BusinessPlus - March 2016

ISSUE 134 - MARCH 2016

BUSINESSPLUS NEWS AND COMMENTARY FOR EMA MEMBERS

SAVING MONEY AND WASTE – SURELY THE SMART WAY TO GO READ MORE: PAGE 30

MORE STORIES Page 5, 20: Surviving the Trans Pacific Partnership Page 11:

NZ trumps Aus in game of business

Page 12:

Overcoming talent shortages

Page 13:

Health and safety concert

10 WAYS WE HAVE HELPED YOUR BUSINESS Been deeply involved in making

01. practical changes to the Health & Safety at Work Act

via our regular Member Briefings

Introduced the concept of Employment

03. Readiness Certificates for school leavers

05.

Provided economic and employment

02. updates to more than 6000 people

Promoted the need for a more efficient planning and consent process

Fought to mitigate members having to

07. bear unnecessary costs of earthquake strengthening for buildings in low risk areas

Provided more than 750 training,

09. networking and conference events for

04.

Continued to raise the importance of better transport infrastructure and funding for this

Been instrumental in the passing of

06. legislation protecting migrant labour from exploitation

Answered more than 30,000 queries from

08. members via our AdviceLine service in the past year

Delivered a reduction

10. in ACC levies

our members, which were attended by more than 10,000 people

NZ 0800 300 362 | AU 1800 300 362 www.ema.co.nz

BUSINESSPLUS is published by The Employers and Manufacturers Association (Northern) Inc (EMA) EMA is the major shareholder of national lobby group, BusinessNZ.

“To champion New Zealand business and help our members succeed” ISSUE 134 - MARCH 2016

On the cover...

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

PO Box 13202, Tauranga Central, Tauranga 3141.

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 more, plus referrals to EMA Legal lawyers and your local EMA consultant in employment relations and/or occupational health and safety.

Visit www.ema.co.nz for owner and staff training programmes, conferences and other events, employer guides and templates, manufacturer services, media statements and submissions, export development and more EMA contacts Chief executive: Kim Campbell Membership manager: Roger Carson External Relations manager: Val Hayes Advocacy and Industry Relations manager: Mark Champion Learning manager: David Foley Enterprises and Strategy manager: Mauro Barsi Head of Legal: Charlotte Hatlauf Industrial Relations and Safety manager: Paul Jarvie Finance and Technology manager: Paul Yeo Corporate and Building Services manager: Sheree Alcock ExportNZ manager: Catherine Lye Editor: Mary MacKinven, +64-9-367 0939, mob +21 636 089, email mary.mackinven@ema.co.nz Writer: Gilbert Peterson Designer: Ripeka Mikaere | Printer: MHP | Distributor: Rocket Mail Advertising sales: Colin Gestro, Affinity Ads, mob + 27 256 8014, colin@affinityads.com ISSN No. 1176-4953

SAVING MONEY AND WASTE – SURELY THE SMART WAY TO GO READ MORE: PAGE 30

Photo credit Garry Brandon Photography

CONTENTS

MORE STORIES Page 5, 20: Surviving the Trans Pacific Partnership Page 11:

NZ trumps Aus in game of business

Page 12:

Overcoming talent shortages

Page 13:

Health and safety concert

Commentary/news 5 6 8 9 10 11

EMA’s CEO Kim Campbell on TPP: Signed, and we survived Council budgets to double transport levy for business Explained: PPPs. Sharing the risk to build big projects BusinessNZ CEO Kirk Hope on: The outlook for 2016 Waikato region growth based on collaboration NZ trumps AUS in business: PMI and PSI survey

Employment 12 13 15 16

18

Recruitment: Strategies for overcoming talent shortages in NZ OH&S: It’s your duty: Keep calm and carry on Case law: Employee to pay $110,000 for multiple breaches Employment Chat – Q and A: Employing migrants and paying staff at Easter – get it right See who was there - Motivate 2016

In business 20

Manufacturing: TPP – the facts on who benefits and how 21 Marketing: Where is everyone? Tips to boost traffic to your website 22 Intangible assets: Identify the invisible edge of your business 23 Governance: Good health and safety at board level could save the day 24 Tax: Ye olde annual return is due 25 Moving along: Steps to selling your business

International trade

Enterprises of all types and sizes belong to EMA for a variety of benefits: • The latest information and advice on everything to do with employing staff or managing contractors, and legal representation if employers require - at member rates; • A choice of 100-plus courses and tailored training options, plus specialist seminars and events on topics such as Lean practice and developing markets offshore through EMA’s Export New Zealand division – all providing opportunities to network; • Ensuring your voice is heard by local and central government, since our aim is to improve the environment in which your business operates.

NEWS AND COMMENTARY FOR EMA MEMBERS

Terry Edwards needs more space for his pallet and crate business, The Pallet Warehouse, that mostly uses recycled wood. Full story, p30.

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EMA is yours

BUSINESSPLUS

27

Easy market validation for exporting F&B to Asia Celebrate your business success: enter the export awards!

Calculating what NZ’s reputation is worth

Member profiles 28 29 30

Hi-Tech Metals: Fast, agile and cost competitive - classic Kiwi company turns 10 years old Miranda Smith Homecare: A business good for the soul The Pallet Warehouse: Making pallets cheaper by recycling

31 Summer Briefings Schedule – register now!

+ Inside: TrainingPlus insert detailing March training courses, and more

ONLY +GST

0 5 4 $ E SAV

$300

YOU’LL GET:

• An easy to understand employer guide detailing what the new H&S legislation means for you.

• A checklist, helping you to work through legislation requirements, created by our H&S expert.

• A one day H&S training course of your choice.

These are the biggest H&S legislation changes in 20 years and they affect you as an owner, manager or team member. The EMA is here to help you meet the requirements, with training, policies, advice and much more.

BONUS - GET $200 OFF A TICKET TO THE H&S CONCERT

CALL NOW: 0800 300 362 I STAYSAFE.NZ TERMS & CONDITIONS APPLY. PLEASE SEE WEBSITE FOR DETAILS.

CEO COMMENTARY

By Kim Campbell

TPP signed, and we survived If you cast your mind back to the first week in February, it felt as if New Zealand was being overtaken by aliens.

We were selling out our sovereignty, the rights of our workers were going down the drain and we were going to sign away our last piece of dignity.

Then, with the world’s spotlight on us, the TransPacific Partnership (TPP) Agreement was signed, in Auckland on February 4 – and we all survived, with the above intact.

Of course, this deal is not perfect. But it is one of the most significant trade deals we have entered for some time. While public commentary focussed on many of the negatives of trade deals, we must also remember the positives this one will deliver.

It does give New Zealand access to 800 million consumers and more markets (36 per cent of the world’s gross domestic product) and boosts our trade figures by $28 million. In addition, the long term benefit is trade barriers are being dropped, eg, tariffs are being eliminated on kiwifruit and wine being sold to Japan.

The long term benefits of deals such as this will far outweigh the original intent. I am confident we will look back in 30 years and wonder what all the fuss was about.

As our executive director of ExportNZ,

“Every day, our exporters are concentrating on growing their business, and they know that with a population of 4.5 million people they are not going to grow by only selling within our borders.”

“While public commentary focussed on many of the negatives of trade deals, we must also remember the positives this one will deliver.”

Catherine Beard, points out later in this edition (on page 20), exporters would have been keen to understand more detail during the negotiation phase too.

However, as they are well aware, our negotiators needed confidentiality to secure the best deal for our country.

Every day, our exporters are concentrating on growing their business, and they know that with a population of 4.5 million people they are not going to grow by only selling within our borders.

Many trade deals rolled into one We are the 47th largest economy in the world and currently, 30 per cent of our gross domestic product (GDP) is based in the export sector.

If we want this to grow, and ergo the wealth of our country, then having access to US and Japan (first - and third - largest economies in the world respectively) is a must. The TPP has delivered us this, along with being a free trade agreement with Canada, Mexico and Peru for the first time. In total, there are 12 signatories to this agreement.

The TPP is now open for public consultation and has to progress through the select committee process. You may well ask, why make a submission?

Submissions are about the strength of the collective voice. If there are conflicts,

these need to be exposed and discussed.

It is important you use this opportunity to add your voice to the process.

One way you can familiarise yourself with TPP is via the roadshows the Ministry of Foreign Affairs and Trade (MFAT) is running in the main centres early this month, and in regional centres in following months. These roadshows are great forums to help businesses identify and plan for new export opportunities.

Each session will include an overview followed by workshops on specific areas of TPP. This roadshow will be a great way for businesses to learn more about TPP, along with being able to connect with online tools, wider business groups and government agencies. These networks will help businesses plan for TPP’s entry into force.

TPP is expected to come into force within two years, once the signatories have completed their domestic legislative procedures.

While I fully envisage there will continue to be lively debate around the TPP as it moves forward, I am equally sure we will survive, and as a nation we will come to enjoy the benefits it will deliver.

• Kim Campbell is the CEO of EMA. Email kim.campbell@ema.co.nz

BusinessPlus March 2016

5

COMMENTARY

By Alan McDonald

Council budgets to double transport levy for business One of the constant irritants for our members is the “Business Differential” applied to local authority rates.

Now another group of city councillors has come up with a plan to load more cost onto business, this time through the Transport Levy.

Led by Ross Clow and Cathy Casey, these councillors have cooked up a plan to have business pay a bigger share of the levy, while gifting residential ratepayers the huge sum of $24 per year in savings over the next two years.

Coincidentally it’s election year, so no doubt we’ll hear plenty of talk about lowering rates for residents.

Given that a proportion of those residential ratepayers will also be business owners, it’s another case of taking with the left hand while giving with the right.

The three-year transport levy – begrudgingly accepted by residents and businesses in the first place – is currently $114 for a resident and $183 for a business per year.

A group of councillors is now proposing three alternatives, where some or all businesses will pay more while residents pay (a paltry) $24 less.

Under one proposal all businesses will see their levy rise to $407 per year for the next two years, while residents pay $90.

