the national business review special report ...the national business review / september 4, 2015...
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SPECIAL REPORT: SPOTLIGHT ON WAIKATO 17The National Business Review / September 4, 2015
of all motor vehicle kilometres. New Zealand’s ‘high-volume
highways’ total just over 700km of road. They are just 6.5% of the state highway network and are less than 1% of the total road network.
However, they carry 35% of the total vehicle kilometres on high-ways; 17% of the total vehicle kilo-metres travelled on the whole New Zealand roading network; and 19% of the freight volume kilometres on the network.
What happens if the number of roads increase or they are length-ened? In 2009, two University of Toronto economists decided to compare the number of new roads and highways built in different cit-ies between 1980 and 2000, and the total number of kilometres driven in those cities over the same period.
They found it was a perfect one-to-one relationship.
If a city had increased its road capacity by 10% between 1980 and 1990, then the amount of driving in that city went up by 10%. If the amount of roads in the same city then went up by 11% between 1990 and 2000, the total number of kilo-metres driven also went up by 11%.
It’s as if the two figures were moving in perfect lockstep, chang-ing at the same exact rate.
The answer has to do with what roads allow people to do: move around. As the number of roads
increase, businesses that rely on them swoop into cities bringing trucking and shipments.
Freight in and out of New Zea-land has been projected to double by 2040. Any level of significant growth in freight will have an impact on the transport modes and how they contribute to the movement of goods.
The growth in the level of freight that originates in, and is attracted to, regions will also vary, placing different demands on the transport system in the future. Waikato, Can-terbury, Northland and Auckland are projected to have the greatest growth in freight volumes. Trans-port infrastructure is expensive to
establish and maintain, and it is widely recognised the country has under-invested in the transport net-work in recent decades. To address this, the government has made record levels of investment in land transport, particularly the Waikato Expressway.
The four-lane expressway extends from the bottom of the Bombay Hills to South of Cam-bridge, reducing travel times between Auckland and Tirau by 35 minutes and increasing safety along the route. It will be finished in 2019.
The NZTA says the expressway will improve economic growth and productivity through more efficient movement of people and freight,
reflecting the city’s position in the economic golden triangle of Hamil-ton-Auckland-Tauranga.
The infrastructure council’s Mr Selwood says with big projects, such as the Waikato Expressway, the government needs to relook at the way roading is funded. Debt funding (or PPPs) is the model being used for Transmission Gully and is under consideration for the Puhoi to Warkworth Expressway to Northland.
“It doesn’t make sense to defer economically beneficial projects like the Waikato Expressway for want of capital, especially when investment in large projects forces a reduction in essential renewals
and maintenance programmes.” He says it would make sense to debt fund more major capital projects and toll the roads to enable debt to be repaid.
“While it is good to see this important strategic route finally proceed, it would make sense to enable debt funding of other trans-port projects, particularly those with strong economic development opportunities.
“This would free up the National Land Transport Fund for much needed maintenance and renewals work across the country and enable faster economic growth in the regions,” Mr Selwood says.
Sally Lindsay
Roads are the backbone of the country’s transport system and the $1 billion NZTA capital injection to finish the Waikato Expressway project will benefit the movement of freight in the golden triangle of Auckland, Hamilton and Tauranga.
The New Zealand Transport Agency’s financial boost is the sin-gle biggest investment in Waikato and by the end of the year all sec-tions of the expressway will be built, under construction or out to tender.
A 10-year project, it has been recently criticised by NZ Council for Infrastructure Development chief executive Stephen Selwood, who says it raises the question why the country doesn’t acceler-ate more transport investment through debt funding.
The route is one of the busiest sections of State Highway 1. “The Upper North Island has shown rapid growth over the past three decades and will comprise more than 60% of the nation’s population and economic growth in the future, yet it will have taken us almost
three decades to complete the expressway, which was first started in 1992,” Mr Selwood says.
He says there is much to be gained from debt funding. “Assum-ing a relatively high 6% discount rate, the benefit cost ratio (BCR) for the full expressway corridor is 2.4, with economic benefits of $5 billion exceeding costs of around $2 billion.
