent votes would 25 years old and significantly, despite the indicate that National – except on issues plaudits, no other countries have rushed of confidence and supply – can’t rely on to replicate this style of legislation. In fact it the increasingly fickle Dunne vote. has been identified in OECD research as a significant handbrake on development. New As a result National has taken major RMA Zealand ranks at the bottom of the 34 OECD policy change off the table – particularly member countries on the cost burden placed reform to sections 6 and 7 of the Act. on business by environmental legislation. Other countries have more stringent Environment Minister Dr Nick Smith environmental legislation; they just don’t face hinted at some areas for reform in a the administrative and cost burdens that the speech to Nelson Rotary early this RMA places on New Zealand business.

The EMA wants to change that.

We are in the early stages of researching a case for a complete overhaul of the RMA. We are working with other like-minded organisations to prepare this case, which will also focus on issues with two other major pieces of planning legislation - the Land Transport Management Act (LTMA) and the Local Government Act (LGA).

While the RMA is the sore point for most members, these three key pieces of planning legislation don’t actually line up and work together. Major projects may well get through the many hurdles of the RMA only to encounter a different set of hurdles in the LGA and LTMA, and more costs and further delays. That needs to change. We’ll keep members updated on progress with our research. • Alan McDonald is advocacy policy director at EMA, email alan.mcdonald@ema.co.nz BusinessPlus November 2015

BusinessNZ COMMENTARY By Phil O’Reilly

Making health and safety regulations work Business has been consulted on the Health and Safety at Work Act 2015 that will come into force next April, and is generally supportive of it. The new law better aligns New Zealand with current international best practice, and in fact a number of new requirements come from Australian model law. The Act makes clearer the issue of control over a workplace. The “person conducting a business or undertaking” (PCBU) has the primary duty for safety. The PCBU (duty holder) will usually be a business entity, such as a company, but may be an individual in the cases of sole traders or self-employed persons. The duty holder, whether business entity or individual, will be primarily responsible for complying with the requirements of the new Act (although workers will also have responsibilities). There will be a number of regulations associated with the new law that are still being formulated. Initial drafts of regulations cover general and prescribed risk management, emergency plans, worker participation, asbestos and hazardous substances. For general risk management, duty holders will have to meet basic minimum standards to meet the duty of care. A risk management process will be required as well as minimum standards for facilities, emergency planning, personal protective equipment, training, supervision and monitoring. Most of these are similar to what was in the previous Health and Safety in Employment Act 1992.

Managing high risk There will be a separate risk management process for high risk or high hazard circumstances where there are different ways to effectively control the risk. In such cases, flexibility will be allowed, eg, managing risks for remote and isolated workers, or falling objects. The requirement will be to “eliminate so far as is reasonably practicable or otherwise minimise the risk”. This approach will allow a duty holder to move quickly to control a particular hazard rather than having to follow a fixed process first. The emphasis will be on duty

“If they do not choose to have safety reps, they will be required to have some kind of mechanism for involving workers in health and safety, eg, by including health and safety as a regular agenda item at team meetings…” holders taking action to make a situation safer, when the solution is clear, rather than following a process that would not provide additional benefit.

Emergency planning There will be a regulation requiring all workplaces to have an emergency plan. Smaller businesses with less risk will not have to have lengthy or complex emergency plans, and a template will be available to help those businesses set up their plan.

Worker participation Regulations governing worker participation in health and safety will make a distinction between small, low-risk businesses and larger, higher-risk ones.

construction site), they will be able to have safety reps that span various businesses, if desired, and to share any associated costs by agreement.

Asbestos register Regulations on asbestos will have stronger requirements than at present. Work with asbestos will be prohibited unless it is of a type authorised by the regulations and meets the regulations’ requirements. There will be a requirement to eliminate people’s exposure to airborne asbestos “to the extent that it is reasonably practicable”. There will be more requirements on workplaces where maintenance, repair and removal work involving asbestos occurs. Businesses will be required to identify all existing asbestos in their workplaces, and record it on a register available to workers, contractors and others in the workplace. Workplaces constructed from 2000 onwards can be assumed to have no asbestos present unless there is evidence otherwise.

Hazards register Workplaces that manufacture, use or store large amounts of hazardous substances will now be regulated under the Health and Safety at Work Act.

Small businesses with fewer than 20 employees in lower risk occupations will not be required to have safety reps, although they may wish to. If they do not choose to have safety reps, they will be required to have some kind of mechanism for involving workers in health and safety, eg, by including health and safety as a regular agenda item at team meetings, and jointly identifying and managing risks.

Workplaces will be required to maintain an inventory of all hazardous substances used, handled, manufactured or stored, to be made available to emergency service workers. There will be a minimum set of matters to be included in information and training for workers. Workplaces will have to have safety data sheets for hazardous substances - accessible to workers, emergency service workers and anyone else likely to be affected.

Regulations governing safety reps will set out their functions and powers. It will not be compulsory for safety reps to undergo training, but only safety reps who have completed appropriate training will be able to issue Provisional Improvement Notices and direct unsafe work to cease.

The regulations attached to the new Act will be important for every workplace in New Zealand. Anyone wishing to respond to the consultation on these regulations can take part via www.mbie.govt.nz or by contacting EMA’s industrial relations and safety manager, Paul Jarvie.

Where multiple duty holders operate together on the same site (eg, in a large shopping mall or on a complex

• Phil O’Reilly is chief executive of BusinessNZ, of which EMA is the major shareholder. visit www.businessnz.org.nz BusinessPlus November 2015

Sustainability COMMENTARY

“Those show we are living in a fast-changing world where new technology and awareness about the impact of energy use are revolutionising the way we think.”

An energy efficient future looks like this What will energy supply and use look like in the future? It will look efficient. Globally, we could reduce emissions by as much as 40 per cent by focussing on how we use and source energy, according to the International Energy Agency. Finding energy efficiencies will be good for business. The New Zealand government’s Energy Efficiency and Conservation Authority (EECA) says most New Zealand businesses can reduce energy costs by at least 20 per cent, with smarter energy use. Last month the BusinessNZ Energy Council released its energy scenarios for 2050. Those show we are living in a fastchanging world where new technology and awareness about the impact of energy use are revolutionising the way we think. New technology is supporting customers to make more informed decisions and companies are embracing the changes. Meridian Energy, which produces 100 per cent renewable energy, is a good example. Customers of its retail arm are using smart meters to track energy use and can set up personalised alerts to help them manage power use and costs. Knowledge is power – and consumers are driving some of the change. In the future, the ‘internet of things’ will see consumers and businesses managing energy use at the click of a button or through sensors and software. But some of the biggest potential for energy efficiency doesn’t look futuristic

BusinessPlus November 2015

and much of it is within easy reach. Commercial buildings in New Zealand use about a fifth of New Zealand’s total electricity. EECA estimates up to a quarter of this could be saved by upgrading to energy efficient technologies or modifying things like lighting, heating, ventilation and cooling. This year Air New Zealand achieved its target to reduce energy consumption on the ground by 20 per cent over four years, with some of its biggest savings coming from large scale LED lighting replacements.

It’s about more than ‘renewable sources’ Most New Zealanders think energy equals electricity, and as our electricity system is 80 per cent renewable, that we’re doing pretty well. But EECA chief executive, Mike Underhill, says the bigger challenge for New Zealand is increasing energy efficiency in transport and from industrial heat. Both are larger energy sectors than electricity, and both are significant carbon emitters. New Zealand already has the potential to produce enough electricity to power an entire fleet of cars on renewable energy. And we expect there will be cost savings for businesses that switch to electric vehicle fleets – electric cars are predicted to cost the equivalent of 30c a litre to charge. A number of companies are already making the switch, including Mighty River Power and Downer. Air New Zealand plans to make 100 per cent of its ground fleet electric and companies like Vector are supporting the infrastructure that will

be needed, for example, by building 35 charging stations around Auckland. EMA will have a charging point at its new Auckland building that is due to be completed in March. Transport currently makes up 17 per cent of New Zealand’s emissions, of which a fifth comes from heavy fleet vehicles. Within 30 years the volume of freight moved around New Zealand will grow rapidly, with freight tonnage expected to increase by nearly 60 per cent. There is also an important role for consumers in encouraging more efficient transport efficiency by changing basic expectations. That may mean sacrificing same-day deliveries where it’s not actually needed. OfficeMax has been looking at ways of working with some of its bigger customers so that when it sends out office supplies, it does so once a week rather than every second day. Cumulatively those behaviour changes equal big energy savings. Some of the benefits of focusing on energy efficiency is that it’s tangible, you can measure it and you can track progress. The long-term gains will come when businesses and consumers reimagine what we do at home and work. • From the Sustainability Council of New Zealand - a division of BusinessNZ, of which EMA is the major owner. The Council has 80 members representing about a third of private sector GDP. www.sbc.org.nz

Technology COMMENTARY By Garth Wyllie

Technology for the coming workplace Key considerations for business in the application of new technology are increased productivity, reduced errors and a safer workplace.

The more you automate the more you need smart humans to service, maintain and oversee those processes – both the physical assets and intellectual property and systems.

Much of what business will deploy in the future is here now, be it in sometimes primitive forms. Imagine the scenario where a consumer or retailer orders stock online (probably using a portable device), selecting the product by size, volume and even colour and the date they want it delivered. The order is placed online to be produced in a traditional automated manufacturing plant for large

volumes, or maybe on a 3D printing system (currently in its “childhood”) located in the country of the buyer to speed delivery.