The other two proposals are dressed up as “some businesses paying more while others pay less” based on their capital value.

The Property Council has analysed these suggestions and they show that some large businesses could see their Transport

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BusinessPlus March 2016

“Some large businesses could see their Transport Levy payment rise to as much as $90,000 to $120,000 per business, while some smaller businesses may see their levy drop.”

Levy payment rise to as much as $90,000 to $120,000 per business, while smaller businesses may see their levy drop.

These two proposals conveniently ignore the fact that those high-value-property owners will, of course, be landlords, and costs will simply be passed onto the smaller business owners.

This “rich” tax breaks the initial three-year contract with businesses on the Transport Levy; it ignores the fact costs will simply be passed on; and it continues Auckland Council’s pattern of finding new ways to squeeze the existing ratepayer base, or specific groups of ratepayers.

Council needs to look at its own spending or find alternative funding through better use of its balance sheet and assets, to fund required projects for Auckland.

Consultation on these proposed levy changes ends on March 24. The EMA will submit against the proposal and we also need individual business members to submit their opposition. The feedback form is available at: shapeauckland.co.nz, or contact me.

Health and Safety at Work Act The EMA Advocacy team partnered with Worksafe New Zealand late last

month and in early March to run a series of Policy Forums for members, featuring key aspects of the new Act and highlighting Worksafe’s approach to the April 4 introduction of the new Act and regulations.

EMA members in Whangarei, Tauranga, Hamilton and Auckland heard from senior Worksafe staff, including CEO Gordon MacDonald.

The key out-takes from the Forums were: • If you are already performing well in this critical area then the new legislation will be pretty much business-as-usual.

• Scaremongering in the market has created unnecessary fears around responsibilities under the new Act, especially for directors, owners and senior managers.

• There is a duty for this governance/ management group to take an active interest in and be aware of responsibilities under the new Act but it doesn’t mean you will be frogmarched to jail if there is a serious accident.

• The introduction of the new legislation is an opportunity to review existing practice to make sure companies (the PCBUs – persons conducting a business or undertaking) are carrying out their duties under the new Act. • Worksafe staff won’t be banging down your door to prosecute – their stated approach is to empower and lead before prosecution. They are currently focusing their attention on identified high risk sectors such as

Auckland port

farming, forestry and heavy industry/ manufacturing.

If you have concerns, Worksafe NZ’s staff are offering their assistance in your region and there will be a plethora of information available on the Worksafe website, www. business.govt.nz/worksafe/ For EMA members with concerns, the first stop should be our Adviceline. You can also contact our Learning team and website pages to find out about our range of training courses on health and safety.

Finally, our two-day conference on April 19-20 in Auckland will provide much expert opinion, knowledge and detail around the new Act. Details of speakers and topics are available on the EMA website www.ema. co.nz and see more on page 13.

Auckland port update The Port Future Study Goup is now working on a shortlist of options for the future of the Port of Auckland.

In mid-February a list of 12 locations, featuring 17 possible sites including the current port site, was made available to the

“A list of 12 locations, featuring 17 possible sites including the current port site, was made available to the public. …Some options will never see the light of day but all were identified to reassure those with an interest in the port’s future that every possible alternative in the region has been considered”

public. These sites were based on the physical characteristics required for a possible port location and included new sites as well as previously identified locations.

Some options will never see the light of day but all were identified to reassure those with an interest in the port’s future that every possible alternative in the region has been considered. For example, one location

would require a 200ha reclamation while another potentially lands on the last remaining piece of tribal coastal land in that region. Neither would ever be likely to gain consents.

There are many potential major and minor issues facing all locations – including the current port – but all are being considered as the Group heads towards a recommendation in June.

Member Briefings EMA’s Advocacy team looks forward to meeting members during the summer round of Member Briefings underway at the moment.

If you or your business is facing an issue created by legislation or business practice, let us know, as we may be able to unlock some of the frustrations you may have in dealing with the problem.

• Alan McDonald is policy director at EMA. Email alan.mcdonald@ema.co.nz

BusinessPlus March 2016

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PPPs explained

By Hamish Glenn

In our first Explained column, we talk about Government and business sharing the cost and running of big infrastructure projects. The model for sharing the funding is called a public-private partnership (PPP or P3).

Sharing the risk to build big projects Public-private partnerships (PPPs) have been called everything from a silver bullet solution for national infrastructure needs, to the worst form of corporate welfare.

The truth is they are a useful tool for providing critical infrastructure and may help meet Auckland and New Zealand’s infrastructure needs.

PPPs can be used for any capital project with a high upfront cost and long operational life such as roads, railways, hospitals, schools, prisons and similar facilities. This is common here and overseas. But few projects under $50 million proceed as PPPs, meaning that the model has a relatively minor role in overall public infrastructure delivery – around 10 per cent.

Defining PPPs PPPs are long-term agreements between the public and private sectors, enabling private partners (business) to design, build, finance and maintain (and potentially operate) public infrastructure. The public always owns the asset, so this is not privatisation.

PPPs differ from traditional government purchasing of infrastructure because those activities are grouped together into one contract lasting three or more decades.

Traditional procurement sees the public sector (a government ministry, agency or council) identify a project such as a bridge, hospital or school. It then contracts and pays a designer, contracts and pays a builder, and contracts and pays parties to maintain or operate the asset, reissuing tenders every few years.

Under traditional procurement, public agencies wait till they have the money before commissioning each phase. No debt

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BusinessPlus March 2016

is attached to the project, although the government may run a deficit financed by public debt in order to invest.

PPPs are privately financed. The group contracted by the public client to design, build and maintain (and perhaps operate) an asset must also provide the cash to build. It is repaid by the Government in fixed, agreed instalments until the debt and principal are paid off. The government agency or council still has to pay for the construction and operation of the asset (as well as the interest), but not up front.

Modern New Zealand PPPs are all DBFM (design-build-finance-maintain) or DBFOM (design-build-finance-operate-maintain).

In other markets BF (build-finance) and DBF (design-build-finance) PPP models are common.

Why are PPPs used?

If the taxpayer still has to pay for an asset, and also has to pay interest on private debt, what’s the point of using PPPs? The answer is: minimising public sector risk.

Building large, complex infrastructure is incredibly risky. Design issues can lead to faulty solutions. Construction issues can cause delays. Maintenance issues can reduce services. On a billion-dollar project even a minor problem can suck tens of millions of dollars from other government programmes, leading to significant public backlash.

Such project blowouts are only part of the problem. The bigger issue is in everyday cost-creep, which occurs with such frequency in government contracts that it is considered normal.

A lack of discipline on the government side is as much to blame for project overruns as

failures on the private side.

PPPs address both of these risks.

How do PPPs insulate the taxpayer against risk?

Blowouts resulting from some combination of design, construction, maintenance and operation are managed by fixing the price at the start of the project.

PPPs shift the focus away from “inputs”, such as the design and materials which make up a road, towards “outcomes” such as the asset providing the service expected. Any interruption to the contracted service directly affects the bottom line of the private consortium, instilling a level of accountability not possible when contract phases are separately let.

Inefficient activities on the public side leading to scope creep and cost revisions, are tackled through an intensive tender evaluation process.

The public gets a chance to say what it wants for the next 30 years, before the project is handed over to the private provider. As a consequence, the asset’s entire lifecycle is rigorously costed and assessed against a public comparator. A decision is then made as to whether the added cost of private finance is worth the benefit gained from insulating the taxpayer against project cost increases.

Traditional procurement reduces opportunities for innovation by isolating different project phases and tendering contracts, principally on price.

PPPs package the entire project lifecycle and require the winner to deliver value above and beyond a public sector comparator. This gives private partners the incentive and flexibility to deliver value.

• Hamish Glenn is policy manager at the New Zealand Council for Infrastructure Development.

Visit www.nzcid.org.nz

BusinessNZ COMMENTARY

By Kirk Hope

Prospects for 2016 Economic prospects in New Zealand look better than in many other places for 2016.

The New Zealand economy has good momentum, while in comparison the global economy is more uncertain.

New Zealand’s growth rate – a bit below 3 per cent – is relatively strong by current international standards, and is forecast to continue.

Our current growth comes from a broad range of sectors including tourism, construction, international education, ICT, high-tech manufacturing, services and a number of primary industries.

Internationally, mergers and acquisitions are increasing, as companies seek to buy growth prospects or move tax headquarters for easier tax regimes, and volatile stock markets are adding to the ambiguity of the world scene.

Global challenges The world is changing fast, and is full of challenges.

A key challenge is debt. After the global financial crisis a number of countries tried to stimulate their economies by increasing money supply, and this along with very low interest rates, brought a big increase in borrowing.

“Whether trading internationally or serving the domestic economy, it is productive, innovative, smart, connected, hard-working New Zealand business operators who will drive our economy and enhance our community in 2016” International factors are helping our prospects in some areas. For example, lower oil prices driving down shipping rates are making our log exports more competitive, and falling international prices for alumina are making aluminium production a bit more profitable.

And despite the poor prospects for dairy – with about 85 per cent of dairy farmers expected to post a loss this season business sentiment is otherwise reasonably positive.

Most risks to economic growth in New Zealand come from offshore.

Many world markets have come to rely on China’s rapid growth, and its recent slowdown has reduced commodity prices and created uncertainty.

Lower oil prices and oil oversupply are creating further doubt in industries such as energy exploration.

The resulting debt-to-GDP ratio in a number of major economies is very high, and there is also estimated to be a high level of non-performing loans in China.

High debt levels are a drain on economic activity and contribute significantly to instability.

Here in New Zealand we avoided quantitative easing and also benefited from conservative bank management during and after the global financial crisis, so our situation is more stable.

While other countries have used their central bank to attempt to prime their economy, New Zealand has taken the alternative road of investing in infrastructure.

Infrastructure investment can help economic growth, give business the confidence to invest and contribute to new jobs.

Our ongoing investment in road, rail and

broadband infrastructure over the next 10 years will provide a good platform for growth in New Zealand.