“At a discount rate of 6%, any project with a BCR exceeding one is economically viable. But with a BCR exceeding two, the costs of delay in completion of projects like the Waikato Expressway vastly exceed the costs to borrow and toll.
“These benefits could have been delivered much sooner if the expressway had been debt funded rather than relying on drip feeding capital investment on a pay-as-you-go basis,” he says.
A June Ministry of Transport report on the country’s infrastruc-ture shows more than 70% of freight tonne-kilometres through-out the country are by road; more than 100 million bus trips each year are on highways and local roads; and 84% of all trips made by
individuals are in cars.The country has a transport net-work that includes:n 11,000km of state highways;n 80,000km of local roads;n seven international airports;n 28 regional airports with scheduled services;n 4000km of rail track; andn 14 exporting sea ports.
The roading network is the backbone of the domestic trans-port system. It is the means by which most New Zealanders get about by car, bus or bicycle and connect with family, friends and employment – 84% of personal daily journeys are by road.
Local roads and state highways provide access to and from air and sea ports for the majority of exports and imports. They also service the needs of international tourists.
The government invests about $1.6 billion a year on the construc-tion, maintenance and renewal of state highways, including provision for walking and cycling.
State highways account for just 12% of all roads, but they carry 50%
16 / The National Business ReviewSeptember 4, 2015
The Waikato region has all the makings of becoming the North Island’s key sustainable food production, agri-research, agri-business, premier engineering and primary processing hub. Waikato is in a prime position to attract visitors, international students, workers, businesses and investment. And it needs it all. Its significant visitor and tourist attractions and infrastructure offer high potential for growth. In short, there is a lot going on in the Waikato heartland.
Special Report
Spotlight on Waikato
n Pokeno and Mercer totalling 22.6km. Open.n Longswamp section of 5.9km. Target opening late 2018.n Rangiriri section of 4.4km. Under construction. Opens late 2016.n Ohinewai section of 7km is open.n Huntly section of 15.2km. Construction due to begin shortly. Target opening 2019.n Ngaruawahia section of 12.3km. Open.n Te Rapa section of 7.3km. Open.n Hamilton section of 21.8km. Being designed. Target opening 2019.n Tamahere interchange of 2.4km is open.n Cambridge section of 16km. Under construction. Opens late 2016.
The individual sections of the expressway are:
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Alternative funding needed for region’s roading
CRITICAL INFRASTRUCTURE: Construction nearly finished on 200m long and 40m high Karapiro Gully bridge
Continued on facing page
SIZE MATTERS: Huntly Hills Valley brings the sheer size of the Huntly section of the expressway into focus
NEXT SECTION: Cambridge section of Waikato Expressway under construction
Nathan Smith
Forestry is New Zealand’s largest industry behind dairy and meat, especially in the Waikato, and may soon receive a boost from an impressive new fuel technology.
Total exports for New Zealand forestry exceed $3 billion annually. The vast majority (90%) of the coun-try’s 1.7 million hectares of plantation forest is planted in Radiata, or New Zealand pine. Of this total, 246,667 ha (15%) located in the Waikato region alone.
New Zealand forestry is one of only a few industries in which the country has a unique competitive advan-tage. New Zealand forests grow softwood trees quicker and more efficiently than every other country in the world, according to the New Zealand Journal of Forestry Science.
However, a major and unavoidable part of the for-estry industry is its “waste” products. More than 50% of logs extracted from the forest and delivered to a processing plant end up as waste products during processing. And the more a log is processed, the more waste is generated. So the industry’s challenge is to turn all this waste into money.
NZ Institute of Forestry fellow Peter Brown, based in Te Awamutu, says a fresh technology – only 18 months old – could provide the answer the industry is searching for with the potential to boost the Waikato region and New Zealand’s productivity.
“We are now very close to finalising arrangements for the first industrial renewable diesel produc-tion plant to be established in New Zealand. It will be
capable of processing forest industry residues and turn-ing them into renewable diesel.
“This is not biodiesel but is a direct drop-in substitute for fossil fuel mineral diesel, including a co-product of high-quality biochar (organic fertiliser), which has a wide range of profitable markets. Potable water would be another co-product of the technology,” says Mr Brown.