But it is only when the “internet of everything” actually connects all the systems so they can communicate with each other that the full potential of technology will be realised.

Robotic and remote devices and RFID (radio-frequency identification for tracking) will perform an increasing array of tasks, charged off wireless power systems.

• Garth Wyllie is EMA’s Executive Officer for Manufacturing and Industry Groups, email garth.wyllie@ema.co.nz

UFB – A smarter way of doing business Ultra Fast Broadband (UFB) deployment is racing ahead in New Zealand. For those already connected, UFB can be used to transform, rather than just speed up, their operations. This article intends to provide more information about UFB and seeks to debunk some of the myths that have arisen. As at 30 June this year, the new fibre optic network was 54 per cent complete. Together, the four public-private partnerships building this UFB network have enabled around 700,000 households (approximately 44 per cent of the NZ population) to connect. They’re running around 9 per cent ahead of target - no mean feat in any construction project. This is good news for businesses, with most urban companies now able to connect. Uptake of UFB amongst firms is approaching 20 per cent, but there’s still a substantial opportunity for businesses yet to connect.

UFB is near you UFB has been built past 93 per cent of urban businesses. To find out whether you can take up a service, enter your address into the National Broadband Map website listed below.

UFB costs the same Some businesses worry the move to fibre will mean paying more, but costs are on a par with copper networks (ADSL and VDSL), yet for a far superior service. More than 70 retailers are selling UFB, so the market is competitive and many new fibre products

come with unlimited data. Start by checking out UFB retailers’ websites, listed below.

be sent easily and the cost of the business’ telecommunications has reduced.

UFB can save you money

In another example, JP Dignon, managing director of Northern Districts Security, moved to UFB two years ago. He’s now running five companies on fibre over two city office locations and a couple of remote bases north of Whangarei. He says UFB has reduced costs and added value, especially as he can now use one system across all the companies he owns.

This isn’t so well known. With UFB you can reduce the lines into the business down to a single voice-over-internet-protocol connection. So instead of paying around $40/month/phone line, you pay once. UFB also enables a move away from fixed servers and greater use of cloud-based applications. A business without a server room will enjoy greatly reduced power costs.

UFB is not just faster email Improved productivity is widely recognised as a benefit of UFB. It could arise through shorter process times, the reduced need to travel, remote working, or the use of cloudbased applications. It might translate through improved reliability and customer service, or the administration of several sites from a single location. The Innovation Partnership with Sapere research recently found that New Zealand firms which make greater use of the internet are 6 per cent more productive, or four years ahead, of the average company in their industry. For example, DJ Hewitt builders switched its south Christchurch office to UFB in 2013. The team of 35 works with more than 100 subcontractors to bring homes from initial concept to completion. All foremen fill out their timesheets online and upload to the cloud, keeping project management up to the minute. Large architectural plans can

Resources to maximise UFB Crown Fibre Holdings business case studies http://www.crownfibre.govt.nz/business/ National Broadband Map https://broadbandmap.nz/ UFB retailers in Whangarei http://northpowerfibre.co.nz/index.php/ partners UFB retailers in central North Island http://www.ultrafastfibre.co.nz/get-ultrafast UFB retailers in Christchurch http://www.enable.net.nz/how/business.html UFB retailers elsewhere in NZ https://www.chorus.co.nz/fibre-for-business/ find-a-service-provider/ufb-benefits-business • By Crown Fibre Holdings – the Crownowned company established to manage the Government’s $1.5 billion investment in UFB infrastructure. The company structure invests in partnerships with the private sector for regional development, namely Northpower Ltd, Waikato Networks Ltd owned by WEL Networks Ltd and Waipa Networks Ltd, Enable Services Ltd owned by Christchurch City Holdings Ltd, and Chorus Ltd. BusinessPlus November 2015

COMMENTARY

Bruce Goldsworthy has retired 46 years after joining manufacturers’ associations that morphed into the Employers and Manufacturers Association (EMA) 20 years ago. His most recent roles were manager of the advocacy, manufacturing and ExportNZ divisions at EMA. Following are excerpts from his farewell speech, highlighting changes he saw in representing business members. One Friday in December 1956 I left secondary school and the following Monday I started work in the New Zealand Customs Department. No holiday, no gap year, and Bruce Goldsworthy coming from a big family, it was time to start contributing. After almost 13 years, I decided that too much of that work was either black and white - “it met the criteria or it didn’t” - and I figured the real action was in the grey area between the “yes” and the “no”. So I applied for just the second and final job in my life, at the New Zealand Manufacturers Federation, where I started with responsibility for its industry group, New Zealand Textile and Garment Manufacturers Federation. One of the first things I was told and have been constantly reminded of, was that the federation was a member organisation; it

“I was pretty much told to remember who paid my salary, and wash my mouth out with soap and water!” belongs to the members, and we are there to serve them. It was never “our organisation”, and I have endeavoured to live by that since. Joining the federation in 1969 I found myself representing a bastion of protectionist industry. The textile and apparel industry was a big employer, especially in the regions, and my job was to endeavour to retain their “protected” status. Import licensing and tariffs were something I had been well grounded in, from my Customs days.

BusinessPlus November 2015

Artist: Craig Garner

Final words: retirement for Bruce Goldsworthy Then, the tariff was 40 per cent or a specific duty on all imported clothing and that was only if you actually held a licence to import! And 90-95 per cent of all clothing on the New Zealand market was made in New Zealand – now it is almost the exact opposite. In 1966 New Zealand had its first free trade arrangement, NAFTA (New Zealand-Australia Free Trade Agreement). Not surprisingly, the most protected or “sensitive” industries were excluded – with textiles and garments among these. But endeavouring to retain that level of protection was clearly going to be a losing battle and I remember suggesting to the textile and garment council they should be looking at the day when their protection was removed. I was pretty much told to remember who paid my salary, and wash my mouth out with soap and water!

Time to move on In New Zealand’s increasingly international business environment in 1976 the Export Institute of New Zealand (later rebranded ExportNZ), which had been nurtured under the umbrella of the Auckland Manufacturers Association (AMA), was ready to go out and stand on its own. I was approached by the AMA’s then-president Fred Bruell of Rex Consolidated, and thendirector John Whatnall, about joining the AMA. So I spent the next 20 years there. Rob Muldoon was Prime Minister and we would attract 600 people to our annual general meetings when he was the speaker. It was at this time I started my relationship with the Waikato Manufacturers Association, which became EMA Waikato that I retained a close involvement with. I took over as AMA’s chief executive in 1988 just as New Zealand’s programme of deregulation really started to bite. Import licensing was dismantled overnight, with import duties being phased down. For many manufacturers it was curtains!

Bruce Goldsworthy might have retired from the EMA, but not from cycling.

During that time I was fortunate to work with some great Association presidents and councillors who were role models for me and the AMA team; some of whom are here today, and I thank them profusely for their voluntary contribution to the association. In 1996 the AMA and Auckland Employers Association merged to establish the current EMA. Vaughan Sampson was our first chief executive, and it was exciting times! Since then I have been acting CEO twice, in challenging times. More recently I became involved with ExportNZ, which had been struggling and came into (or back into) the BusinessNZ family in 2008, operating as a division of BusinessNZ nationally and of EMA regionally. I was designated manager and thanks to the help of our regional executive officers, ExportNZ has become such a successful component of EMA. I have seen a succession of different governments, both central and local; worked, or endeavoured to, with a large number of officials - some more competent and co-operative than others. We have suffered or succeeded on the back of a wide variety of legislation; watched the exchange rate go up, down and up again, and throughout we sought to do the best by our membership. I am now ready for the next exciting chapter of my life, which I have dubbed “active retirement”.

EMPLOYMENT By Bernadette Emerson

Critical end-of-year communication Productivity and profits are tangible measurements, and generated by your people. To quote Bill Logue, former president and chief executive of FedEx Freight, “If you take care of the people, they’ll take care of the service, and they’ll generate a profit”.

Regardless of how your business operates, it’s vital to discuss and remind staff of workforce requirements or close-down dates (at least 14 days in advance, although preferably before). For more information check EMA’s guide to Annual Holidays on www.ema.co.nz, or call Adviceline for help.

This time of year invites reflection and provides a reason for managers and leaders to reiterate expectations of behaviour, the unwritten rules of what’s acceptable and, ‘how we do things around here’.

In businesses operating with reduced staffing levels through holiday periods, opportunities exist for cross-training team members.

At year-end functions for teams and clients, bringing people together to show appreciation for a job well done and celebrating success can lead to unpredicted ‘in the moment’ outcomes. Consequently, it’s beneficial to recap expectations with your team around their use of alcohol, annual leave and social media. Once discussed, a company-wide followup via email reaffirms expectations and provides a safeguard for employers, should potentially jeopardising events occur. From an employee engagement angle, doing this clarifies, reminds and gives permission to pull each other up. It reinforces good behaviour and codes of conduct. The three areas pertinent at this time of year for your people are delved into below.

Holidays cover In striving to be competitive in a customerfocused world, many businesses are open for longer hours and operate across historical ‘holiday periods’. In addition, businesses small and large commonly instigate a compulsory ‘close-down’ period.

In critical or essential functions care must be taken to prepare training documentation (and ensure enough time is given to train) that allows the learner to understand the processes and expected outcomes. Communication among managers, the learner and incumbent must acknowledge the likelihood of lower or slower productivity during the period of cover. If the function is critical to business operations, it’s advisable to make contact details available to on-site staff in case of emergency.