New Zealand faces global challenges, but global challenges are not new. With our resilient economy and good economic settings, we should be able to cope and thrive.

What are we likely to see in 2016?

We can expect to see the continuation of low inflation, and possibly more cuts in interest rates – a good basis for business investment.

Housing pressures in Auckland may not be amenable to a quick fix, unfortunately.

Expansion of housing supply may require significant change to regulation including the Resource Management Act and Local Government Act. Reforming this key legislation will be important for improving Auckland’s economic performance.

We may see movement on the Trans Pacific Partnership (TPP) Agreement trade deal among 12 countries near the end of the year.

For the deal to proceed it requires ratification by the US, which is only likely to occur in late 2016 in the final stages of the Obama Presidency. If this happens New Zealand will begin to get greater access to large markets and more profitability from reduced tariffs – great benefits for a trading nation.

A key element making a difference in 2016 will continue to be the performance of New Zealand businesses.

Whether trading internationally or serving the domestic economy, it is productive, innovative, smart, connected, hard-working New Zealand business operators who will drive our economy and enhance our community in 2016.

• Kirk Hope is chief executive of BusinessNZ. Visit www.businessnz.org.nz

BusinessPlus March 2016

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COMMENTARY

By Gilbert Peterson

Waikato region growth based on collaboration People fixated on succeeding in business in Auckland may be missing a trick on what’s happening in the wider neighbourhood.

The development and opportunities well underway for the Waikato region, and indeed the upper North Island in general, may surprise.

A lot’s happening. The Waikato is rife with agreement and goodwill between business, iwi and local councils on the future for the region. The parties have agreed on the strategy and begun to implement plans.

The Waikato population of 440,000 is spread from the Bombay Hills and Port Waikato in the north down to the Kaimai Ranges and Mt Ruapehu in the south, and from Mokau on the west coast of New Zealand across to the Coromandel Peninsula in the east.

The region’s one city is Hamilton and of its 10 districts, three lie across the regional boundary.

The Waikato Regional Council’s chief executive, Vaughan Payne, describes how the region’s economic development activity comes under two main strands: “Waikato Means Business” (WMB), the region’s economic development strategy (www.waikatoregion.govt.nz/economy) led by a steering group made up of business people, the local councils and iwi; and the

Council’s Regional Development Fund.

It is intended that the Fund of about $800,000 per annum, set up in July, will be built up over time. It’s designed to leverage other funding, actively support intergenerational projects of scale, and for the council to be able to work alongside and in partnership with potential big regional development projects.

The WMB strategy lists five priorities: 1.

2.

3.

4.

5.

Building on our location advantage Growing global industries Making business easier Building, attracting and retaining skills and talents Telling the Waikato story

Vaughan says, “From a business point of view we have the land and we have set out the priorities for development of the region. Waikato is in a fantastic position.

“The Waikato is an incredibly good place to locate a business and to work, live and play.

It’s so central to everything, and extremely well connected.”

Collaboration critical to success The WMB strategy and action plan processes have always been collaborative

Vaughan Payne, CEO of the Waikato Regional Council

and very clear about the benefits expected to flow from them.

The partnership model gives it great strength, adds Harvey Brookes, WMB project manager. From the outset it’s been remarkable for its clarity and buy-in by business, iwi and local government, he says.

Vaughan says, “An example of the issues we’re looking at is how we get the best use from fresh water. We need to take a 30-50year view of this, and the tools we have at present are not up to the task.

“Collaborative work is very important by allowing us to think regionally about economic and environmental outcomes in an integrated way.”

Another example of a collaborative approach is the Upper North Island Strategic Alliance (UNISA), made up of the regional and metropolitan councils of the area. UNISA supports economic development by looking at transport networks, freight movement, the availability of industrial land and changes to population and industry sectors.

Citing the example of the ports of Tauranga and Auckland, Vaughan points out, “Their decisions have knock-on impacts in the Waikato, and on how economic activity occurs as a result, and where.”

As Auckland spills over heading south on the new Waikato Expressway - the number one transport priority for the region Vaughan says, “It makes no sense to take an isolationist approach.”

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BusinessPlus March 2016

COMMENTARY

NZ trumps AUS in business: PMI and PSI surveys New Zealand businesses’ level of activity in the manufacturing and service sectors trumps Australia’s in an ongoing trend, according to the monthly surveys conducted by BusinessNZ. While we sometimes concede to Australia’s sporting prowess, the economic rivalry shows New Zealand has been on top for some time, according to the Performance of Manufacturing Index (PMI) survey and Performance of Services Index (PSI) survey. The graph shows New Zealand (black line) outperforming Australia (green line) in the PMI for the past five years.

(Aug 2002 to Dec 2015)

Read more about the PMI and PSI at www.businessnz.org.nz

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BusinessPlus March 2016

11

EMPLOYMENT

By Nicola Pohlen

“… the concept of talent shortages makes leaders very uncomfortable and is identified as a risk factor impacting business negatively …”

Strategies for overcoming talent shortages in NZ Globally conversations acknowledge it is the workforce that has greatest impact on company productivity and financial success, rather than hard assets and operating systems as previously believed.

It follows that the concept of talent shortages makes leaders very uncomfortable and is identified as a risk factor impacting business negatively through: • reducing productivity, • increasing labour costs, • limiting growth potential, and • hindering the ability to service clients.

From a national perspective, a wellfunctioning labour market is one of the factors facilitating economic growth, so employment market trends are important.

Statistics NZ’s recent publication of unemployment data (the New Zealand’s household labour force survey) noted a fall to a near six-year low of 5.3 per cent in the December quarter, below economists’ expectations.

This can be an indicator of talent shortages too.

Talent shortages exist at any level in any function where employers complain they can’t find people with desired skills and experience, and for exactly the remuneration they’d like to pay.

A key question: is a company’s perceived talent shortage real, or a set of circumstances in which the unrealistic expectations of a hiring manager lead to waiting for the perfect candidate to show up?

If the latter position is real, a shift in hiring attitude - to accurately reflect your company’s alignment of needs and resource will overcome the perceived talent shortage, allowing you to find keen job-seekers in the market.

Acknowledged talent shortages exist in

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BusinessPlus March 2016

some locations, in specific functional areas, in particular experience levels and for certain employee attributes. In each situation the scarcity creates greater competition among employers, requiring them to stand out to candidates. These employers need to formulate talent strategies tailored to needs and to focus on employee engagement and retention.

21st century employment market predictions Recognising the changing nature of workforce requirements may involve taking a fresh look at internal and external factors, to ensure your prospective employees’ expectations are aligned with your talent sourcing strategies.

Following are some predictions worth considering: • globalisation will continue to intensify along with the mobility of candidates; • workers will be able to market their services in cross-border labour markets; • new technologies will drive demand in skill requirements; and • the nature of work itself will evolve.

Actions to increase the talent pool available to you Use short and long term strategies There is value in combining your marketing and human resource expertise to jointly define a suitable process for promoting the role you are filling, and to define your proposition as an employer, to gain the best outcome.

For immediate talent-search campaigns, ensure your compelling story is targeted to the right audience through proactive advertising or a search approach.

As a longer term strategy, developing talent pipelines is cost effective and efficient in managing your organisational capability as well as for succession planning, as job candidates unsuccessful in one process may suit future opportunities.

Source channels widely Suitable candidates may be found: • currently working in New Zealand, or • offshore, thinking of returning for their dream role at home in New Zealand, or • offshore and keen to live here, but not yet having New Zealand experience, or • known to your networks, in partnering businesses or tertiary institutions, or • working elsewhere within your organisation!

In any case, keep a passive eye on opportunities, or be active in the recruitment market.

Challenge current thinking Disruption is a key concept in presentday conversations and in the context of recruitment may offer new options such as: • Offer flexible work practices such as in employees’ hours, job sharing or location; • Hire transferrable skills from another industry sector; • Define generic capabilities and map to potential role sources; and • Explore new sourcing methods.

Engage candidates at the recruitment phase Provide candidates with a structured, communicative evaluation process to encourage their feeling engaged and to elevate the company brand.

Investing time throughout the attraction and assessment periods will increase the chances of the most suitable candidate accepting an offer at the final stage.

In short, smart businesses create their own markets, and are proactive and flexible in their approach to sourcing talent.

They tailor their approaches to suit particular roles, locations and candidate expectations.

They consult with others to understand market dynamics, challenge their own thinking to try new things while combining short and long term strategies to ensure a sustainable organisation.

• Nicola Pohlen is principal at Pohlen Partners human resource and recruitment specialists. Visit www.pohlenpartners.co.nz

EMPLOYMENT

By Craig Garner

It’s your duty: Keep calm and carry on Anyone who has children has a grasp of the health and safety management process.

We understand because we would do anything and everything to keep our kids safe from harm.

of the workforce harmed enough to make a claim to ACC in one year. One-quarter of agriculture and fishery workers made a work-related claim in 2014.

In doing so, we apply past experience, common sense, appropriate channels of communication and authority to ensure, as much as possible, risk is eliminated.

When we think of OH&S we often refer to keeping safe, yet it’s also the health of our workforce that is letting us down.

In our homes we constantly review our strategies. We ensure that all stakeholders (mum, dad and the kids) are well briefed on changes in policy and that every potential issue - from the bike, the route to school to the latest boyfriend - are reviewed for possible hazards, then risk-assessed in microscopic detail.

As employers, occupational health and safety (OH&S) in theory should be no different from the way we care for our family members. The question we must ask ourselves as the business influencer is: do we care enough about the people in our business to make it a real priority?

There are plenty of reasons why OH&S can take a back seat in the workplace: it’s not mission critical; we don’t have time; it may cost money; we’ve never done anything about it before and we’re still here; it will just open a can of worms; we are a low-risk business; what we don’t know won’t hurt us … The potential for procrastination is endless.

There is no argument that nationally we have performed poorly in the safety ranks.

Our workplace death rate consistently keeps us in the lowest of the OECD rankings.