Making mills more efficientThis particular diesel pro-duction process differs significantly from those investigated by Z Energy and Norwegian com-pany Norske Skog in their “Stump to Pump” project feasibility study. Renew-able diesel technology is of much smaller scale, already proven commercially and operating in the US.
Mr Brown doesn’t wish to name the company involved in developing the technology, due to unde-cided regional representa-tion decisions – although he says more information would be available upon the signing of a non-disclosure agreement.
The company is cur-rently applying to the US Environmental Protection Agency (EPA) for its renew-able diesel product to be considered equivalent to fossil fuel diesel, opening the way for larger scale production. New Zealand standards are tighter than US standards, especially on sulphur content but Mr Brown says a EPA certifi-cation should precipitate similar clearance in New Zealand.
SPECIAL REPORT: SPOTLIGHT ON WAIKATO 19The National Business Review / September 4, 201518 SPECIAL REPORT: SPOTLIGHT ON WAIKATO / The National Business ReviewSeptember 4, 2015
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The chief executive of Hamilton’s WaikatoInnovation Park is challenging Aucklandbusinesses to move their companiessouth to its burgeoning campus.
Stuart Gordon says the collaborativeatmosphere rivals the best corporatelocations north of the Bombays. Plusthere’s one extra benefit: an unparalleledlifestyle for staff.
“Our 34 resident companies employaround 400 staff – the majority of whomlove the lifestyle Hamilton city provides.This is a huge benefit for our residentcompanies because happier staff equalsgreater productivity, creativity andsuccess.
“Staff working on our campus averagearound a 15 minute commute to work,they spend far less on housing thanAucklanders and experience a greatwork-life balance – all while enjoying thechallenge of working in the innovationsector. Those benefits are hard to beat,”says Gordon.
Evidence of Auckland companies makingthe move to Waikato Innovation Parkis the new two-storey building beingconstructed on campus to house TetraPak’s New Zealand headquarters.
“When Tetra Pak moved part of itscompany onto our campus in 2009 anumber of staff relocated from Auckland.We’ve since worked with the company toexpand into a purpose-built facility thatallows them even more space onsite,”explains Gordon.
He says the core strength of the Park is itssense of community.
“The Park is a dynamic campus whererelationships between business, researchand academic organisations happennaturally. This collaborative cultureultimately drives commercial andeconomic growth.
“We house a wide range of companies –from start-ups through to multinationals.What they all have in common is they’retechnology based, driven by innovationand export focussed,” says Gordon.
Around 80% of the Park’s tenants activelyexport, 75% actively engage in R&D andone-third experienced positive financialgrowth during the past year.
“So what we’re saying to Aucklandcompanies who are looking for a newlocation is: take the opportunity toconsider Waikato Innovation Park. Takeup the challenge and give us a chanceto show you the benefits the Park canprovide your business.”
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“I’ve learned over the years that companies cover costs by selling high-quality goods, but make profits by selling the low-quality goods.
“The whole thrust of renewable diesel is to uti-lise forestry waste products, turning them into money. It has the potential to make processing mills more eco-nomical. The co-product of high-quality bio-char will also sequester carbon on a permanent basis, which means the industry can achieve an even better car-bon footprint,” he says.
Transport costNZ Institute of Forestry president James Tread-well says one difficulty is the cost of getting waste material from the forest to renewable diesel plants often outweighs any profit. This might be overcome but presently it ends up as a cost to the forest owner rather than an income.
“Renewable diesel is another upside to process-ing more logs domestically. The industry already sends a lot of raw logs overseas. It takes a 19c seedling tree
and adds $250 of value sim-ply by letting it grow. Utilis-ing waste products would definitely add greater value to the industry,” he says.
Renewable diesel is dif-ferent from biodiesel. For instance, biodiesel, which is made from plant and ani-mal fats and oils, is already different from normal min-eral diesel – requiring its own separate set of speci-fications in New Zealand regulations.