Host responsibility The season of goodwill goes hand-in-hand with a rise in alcohol consumption. As hosts at work-sanctioned events, employers need to remind their teams of the drink-driving limit of 250 micrograms of alcohol per litre of breath. It’s also advisable to ensure company policies state what the legal limits are and/or reiterate the company’s rules around alcohol consumption and use of company vehicles. Additionally, we recommend employers put steps in place to ensure employees’ health and safety during and after work functions. These can include providing food and non-

alcoholic drink alternatives, encouraging use of public transport or providing transport/ taxi chits, identifying excessive drinking and stopping the supply of alcohol if necessary.

Social media limits Extensive use of websites such as Facebook, Twitter and LinkedIn can pose risks to employers including starting or exacerbating conflict between employees, lowering productivity, and damaging professional, personal or company reputations. Ideally company policies and clauses in employment agreements should define the boundaries of appropriate social media use. The main risks to employers are postings that bring the company into disrepute, derogatory comments about the employer or other employees, clients or suppliers, and disclosures of confidential information. Reminding employees of rules and expectations around their online conduct gives clarity to all parties. Whether your business is small or medium sized or multi-national, widespread use of social media, an increase in alcohol consumption in the season of goodwill and potential issues around annual leave affect us all. The message is clear – communicating expectations of acceptable behaviour minimises risks to employers, brands and reputations. • Bernadette Emerson is EMA’s Learning portfolio manager for ER/HR, email bernadette.emerson@ema.co.nz

Free call EMA Learning 0800 300 362 or visit our website www.ema.co.nz

BusinessPlus November 2015

EMPLOYMENT

Changing world, new provisions for chief executives This article is part I of a series about employment contracts and golden provisions for chief executive officers (CEOs). We will review the range of so-called “golden parachutes, handcuffs and other employment provisions”, starting with an overview in part I. A frequent concern of companies’ boards of directors is developing a fair and productive contractual arrangement with the CEO. And in turn, of course, the CEO carries the same concern for his/her group of supporting senior managers.

At a minimum, this entails figuring out what and where you as CEO are now; what and where you want to be; and how you’re going to get there.

The employee may conclude that the only way to attain career objectives is to seek a new employer. This is perfectly acceptable under the “new rules”. Indeed, if the employee’s career is stalled, changing it can be admirable. In negotiating with a prospective employer, employees should try to get made explicit points of agreement that would have been implicit under the old rules. Under the new rules employees will push to have new job responsibilities, conditions of employment and benefits spelled out. The employer also has some new responsibilities. The proclaimed reason for introducing the new rules is “all the change out there”, such as global competition, takeovers, deregulation, new technologies - and the promise of more change to come.

Today, a “lifetime career” with a single organisation is less and less common, so CEO departures must be planned for - even when not expected.

For starters, what will it take to achieve career satisfaction? Possible answers include money, promotion, security, physical location and inherently interesting work. “All of the above” is not necessarily an available option; employees should at least assign priorities.

Proper thought and consideration are required to ensure the employment contract protects the interests of both employer (the board) and employee (CEO).

“Today, a “lifetime career” with a single organisation is less and less common, so CEO departures must be planned for - even when not expected.”

A world where greater job opportunities beckon talented individuals has challenged long-standing notions of corporate loyalty.

According to the old model, loyalty was a zero-sum game. Whatever attention the employee devoted to him or herself was subtracted from that available for the employer.

Good people are the single most adaptive resource with which to meet that change. The employer who ignores the new rules will not be able to keep good people or hire replacements.

The new model, by comparison, is win-win.

Perhaps most revolutionary, if employers are serious about adopting the new rules, they will give the newly empowered CEO the opportunity to do the job the way he/she thinks the work can best be done. This may not go down easily with old-line, I-am-theboss-and-I’ll-tell-you-how-to-do-it boards or managers.

The question now is, what will replace this old understanding? What can a manager rightfully expect of the company these days, or it of him/her?

The new employment contract Many organisations maintain that a “new” form of employment contract already exists. Its terms in brief are: “Hereinafter, the employee will assume full responsibility for his or her own career, for keeping qualifications up-to-date, for moving to the next position at the right time, for putting away funds for retirement, and, most daunting of all, for achieving job satisfaction. The company, while making no promises, will endeavour to provide a conducive environment - economic exigencies permitting.” However, there are complexities involved that both sides are only beginning to

grasp. To make the arrangement work, the company will have to pay more attention to individual employees. More than that, employees may have to learn new skills and engage in their own career planning.

longer an extended series of more senior positions providing logical career steps for everybody. Fewer positions are available for moving up the hierarchy, meaning higher career objectives are achievable only by a select few.

BusinessPlus November 2015

The employer will benefit more when an employee operates out of direct selfinterest. Employees must be particularly objective in assessing what they have to offer to an employer. Often a person seeks only to match the requirements of a job title. In reality each employee is an inventory of skills, experiences and interests. For a CEO, the trick is finding a job that allows full use of that inventory, and the opportunity to add to it.

Flatter management, less movement Complicating this is the evolution of flatter management structures. There is often no

As both employers and employees come to appreciate and practice the rules of the newstyle employment contract, the relationship will become richer and more beneficial to both parties. In the next issue we will cover objectives and the duration of CEOs’ employment contracts. • By David Shannon, EMA’s remuneration consultant, email advice@ema.co.nz

EMPLOYMENT

Hijinks and humour onstage at OSH Rotorua conference Health and safety is about taking care of ourselves and those we influence, and that’s no laughing matter. However, the session after lunch at any conference is always hard work for both delegates and presenters, due to the digestive process and its negative impact on our attentiveness. This year at EMA’s annual Occupational Health and Safety Conference in Rotorua we took the initiative in providing valuable education while poking fun at ourselves on the topic of accident investigation, to help us settle into the afternoon sessions. Talented entertainers from Craig Davson’s Rotorua-based troupe, Showtime, donned hard hats and high-vis vests for a humorous lampoon of a workplace accident scenario. The conference was a valuable learning experience for those present, especially with the looming obligations of the new Health and Safety at Work Act due to be enacted on April 4, 2016. This information-

packed day brought together industry leaders with a wealth of experience representing government and business, to present their expertise to members. We hold a range of training programmes on health and safety throughout the year for managers and staff at all levels, on developing a safe work culture and coping with accidents and injuries. For example, we have a half-day conference on Accident Investigations in Auckland on November 4 and in Hamilton on November 19. Effective accident and incident investigation supports the identification of new hazards or associated risk, contributing to a safer and more productive working environment. You can read more and register to attend at www.ema.co.nz/accident

We are all responsible: overview of health and safety law We provide an overview of the critical terms in the Health and Safety at Work Act 2015 that comes into effect on April 4 next year, after much consultation with business. There will be small changes since we talked about what was in the Bill (Business Plus, September 2015). The principal aim of the Health and Safety at Work Act is to ensure that workers and other persons on your work site are given the highest level of protection against harm to their health, safety and welfare,

Craig Davson of Showtime, as Inspector OSH at our health and safety conference in Rotorua.

Our next comprehensive conference will be in Auckland in mid-April to explain all the changes newly in force.

from the hazards and risks arising from work - as is reasonably practicable. Basically the new Act says everyone in the workplace is responsible for health and safety, from those at the most senior governance levels down to those workers on the factory floor, so to speak.

Key terms and changes A key term under the Act is a Person Conducting a Business or Undertaking (PCBU). Essentially, a PCBU is a legal term referring to an entity, and not usually a person. The business or business entity is often a company but a PCBU can also be a partnership, government agency, self-employed person [as business entity], franchisee, franchisor, not for profit organisation, principal or sub-contractor, to list a few. PCBUs have the primary duty of care under the new Act to ensure, so far as reasonably Continued pg18 BusinessPlus November 2015

Employment CHAT

Getting to grips with uniform policy and Q. We have a staff uniform but some staff wear it badly – not clean or ironed properly. What right do I have to insist on a particular standard and how do I enforce that? Also to ‘warn’ job candidates. – Jo

Dear Jo Yes, the presentation and care of company-owned uniforms is something you can specify as a requirement. It’s part of your overall marketing and customer service. People are representing your business in a very obvious way when

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BusinessPlus November 2015

“Spell it out in detail, eg, which garment combinations are to be worn, whether shirts must be tucked in or not or it doesn’t matter, and if creases must be ironed on sleeves/trousers.” wearing a uniform or ‘branding’.

for guidance on the wording, but it should spell out that the uniforms are company property to be cared for in a specific way. Spell it out in detail, eg, which garment combinations are to be worn, whether shirts must be tucked in or not or it doesn’t matter, and if creases must be ironed on sleeves/trousers. Make it clear if dry-cleaning is necessary and who will pay for that, or how to wash the garments, and polish the shoes. Also point out what to do if garments get damaged, and how often you will otherwise replace them.

Where a specific uniform is required to be worn staff benefit by having their work clothes paid for and provided – avoiding shopping time and cost. However, it is not always the way people want to look or the most flattering attire, so employees would probably appreciate compliments or gratitude for their appearance.

Ask staff to refer back to this policy or clause, or to ask someone, if they find themselves forgetting or uncertain.

In job advertisements you need to mention a uniform is provided. You would tell candidates at the first job interview that the supplied uniform must be worn at all times and in a particular way.