The ACC 2014 injury data reports that there were 111 claims for every 1000 full-time equivalent employees. That’s 11 per cent

Remember the H in OH&S

Work-related disease leads to an estimated 516–804 deaths and 17,000–20,000 new cases a year – with asthma, work-related cancer and musculoskeletal disorders featuring as big contributors.

As recently as last month, an Upper Huttbased company was fined $26,812.50 and ordered to pay $7,500 in reparations for failing to properly identify and manage asbestos at a demolition site. The building being demolished, which had asbestoscontaining material, was adjacent to a preschool.

As parents we again, in the work environment, switch into risk management mode with priority consideration for our children, and become enraged at the audacity of those responsible for putting

“There are plenty of reasons why OH&S can take a back seat in the workplace: it’s not mission critical; we don’t have time; it may cost money; we’ve never done anything about it before and we’re still here… The potential for procrastination is endless.”

people we care for in harm’s way.

A fundamental change in the new OH&S legislation, the Health and Safety at Work Act, is the introduction of the “Due Diligence” duty. While the primary duty of care for health and safety still remains with the business (the “PCBU”), the emphasis is on the individuals in governance and senior management (“Officers”) to be legally accountable for ensuring their business is safe for their “worker” and “others”.

We are only weeks away from the introduction of the Health and Safety at Work Act and associated regulations on April 4, and though this does not mean we have to forget everything we’ve done before, we should be reviewing our OH&S systems, practices and policies to ensure they are fit for purpose moving forward.

Scaremongering, misinformation and opportunistic snake-oil salesmen aside, the essence of a good, and compliant OH&S workplace management system is its people. Everyone involved in the workplace should have a say in what constitutes a safe environment and how they, as workers, can ensure their own safety and the safety of those they work and interact with.

The essential component for ensuring a common approach - a culture of safety - is education and training.

Helping business comply The EMA has a long history in effective training, ranging from Health and Safety Representative up-skilling through to our National Certificates and Diploma in OH&S Management, which are increasingly in demand.

In the past year our workshops have been updated with emphasis on the imminent legislative changes. For 2016 we have increased our range of workshops on practical topics like “Migrating from a Hazard to a Risk Register” and “Developing Effective Safety Reporting and KPIs”.

We have training to suit everyone from the “Officer” to “Worker” (referring to terms in

BusinessPlus March 2016

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the new legislation), whether they choose a self-paced, online programme, or a webinar or workshop or conference. The choice, and duty, is yours.

20th Annual Occupational Health and Safety CONCERT The Occupational Health and Safety Concert on April 19 -20 is the 20th annual conference hosted by the EMA. We call this a concert to bring to your attention its being no ordinary OH&S event. You will be inspired, well informed and seriously entertained.

You will hear from the regulator WorkSafe NZ, from Australian and New Zealand legal experts and industry representatives.

You will gain insight from real world case studies by those who understand what it means to operate a business in a high-risk environment.

You will be entertained by the iconic comedian Mike King as MC, the wit and satire of Te Radar, musicians and a stuntman, ensuring this is an occasion you can enjoy and value.

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Comedian and TV personality Te Radar will entertain at the 20th Annual Occupational Health and Safety CONCERT

Comedian and TV personality Mike King is MC

after the introduction of New Zealand’s most significant OH&S law reform in decades, the Health and Safety at Work Act. If you are a business leader, manager, supervisor, HR, ER or OH&S professional, this event is for you. Gain even greater impact by bringing members of your team who are involved with, or have influence over, the health and safety strategy and implementation in your workplace.

At the end you will be able to apply this relevant knowledge directly to your own business, building on our theme, “The changing scene - what does good look like?”

We know you will leave inspired and better prepared for what’s ahead for you and your business, whether you are attending as part of your due diligence duty, to qualify in what is recognised up-skilling, or to network with some of New Zealand’s top business and OH&S professionals.

This year’s two-day programme is our most important yet, given it will be just days

Book places for your team now, as seats are limited. Visit www.ema.co.nz

BusinessPlus March 2016

WorkSafe NZ chief executive Gordon MacDonald will be presenting

Win a prize!

When you register to attend the Concert, you have the opportunity to enter a competition for the most creative or inventive example of a “hazard identification”.

Simply identify an object or situation that might create a hazard – it doesn’t have to be serious or factual, eg, it could be “a hole in the side of the space station” – and you enter the draw to win iPads and other great prizes. The competition is accessed via a cloud-based “hazard identification portal” supplied by Ecoportal (The Dashboard will feature in their presentation and throughout the event).

• Craig Garner is EMA’s Learning portfolio manager focussed on occupational health and safety. Email craig.garner@ema.co.nz

EMPLOYMENT

By Michael Witt

Employee to pay $110,000 for multiple breaches Employees can face severe financial repercussions when misappropriating their employer’s intellectual property and breaching obligations of good faith, loyalty and fidelity, confidentiality and nonsolicitation of customers.

All these breaches resulted in a ‘bill’ of $110,058 for a Mr Hill to pay his former employer, in a recent case before the Employment Relations Authority.

Mr Hill worked for 15 months at Tex Onsite, a company that provides high voltage testing and calibration services to the electricity industry throughout New Zealand.

His position as market manager was a customer service/marketing role, which involved close contact with Tex Onsite’s existing and potential customer base.

Mr Hill had access to the company’s customer database, testing practices and procedures, pricing and other financial information.

The employment agreement contained clauses in relation to the company’s intellectual property and the handling of confidential information during the employment relationship and after its termination. It also contained a clause that prohibited Mr Hill from either personally, or as an employee, consultant or agent for any other entity or employer, seeking to solicit or carrying out any work of the same nature for any client or customer of Tex Onsite with which Mr Hill had any contact or dealings whilst employed by Tex Onsite – for six months after he left the company.

Mr Hill resigned in October 2014 and shortly after, Tex Onsite became suspicious that he may have misappropriated the company’s

intellectual property and confidential information, during and after his employment. The suspicion grew stronger when out of the blue a long-standing customer left Tex Onsite to enter into a relationship with a newly established direct competitor, Mobile Test’n’Cal NZ, of which Mr Hill was a director and shareholder.

Tex Onsite enquired as to the circumstances of the loss of that customer.

The company also undertook a digital forensic inspection of Mr Hill’s former work laptop, which suggested that Mr Hill had deleted a large number of emails from his work account before leaving Tex Onsite and that he had copied confidential and commercially sensitive information about Tex Onsite onto a personal USB hard drive.

Tex Onsite subsequently commenced proceedings in the Authority, seeking penalties and damages for breaches of express and implied obligations under the employment agreement, and for financial loss caused by Mr Hill’s actions.

The Authority’s investigation established that Mr Hill had been assisting a competitor company in the process of setting up a business and trying to solicit customers to that competitor firm whilst employed by Tex Onsite.

It also established that Mr Hill had copied confidential and commercially sensitive information about Tex Onsite onto a personal hard drive that he deleted when he was ordered by the Authority to produce the hard drive for the investigation.

Further, the Authority found that Mr Hill actively solicited one of Tex Onsite’s key customers to his new business and thereby

breached the non-solicitation arrangement.

The Authority established that Tex Onsite could have reasonably expected for that customer to stay in business with Tex Onsite for at least another three years. As a result, Tex Onsite suffered a substantial loss of predictable profits.

Investigation obstructed The Authority was highly critical of Mr Hill’s actions towards Tex Onsite and his obstruction of the investigation.

It was satisfied Tex Onsite’s claims for damages and penalties were substantiated, and it awarded Tex Onsite general and special damages totalling $92,058, comprising $70,736 for loss of profit, $2,572 for forensic costs, $8,750 for loss of management time and disruption to the business as a result of Mr Hill’s breaches, and $10,000 damages consequential to Mr Hill’s breaches of his obligations under the employment agreement.

The Authority also awarded penalties against Mr Hill totalling $18,000, comprising $10,000 for his obstructing the Authority’s investigation and $8,000 for his breaching express and implied obligations under his employment agreement. It ordered him to pay the penalties to Tex Onsite rather than to the Crown.

In total, Mr Hill ‘bill’ was $110,058.

This case illustrates that certain employee obligations continue to exist even after the termination of an employment relationship, and that employees can be held to account when breaching such obligations.

The case also demonstrates the importance of clauses in employment agreements that deal with issues such as confidentiality, non-solicitation of customers or, where appropriate, restraint of trade. We can assist members to draft legally compliant clauses in this respect, and to enforce such arrangements.

• Michael Witt is a senior solicitor at EMA. Email Michael.witt@ema.co.nz

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Employment CHAT

Employing migrants and paying Q. I can’t find someone with the skills I need.

How much trouble is it to employ someone from, say, England? – Susie

Dear Susie Possibly quite a bit of trouble…The prospective employee needs to have the correct visa or New Zealand citizenship to legally work in New Zealand.

For a non-New Zealander to be entitled to work here they must have at least one of the following: 1. A New Zealand Permanent Residence Visa that enables a person to travel to New Zealand at any time, to stay in New Zealand indefinitely, and to work and/or study in New Zealand.

4. An Interim Visa granted by (but not applied for) the Minister of Immigration or an immigration officer for the purpose of maintaining the lawful status in New Zealand of an applicant while an application is being considered, for a person who holds a temporary visa and has applied for a further visa.

EMA Advice can help you to keep up-to-date with the legislative environment in which you employ employees and engage contractors, and assist you to draft policies and contracts that ensure you are on the right side of the law. Call our AdviceLine team (see details below) for a referral to our business partner, Malcolm Pacific, who are immigration specialists.

“Do you like being Mr Unpopular? Or better still, facing a court judge?!

Employees should be paid on the day and at the intervals that have been agreed with the employer, and as specified in their Employment Agreement.”

Also read our members’ guide, A-Z of Employing – Immigration, which you can find on our website. It points out: • The Immigration Service also oversees the Work to Residence and Essential Skills work policies.

2. A New Zealand Residence Visa, with which the holder is entitled to travel to New Zealand and apply for entry permission. If entry permission is granted the holder is entitled to stay in New Zealand indefinitely and work and/or study in accordance with the conditions of the visa.