Biodiesel also has a reputation of causing problems for seals in diesel engines, and can cause
difficulties in low tempera-tures because it begins to cloud and solidify, block-ing filters. Because of this and other factors, no more than 5% of biodiesel can be added to normal diesel for retail sale.
However, renewable die-sel is effectively equivalent to normal diesel but is renew-ably produced. One of its greatest advantages is that once a processing plant is operational, five-year supply contracts could be written for diesel consumers, effec-tively cancelling the impact of oscillating fuel prices.
This is possible because the feedstock (branches, sawdust, etc) can be steadily supplied, allowing the diesel to be sold for a fixed price, indexed only to inflation. For businesses reliant on diesel, knowing the cost of fuel for the next five years would be a major advantage.
“Having a commercially viable process that can pro-duce road quality diesel from forest industry waste prod-ucts and paying for those waste products at a reason-able price, has the potential to turn otherwise marginally viable log processing into a commercial success.
“At the same time, the associated renewable diesel plant will have the potential to make all the aspects of the forest that use diesel more commercially competitive because a company can sign up to buy diesel on a multi-year basis which is com-petitive with current diesel prices,” says Mr Brown.
A not-insignificant amount of energy is expend-ed in getting conventional crude oil from the ground to refineries whereas producing renewable diesel is essential-ly only a matter of harvesting the waste and carting it over much shorter distances for processing. Being a smaller operation, it can be located regionally and close to feed-stock, making Waikato an ideal location.
“I can see possibilities not just for sawmills and similar wood processors but also for sites such as the new Lum-bercube [processing site] in Rotorua,” says Mr Brown.
Inland port relies on road and rail infrastructure New fuel tech to boost Waikato forestry
More than 50% of logs extracted from the forest and
delivered to a processing plant end up as waste products during processing
The finished Waikato Expressway will be crucial for Waikato-Tainui’s $3.3 billion Ruakura transport hub, as will a rail line connecting Hamilton and the Waikato region to Ports of Auckland and Tauranga Port.
The commercial development arm of Waikato-Tainui, Tainui Group Holdings (TGH), together with Chedworth Properties, is planning the 80-hectare inland port along with a residential development on 500 hec-tares of its own land at Ruakura, on the east side of Hamilton. The development will be the size of the entire Auckland CBD.
The project skipped years of Hamilton City Council red tape when it was listed as a project of national significance by the Envi-ronmental Protection Authority (EPA). It has now been granted resource consent by the council.
TGH says within 20 years it is expected the population and freight volumes across the upper North Island will double and 50% of New Zealand’s GDP will be pro-duced in the golden triangle of Waikato, Auckland and Tauranga. TGH says the Waikato region will be the primary export producer for the country.
About 12,000 jobs are expected to be generated by the development, with
10,000 of them new positions in the region.
TGH has half of another asset The Base shopping centre at Te Rapa up for sale and will plough the funds into the Ruakura project.
The company says it takes a prudent approach to development financing to underwrite the cost of the project. The long-term timeframe for the project means TGH can match development with demand.
It says further analysis shows the devel-opment at Ruakura has the potential to increase the region’s GDP alone by $4.4 billion.
The residential development will start at the same time as building of the inland port and is expected to contain a range of traditional, medium and high density houses.
TGH says it believes integrating a resi-dential area into the wider Ruakura plan helps Hamiltonians to achieve the “live-work-play” philosophy promoted by the council’s Future Proof programme and the Hamilton City Urban Growth Strategy.
The freight hub, the first phase of the project, is planned for completion by 2021.