Dear Ann

Writing a clause in employment agreements or having a uniform policy is necessary to enforce this. Talk to us

All types of leave including for sickness, and holidays (annual leave), are governed by the Holidays Act 2003.

Q. How can I be sure we are calculating our leave correctly for people this summer? We are a small new business with no software, we do it manually. – Ann

We have written a comprehensive Payroll Essentials employer guide for our members that you can find on www.ema.co.nz and searching for that title.

We’ve got a team of advisors, lawyers and consultants who’ll do more than take the case - they’ll help you build a workplace for the future. AdviceLine

Member-Only Resources

Don’t just get information – get advice you can rely on from industry specialists.

A library of knowledge, tested in the courts and all in one place.

A free, confidential telephone service providing employers with up to date, direct and practical advice.

Our member only resources allow you to download templates for all the difficult jobs that face employers - like Employment Agreements and OH&S.

Employment CHAT

annual leave calculations Calculations differ for permanent and casual workers. Logically, you have no paid leave obligations to contractors. Then it also depends on whether staff are paid a salary or hourly wages. Always refer to your employment agreements, which were presumably drawn up with legal oversight! Typically clauses on holidays will say employees are entitled to paid annual leave of four weeks after 12 months continuous employment - at the higher of either their average weekly earnings or their ordinary weekly pay when they take their holiday. Average weekly earnings are gross earnings divided by 52. Ordinary weekly pay is the gross amount paid normally/regularly in a week and includes those weekly payments for commission/incentives, overtime and the cash value of any lodgings you provide. It excludes discretionary payments. Gross earnings are defined in Payroll Essentials - it’s a complex list! Employees are entitled to be paid before they take their leave, too, unless the parties agree otherwise. For casual/intermittent staff, and those on fixed term agreements of less than

“While annual leave entitlements do not expire … you can require the employee to take leave at a certain time if this can’t be agreed, eg, where there is a large outstanding leave entitlement.” 12 months duration, holiday pay may be added to the employee’s regular pay at the rate of 8 per cent of their gross earnings in each pay packet, so employers don’t have to pay out at the end of their term or when they take leave. It simplifies calculations and ensures the person is fairly paid. But the employee must agree to this form of annual leave payments in the employment agreement, and you must identify this 8 per cent on their play slip to show it’s there. Some people do not like to take (much) leave! While annual leave entitlements do not expire at any time before their employment ends with you, you can require the employee to take leave at a certain time if this can’t be agreed, eg, where there is a

large outstanding leave entitlement. You can give them 14 days’ notice and instruct them to take (paid) leave, if the two of you can’t agree on timing. Holidays may also be taken in advance of entitlement by agreement, which is common where employees have worked for less than 12 months. EMA runs regular courses on payroll legislation essentials – next in Auckland on November 12 and in Whangarei on November 19. Keep an eye on our training pages at www.ema.co.nz for more dates and to register to attend. • By the EMA communications team in consultation with EMA Advice, and loosely based on real calls to EMA’s AdviceLine. All names are fictional. The information in this article is a guide only and not to be used as business advice without further consultation. EMA members can start with our free AdviceLine team at phone 09-367 0909 or 0800 300 362 (within NZ), and 1800 300 362 (from Australia), 8am-8pm weekdays. Alternatively, email advice@ema.co.nz or read or print information such as the A-Z of Employing – a manager’s guide on more than 100 specific employment topics, at www.ema.co.nz

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BusinessPlus November 2015

Continued from pg15 practicable, the health and safety of their workers while at work, and of other persons such as members of the public, visitors and customers in the workplace. This means that health and safety duties may overlap with the duties of other PCBUs, for instance on shared work sites where builders, electricians and plumbers are working at the same time. In these types of situations the Act requires PCBUs to consult, cooperate and co-ordinate with each other, so far as is reasonably practicable in terms of their relative influence and control. So how do PCBUs take all reasonably practicable steps to ensure the health and safety of workers and other persons? They must do everything they are reasonably able to do in terms of: • the likelihood of hazards and risks faced by and created by the PCBU, • the likelihood of such hazard or risk occurring, • the degree of harm that may result, and • the steps that can be taken to eliminate or minimise such risks or hazards. The relevance of costs is secondary in the ‘all reasonably practicable steps’ equation and is met with an extremely high threshold – namely, that the cost is grossly disproportionate to the risk. As such, businesses can be relatively confident that the issue of costs will not be afforded much weight under the Act when it comes to prosecutions. Another significant feature of the Act is the concept of Officers. An officer in relation to a PCBU means a person occupying a position in relation to the business or undertaking

that allows that person to exercise significant influence over the management of the business or undertaking (for example, a chief executive, director, board member or partner). Officers have the duty to exercise due diligence to ensure that the PCBU complies with its primary duty of care. In short, this places a positive obligation on people at the senior governance levels of organisations to be actively involved in health and safety issues. It means that officers must have an up-to-date knowledge of workplace health and safety matters and be confident that the PCBU is complying with its obligations. Workers must also take reasonable care for their own and others’ health and safety, comply with any PCBU’s reasonable instruction regarding compliance and cooperate with any reasonable policy or procedure. The final component of the main changes concerns worker engagement, participation and representation. PCBUs will need to ensure they engage with all workers and develop practices that provide reasonable opportunities for workers to participate in improving health and safety, on an ongoing basis, for example, as health and safety representatives and/or on committees. Additionally, PCBUs have an obligation to share relevant information with their workers, provide workers a reasonable opportunity to express their views and to take those views into account.

Offences and penalties The Act also gives the courts the power to require offenders to publish adverse publicity orders, ie, publish in a public forum the offence, the consequence and the penalty

imposed, in relation to the matter. This power is in addition to the creation of new types of court orders, for example ‘improvement, project, restoration and training orders’. The Act also carries over the ability of third parties to bring private prosecutions against a PCBU and/or officer implicated in injury, illness or death. More notably, the Act provides graduated categories of offences which impose substantially higher penalties than now. The maximum penalties under the new regime for both individuals and corporate entities held liable for reckless conduct that results in the death of a worker can be up to $3 million for corporations, and/or up to five years imprisonment for individuals. In summary, the legislation is sending a clear signal that all areas of a PCBU’s business need to be part of the wider health and safety conversation in order to create practices, behaviours and ultimately a culture that ensures the right of every person to be protected from harm in the workplace. The Act represents the biggest changes to New Zealand’s health and safety legislation in over 20 years. It initially came about as a result of the Pike River mine workplace deaths. The Act is supported by the Government’s “Working Safer” package, which seeks to reduce New Zealand’s workplace injury and death toll by 25 per cent by 2020. • By EMA’s AdviceLine employment advisers. Phone 0800 300 362 (in NZ) or 1800 300 362 (from Australia) or email advice@ema.co.nz

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BusinessPlus November 2015

PRODUCTION MACHINERY

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EMPLOYMENT

Graduating as work-ready Bringing together schools, government and industry (l-r foreground): Sir Edmund Hillary Collegiate principal Peter Uys, Auckland City Mayor Len Brown, COMET’s Shirley Johnson, Careers NZ’s Philip du Preez, Fuji Xerox’s Steve Caunce (pilot participant company), Career Development Association’s Val O’Reilly and EMA’s Michael Burgess. They are among dignitaries and families celebrating the graduation of 90 students from three secondary schools and a youth training organisation in Auckland who received their Youth Employability Passports. The Passport programme is in pilot phase led by COMET (City of Manukau Education Trust) Auckland with partners including the EMA, Careers NZ, Auckland Council and its economic development agency ATEED, Pathways to Employment Trust, the Ministry of Education, the Ministry of Social Development and Workchoice. The programme is designed to teach the soft skills that are often simple but employers say are

often lacking in young people, such as showing up on time, following basic instructions, working as a team and demonstrating a positive attitude. At the end, participating students receive a Youth Employability Passport - a small booklet with ticks for the work skills achieved.

• For inquiries or to discuss your business taking part in the pilot, please contact Michael Burgess at EMA, email michael.burgess@ema.co.nz

Don’t be frightened of IRD interest rates and penalties. Simply purchase tax from the TMNZ tax pool to settle your tax bill. Save up to 30% on IRD interest and eliminate late payment penalties. For a better tax outcome visit tmnz.co.nz, talk to your tax adviser or call 0800 829 888.

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BusinessPlus November 2015

New Zealand’s most flexible way to pay your income tax Flexitax takes the bite out of large provisional and terminal tax payments by letting you settle these liabilities in flexible monthly instalments, without incurring late payment penalties from Inland Revenue.

independent trustee, Guardian Trust.

Businesses wanting to ease the burden income tax payments have on cashflow and have greater flexibility around their payments now have another way to pay.

This tax pool transfer will show on the business’ IRD statement once it has been processed by IRD.

Flexitax lets them pay their provisional and terminal tax through tax pooling intermediary Tax Management NZ (TMNZ) via monthly instalments, where they pay what they can, when they can. TMNZ, whose service is approved by Inland Revenue (IRD), reduce IRD interest costs by up to 30 percent and eliminate late payment penalties. Businesses that owe a substantial amount of tax will find this a useful way to manage cashflow while meeting their tax obligations, says TMNZ chief executive Chris Cunniffe. “While IRD is thinking about how business should pay tax in the future, TMNZ has provided a way that allows them to pay in flexible monthly instalments,” he says. “For instance, say a business owes provisional tax of $50,000. They could pay $1000 in the first month, nothing the following two months, $15,000 the next and then the remainder of what is owed after that.” Businesses can pay in instalments for income tax for the current tax year or one just completed. Late payment penalties are wiped and IRD interest costs reduced as the tax they purchase had been date stamped on the original due date. TMNZ’s interest cost is recalculated on the remaining amount of tax owed every month, says Cunniffe.