Employing people from overseas can enrich your organisation in a multitude of ways.

Understanding your obligations and the obligations of others can make the process of employing that much easier and safer.

3. A Temporary Entry Class Visa with which the holder may work and/or study in New Zealand only if the conditions of the visa allow, and only consistently with these conditions. The conditions of the visa may include the type of employment, the employer’s name and the location in New

The Government’s immigration policy changes often in response to international events and domestic labour market demands domestically, so it is always wise to keep abreast of the those policy changes. The New Zealand Immigration Service offers a range of products and services to assist

ADVICE AND SUPPORT WHEN YOU NEED IT. Free call NZ 0800 300 362 AU 1800 300 362 Visit www.ema.co.nz

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you in understanding what you can and cannot do in respect of employing non-New Zealanders.

Zealand where the person is permitted to work.

BusinessPlus March 2016

• If you are an employer who needs to recruit a person from overseas because you are unable to employ a suitable New Zealander, you must provide evidence that there is no New Zealand citizen or resident available that is: - Suitably qualified by training and experience to do the job offered, or - Readily able to be trained to do the job.

• Employers should require proof of eligibility to work, from prospective employees, such

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

staff at Easter – get it right as a passport, birth certificate or visa.

• A best practice guide for helping employers check work entitlements, and an online employer enquiry system is available at www.immigration.govt.nz/visaview The online Visaview system will check against the Immigration database and in most cases provide you, the employer, with a yes or no answer, plus the expiry date of the visa and any specific work conditions that may apply. Visaview will also maintain a history of enquiries made by an employer.

Interviewing someone overseas could be difficult. There is video Skype of course, and you could ask a New Zealand recruitment agency to handle it all for you.

Employees should be paid on the day and at the intervals that have been agreed with the employer, and as specified in their Employment Agreement.

Employers cannot change the normal pay day without the agreement of the employee.

Yes Easter Friday is March 25, a statutory holiday for those who normally work that date, as is Monday March 28. Easter Sunday is one of those days for people who work that date too.

Separate from employment law is trading law that says only certain businesses can open those days.

It depends on the role and your circumstances how much you help the person immigrate and settle here. You are under no obligation of course, to pay for their air fares or housing or anything. But these benefits can be great attractions…

See EMA’s e-report newsletter for members (February 17 issue) that links you to a two-page pdf explaining the holiday pay entitlements.

Q. Easter comes up this month and we have such a complexity of pay requirements for staff and contractors. Can we pay them late, to give us time to work it all out? - Brad

• By the EMA communications team in consultation with EMA Advice, and loosely based on real calls to EMA’s AdviceLine. All names are fictional.

Dear Brad

The information in this article is a guide only and not to be used as business advice without further consultation.

Do you like being Mr Unpopular? Or better still, facing a court judge?!

And ring AdviceLine to talk it through.

EMA members can start with our free AdviceLine team at phone 09-367 0909 or 0800 300 362 (within New Zealand), 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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SEEN @

Motivate 2016

conference, Auckland

Left to right: Karen Joe [EMA] and Petr Fedorov [SMP Solutions]

Left to right : Vanessa Green [EMA] and Claire Day [Culturewise – speaker] Left to right : Lisa Breckon and Angharad Sturrock [Rendezvous Hotels NZ]

Left to right: Jenny Smith [Cushman & Wakefield], Myriam Heynen and Deborah Carruthers [EMA] Left to right : Abhi Singh [SMP Solutions], Debbi Norman [Northland Regional Council] and Darren Hasset [SMP Solutions]

Left to right: Melanie Blake and Gemma Burt [Online Republic]

Left to right : Bruce Cotterill [company director – speaker] and Kelly Walden [EMA]

Left to right : Kavitha Sadasivam [Broadcast M.A.P], Dot McBride [Online Republic]

Left to right: Rohan Marx and Phil Wright [Online Republic]

Left to right : Caroline Newton [Aqualine Products] and Vincent Tam [Broadcast M.A.P]

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BusinessPlus March 2016

Left to right: Yoshimi Brett [TetraMap® International – speaker] , Kavitha Sadasivam [Broadcast M.A.P] and Jon Brett [TetraMap® International]

Find the middle ground.

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IN BUSINESS

By Catherine Beard

TPP – the facts on who benefits and how In the lead-up to the signing of the Trans Pacific Partnership (TPP) Agreement and Waitangi celebrations last month, much was made of Maori opposing the TPP due to a lack of consultation and a perceived loss of sovereignty, for New Zealand in general and Maori in particular.

in 2014. It is estimated that there will be duty savings of approximately $10 million when the Agreement is fully implemented. For other agricultural goods, New Zealand exported $1.6bn to the TPP region in 2014. The estimated duty savings for this sector will be $18m per year.

Exporting manufacturers would also have liked more transparency and consultation, but we (ExportNZ and ManufacturingNZ) understood the need for some confidentiality amongst negotiators in order for them to get the best deal they could for New Zealand.

Maori business

No country that is party to a multilateral trade deal ever gets 100 per cent of what it wants, but New Zealand tends to do well because our biggest exports (dairy, meat, fishing, forestry and horticulture) also tend to face the largest tariffs – which get reduced in trade deals.

New Zealand exported NZ$7 billion in manufactured goods to the TPP region

When Maori multi-nationals get to the size where they are investing overseas (and some already are) they will benefit from Investor-State Dispute Settlement (ISDS) protection in the TPP – a feature that is being criticised. This means a foreign government must treat Maori enterprises fairly and not discriminate against them or appropriate their assets.

The reason Maori will do so well out of the TPP is because they are large owners of our biggest export assets. The Maori ownership of agriculture, forestry and fishing in 2013 was over $10bn, close to a 30 per cent share. They have 40 per cent of the fishing quota, 10 per cent of kiwifruit, 30 per cent of lamb production, 36 per cent of forestry, 10 per cent of dairy production, and the list goes on.

Larger entities are able to execute better in overseas markets because they will have deeper pockets. But in order for this to happen, all our exporters need a level playing field to compete.

They will be our globally competitive multi-nationals investing here and overseas. We would otherwise struggle to build these, being a small economy a long way from markets.

• Catherine Beard is executive director of ExportNZ and ManufacturingNZ, divisions of BusinessNZ, of which EMA is the main shareholder. Email cbeard@businessnz.org.nz

And people should remember that trade is not just about exchanging goods but also ideas, services and people skills.

Maori are important players in all those areas.

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BusinessPlus March 2016

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IN BUSINESS

By Rosina Webb

Where is everyone?

- Tips to boost traffic to your website Building a website or upgrading your current one can be costly, so it’s important to ensure people visit it! But how can you build traffic to your site?

A good starting point is Search Engine Optimisation (SEO), which describes the way websites ‘speak’ to search engines.

Search engines use complex algorithms to determine which website pages do the following: • Appear in their index, and • Are the most highly ranked in the search results page (ie, closest to the top of the search results’ first page), and • Appear most frequently in the search results list.

SEO adds credibility to your website, increases your brand awareness and encourages high quality visitors to your site, ie, visitors who won’t just ‘bounce’ straight off your site.

Let’s get technical and consider how this works.

Two main aspects to high quality search engine optimisation are: • On-Page Optimisation: ways to optimise your website within the boundaries of your site; • Off-Page Optimisation: activities that tend to be undertaken ‘off’ the website pages, eg, via links, Facebook and video clips.

Improvements you can make include: Research keywords and optimise your website content Think like your target audience, and identify the types of key words they would likely input into the search engine to find your product/ service. Once you have identified the main ‘niche keyword’, brainstorm to expand upon various alternative keywords that are similar.

These key words need to be included throughout your website content and tags.

The more accurate and relevant to your website these keywords are, the more quality traffic will be driven to your site.

Meta tags Meta tags are one piece of the information loaded in the back end of a site that search engines look for when they are processing and deciding which search results will be most relevant to the search criteria/key words that the user has typed in. They help tell the search engine (and your target audience) what your site is about.

There are 2 types of meta data that you can adjust from the back end of your site: meta title tag (pointed out by the first arrow below) and description meta tag (pointed out by the second arrow below).

• Optimise your meta title tag A title tag is compulsory and should include

the main key word associated with a website page. It is what the search engines use as the ‘search results title’ for that page. Ensure your meta tag title is: • Unique for every page on the website, • A relevant title description of the information on the page that it relates to, • Begun with the main keyword, with less important keywords following it, • A location identifier to provide more specificity to your business location, eg, city or country.

• Optimise your description meta tag This tag tells the search engine what your page or site is all about, much like an advertisement for your site. It should include the main keyword upfront, with other keywords following, and be an accurate, informative description telling users what is on your site.

If the search engine assesses your description tag as badly composed or inaccurate, it may be ‘demoted’ by the search engines.

Likewise if the description you have is not an accurate reflection of the information on your site, a user will ‘bounce off’ your site and become frustrated that they have wasted their time looking at irrelevant information.

A simple improvement you can make yourself is providing a ‘call to action’ such as a phone number to encourage people to call you.

Talk to your website provider for more information on how to ensure you are optimising your meta tags.

• Rosina Webb is founder and managing director of Energise & Associates specialising in marketing and sales performance. Visit www.energise.net.nz

I’ll talk about On-Page Optimisation now, and Off-page Optimisation in the next issue (April 2016).

On-Page Optimisation refers to the back-end settings that you can apply to your website pages so they are optimised for search engine analysis and ranking.

BusinessPlus March 2016

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IN BUSINESS

By Paul Adams

“For many companies, the initial barrier to identifying intangible assets begins with the understanding that they actually have some at all.”

Identify the invisible edge of your business: intangible assets The rise in the value and importance of intangible assets is one of the biggest changes seen in business over the past 40 years.

Intangible assets (sometimes known by the narrower term intellectual property) not only include the “hard rights” such as patents and trademarks but also “soft rights” such as confidential information, data, content, software code, copyright, trademarks, manufacturing know-how, etc – all the IP rights.