In the Waikato, and for much of the country, the name Gallagher is synonymous with farming. For over 75 years, the New Zealand owned and operated business has built a solid international reputation for innovative product design and man-ufacturing of animal management equipment. What’s not so well known about Gallagher is that during the 1980s and 1990s, the company diversified by adding three business units: Contract Manufacturing, Fuel Systems, and Security. These divi-
sions are now thriving businesses in their own right, with the Security division contributing 23% to the annual Gallagher Group turnover last year. As the company continues to go from strength to strength, partic-ularly with its offshore development, many are beginning to ask – what’s the secret to its success. Sir William Gallagher, current CEO and Chairman - and son of founder Bill Gallagher – has been at the helm since the mid-1970s. “Diversification was key for us” says
Sir William. “With our strength in R&D and our considerable manu-facturing capabilities, it made sense to apply our product development expertise to other industries.” Gallagher’s security business has grown significantly across the globe, and there are now offices and staff based in the UK, South Africa, Asia, the U.S, and Australia – as well as a team in New Zealand. Recently appointed Global General Manager for Gallagher’s security division, Kahl Betham, describes the business as being on the rising side of a substan-tial growth phase. “A lot of points are lining up for us right now” says Betham. “We’re a Waikato business competing with big players on a global stage – and there are some very exciting opportunities on the horizon.”
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SPECIAL REPORT: SPOTLIGHT ON WAIKATO 21The National Business Review / September 4, 2015
Nevil Gibson
Tourism and local govern-ment officials in Waikato were disappointed Hamil-ton Airport failed to make the cut in the first round of Jetstar’s new regional net-work.
But Hamilton mayor Julie Hardaker says the council will continue to make a case if and when Jetstar decides to add more destinations.
“They indicated from day one they were very keen to expand to region-al New Zealand and they would be starting with four but the intention was to increase that number.”
All three airports in the upper half of the North Island – Hamilton as well as Tauranga and Rotorua – lost out to three central region airports, Napier, Palmerston North and New Plymouth.
“It seems to me that being about one hour’s drive from Auckland Air-port will have also been a factor in their decision, as we know locals do travel to Auckland for domestic flights,” Ms Hardaker says.
However, Ewan Wilson’s startup Kiwi Regional Air-lines will include Hamilton as the sole North Island link in its route network along with Nelson, Dunedin and Queenstown.
Kiwi’s 26-seater Saab 340 arrived in Hamilton this week and is due in service on October 27.
Growth in Waikato’s tourism sector continues to outstrip the national aver-age and figures show it con-tributes about $1 billion to the regional economy.
Domestic travellers make up $800 million of this, according to Hamilton & Waikato Tourism, with $200 million coming from overseas visitors.
They are attracted to the Lord of the Rings-related Hobbiton Movie Set Tours at Matamata, the Waitomo Caves near Te Kuiti and the seaside town of Raglan on Kawhia Harbour.
Tourism New Zealand’s Middle-earth campaign is mainly aimed at Euro-pean, North American and Japanese markets, while the local promotional agen-cies also have an eye on the potential for more Chinese, who now make up the larg-
est number of tourists after Australians.
The region had nearly
Middle-earth underpins tourismJason Walls
The downturn in global milk prices is no doubt going to weigh heavily on New Zealand’s economy and its regions.
Many have already felt the pinch, with some dairy farms already buckling as a result of the low prices.
Last month, NBR reported two dairy companies, a farm in Whangarei, and a share-milker in Feilding, had collapsed owing more than $4.5 million and $130,000 respectively.
This followed Fonterra slashing its forecasted farm-gate milk price payout to $3.85 per kg of milk solids for the 2015/16 season, down from a previous forecast of $5.25.
DairyNZ economist Matt Newman says the break-even milk price in the Waikato region is $5.80, so the outlook
is looking gloomy for many farmers.
But as many regions prepare for the downturn, the Waikato looks to be beating the dairy blues.
ASB’s rural economist Nathan Penny says although the dairy industry is impor-tant to Waikato, the effect on its local economy is likely to be smaller than many people expect.
“One thing which is not well understood is that Wai-kato’s economy is diverse,” he says.
This is a sentiment shared by Waikato Chamber of Commerce chief executive William Durning.
He admits the low dairy prices will “definitely have an impact” on the region’s economy.
“But I would caution that we shouldn’t think dairy’s the only game in town,” he says.
He says Waikato has many other busi-ness sectors that remain strong. This view is reflected by inde-pendent studies.
The ASB Main report – which measures the per-formance of New Zealand’s regional economies – gave the Waikato region four out of five stars.
The region’s employment grew by 4.3% in June, second only to the Bay of Plenty, and was described by the report as a “standout performer.”