BusinessPlus October 2015

Guardian Trust then instructs IRD to transfer the $2000 payment from the tax pool to the business’ IRD account.

Businesses have until 75 days after their terminal tax date to make their last payment. Cunniffe says providing flexibility was TMNZ’s response after noticing growing demand from its clients for instalment-type payments. “This is about ensuring our services are tailored to the needs of everyone who pays provisional tax.”

Where might Flexitax be useful?

TMNZ would issue the business an updated balance statement showing $18,000 is left to pay off. Updated balance statements are sent to the business each month under a Flexitax arrangement until it pays off what it owes IRD.

Scenario B: underpaid income tax A business owner’s accountant has finalised their tax return for the 2015 tax year and has notified the owner they have underpaid provisional tax by $15,000.

Below are two examples of how businesses with income tax liabilities could use Flexitax.

The owner has up until mid-June 2016 to pay what they can, when they can with Flexitax.

Scenario A: upcoming provisional tax payment

They decide to pay $5000 at their first payment and then the remaining $10,000 whenever they can after that, but before the mid-June 2016 deadline.

A business has an upcoming provisional tax payment of $20,000 for the 2016 tax year due on 15 January 2016. Paying the full amount to IRD at this date is problematic as, like 59 percent of respondents to a tax payment survey conducted by EMA, they experience cashflow constraints during the January-March period. TMNZ can arrange for them to pay via monthly instalments to help manage their cashflow. To activate Flexitax, the business would pay to TMNZ part of the amount due on 15 January. Let’s say it choose to pay $2000 first up. This payment – and other Flexitax payments made in the future – would be made into a bank account administered by an

About TMNZ Tax pooling has been operating in New Zealand since 2003, with TMNZ the first to provide the service. As the largest and oldest tax pooling intermediary, it has helped more than 25,000 small and medium sized business save many millions of dollars in IRD compliance costs. TMNZ’s founder director Ian Kuperus not only devised the concept, but also helped IRD implement the framework when ways were sought to reduce compliance costs for businesses. Visit www.tmnz.co.nz or phone 0800 829 888 for more information.

IN BUSINESS By Joanne Doolan

and think about what you can produce to independently verify this evidence, rather than asking IRD to read your mind. There are also penalties for providing false information, for example, if your insurance policy does not match what you are claiming, you will find yourself in hot water.

Complex property

tax could catch you out Quick-flick residential property transactions are much more difficult since the tax measures announced in Budget 2015 became law on October 1. Dubbed the “bright line test”, the short version of the new rules is this: if you sell a residential property within two years of buying it, you can be taxed on the gain in value. But there are exemptions if the house for sale is your main home or is transferred as part of a property relationship agreement or is inherited property from a deceased estate. Then there’s the finer points to beware of. The date you are considered to acquire the property is the date the title is registered in your name, and the date of disposal is the date you sign the “sale and purchase” agreement. This could well catch people out if they enter into a deferred settlement agreement. There are also special and more complex tax rules when you sell after buying off a development plan or undertake a subdivision, or sell a home that is also your worksite, for example. Inland Revenue (IRD) describes the fictional case of Deepak, who enters into an agreement to buy a bare section in a planned subdivision on 1 December 2015. The purchase of the section is due to settle (with title passing) in December 2018. Deepak enters into an agreement to sell his

interest in the property to a third party on 10 December 2016. Is Deepak subject to the bright-line test on the sale of his interest in the property? Yes, Deepak has sold an interest in bare land that, because of its area and nature, is capable of having a dwelling erected on it. As Deepak has not had legal title to the land transferred to him at the time of sale, the additional rule for “off the plan” sales applies. The relevant two-year period for “off the plan” sales starts at entering into the contract to buy (1 December 2015) until entering into of the contract to sell (10 December 2016) - in this case, less than two years.

Main home: proof required To qualify for the “main home” exemption, you have to “predominantly” use the property as your main home. If you have a country estate and an apartment in the city that you use during the week, the exemption applies to the place you have the greatest connection with. This is judged on several factors such as the time spent in the dwelling, where your immediate family is living, where your social ties are strongest, what you use the building for, your employment, your business interests and economic ties to the area, where the property is located and where you store your personal property. You need to record these types of details

Another tricky exemption is for the sale of “mixed-use property” such as where your business premises are on the same property as your home. If less than 50 per cent of the property is used as the main home, you will miss out on the exemption. Furthermore, there is no right of apportionment, so if you live above your shop and the area of the shop is greater than the area of your home, you do not get an exemption. Another key point is the new rules supplement the pre-existing rules: they do not replace them, so if you buy a property that includes your main home and intend to sell it within two years, then you are taxed anyway. Also if you are in the business of buying and selling properties, are a builder, a property developer, undertake substantial developments or are associated with a builder or a property developer, you are taxed as before October 1.

“If you have a country estate and an apartment in the city that you use during the week, the exemption applies to the place you have the greatest connection with.” Finally, if you are caught under the existing rules you can offset your losses against your other income. If you are taxable under the bright-line test then your losses are quarantined and can only be offset against other property price gain. Overall, publicity about the new rules raises the “tax beware” flag at the time property is bought rather than waiting for the IRD to discover the transaction years afterwards. • Joanna Doolan is a Partner with EY. Email joanna.doolan@nz.ey.com BusinessPlus November 2015

IN BUSINESS By Dave Jacques

Summer here we come As I have said previously in BusinessPlus, good governance includes holding regular but short and punchy board meetings. It is also having the right team of board members for a balance of perspectives. This month the focus is on the higher level view of your enterprise. Do you find it always seems to be raining but you think you’re in the middle of summer? Perhaps it is because your business is actually in a ‘winter’ season? Businesses go through seasons just like nature does, and from a governance point of view it is important to recognise the signs to know which season your business is in so that your board can govern effectively. ‘Spring’ is a time of emerging opportunity. You have stumbled upon a new creation or service and you are trying it out on your market. Your phone is not ringing off the hook but you are certainly feeling quietly optimistic. ‘Summer’ is full-on. The phone is ringing hot, all your quotes are being accepted, and actually the challenge is how to keep up with the orders. ‘Autumn’ is a period when things are quietening down. It’s similar to spring, but this time you are not sure why and you don’t have the same sense of optimism that you previously had. ‘Winter’ is just painful. Your staff are not happy, the phone is dead, and money is not easy to come by.

BusinessPlus November 2015

When sales are hard to come by in an autumn season this is not the time to invest in more marketing. It is our natural tendency to do this (to recover lost revenue) but money spent on marketing at this time is both expensive and a waste. Autumn (and more so winter) is a time to spend time indoors rebuilding, tidying up, and preparing for the next spring to come. As your business runs through the various cycles your governance board should be mindful of this. The aim is to task the management team with focusing on the most appropriate behaviour at the various times. Spring is certainly a time to go to market and attract more sales. Summer is a time to focus on operational efficiency (to meet demand) and as autumn comes along, the idea is to notice this early and start preparing for organising a winter of full house-keeping and innovation to create a new spring. In a high-growth business this cycle might be as short as 12 weeks. In others you might evolve through these seasons over two to three years. Either way, the trick is to know and act accordingly.

Five more elements Another cycle that is important is what the Chinese call Wu Xing (or the five elements). In Chinese culture this relates to the four elements of wood, fire, earth and metal, and the fifth element of water. In the West we understand this as what, who, when, how and the fifth element as why. As in the Wu Xing, each is important, but the timing of the question is also

critical. Asking “why?” first (instead of last) pours cold water on the idea and sinks it. In governing your business your first question is “what?” What is it that you do? The second is “who?” Who is on your team and who are your target customers? As you answer each of these, move on to ask “when?” When are you doing it, and when is the best time to do it? The fourth element of “how?” is the operational logistics of filling your customers’ orders. The quintessential question is “why?” This question is asked last but gives the greatest power to your enterprise. Why is it that you do what you do? It is the answer to this last question that gives the opportunity for the greatest connection to your client. Most of us are in business to excel at what we do, or to provide to a greater good (rather than to just make money). Communicating this reason to clients creates their buy-in, moving the spending decision away from pure dollars and cents to the higher value realm. In your governance, as well as recognising the season your business is in, your board should periodically discuss their answer to the five elements. Doing so gives incredible clarity to your unique selling proposition (USP) and profit/cost centres. • Dave Jaques LLB NZIM is managing director of Good Governance NZ Ltd focusing on educating SMEs on good governance, and providing independent company directors to SMEs. Visit www. goodgovernance.co.nz

IN BUSINESS By Rosina Webb

Marketing essential whether customers are businesses or consumers We know it’s tough out there. In the competitive world of business-to-business (B2B) marketing it’s hard to stand out and make your mark – and importantly drive more sales. That’s why it’s crucial to spend time crafting out a marketing plan for your business; a business road map to keep you on track and heading in the right direction. It’s often hard to figure out where to start, so we’ve gathered some insights to guide you on the content of your marketing plan.