Financial markets recognise intangible assets account for more than 80 per cent of corporate value. The impact is also felt in medium and small enterprises, where their owners and senior managers increasingly recognise business value is not in tangible assets (plant and equipment) but in intangibles such as customer insights, production expertise and brand.

Often, however, the value of intangible assets is not recognized until it is too late, eg, a manager discovers a contractor, and not his company, owns a core innovation (intangible asset) or that the company’s latest breakthrough technology actually broke through 10 years ago and the company is infringing someone else’s patent.

Managing your intangible assets begins with understanding what you have now and what you do with the new stuff you are creating. Take steps as early as possible to identify your business’ intangible assets and the role they perform. While you can’t see or touch these assets they are important determinants of competitive advantage and commercial success.

For many companies, the initial barrier is understanding they have any at all.

Ironically, the most common statement we hear when engaging with clients is, “We don’t have any”. This is extremely

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BusinessPlus March 2016

unlikely and fortunately there is an easy test: try running your business for a week without using your brand, your database, your customer or supplier list, any of your content, your know-how or confidential information. It will quickly become apparent that most of the value is in intangible assets.

We invariably uncover significant value in clients’ soft intangible assets such as data, business process, supplier relationships, pricing models, trade secrets and knowhow by the bucket load. This is a revelation for most clients, who view this stuff as “business as usual”.

Sort your business value into categories

Some intangibles are easily identified and have a separate identity and existence independent of the business as a whole.

Examples are patents, copyrights and trademarks.

On the other hand, soft rights, such as manufacturing or service know-how and trade secrets, are more difficult to separate from the business.

The identification of intangible assets can be daunting. However, you can start by sorting your business value into the following broad categories: 1. Marketing-related a. Trade names b. Brand names c. Trademarks d. Service marks 2. Customer-related a. Customer databases b. Supplier databases c. Order or production backlog d. Non-contractual customer relationships 3. Technology-related a. Patented and unpatented proprietary

technology b. Computer software c. Manufacturing information d. Trade secrets such as proprietary formulas, processes, recipes e. Data 4. Contract-related a. Licensing and royalty agreements b. Supply contracts d. Construction permits e. Franchise agreements f. Broadcast rights g. Servicing contracts h. Employment contracts i. Use rights such as water, air, and route authorities 5. Content-related a. Plays, operas, ballets b. Books, magazines, newspapers, other literary works c. Musical works such as song lyrics, advertising jingles d. Pictures, photographs and other content e. Video and audio-visual material f. Television programmes For more and more companies, intangible assets are their most valuable property and their theft or loss poses a growing risk.

The irony is that most companies have a fixed asset register listing cars, desks and monitors. But few have any record, let alone active management, of potentially high-value intangible assets such as trade secrets, copyright, trademarks or inventions.

Identifying these assets is the first step in managing and extracting value from them.

• Next article (May2016 issue): managing these assets to unlock growth and drive new revenue, margin and collaboration opportunities.

• Paul Adams is CEO of EverEdge, global intangible asset specialists.

Visit www.everedgeip.com

IN BUSINESS

By Dave Jaques

Good health and safety at board level could save the day The Health and Safety at Work Act comes into effect on April 4, so organisations that practise good governance will be preparing for that event.

Remembering that governance is the ‘steering of the ship’, not any of the ‘doing’, a good governance approach to the issue of health and safety is to check what the organisation has in place, to identify the needs/risks, and plan to address those.

It is the job of the board of governors or advisers that sits above all the detail, to take a fresh overview and check all the proper processes are in place.

The management (team) will gather all the information required and implement any actions the board deems necessary.

Is your oil ready to explode?

Let’s look at a case study. A mobile fast food outlet was operating an open-top cooker with hot oil, at multiple outlets.

When rain started, even little spits of water were enough to ignite the oil into an instant fire. The company had written Personal Employment Agreements with staff, but no other policy or procedures.

From a governance perspective, we on the board are required to ‘spot the hazards’ then ‘do something about them’. It does not require us to anticipate that which is not reasonably foreseeable (which is the start of a legal test). In plain English this means there is no liability when an incident occurs from a set of circumstances coming together that no-one would reasonably have expected ever would.

But the hot oil hazard was obvious: the open top created a serious burn risk to anyone reaching over, plus a splash risk and

the flash fire risk. When these were pointed out to the owners they understood them, but it had never occurred to them to write it down, let alone communicate this to their staff.

Once you’ve got your list of risks and prevention, how do you communicate it?

All too often people put the list on the wall with a big sign saying, “Don’t Do These Things”. The induction process is one opportunity to educate staff about your trading principles and show them you care about their safety, also building the team.

When this concept was put to the fast food operator they instantly saw it as an opportunity for growth.

“Good governance at the board means showing a strong awareness of what is going on in your business, and that you have a clear and meaningful best practice approach to working safely.”

They created an “Induction” sheet that spelt out the company cared for the staff’s safety, how the company regarded customers, cellphone usage and uniform, and generally the company’s trading practices, for those new to the enterprise.

Added to this was a list of known hazards, and some plain English talk about how the hazards might occur and be avoided. Staff were trained to use fire extinguishers and fire blankets, and told to cease trade if the weather turned bad.

Safety should be ingrained in daily practice

and not just written on a piece of paper that’s never looked at again.

Governance at the board I attended the EMA Occupational Health and Safety course and if you are a director or involved in running a company, you should as well. Ignorance is no defence of the law.

If board members don’t actively ask the question, “What risks are there?”, and ensure they measure their trading environment (primarily, near misses), they will seriously risk vicarious director liability.

Since the law is not in yet, it has not been tested, but I hope that in any initial investigations the parties push back hard to ensure more common sense returns to this area. Last week I still saw one business site close all the gates to its yard just so one empty shipping container could be moved by a hoist. Surely this exercise only needed one spotter?

Good governance at the board means showing a strong awareness of what is going on in your business, and that you have a clear and meaningful best practice approach to working safely. Old Man Murphy dictates accidents can always happen, but under the new legislation one would hope that where appropriate care has been taken, and an incident occurs, the company or directors won’t be liable.

I was pleased with the outcome of a recent investigation by WorkSafe NZ of a fatal rollover of a Waikato fertiliser sprayer. While of course we feel deeply for the widow, despite the very serious and unfortunate disaster no prosecution was brought.

WorkSafe found all proper procedures and training were in place.

So I hope the new legislation will protect directors who have taken safety seriously in the businesses they govern.

• Dave Jaques LLB NZIM is managing director of Good Governance Ltd. Visit www.goodgovernance.co.nz

BusinessPlus March 2016

23

IN BUSINESS

By Joanna Doolan and Claire Dilks

Ye olde annual return is due If you haven’t filed your 2015 tax returns, get it done now, even if you’re on an agency list: 31 March is the last date.

Filing after this date makes you likely to incur late filing penalties, as follows:

If your net income is...

then the ‘late’ penalty is ...

less than $100,000

$50

$100,000 to $1 million

$250

more than $1 million

$500

In filing late you will also lose a year of statute barring, where the IRD’s ability to reassess your return is limited to four years from the end of the year you file your return - except in the case of evasion or failing to return income from a particular source.

There is also some housekeeping you need to do before 31 March, for the 2016 tax year.

This includes: • To get a deduction for bad debts, the debts must be physically written off in your books before the end of the year.

• Entertainment expenses within New Zealand are only 50 per cent deductible for tax. An adjustment is also required in your next GST return to ensure that 50 per cent is treated as a supply.

• Provisions are not tax deductible unless you have evidence to show they are incurred in the particular tax year.

A deduction is not likely to be allowed for an estimate or a prepayment.

• Tax losses can be carried forward only if the shareholder continuity test is met. This requires you to have at least

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BusinessPlus March 2016

49 per cent of the same ultimate shareholders from the start of the loss-making period to the end of the profit period in which you utilise the loss.

• The above also applies to imputation credits, though a 66 per cent level of continuity is required.

A transfer to a family trust will be viewed as a change in shareholder.

• Companies with unused imputation credits can convert these to losses (grossed up at 28 per cent).

Shareholder-operated businesses should distribute, via salary or dividend, at least 80 per cent of their profits, which should be taxed in the shareholder’s name.

Sometimes this cannot be achieved: maybe you are expanding the business or making new capital acquisitions, or there are doubtful debts to fund or bank funding to repay. Nevertheless you must document the reasons at the time the decision is made because the IRD (rightly) expects what is termed “contemporaneous documentation”, ie, documentation must be recorded when the decision is made – not as an afterthought.

Treatment of income, prices, private expenditure Income is generally taxable when you are entitled to invoice it, or you’ve received it and it is not refundable. Also using this principle, consider whether any income amounts you have accrued for accounting purposes might not be taxable.

If you have offshore entities, ensure your prices are arms-length. Even if you do not want to pay for a transfer pricing report, you should have evidence on file to show why you consider the prices charged are what you would have charged if you were dealing with a non-associated party. This includes

interest rates charged on funds lent to, or from, your offshore entity. Intergroup loans cannot be ignored. Even if you are providing a guarantee for your offshore entities’ borrowing there needs to be a market fee charged.

Reconcile your GST returns with what is shown in your tax returns.

Then there is the private expenditure bug-bear. Ensure private expenses are not being charged to the business. New rules are in place for what is termed “mixed-use assets”. It is not advantageous from a tax perspective for these to be part of your business if they are used mainly for private purposes (particularly for corporates with any debt funding), so consider moving these out of the business.

Watch the overdrawn current accounts, as interest should be charged on these.

And do not ignore things on the grounds you think they are immaterial. Mistakes soon add up.

Employee vs contractor There are strict tests to differentiate between contractors and employees but businesses ignore them too often. Do the workers dictate their hours of work?

Do they provide their own materials? It does not matter if you have a signed document saying the individual is a contactor and responsible for his or her own taxes; if they are employees according to those tests, you are liable for paying their tax.

Just think how good you will feel if you are proactively managing your tax: it is worth it.