As well as favourable employment figures, Mr Penny says Waikato’s hous-ing sector is performing well,
with the construction sector paving the way for a lot of growth.
ANZ’s latest regional trends report paints a similar picture, revealing Waikato’s economy is on the right track.
The region recorded 1.4% growth quarter-on-quarter for June, with the annual growth, predicted to ease to 2.7%.
Despite being hit by the dairy downturn, the report says Waikato’s economy is still growing at a reasonable pace.
“The residential prop-
erty market continued to strengthen, as the spillover from the buoyant Auckland housing market filtered into surrounding regions,” it says.
Waikato house sales vol-umes lifted 15.4% in the three months ended July, up 69.2% from 2014. Median house prices were also up 15.9% from the previous year.
Perhaps most impor-tantly, consumer confidence
in the June quarter in the Waikato has lifted.
Although business confi-dence has slipped, it remains “in positive territory,” the report says.
Mr Durning says indus-tries such as beef produc-tion are booming across the region.
Figures from Rabobank have revealed the global beef market is poised to benefit from an increased demand from China for red meat.
Rabobank analyst Matt Costello says New Zealand’s beef industry will reap these rewards.
He says New Zealand is in the perfect position to take advantage of China’s taste for red meat.
Mr Durning says although there will probably be some short-term challenges, the long term view of the region across the next 20-30 years is optimistic.
“That’s not just for the towns and cities within the region but for New Zealand overall,” he says.
Dairy downturn: Should Waikato be crying over spilt milk?
20 SPECIAL REPORT: SPOTLIGHT ON WAIKATO / The National Business ReviewSeptember 4, 2015
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WILLIAM DURNING: Waikato has many business sectors that remain strong
As many regions prepare for the downturn, the
Waikato looks to be beating the dairy blues
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LEADING ATTRACTION: The Lord of the Rings movie set featuring Hobbiton at Matamata
Continued P22
SPECIAL REPORT: SPOTLIGHT ON WAIKATO 23The National Business Review / September 4, 201522 SPECIAL REPORT: SPOTLIGHT ON WAIKATO / The National Business ReviewSeptember 4, 2015
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growth in the area and is looking for study areas in which it will stand out from other tertiary providers.
Courses which have been identified include sport sci-ence, civil engineering and agri-engineering, which is a no-brainer seeing Waikato is the heart of dairy country.
With more than 12,000 students – and about a third of those over 25 years old – the university generated $998 million revenue for the New Zealand economy last year.
International student numbers are expected to rise 11% on last year’s 2000 and domestic numbers are also on a growth track.
Colleen Rigby, senior fellow at the Waikato Man-agement School, says post-graduate business leadership degrees are a popular study option as Waikato’s technol-ogy, agriculture and health sectors grow.
“Waikato has a really good reputation for being theoretical and practical. Our students often say what they learn in the weekend can be applied the following week. We feel we imbed the knowl-edge very strongly over the year.”
Dr Rigby, an organisation-al psychologist who was the regional director for the con-sulting arm of Ernst & Young, says a focus on developing business leaders means one-on-one coaching, individual development plans, and residential case studies. “The graduates are really adding the region, which is one of the fastest-growing and most productive in New Zealand.”
Built on Waikato-Tainui land, the university has a strong link with Maoridom and has high numbers of Maori students and pastoral support networks on cam-pus.
The region’s other tertiary education providers include Waikato Institute of Technol-ogy, Te Wananga o Aotearoa and specialised trade schools.
Image issue being addressed
But attracting students from outside the Waikato is not always easy, since Ham-ilton has suffered an image problem in the past – which wasn’t helped by the unin-spiring ‘Hamilton – more than you would expect’ logo.
However, concerted efforts are being done to
address this, led by the Waikato Regional Council.
“The way people per-ceive a place can have a big influence on its economy. The good news is local busi-nesses and residents largely have a positive image of the Waikato, but research shows the region has not yet been able to project its advantages
nationally and internation-ally,” the council notes.
“This means Waikato is falling short of its economic potential because it is failing to attract its share of invest-ment, visitors, new residents and students.”