It’s competitive In comparison to business-to-consumer (B2C) marketing, your potential B2B customer base is small. Furthermore, statistics prove 20 per cent of your customers are going to bring in 80 per cent of your profit. So make sure that you capture those customers who pay on time, love your product or service and will be a vocal advocate on how much they love doing business with you.

Unique selling point (USP) Spend time defining what makes you special. Why would a customer purchase from you rather than a competitor? How do you currently stack up against your rivals? Do customers actually want, and value what you are selling? If you understand your USP, your marketing efforts can be more targeted and therefore have a higher sales strike rate.

Fishing in the right pond Segmentation and research are key to understanding which “fish” you need to hook. Target your product/service to the right customer group and ensure your salespeople are the right people for the job.

Sales superstars Firstly, understand what your customers’ needs are, and if they are a right fit for your product/service. Don’t waste your time “fishing” if their needs do not match up to what you can offer them.

If you have a technical product, make sure your sales staff are tech savvy. It’s important their knowledge level extends beyond the basic facts about the product or service to include troubleshooting, technical backup and providing other services that the buyer may require over the life of the product, plus an ability to build strong relationships.

Undertake market research

Customer champions

It’s important to understand what the market is doing, what your competitors are doing, and even what your past and present customers say about you. Gather good quality information on which to base your business planning decisions.

In your marketing and wider communications, emphasise your brand promise, guarantees and service standards, to promote the reliability and consistency of your approach and to build trust and value.

Customer Relationship Management (CRM) To identify key clients, it’s unrealistic to keep tabs on your customers in your head or a paper filing system. The key is to invest in a quality Customer Relationship Management (CRM) software system to record customer information, including details of multiple key players from any larger organisations/clients, and to keep that information current. Database marketing is crucial for B2B marketing. CRM search criteria allow you to identify particular customers for offers, and target-email only them. Likewise it gives you the ability to view each of their transactional records, to identify high value customers.

It’s about relationships Even if the properties of your product stack up, B2B buyers don’t want to risk their reputation (or money) on purchasing an unreliable product or service or buying from an unreliable supplier. This is where the emotional side sets in. Building secure, trusting relationships with those customers becomes critical to your selling success. This means building a brand that your customers can trust, as well as building one-on-one relationships with customers, so they trust you personally as well.

Aside from the obvious way to build trust in your brand, ie, delivering exceptional customer service and honouring your promises, spend time gathering success stories and customer endorsements and presenting them in ‘easy to understand’ case study formats. “What’s in it for me?” is a crucial question that customers ask, and that needs a positive response. Motivational offers build relationships, and as a rule they work best when they promote value. Maybe offer a sales incentive such as a free tablet with certain sales targets, an e-book or emailed article that provides customers with free tips on how to solve their business problem.

In summary B2B buyers are demanding. They have a responsibility to make the right purchasing decisions on behalf of their companies. They take less risk, and quality and trust are of the utmost importance. So don’t underestimate the need for a marketing plan to navigate the waters, seize the right opportunities and identify the right businesses to work with, to achieve your profit objectives. • Rosina Webb is founder and managing director of Energise & Associates, consultants for effective marketing and sales performance. www.energise.net.nz BusinessPlus November 2015

IN BUSINESS By Gilbert Peterson

Pitching to angel investors Four angel investors from overseas addressed the EMA-Lowndes Business Intelligence Workshop last month on what they want to learn from an entrepreneur who is seeking funding. Rather than make presentations, the four responded to the following questions from the floor.

Q1. What is your approach to growing the business you invest in? Raiyo Naima, based in Malaysia and Hong Kong, partner in a software fund specialising in medical devices, said: “Our approach is to be involved in the proof of concept from day one. “Second, we will invest in Asia because that’s where we are on the ground. Trying to raise capital without being based in the country where you are raising, is fraught: do you [as entrepreneur] understand the market where you’re looking to raise capital?” Jayesh Parekh is based in Singapore working with a wide range of early-stage business growth and investment vehicles including Jungle Ventures, 500 Startups and Mumbai Angels. He said, “What doesn’t work is when we hear, ‘I didn’t raise capital at home so I’m coming to you for it.’ We insist on you having local investment. “Nine out of 10 approaches come without a well-developed strategy, or an exit strategy; there is no excuse for this [omission]. Advice on the best practice approach is easily accessible – just Google it.” Marcia Dawood from the board of the Angel Capital Association in the US, said: “In the US we have so much deal flow we don’t actually go looking for things to invest in, so your objective in getting my attention is not to ensure your proposition is in the stack on my desk – it must be on top of the stack. So you need to differentiate yourself.”

Q2. In New Zealand we seem to struggle with deciding on reasonable valuations. Your comments? Raiyo: “If you feel a valuation is not in

BusinessPlus November 2015

From left: Angel investors Marcia Rick Dawood, Raiyo Nariman, Jayesh Parekh and Allan May, and Lowndes partner Allan McRae.

line with your expectations then ask, do I really need the cash? It’s your call, your responsibility.” Jayesh: “I’m not interested in investing in a company for 5 per cent of its equity. I will want 40-50 per cent.” Allan May from the US represented Life Science Angels managing US$50 million. He said: “It’s not uncommon for the founder of a business to end up with just 15-20 per cent of it.”

Q3. What is the best way to exit? Jayesh: “Usually a merger/acquisition is best. It’s the easiest and most clean-cut.”

Q4. How do we manage the tyranny of distance? Raiyo: “You have no choice but to get on a plane and talk to your customers. And there’s Skype et al.” Allan: “If you haven’t talked to thousands of your customers we won’t talk to you. This is an investor paradigm. You have got to talk to your customers.” Jayesh: “The counter factual is to invest in a youngster. They’re building products that have no customers, or they don’t know who the customer is. Get the heavy lifters involved later.

“Times have changed with the internet of things. There are no boundaries. Mobile is accelerating this. There is nothing preventing you developing a global business from here.”

Q5. ‘I’m going to make world a better place and I’m going to get paid for it’. How realistic is this point of view? Allan: “In the US this is important; there is the Acumen Fund for this. People can invest in businesses that have charitable status and get tax rebates for them. For these, a business has to be not-for-profit from day one. You can’t switch later.” Jayesh: “A website for an example of innovative investing in poorer communities is www.aavishkaar.in, and Pierre Omidyar, the founder of eBay, is deeply involved with the Omidyar Network.”

Q6. When is failure ok? Allan: “You don’t need to start ‘some’ companies, you need to start boot loads of them. Peter Thiel’s first company was not a success. Apple, Intel, Gentech: none of these are in the business they started in. Your character shows up when you fail.” Marcia: “It’s not good to fail for the sake of it; it’s what you learned from the failure.”

International TRADE By Brendon Wilson

Building trust internationally in New Zealand business New Zealand leaders in business, accounting, law and government agencies whose work for New Zealand business is concerned about our “country reputation” have come up with ways to keep showing trust as a platform to win business overseas. Transparency International New Zealand (TINZ) organised a day last month for speakers to address business on the threat to New Zealand’s business’ prosperity. These strong themes and recommendations emerged: • New Zealand is slowly losing ground to other countries that are capturing the crown for trust in business. • Purposely creating a company culture based on trust, ethics, anti-corruption and protection of reputation - with systems and processes to monitor and report on them - is not just desirable, it is now essential to maintain reputation, keep customers and especially to assure investors they should come aboard. • New Zealand’s ‘100% Pure’ strapline is not enough for non-tourism or nonfoods business – for most business the important message is ‘Trust in New Zealand’, which needs real commitment by businesses to show its truth. • Adopting whistleblowing as a basic way to keep your company clean, with supports and processes to make this work for you and your people, is fast becoming the best way to protect your reputation – an early warning system which you can use and show as a major risk prevention strategy. The Auditor General Lyn Provost said at the workshop that while innovation is New Zealand’s claim to fame, innovation must never be at the expense of trust and accountability.

The Financial Markets Authority chief executive Rob Everett said the greatest threats to attaining “trusted business” status are conflicts of interest, related party dealings, poor or misleading reporting, inattention to fair dealing, lapses in governance, culture lacking in ethics and integrity, failure to recognise the enormous risk in lack of ethics and integrity, and failure to adopt integrity support systems. He said New Zealand’s business reputation overseas is “straight, honest, genuine, self-critical; we do what we say”, but this reputation is fragile and can be lost in an instant. Focus and planning are needed to hang onto it.

Protect whistle-blowers

Clear, simple, honest reporting and communication are basic to accountability and trust.

Whistleblowing is an opportunity not a threat, said Serious Fraud Office chief executive Julie Read. She added whistleblowing about possible corruption is a sign of the greatest commitment and loyalty, not disloyalty; so employers need to provide channels such as writing it into their Code of Conduct.

Risks can arise when contracting out but a solution can be to expect full supply chain reporting and visibility.

Tools for developing business integrity were outlined by Daniel King, director of TINZ.

