Venture Taranaki Release June 2021 Business Survey Results

The results of Venture Taranaki’s latest 6-monthly Business Survey indicate an overall positive outlook and show an increase in business confidence post pandemic; however new challenges are growing with concerns about increasing wage rates, cost and availability of materials and labour availability.

The 6-monthly survey has been undertaken by Taranaki’s Regional Development Agency since 1999, with the survey being sent to more than 1700 enterprises over a cross-section of industries. The results of this survey are of particular interest and indicate the current state of business confidence and key business indicators across the Taranaki region. The June survey included the usual questions as well as a section on COVID-19 impacts and the New Zealand Government Budget 2021.

Of the participants that completed the recent June 2021 survey most respondents expect New Zealand’s economic outlook to remain at similar levels (38%) or to improve (38%), with only 16% of respondents anticipating deterioration.

"This is a good indication of business confidence, as confidence in a stable or improving national economic outlook supports resilience across our local business community, enabling businesses to act with a level of decisiveness, and increasing their likelihood to look to growth opportunities", says Venture Taranaki Chief Executive Justine Gilliland.

Responses for industry-specific outlook show a similar picture with 50% of respondents anticipating similar conditions ahead, and 33.5% of respondents anticipating improvement. Only 14% believed economic conditions within their own industry would decline.

At a regional level, the outlook also reaffirmed expectations, reflecting that the majority of respondents have confidence in a stable and increasingly positive outlook for the coming 12 months. 36% of respondents anticipated improvement and 44% that the Taranaki regional economy would remain the same. With only 15% feeling that the regional economy would deteriorate.

"Relative to the previous survey, these collective results indicate a small but heartening signal of confidence in the regional and national economy as we move past the significant instability of the last 12 months and look to the future. However, this shift needs to be tempered with evolving and growing concerns in other areas - such as price increases, labour and skills shortages, and supply chain bottlenecks," explains Justine.

Whilst most enterprises are anticipating no changes to staffing numbers, 30% of respondents indicated they could be looking to increase staff numbers in the next 6 months.

The ability to recruit and onboard new talent was identified as an area of concern, having had an impact on Taranaki enterprises over the last 6 months. 45% of respondents who were currently (or looking to) recruit staff conveyed they are experiencing challenges in this space.

Recruiting highly skilled or specialist workers was noted as particularly problematic, with examples provided that highlighted technical areas, including marketing specialists, designers, software developers, and engineers. Finding hospitality workers and filling trades roles was also a common challenge.

"We’ve been aware of our skills shortages for some time, and this data confirms the continued challenge these shortages bring to our enterprises and local economy," says Justine.

"We continue to support the reduction of skills shortages across the region, working with partners like WITT, MSD and businesses directly to identify the gaps, forward plan and re-train, as well as promote nationally for those skills that we need," explains Justine.

The majority (60%) of respondents however signalled they were confident they will be able to find people within New Zealand to fill their recruitment or skill needs.

The three biggest concerns respondents indicated impacting business growth out of a list of fifteen options were increasing wage rates, cost of materials and challenges with labour availability. COVID-19 remains a significant concern but is now ranked number four.

"Compared to the June 2020 survey, much fewer enterprises are concerned about declining markets, and the factors weighing on their minds are now more spread across a number of issues/factors rather than just COVID-19," continues Justine.

In relation to feedback on regional infrastructure, whilst most respondents (65%) considered that Taranaki infrastructure meets their needs, there were many comments from respondents about the quality of roads and the perception that roads are always being worked on.

A key frustration for many businesses was the disruption to business operations due to the national and global supply chain challenges impacting their ability to complete projects and/or provide goods and services to customers. 23% of respondents conveyed they could not get parts, components, or raw materials to complete projects on time; 17% were having to seek out new suppliers; 15% stated they cannot get enough stock to meet demand and 12% reported they have had to change their business offering as a response to such supply change challenges.

"The building industry was one sector identified as affected as demand outweighs supply of materials, goods, and labour. The situation is also impacting businesses accessing packaging, raw materials, and IT components. For example, some respondents reported little to minimal stock of new computers and laptops. Shipping delays were also impacting our exporters. Pricing of products is increasing as a result and businesses are having to get more creative around finding solutions," says Justine.

All business survey respondents who completed the June 2021 survey went into the draw to win $200 to donate to a charity of their choice. Midas New Plymouth won the prize draw and are donating to St John.

APPENDIX - COVID-19 and Budget 2021 highlights and indicators

-Border closures were also impacting projects and goods and services. 15% reported that their business depended in part on overseas visitors and 7% signalled their workforce was impacted as it had become harder to find migrant workers and do international business.

-Survey respondents signalled COVID-19 has changed elements of their business leadership in a good way. Almost 90% reported the experience has made them more aware of the mental health of themselves and their staff. They also conveyed it has made them a more resilient leader, changed the way they use technology, and over 60% indicated they now travel less for business.

-Respondents did convey the Government initiatives for COVID-19 have centred largely on employees as opposed to the businesses themselves. There could have been more consideration also given to the mental health of business owners, not just staff.

-Survey respondents rated the Budget 2021 2.1 out of 5, on a scale from 1 to 5. Feedback indicated that respondents felt there was little in it to assist business growth, thus would have minimal impact on their business.

-There were concerns it would weaken the national and regional economy, with a common complaint there was not enough support in investment in small businesses to develop and grow.

-Some positive responses included Budget announcements on climate change funding, healthcare, benefits, improving living standards for the middle and lower class, and housing. There are many businesses owners that were happy to see more families having a chance to be able to provide the basics for their whanau.

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