The council is running a ‘Waikato Story’ project, which began in mid-2014
with the help of business leaders, community groups and iwi, to present a unified voice to outsiders about the benefits and identity of the Waikato.
Its character partly comes from Hamilton’s strengths as a strong education and commercial centre, and as Dr Rigby puts it, the region is
“buzzing” with a climate of entrepreneurism.
“It feels really positive here at the moment. In gen-eral, business leaders, the public and Waikato’s cham-bers of commerce are feeling optimistic about the future. There’s a lot of interesting things going on.”
Calida Smylie
Waikato’s population is tipped to grow rapidly over the next 50 years, and with it, education opportunities.
A recent report commis-sioned by Waikato Regional Council found the region may grow by about 40% from 425,000 to more than 600,000 people in the next 50 years.
Much of the growth is predicted to be centred in Hamilton, which is the fast-est-growing urban centre after Auckland and due to increase its Waikato popula-tion share from 35% to 44% over the next five decades.
Waikato and Waipa dis-tricts are forecast to increase
population but Otorohanga, Thames-Coromandel, Waitomo and South Waikato are to slowly decline.
The researchers stressed to keep young people in the region it is important to invest in youth, to make sure the right skills are developed for work opportunities.
Unfortunately, Waikato’s rate of youth not in employ-ment, education or train-ing is currently above the national average, at about 14% of the nationwide num-ber, according to Ministry of Business figures.
To address this, more than 150 Waikato leaders gathered at the inaugural Smart Waikato Leadership
Summit last week to launch initiatives targeting youth unemployment.
This includes creating a formal structure for employ-ers and schools to work together to move students successfully from study to work life, with a particular focus on sectors with severe skills shortages.
A regional body in charge of creating an economic development strategy, Waikato Means Business, has identified skills shortages in primary industries, engi-neering, trades, health, busi-ness and ICT sectors.
The University of Waikato is starting to prepare for population and economic
Waikato gets education in order as population booms
three million guest nights in the year to June, with monthly rises of 6-7% during the October-March peak season, accommoda-tion statistics show.
Hobbiton has doubled its annual num-bers for the past five years to the 500,000 that are expected this year. The most recent Hobbit movie, The Battle of the Five Armies, was a huge hit in China and is attracting an increasing number from that country.
One in six (16.6%) jobs held by Waikato District residents are supported by tour-ism, the Tourism Industry Association (TIA) says, making it one of the most dependent in the country.
While the TIA doesn’t break out hotel figures for Waikato, it says Rotorua record-ed its best occupancy level in five years during 2014, while hotels in the Central Park area (Gisborne, Napier, Taupo and Tongariro) collectively recorded the highest average daily rate in the country.
Middle-earth underpins tourismFrom P21
A recent report commissioned by Waikato Regional Council found the region may grow by about 40% from
425,000 to more than 600,000 people in the next 50 years
WAIKATO UNIVERSITY: Gearing up for population and economic growth
SPECIAL REPORT: SPOTLIGHT ON WAIKATO 25The National Business Review / September 4, 2015
Waikato’s icons a ‘nice foundation’ for $350 million tourism growth
UNIQUE: International icons like Waitomo Caves and Hobbiton enable Waikato to be noticed on the world stage
24 SPECIAL REPORT: SPOTLIGHT ON WAIKATO / The National Business ReviewSeptember 4, 2015
www.tcdc.govt.nz/business www.thecoromandel.com
theCoromandel
Come to
good for your soul
Hamish McNicol
Tourism is a $1 billion industry for the Waikato region but it wants to add another $350 million to this in just 10 years’ time.
Doing so, however, will require developing a range of new and expanded experiences, rather than just pushing the same message to potential visitors, the head of the local regional tourism organisation says.
Last month, Hamilton & Waikato Tourism (HWT) chief executive Kiri Goulter was named a finalist in the tourism champion category of the New Zealand Tourism Industry awards.
HWT was established in 2011 to promote the region to
attract visitors, working alongside Tourism New Zealand in the international market, as well as running domestic promotion-al activities itself.