• Joanna Doolan is a tax partner and Claire Dilks is a senior tax manager at [correct] EY. Email joanna.doolan@ nz.ey.com; claire.dilks@nz.ey.com

IN BUSINESS

By Mike Fokkens

Steps to selling

your business Thoughts of selling your business possibly cross your mind from time to time. And with that, you may be wondering how much your business is actually worth and how to go about selling it to maximise the efforts of your labour and investment.

(financial or otherwise) so they can be highlighted when marketing the enterprise.

Items that are attractive to potential purchasers are written contracts, upcoming and ongoing orders and long-term relationships – all of these, not just one item.

For many business owners, selling up represents the end of years of personal effort and commitment, and reaping the rewards of the financial gain that selling can bring.

Risks It is also wise to identify the key issues or risks associated with the business. Spend time mitigating these or, at least, be well prepared to respond to questions buyers pose about them.

For others, it’s time to move on to new opportunities and challenges.

Whatever the reason, selling your business is a significant decision, so it is vital that the business is priced and presented correctly to get the best possible outcome from the sale process.

The New Zealand economy is strong and looks likely to continue that way for the foreseeable future. At present, the market is buoyant and this is reflected in the strong buyer demand for good solid businesses with good trading histories.

Preparing your business for sale Records The financial records of the business are the most important piece of information for demonstrating its profitability to potential buyers. Generally, a buyer (and their adviser or accountant) will want to see the financial accounts for the past three years, and often, year-to-date information.

This helps buyers to identify profitability, variances and trends.

Financial records that are professional, prepared by an external accountant and are up-to-date will give a buyer confidence that the business is well managed.

Identify the positive aspects of your business

Price Determining a realistic value for your business is vital. If you price it too high, serious and savvy buyers won’t even consider it. If you price it too low, you are throwing away your hard-earned money.

Unlike the housing market where sales data is freely and readily available and tangible, data on business sales is often specific to the industry, location and scale of the business.

There are several methods that can be applied to the business valuation.

Valuing your own business will generally provide a very subjective figure. Engaging a professional advisor experienced in providing market appraisals will ensure you get an objective and market-oriented perspective on the recommended selling price.

Using a business broker Current legislation means it is no longer simple or practical for business owners to sell their own businesses. Over recent years legal and financial constraints have made it more complex and more open to risk.

Selling a business can take considerable time and commitment in order to achieve the best possible price.

As part of your decision-making process you may consider using a business brokerage. In selecting the right broker you should consider the following: 1. Does the brokerage company specialise in businesses for sale or is that function an add-on to a real estate operation?

2. Does the company have brokers who specialise in your industry? Does the company get results?

3. What is their track record in business sales?

4. Are they professional and ethical?

There are many advantages in using a business broker.

While you are busy with the day-today management of your business a business broker will handle the calls from prospective purchasers, will qualify all the callers and ensure they are genuine and have the financial ability to purchase.

It can be much more difficult for you to keep the sale confidential from your staff, customers and suppliers when there are prospective buyers personally contacting you.

A good business broker is experienced and able to interpret the range of data available on the make-up of businesses and their relative performance, such as profitability, competition, barriers to entry and other factors.

By applying their data analysis and expertise, brokers are able to provide sound guidance on the market value for your business and how to go about preparing your business for sale.

If you are considering selling your business, contact a Link broker like me who specialises in manufacturing and engineering, for a free and confidential appraisal of your business.

In the next issue (April 2016): More detail on preparing your business for sale.

• Mike Fokkens is a business broker at Link Business Broking Ltd (Licenced REAA08), email michaelf@linkbusiness.co.nz

BusinessPlus March 2016

25

International trade

By Nada Young

Easy market validation for exporting F&B to Asia

It’s easy to drown in data. Statistics about an export market’s GDP, population growth, buying patterns and consumer trends are merely a click way.

And yet, extrapolating the relevant information you need to validate new export markets can be extremely difficult.

In my experience, focus is key. While macro-economic data has its uses, most food and beverage (F&B) exporters need to understand some very specific market indicators in order to complete their costbenefit analysis. These essential market indicators are demand, competition and cost, as outlined below.

Assess demand In the markets I work in across Asia, volume sales for imported F&B products come from commodity sectors including meat, dairy and fresh fruit. Products of this nature tend to move steadily, in container volumes.

Conversely, value-add, premium products with no international brand recognition, especially those with handling constraints such as a short shelf life or temperature sensitivities, have a very small share of the imported F&B sector in Asia.

For many exporters, the easiest place to start is to discuss your offering with relevant distributors in each market. They will waste no time in telling you whether there is demand for your products. Just make sure that you are dealing with a reputable company and be cognisant of the fact that these distributors wield a lot of power given the vital role they play in

26

BusinessPlus March 2016

Inside BIG (Ben’s Independent Grocer), a premium supermarket in Kuala Lumpur

providing market access for international food brands. You’ll need to make your pitch short and convincing.

Assess competition Understanding the competitive landscape and how your product will compete in the market encompasses the following two elements: 1.

2.

A survey of the competitors in market and their pricing: For reliable results, it’s best to gather this information from the source, which means traveling to the market.

Your estimated wholesale or retail price: To calculate this, you will need to know your landed cost, once all duties and taxes are paid, and the typical supply chain margins applied in your target market. Your freight forwarder can help you with landed costs. For the supply chain margins, you’ll need to speak to an expert.

Assess cost Knowing what it will cost to enter a market

requires a thorough understanding of the various distribution models appropriate for your product, and the norms around supporting sales.

If you are prepared to put in the leg work, you can find this information yourself by speaking to various people from within the industry, eg, distributors, retail buyers, marketing agencies and the like.

Alternatively, you can enlist the help of a market expert.

Producers of fast moving consumer goods (FMCG) brands should be prepared to pay handsomely to have their product listed in the right retail channels across Asia. Fortunately, there are no official entry costs in the food service or industrial sectors, however, an adequate marketing budget is still required to convert end customers and develop sales.

• Nada Young is Asia Market Director at Incite, an export development agency for F&B companies trading with Asia.

Visit www.exportincite.com

International trade

By Daniel King and Brendon Wilson

Calculating what NZ’s reputation is worth The presence of a strong international reputation is critical to the NZ Inc. brand and to business’ ability to drive terms of trade.

However, things aren’t as rosy with New Zealand’s reputation as we’d like to think.

But there are ways business and government can make sure they are perceived by the outside world as honest, trustworthy people living in a country where bribery and corruption are virtually non-existent.

Since our last article (February 2016 issue), the 2015 Transparency International Corruption Perceptions Index (CPI) has been released, showing the New Zealand public sector fell in the ranking from number two spot to fourth since the year before.

And the year before that (2013), New Zealand was considered to be the least corrupt, along with Denmark.

This may not seem like a drastic fall but the trend is very worrying: we are sliding while others are improving.

Business’ role Corruption and bribery certainly do exist in New Zealand, and in business also. This was made clear in a survey recently conducted

by Chartered Accountants in Australia and New Zealand (CAANZ), which looked at corruption faced by Kiwi businesses.

The survey of 1,000 New Zealand businesses of different sizes and across industries countrywide, reported that overall, 6 per cent of respondents reported having had illegal demands or bribes made by customers or suppliers – in some sectors as high as 11 per cent.

In addition, only 51 per cent of businesses stated they would definitely report an illegal demand.

Even more worrying, is that by ‘not getting around to it’, companies are living in denial,

and don’t have robust systems in place to detect and combat bribery and corruption risks.

Only 16 per cent of businesses in the CA ANZ survey had a formal anti-bribery/corruption policy in place, with Wellington businesses most likely to (at 21.8 per cent) and Auckland least likely (at 11.6 per cent).

A 2015 survey conducted by Deloitte of New Zealand and Australian companies showed that 40 per cent of respondents with offshore operations did not have a formal compliance programme to manage corruption risks.

This comes at a time when New Zealand has tightened its anti-corruption and bribery legislation to ratify the UN Convention Against Corruption, a legally binding, global agreement to address corruption in the private and public spheres.

Penalties for bribery offences have increased in New Zealand: courts can impose extremely hefty fines and imprisonment for up to seven years. Companies can be held culpable for the actions of employees or agents acting on their behalf.

It’s important to note that under the new legislation, taking ‘reasonable steps’ (ie, having a compliance system in place and functioning) to prevent incidents can be a defence in court. So, feigning ignorance or ‘burying your head in the sand’ is not a viable option if your company is investigated by New Zealand or overseas authorities.

How can companies avoid ending up in court and facing fines and/or imprisonment?

Developing a system to build reputation There are a number of tools available to help you reduce your company’s bribery risks. The Ministry of Justice has developed guidance material for companies to meet

the new legislative requirements, and Transparency International has developed best practice tools with its international business partners.

The essentials of a robust compliance programme include: 1. Adopting a policy addressing bribery/corruption, fraud, gift-giving, entertainment, conflict of interest, etc; 2. Board commitment and responsibility for the compliance programme and its ongoing measures; 3. Due diligence of agents, distributors, etc; and their inclusion in monitoring and reporting; 4. A thorough risk assessment of your company’s operations – including relevant agents and business partners; 5. Engaging with and communicating this commitment to relevant staff and business partners; 6. Training of key functions (eg, sales, procurement staff); 7. Accountability – who is responsible for ensuring compliance, and responsible at all levels?; 8. Risk reporting – a mechanism so staff or business partners can report any concerns without fear of derision or retribution; 9. Measurement and reporting – requirement for regular measurement and reporting in all areas of possible risk.

We highly recommend establishing these commitments as a central part of a committed ‘integrity culture’ – make it your point of difference. That builds a ‘no surprises’ principle into workable daily practice and makes it a reputational advantage.

When a crisis occurs it will be far too late to establishing any of those measures.

To improve our country reputation in the same way, you should expect these same standards from agencies and non-business structures you deal with, and which govern your activities. In some cases they have let us all down.

• Daniel King and Brendon Wilson are consultants for Transparency International New Zealand.