He said a compliance programme to avoid corruption could comprise the following: • A thorough risk assessment right through the supply and delivery chain, • Training of all people in your business chain - a good start is to use the Transparency International New Zealand free e-learning tool, developed with Business New Zealand and the Serious Fraud Office, • Acceptance of accountability at all levels of a business from top to bottom – unethical behaviour must bring serious consequences to anybody involved, • A reporting mechanism enabling threat assessment, and a non-judgemental ear for whistleblowers who may just have a question or even a niggling doubt, • Communication on these matters to all your people so they expect and want to hear how things are going – including agents, distributors, business partners and suppliers, • Due diligence incorporating bribery and corruption risks before engaging with all intermediaries, ensuring adherence to your policy is binding in all contractual agreements, • A solid business integrity plan. Daniel said companies are responsible for the actions of their employees and their agents. The Organised Crime and Anti-Corruption Legislation Bill and other legislation in New Zealand and overseas exert severe penalties, including imprisonment, for failure to prevent corrupt payments or similar. Companies that have taken reasonable steps to prevent this occurring can show that as a defence. Further articles will detail ideas and opportunities to ensure NZ businesses can learn, act and benefit in the international marketplace. • Brendon Wilson works with business and philanthropy in Transparency International New Zealand. To benefit directly through involvement go to http://www.transparency.org.nz/ and select ‘Get Involved’ BusinessPlus November 2015

International TRADE

Done deal: TPP will be transformative for NZ The five-year-old negotiations for the Trans Pacific Partnership among New Zealand and 11 other countries are finished, with agreement - an outstanding achievement, says Kim Campbell, EMA’s chief executive. We look forward to seeing the detail of the agreement, but some highlights are outlined below. Our ExportNZ division will work with the Ministry of Foreign Affairs and Trade (MFAT) to ensure businesses are ready to plan to take advantage of TPP when it comes into force in around two-plus years’ time.

markets like Japan, Mexico and Peru which hitherto may not have been worthwhile markets. Trade Minister Tim Groser says New Zealand supports the public release of the text before it is signed by TPP governments, but arrangements are yet to be finalised.

MFAT says around half the tariff savings will be achieved when the agreement enters into force, while other tariff reductions will be subject to phase-out periods.

In the meantime, MFAT has rolled out fact sheets on TPP content for specific areas of trade, on its TPP website www.tpp. mfat.govt.nz Individual tariff outcomes, as part of the full details of the agreement, will come later (see “Next Steps” on the website).

The details of the phase-out periods will most likely be released along with the text of TPP. Some tariffs will be lowered for New Zealand manufactured exports going to

Groser says these fact sheets demonstrate what a comprehensive agreement TPP is, and that the benefits of the agreement go beyond reductions in tariffs.

Source: www.tpp.mfat.govt.nz

The fact sheets cover the following areas: • Overview • Goods Market Access • Intellectual Property • Investment and ISDS • Market Access for Services and Investment • Pharmaceutical and Medical Device Purchasing (Reimbursement) • Government Procurement • Labour and Environment • Legal and Institutional • State Owned Enterprises

TPP benefits at a glance - according to the Government Sector Meat

NZ exports to TPP markets Estimated annual tariff savings when TPP in 2014 fully implemented - $ - $ value 2.3bn 72 million

Dairy

4.6bn

102m

Fruit and vegetables Other agricultural products Forestry Wine Fish and fish products Wool, leather, textiles Manufactured goods Total

1.2bn 1.6bn 1.5bn 839 million 564m 621m 7bn 20.1bn

26m 18m 9m 10m 8m 4m 10m 259m

Table: Estimated annual tariff savings from TPP based on the current level of exports

• This comprehensive agreement offers much better access for New Zealand goods and services in the 11 important TPP markets across Asia and the Pacific, namely the US, Canada, Mexico, Peru, Chile, Japan, Australia, Brunei Darussalam, Malaysia, Singapore and Vietnam. • New Zealand will have FTAs covering our top five trading partners – Australia, China, the US, Japan and Korea. Previously we have had no trade agreements covering the US or Japan. • In New Zealand the copyright protection period for books, music and art, for example, extends from 50 years to

BusinessPlus November 2015

70 years. This means New Zealand businesses will need to continue to have permission (in most cases, by buying the rights) to reproduce copyrighted material for an extra 20 years for each work. The cost of this to consumers and businesses will be small to begin with and increases gradually over a 20-year period. • Ensures fair access for New Zealand firms doing business in TPP countries and greater opportunities to bid for their governments’ procurement contracts. • Gives more confidence and certainty to New Zealand firms investing overseas. • The full benefit of TPP is estimated to be at least $2.7 billion a year extra in New

Zealand’s GDP by 2030 [which is not the confirmed full implementation date but probably an economic modelling date – ed]. • Improvements to tariffs include: 1. Tariffs on beef exports to TPP countries will be eliminated, except: in Japan where tariffs reduce from 38.5 per cent to 9 per cent at full implementation; in the US, five years after TPP comes into force. 2. New Zealand dairy exporters will have preferential access to new quotas into the US, Japan, Canada and Mexico, in addition to tariff elimination on a number of products. 3. Products like cheese, infant formula and ice cream will have improved access into some very big consumer markets like the US, Japan and Mexico. 4. Tariffs on all other New Zealand exports to TPP countries will be eliminated – including fruit and vegetables, sheep meat, forestry products, seafood, wine and industrial products. • Improvements to non-tariff barriers include:

International TRADE 1. customs procedures are to be applied predictably, consistently and transparently, 2. food safety and biosecurity measures must not create unjustified obstacles to trade, and to be based on scientific principles, 3. elimination of agricultural export Subsidies, • Market access and non discriminatory treatment for services providers, • Investment threshold increases from $100m to $200m, • NZ can impose some types of new, discriminatory taxes on property.

Benefits to manufacturing exporters in New Zealand

All New Zealand manufacturers who export are expected to save $10 million among them each year when the TPP comes into force. Source: www.tpp.mfat.govt.nz

Other sectors depicted graphically (but with no greater detail) are dairy, meat, other agricultural products, wine, fish and fish products, fruit and vegetables, forestry, wool/leather/textiles.

This can be found at http://www.tpp.mfat.govt.nz/ • MFAT is happy to take enquiries from specific exporters at email tpp@mfat.govt.nz

Exporters overcome barriers in foreign markets

By Catherine Lye

The recent ExportNZ Exporters Survey cited “regulatory and non-tariff barriers” as one of the key restraints impeding export growth for nearly half the respondents (41.8 per cent). The exporters that are facing trade barriers mentioned a number of difficulties. China is often named and continues to be a challenging export market. We often hear from exporters in the food and beverage category who need more help from the Ministry of Primary Industries (MPI) to navigate market access, particularly in the processed food category. In response to this feedback, ExportNZ’s executive director, Catherine Beard, set up a Processed Food and Beverage Exporters Advocacy Group a year ago, allowing exporters to engage with officials from MPI and the Ministry of Foreign Affairs and Trade (MFAT). A positive outcome from these meetings was the agreement of MPI officials to work with an exporting company on a voluntary food safety assurance programme. The company involved (an EMA and ExportNZ member) will be a good test case, as it processes foods with both meat

and dairy bases – which makes market access particularly challenging.

your efforts, either onshore or offshore.

Officials think this Group is a good forum and are keen to keep meeting several times a year. If you are an EMA/ExportNZ member selling processed food and/or beverage, and are experiencing market access issues, you are very welcome to join our group. Ten member companies have participated in this group since its inception. Business cards are exchanged and as usual exporters are helpful to each other about jumping through the various hurdles.

“Recently we have been fortunate to have ExportNZ advocate on our behalf with a raft of regulatory agencies, ie, MPI, as well as MFAT, to resolve some long-standing issues affecting the export of processed foods from New Zealand.

One such group member, Greenmount Foods, and is happy to write the following recommendation: “If you are thinking of exporting or are a long term exporter experiencing issues exporting your goods offshore I highly recommend joining ExportNZ and using their excellent array of services. ExportNZ are one of the most effective organisations within New Zealand providing pragmatic, relevant support, whether you are starting out and don’t know how to get underway or are an experienced operator coming up against a brick wall inhibiting

Without ExportNZ’s support and guidance we would not now be exporting to China and potentially we may not have continued in business, so profound were the challenges in front of us. Thanks to Catherine Beard and her very able team, we are now expanding at a rapid rate. “Do yourself a favour and join ExportNZ, you will not regret it.” - Allan MacDonald, chief executive, GreenMount Foods EMA members pay one subscription for EMA and ExportNZ services. To access ExportNZ services, simply register your interest with Catherine@exportnz.org.nz • Catherine Lye is manger of the ExportNZ Division of EMA. Visit www.exportnz.org.nz BusinessPlus November 2015

Member PROFILE

Patrick Brus, corporate services manager

Dr Ralf Schlothauer, head of research

Comvita,

finalist in the Best “Our latest market is the US where we’re doing an e-commerce entry, and it’s looking very promising. We have two staff based there and could have five before the end of the year.”

At a time of rapid company growth, Comvita made time again this year to join the annual IBM Best Work Places programme that is judged by employees. And it has reached the finals in the category of medium to large business. Patrick Brus, the company’s Swedish-born and educated corporate services manager, says Comvita has been involved with the programme from early on, using it as a change management tool for continuously improving performance. The point is to have happy staff, and happy customers spending more, so there’s more money for the business and more for the staff, he says. With the company doubling in size every four years everyone’s job is getting more complex, which adds massive pressure for people to develop faster to keep up. When he joined Comvita three years ago it employed 320 staff. Now it has 500, including 300 in New Zealand.

So Comvita is careful when employing staff. He says, “We really try to live by our values and to have good staff.” Part of Comvita’s commitment to staff and the Best Work Places programme includes carrying out checks with staff on the company’s three values, which are to be caring, courageous and curious. Comvita’s staff values:

Patrick says, “We’ve come a long way. We’ve been 41 years in the making. Ten years ago sales were $30 million; this year they were $153m. “Business for us is booming. Our goal is to lift revenue to $400 million in sales by 2020 and maintain NPAT (net profit after tax) levels.”