It receives funding from seven council partners, including Hamilton City, Waikato, Waipa, Matamata Piako, Waitomo, Otorohanga and South Waikato districts, as well as through the tourism industry via a range of activities.
HWT recently announced it will now receive $1.215 million from its council partners each year, up from $810,000.
The award Ms Goulter is up for recognises those who have made a “sustained and measurable” contribution to tourism, which for Waikato is built around its “international icons,” she says.
“We have a small number but large scale, international visitor experiences that are relatively unique and iconic on the global stage.
“The strength of icons comes down to their uniqueness.”Ms Goulter points to the Waitomo Caves, the Hobbiton
movie set, Raglan, and Hamilton Gardens as the four key icons which have driven a lot of the region’s growth over the last few years.
Two of these attractions, Discover Waitomo and Hobbiton, are also finalists in the awards, from which winners will be announced next month.
“Our region has seen significant growth in international visitor expenditure over the last few years and both attractions have played a key role in that.”
It has not always been easy for the country’s fifth largest destination by visitor expenditure, however.
As such, it is looking at where there might be opportunity to enhance the visitor offering over the next few years.
“We’ve got a really nice foundation but we wish to further expand and enhance that over the next five to 10 years and attract new investment into our sector as well around various tourism business and experiences.
“That will be focusing on what we do around promoting the region but also developing a range of new and expanded experiences over time. It’s all about growing a $1 billion indus-try into a $1.35 billion, that’s our strategic goal.”
International iconsMs Goulter says Waikato has seen really good growth in tour-ism over the past 18 months to two years but there were “five fairly tough years” during the global financial crisis before then.
Global economies were down and people were travelling less but she says Waikato was one of the regions that fared “quite well” during those times.
“And that’s been off the back of what we call our interna-tional icons.
“Those four icons have been driving a lot of our region’s growth over the last few years.”
Ms Goulter says about $200 million of the annual $1 billion visitor spend in the regions comes from international visitors.
The Waitomo caves are “the” caving destination in New Zealand, she says, while there is no other Hobbiton move set, surfers visit Raglan from across the world for its “renowned” surf, and the Hamilton Gardens, which last year won an inter-national award, attract a million visitors each year.
What is important about the Waikato’s icons is not just their uniqueness but their scale as well.
“When you think international visitors come to New Zea-land and want to see a large part of the country, it’s really important that regions stand out.
“Internationally, we’re very fortunate to have those strong icons that are enabling us to be noticed on the world stage.”
Ms Goulter says the traditional markets – Australia, the US and the UK– have mostly come back strongly, after the US and UK particularly dropped off.
Growth in visitors from Asia, however, including China, India and South East Asia, is booming.
“What we’re also seeing out of China, which is fantastic for regions such as ours, is that our Chinese visitors are starting to stay longer.
“There are much higher-value visitors coming out of China, because they’re staying longer with us and they’re spending more.”
Ms Goulter says this is because of Tourism New Zealand’s global campaign around Middle Earth, from which Hobbiton and Waitomo in particular benefited, because they were expe-riences aligned to the Lord of the Rings movies.
But the hosting of major events this year, such as the Crick-et World Cup and Fifa under-20 Football World Cup, helps pro-vide international media coverage.
“That gives us huge global reach which has really lifted the profile.”
Cycleways and sportMs Goulter emphasises domestic visitors as being a key part of the market as well, accounting for $800 million expenditure each year.
But, while domestic guest nights into the region have grown, domestic expenditure has been sluggish.
She sees business events, such as confer-ences, as being a key strategy for “extracting greater value” from domestic visitors.
“They don’t just come for the conference, it’s a high-value market.”
Ms Goulter says cycle tourism and oppor-tunities around high-performance sport will also be key.
The government has invested in three cycleways across the region, which she says is a great activity for friends and family.
But Waikato also boasts a new velodrome
in Cambridge, as well as Lake Karapiro.“High-performance sport presents us with
some quite exciting opportunities into the future because we can host not just national but international events within our region and that brings athletes and visitors into the region.
“The sector’s a key driver of the region’s economy and so this is the role that we have to play and the opportunity we have for eco-nomic development.”