Visit www.ti.org.nz

BusinessPlus March 2016

27

MEMBER PROFILES

Fast, agile and cost competitive: classic Kiwi company turns 10 years Sheet metal manufacturer Hi-Tech Metals is celebrating 10 years in business by installing a new $180,000 computer system, plus moving into new premises and commissioning a new $260,000 press brake.

Says Edan Newell, co- owner and joint managing director with his wife Michelle, “It’s not a large machine, but it’s packed with the latest technology; just the latest and best for folding smaller jobs like brackets and the fiddly super-accurate jobs we process.”

The recent move combines their two operations under one roof and took four years in the planning and didn’t exactly go smoothly.

“We had lots of hurdles to overcome,” Edan says, “but it will be the best thing for us.”

Hi-Tech Metals employs 24 staff in its Auckland engineering workshop making metal parts such as electrical boxes, conveyor systems and components for fitting out vehicles; in fact, anything that can be made from sheet metal.

“In every step we’ve taken we buy the best machines we can. If we can’t buy the best, we don’t buy.”

The recent fibre laser cutting machine is a case in point. It will use 40 per cent of the power, cut two to three times faster, is more accurate, requires less maintenance, and will cut as soon as it’s turned on unlike the present machines which take 30 minutes each day to start up and close down.

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BusinessPlus March 2016

Another example is their plan for a new, 4m x 2m high-powered fibre laser to replace two older carbon dioxide laser cutters.

“But it’s no good having the best machines unless you have the best staff,” Edan says. “And as far as I’m concerned we have some of the best guys in the business. We have very good staff retention, the sort of people who get it right first time.”

Despite the company’s exuberant investment programme, Edan reports business has been hard lately. Some manufacturers are going back to making their own components, plus he says, “There’s some good operators out there. It’s a tough industry.”

Edan says the company’s aim is to confound the view that customers should not expect quality and prompt service as well as a competitive price.

“Our aim is to provide all three. We are 100 per cent focused on quality. We’re not aiming to be the cheapest but we are very flexible with fast turnaround.

We specialise in small runs but are very efficient at large production runs, and we deliver at a good price.

“We’re here on the ground and can get it to you in three days.

“The technology we use to make these products is moving so fast now, and we always aim to stay up with the latest and best,” he says.

Hi-Tech Metals owners - husband and wife team Michelle and Edan Newell.

“But it’s no good having the best machines unless you have the best staff. And as far as I’m concerned we have some of the best guys in the business. We have very good staff retention, the sort of people who get it right first time.”

MEMBER PROFILE

A business good

for the soul When Miranda Smith returned to New Zealand from her OE in the UK, her father said, “Well, are you going to get a job?”

“No,” said Miranda, “I’m going to start my own business.”

She was 23.

Seventeen years on, Miranda Smith Homecare employs 30 staff managing 400 caregivers in Auckland, Bay of Plenty, Hawkes Bay and Christchurch.

The business has doubled in size over the past 18 to 24 months. Demand has grown along with our ageing population and with the increased incidence of conditions such as Alzheimer’s and Parkinsons.

But anyone seeking someone to look out for a loved one can call on Miranda Smith Homecare. Miranda describes the business as looking after vulnerable people in their own home, or in their rest home village or elsewhere.

“We’re not restricted by rules around funded care focused on absolute need, or for any particular function or purpose,” Miranda says.

“We’re there to make life better for our clients. We do a lot of palliative care and we have a lot of end-of-life hospice clients.”

About 20 per cent of Miranda’s contractor workers are enrolled nurses, with others drawn from a wide range of professions such as occupational therapy and teaching, but “no one is out there without training,” Miranda says.

The business rates start at $28 an hour with different rates for sleepovers and running up to 24/7 care charged at perhaps $30004000 a week. The rates vary depending on whether such things as lifting, supervision of medication, or clinical expertise is required.

Her biggest headaches are finding enough of the right caregivers - “all our carers are ageing” – and managing growth due to demand.

But a shortage of people doesn’t mean anyone will do.

“In our business our reputation is everything. I have very high expectations of my staff and they’re really amazing. I know all their families.

We’re passionate about our carers and really proud of them, and we have great staff retention. Though we have lost two or three, once I’ve got them I don’t let them leave!”

Miranda’s caregivers are all independent contractors who come with a very clear idea of how many hours they want to work, from two to 24 a day.

In people’s homes the carers tend to build relationships with their families, and the business trains and upskills them as their clients’ needs change.

So every week Miranda travels either north or south from her home in the Hawkes Bay where she grew up and lives with her husband and two boys.

“I can [base] my family here because I have such amazing staff,” she says.

“They make my life really easy!

“I love my business, and I’m really lucky, and I work my butt off! But our business is good for the soul and we really do help people.”

BusinessPlus March 2016

29

MEMBER PROFILES

“Businesses these days do seem to be more committed to green practices, especially as climate change is not going away. Younger people see the need, and [recycling is] not just good for the environment, it takes the pressure off landfill.”

Making pallets cheaper

by recycling The big question on Terry Edwards’ mind just now is, does he expand his pallet business on the present site in Auckland, or duplicate it and add the extra capacity needed on another site? Out in the regions perhaps, near where he can develop another customer base?

then merged with a company making pallets, which Terry eventually owned fully.

Maintaining a warehouse for pallets requires quite a lot of space, and the cost of land for this is a major consideration for The Pallet Warehouse, Terry says.

Now The Pallet Warehouse in Papakura employs a team of 15. They work closely with a business next door that makes a range of wood mulches, chips and other products for such as children’s playgrounds, horse arenas and landscaping. Nothing goes to waste. All offcuts and other wood wastes from the pallet-making operation are put to good use.

Another issue for him is proving to potential customers that the company is a dependable supplier. “No one’s going to change over their supply to us for three months,” he says. “We need to prove we’re in it for the long haul, and we think we have done that by now.”

The pallets are either custom-made or supplied ex stock - The Pallet Warehouse has thousands to choose from. Ninety per cent are made from recycled wood, typically at an average cost of 40 per cent of those made from new wood, depending on the type of pallet required.

Terry has been recycling wood for the past 18 years. The business started by sourcing wood waste from the Wiri Ford factory,

Terry says his biggest challenge is finding reliable sources of wood to recycle for the purpose. He wonders aloud why anyone

Pallet sorting: Charlie Alefaio (L) and Jaden Cooper

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BusinessPlus March 2016

would send such material to landfill when the cost of doing that, and the waste of the resource involved, factor so strongly.

Importantly too, there’s the compelling case for recycling as much as possible, to demonstrate a business’ commitment to going green and doing one’s bit towards ameliorating climate change.

He says businesses these days do seem to be more committed to green practices, especially as climate change is not going away. He says younger people see the need, and [recycling is] not just good for the environment, it takes the pressure off landfill.

Councils want to be seen to be green, he says, but they apparently don’t want to be seen preferring one business over another, even if businesses like his save them thousands of ratepayer dollars in landfill costs.

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

Summer Member Briefings Schedule 2016 Day/Date

Time

Venue

Waikato / BOP Mon. 29 Feb.

9.30am - 11.00am

The Junction Hotel, 700 Pollen Street, THAMES

Mon. 29 Feb.

3.00pm - 4.30pm

ASB Baypark, 81 Truman Lane, MT MAUNGANUI

Tues. 1 March

9.30am - 11.00am

East Bay REAP, Reap House, 21 Pyne Street, WHAKATANE

Tues. 1 March

3.00pm - 4.30pm

Suncourt Hotel & Conference Centre, 14 Northcroft Street, TAUPO

Weds. 2 March

9.30am -11.00am

Holiday Inn, 10 Tryon Street, Whakarewarewa, ROTORUA

Weds. 2 March

2.00pm - 3.30pm

Central North Island Kindergarten Association, 6 Glenshea Street, PUTARURU

Thurs. 3 March

2.30pm - 4.00pm

Bruce Pulman Park, Teamsports Centre, Walters Road, PAPAKURA

Fri. 4 March

7.30am - 9.00am

EMA, 159 Khyber Pass Road, GRAFTON Room 2C/2D

Fri. 4 March

3.00pm - 4.30pm

EMA, 159 Khyber Pass Road, GRAFTON Room 2C/2D

Mon. 7 March

3.00pm - 4.30pm

Waipuna Conference Centre, 58 Waipuna Road, MT WELLINGTON

Tues. 8 March

9.30am - 11.00am

QBE Stadium, Stadium Drive, ALBANY

Tues. 8 March

3.00pm - 4.30pm

Bruce Mason Centre, 1 The Promenade, TAKAPUNA

Weds. 9 March

3.00pm - 4.30pm

Ellerslie Event Centre, Ellerslie Racecourse, 80 Ascot Avenue, REMUERA

Thurs. 10 March

9.30am - 11.00am

Counties Inn, 17 Paerata Road, PUKEKOHE

Thurs. 10 March

1:00pm - 2:30pm

Greyhound Function Centre, Manukau Sports Bowl, Te Irirangi Drive, MANUKAU

Fri. 11 March

9.30am - 11.00am

Quality Hotel Lincoln Green, 159 Lincoln Rd, HENDERSON

Mon. 14 March

9.30am - 11.00am

Stamford Plaza, Albert Street, AUCKLAND CITY

Tues. 15 March

2:00pm - 3:00pm

Webinar: www.ema.webex.com

Weds. 16 March

3:00pm - 4:30pm

Switzer Residential Care, 71 South Road, KAITAIA

Thurs. 17 March

9:00am - 10:30am

Scenic Hotel Bay of Islands, 58 Seaview Road, PAIHIA

Thurs. 17 March

1:30pm - 3:00pm

Kingsgate Hotel Whangarei, 9 Riverside Drive, WHANGAREI

Mon. 21 March

9.30am - 11.00am

Titirangi Golf Club, Links Road, NEW LYNN

Mon. 21 March

2:30pm - 4.00pm

Butterfly Creek, Tom Pearce Drive, MANGERE

Auckland

Northland

Auckland

BusinessPlus March 2016

31

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