BusinessPlus October 2015

Caring • • • •

Support others and share your knowledge. Give praise when it’s due. Show respect and deal with performance issues. Listen to other points of view.

Member PROFILE

Workplace Awards Courageous • • • •

Do what you believe is right, speak your mind. Experiment and learn when you fail. Give new things a go. Embrace change. Dare to be different and learn from your mistakes.

Curious •

• •

Ask why and how we might seek constant improvement and new knowledge. Collaborate with others. Embrace innovation and achievement.

Patrick admits it’s hard to grow staff engagement levels in a business that’s growing so rapidly, but people stay.

Diversification through products, acquisition and markets As well as its Manuka honey, Comvita has a lead position with freshly picked olive leaf extract, scientifically researched to support normal blood sugar levels. This is grown, harvested and processed at the world’s largest specialised olive leaf grove in Queensland. A lot of Comvita’s growth is organic but it has been targeting acquisitions lately, and diversifying into the omega (fish oils based) ingredients platform.

“The point is to have happy staff, and happy customers spending more, so there’s more money for the business and more for the staff.” Asked about diversifying into new markets, Patrick says, “We don’t try to attack the world on too many fronts because at present we can sell all that we make.” Comvita has offices in China, Hong Kong (30 retail stores), Taiwan, Korea, Japan, Australia, the UK and Europe and exports to more than 18 countries. “Our latest market is the US where we’re doing an e-commerce entry, and it’s looking very promising. We have two staff based there and could have five before the end of the year.” Asked about where the company is investing Patrick says, “In the past three years we have invested heavily in ICT right through the supply chain, from logistics to point of sale.

“We own 30,000 hives and each one is barcoded using our proprietary apiary management system so we can identify where the product came from and when. “We have a large amount of honey supply under direct ownership or control, with the balance of supply from long term contractual and partnership arrangements. The business is vertically integrated and is now showing very strong benefits from that.” As well, Comvita is expanding its manufacturing plant and warehouse in Paengaroa. So what’s holding Comvita back from even faster growth? “Our key ingredients are a scarce resource,” Patrick says. “We have planting programmes and are working with iwi to secure more access to supply. “Natural health is our business and we stand for natural products that work. And we have created a luxury brand that commands a price premium.” • The winners of the IBM Kenexa Best Workplaces Awards 2015 are announced on November 5. You can read who they are in BusinessPlus (December issue). BusinessPlus November 2015

Member PROFILE

Heat finds faults fast From the time he began to use infrared diagnostics technology five years ago, Tony Eggleton knew there had to be many more applications than for the big mining machinery and power transmission lines he was familiar with. He set up Briton Infrared Ltd with his wife three years ago. He uses specialised instruments to identify faults before they can be seen and cause problems. Now, he says, a skilled operator using the latest Jenoptik gear that he has invested in, can pick out a dry bearing on a conveyor line at 50 metres. His work can take him to out-of-the-way places to run tests, for instance on high voltage power lines, sub stations and switch gear and quarries, where identifying an imminent failure of a heavy duty conveyor could save thousands of dollars. Tony says, “We’ve been identifying underground high resistance power faults to within a few centimetres by scanning the

Tony Eggleton: infrared scanning for faults

ground above - it saves the time and trouble of digging up whole sections of line.”

a picture of where the fault was located,” Tony says.

In a recent case, a boat builder called him to test a large area of fibreglass hull for delamination and bonding. The problem couldn’t be located using a traditional moisture meter below the water line.

He’s clearly pleased with the success of another marine-related project - locating an intermittent break in an internal bearing in the gyro stabiliser of a big launch. Other people had been trying to find the fault for over a year, but he had it pinpointed deep within the stabiliser system within four hours.

“We applied heat across a large area of the hull and by scanning for variations, made

Delicious plans for pre-blended drinks

Bon Accord Products started making inroads into the local café market and now exports - not in the usual way with coffee; rather, by supplying a range of prepared drinks for people wanting an alternative to coffee.

from offshore; and in five years’ time to be predominantly export focused.

The company makes it easy for cafes to offer their clients drinking chocolate, smoothies, frappes, frozen yoghurts and a range of iced teas, all pre-blended to mix and serve.

The company employs 20 staff, and plans to run a second production line from April.

But Bon Accord Products is still enjoying up to 30 per cent growth a year in New Zealand.

Says owner Paul L’Amie, “Just add water and ice to a scoop of chocolate powder.

Products’ 30,000 sq ft plant in Auckland is certified to dairy export standard, registered with the Ministry of Primary industries, Food Safety certified and audited frequently by Assure Quality.

“We’re totally focused on delivering a great taste experience. We use the world’s best ingredients - West African cocoa and New Zealand milk powder, and I can tell you it is the worlds’ best.”

A third of revenue is derived from exports from a growing client base in China and Japan - with the help of marketing director Mark Bartlett who spent 26 years in Japan and is very well connected, Paul says.

And hygiene is critical. Bon Accord

He expects future growth to be driven

BusinessPlus November 2015

“We’re not highly geared and have good backing from our bankers,” Paul says. And the source of the name? Given Paul’s French heritage, when he visited Bon Accord harbour in Kawau Island it seemed a natural fit. On belonging to EMA, he says, “We joined because we like the fact EMA is an advocate for businesses like mine, along with the employment support available should we need it.”

SCHEDULE FREE for all EMA members | To register call AdviceLine on 0800 300 362 or email AdviceLine@ema.co.nz

Spring Briefings Schedule 2015 Auckland Day/Date

Time

Venue

Mon. 2nd Nov.

9.30am - 11.00am

Titirangi Golf Club, Links Road

NEW LYNN

Mon. 2nd Nov.

3.00pm - 4.30pm

Stamford Plaza, Albert Street

AUCKLAND CITY

Tues. 3rd Nov.

9.30am - 11.00am

QBE Stadium, ASB North, Stadium Drive

ALBANY

Tues. 3rd Nov.

3.00pm - 4.30pm

Bruce Mason Centre, 1 The Promenade

TAKAPUNA

Weds. 4th Nov.

9.30am - 11.00am

Counties Inn, 17 Paerata Road

PUKEKOHE

Weds. 4th Nov.

3.00pm - 4.30pm

Waipuna Conference Suites, 60 Highbrook Drive

EAST TAMAKI

Thurs. 5th Nov.

9.30am - 11.00am

Butterfly Creek, Tom Pearce Drive

MANGERE

Thurs. 5th Nov.

2.00pm - 3.30pm

Ellerslie Event Centre, 80 Ascot Avenue

REMUERA

Friday 6th Nov.

9.30am - 11.00am

Quality Hotel Lincoln Green, 159 Lincoln Rd

HENDERSON

Friday 6th Nov.

3.00pm - 4.30pm

EMA Room 2C, 159 Khyber Pass Road

GRAFTON

Mon. 9th Nov.

7.30am - 9.00am

EMA Board Room, 159 Khyber Pass Road

GRAFTON

Mon. 9th Nov.

2.30pm - 4.00pm

Waipuna Conference Centre, 58 Waipuna Road

MT WELLINGTON

Tues. 10th Nov.

2:00pm - 3:00pm

Webinar: www.ema.webex.com

Thurs. 19 Nov

3.00pm - 4.30pm

Bruce Pulman Park, Teamsports Centre, Walters Road

PAPAKURA

Northland Day/Date

Time

Venue

Weds. 11th Nov.

3.00pm - 4.30pm

The Northerner, Corner North Road & Kohuhu Street

KAITAIA

Thurs. 12th Nov.

9:00am - 10:30am

Scenic Circle Bay of Islands, 58 Seaview Road

PAIHIA

Thurs. 12th Nov.

1:30pm - 3:00pm

Kingsgate Hotel Whangarei, 9 Riverside Drive

WHANGAREI

Waikato / BOP Day/Date

Time

Venue

Mon. 16 Nov.

9.30am - 11.00am

Junction Hotel, 700 Pollen Street

THAMES

Mon. 16 Nov.

3.00pm - 4.30pm

Trinity Wharf, 51 Dive Crescent

TAURANGA

Tues. 17 Nov

3.00pm - 4.30pm

Suncourt Hotel & Conference Centre, 14 Northcroft Street

TAUPO

Weds. 18 Nov

9.30am - 11.00am

Holiday Inn, 10 Tryon Street, Whakarewarewa

ROTORUA

Weds. 18 Nov

2.00pm - 3.30pm

Central North Island Kindergarten Association, 6 Glenshea Street

PUTARURU

Thurs. 19 Nov

9.30am - 11.00am

Kingsgate Hotel Te Rapa, 100 Garnett Ave, Te Rapa

HAMILTON

Mon. 23 Nov

2.00pm - 3.30pm

East Bay REAP, Reap House, 21 Pyne Street

WHAKATANE

BusinessPlus November 2015

SPA0702

74% OF CUSTOMERS SEARCH FOR YOUR BUSINESS VIA MOBILE

Start being seen online. If you don’t have a mobile friendly website, you’re invisible to customers. Which means they’re likely going elsewhere. Spark Business customers now get mobile-friendly websites free, so they can stop missing out on business. Start being easier to ﬁnd, call us now on 0800 BUSINESS (287 763).

spark.co.nz/business