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Report to:

Bay of Connections

UPDATE OF THE BAY OF CONNECTIONS REGIONAL

ECONOMIC DEVELOPMENT STRATEGY:

ECONOMY, INDUSTRY PROFILE, AND PROJECTIONS

Prepared by

Jason Leung-Wai

Hugh Dixon

Kel Sanderson

Dr Ganesh Nana

August 2011

Copyright© BERL

BERL ref #5040

JEL Classification: R11 Regional Economic Activity; Growth, Development and Changes

2 Bay of Plenty Economic Profile Bay of Connections

August 2011

1 Executive Summary

This report is the first step in refreshing the 2008 Bay of Connections Regional Economic Development Strategy.

The purpose of this report is to explore what has changed, what is working and refocus the strategy to build on

what has already been done successfully. In addition, this report provides a new regional economic development

strategy framework that will support the Bay of Connections in identifying actions, generating outputs, and

delivering outcomes that grow the economy of the Bay of Plenty.

The focus of the strategy is on clarity and simplicity, with clear outcomes and a single primary measure of

success - employment. To summarise, the strategy focuses on aspirational employment growth delivered

through sector-based interventions.

As a sector based approach, interventions are at the sector level. As such, sectors selected need to:

be based on a regional capability or comparative advantage

be aligned with nationally competitive sectors

have strong sector buy-in and leadership

have areas/issues where intervention can support transformative growth.

Business and, indeed, the region, do not operate in a vacuum. Sector strategies and interventions need to be

considered in light of the regional, national and international economic environment, and global megatrends that

will affect what is demanded and how it is produced in the future. We expect that the New Zealand economy will

continue to be focused on export-based sectors. However, the international market will remain uncertain and

volatile over the next decade. In general, people are ageing, more mobile (nationally and internationally) and

demanding more. The environment and resources will matter more – sustainability is a key concept.

The Bay of Plenty region accounts for around six percent of the country’s population and employment, and five

percent of national GDP. In general, the region has tended to perform slightly better than nationally over the

longer terms (10 and 15 years) although change has been relatively consistent with national. Positive

performances have been driven by the Western Districts – Tauranga and Western Bay of Plenty; with Rotorua

and the Eastern Districts not performing as well as nationally. In particular population growth has been twice the

national average in the Western Districts, whereas they have been constant to falling in the other districts.

The industry analysis considered size, growth, and concentration of activity across industries in terms of both

employment and GDP. The analysis considered industry activity in the Bay of Plenty region as a whole, as well

as broken down into the three sub-regions and the six local authorities.

Based on the economic environment and an industry analysis within the Bay of Plenty and nationally, there are

13 key sectors within the Bay of Connections region that warrant consideration for inclusion in the Bay of

Connections Strategy. These are:

Kiwifruit

Dairy

Meat

Other Food Cultivation &

Processing

Forestry

Energy

Transport & Logistics

Tourism

ICT

Tertiary Education

Emerging Technologies

Marine

Aquaculture


August 2011

These sectors currently account for a third of regional employment and 35 percent of regional GDP. They are

largely consistent with nationally identified growth sectors and most are sectors where there are active industry-

led growth strategies.

While significant at a regional level, many of these sectors are geographically located in one or two of the sub-

regions.

Over the next 15 years, the majority of these sectors are expected to grow at a faster rate than other sectors in

the region.

Employment in the Bay of Plenty region is projected to grow at 1.5 percent per annum, which is 1.3 times the

national rate (1.0 percent). Employment is projected to increase by 1,360 annually, reaching 126,000 by 2026.

Employment in the strategic sectors is expected to grow at an even faster rate of 1.8 percent per annum, which is

1.6 times faster than employment growth across all industries and 1.4 times faster than the Other (non-key)

Industries in the Region. Of the projected additional 1,820 FTEs expected annually, 748 are likely to come from

the key sectors.

The key thing to note in this analysis is that

these forecast growth rates are what could be

expected and would likely occur if the Bay of

Connections did “nothing”.

However, the purpose of Bay of Connections

is to encourage growth in the Bay of Plenty

region and any intervention should result in an

increase in activity “above” what could be

expected. It is this “aspirational” growth that

underpins the Bay of Connections strategy

and forms the next stages of this project.

Assuming that these are the expected employment outcomes, the objective of the Bay of Connections strategy

would be to move these sectors up and to the right. The level to which the Bay of Connections strategy can

achieve this for each sector is what will determine the sectors supported.

1.1 Next steps

Stakeholder consultation and buy-in

Underpinning the success of the strategy is the contribution and buy-in from the region’s stakeholders.

Stakeholders need to agree on the approach and the key sectors and buy into and “own” the aspirational targets

for the aggregated strategy but also the individual sectors.

In particular, there needs to be agreement and buy in at the governance and management level, the sector

participants, central government agencies, and the civic leadership level. This will be achieved through a

strategy forum to be held in September 2011, but also through discussions within the various stakeholder groups.

Aquaculture

Forestry

KiwifruitDairy

Other Food Cultivation & Processing

Energy


ICT

Marine

Tourism


Meat

Tertiary Education

0%

1%

2%

3%

4%

5%

6%

7%

8%

0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000

% P

A I

ncr

eas

e

Additional FTEs to 2026source: BERL Regional Database and CGE Forecast to 2026

average growth rate of non-key industries


August 2011

Review and confirm the sector strategy action plans

Existing action plans need to be analysed to identify the potential employment and value added outcomes from

the interventions. For those sectors where strategies have not yet been developed, estimates of possible

outcomes need to be made

Align the action plans to allow an evaluation and monitoring framework

This involves identifying the expected outcomes of each sectors action plans by year. This will allow for annual

assessment of performance of each sector, as well as the ability to assess the performance of the strategy as a

whole. This is not expected to be a straight line increase as it will take into account the length of time required to

achieve the outcomes.

Assess the growth potential of strategic sector plans and align with the aspirational growth projection

The strategy scenario needs to be aspirational. In particular it needs to be a stretch target well beyond what

could be achieved if Bay of Connections did not exist. The aspirational target will be set based on a reviewed

BAU scenario and identified actions and outcomes for each sector. These targets will be developed with the

governance groups, particularly in relation to their existing involvement in sector strategies.

Draw up and deliver the updated the Bay of Connections Strategy

This pulls together the front end of the strategy – the vision, the themes and the desired outcomes; and combines

these with the key sectors and expected outcomes. The strategy should provide a clear picture of what it

expects to deliver.


August 2011

Table of Contents

1 Executive Summary ........................................................................ 2

1.1 Next steps ........................................................................................................... 3

2 Introduction ..................................................................................... 7

2.1 Approach ............................................................................................................ 7

2.2 A sector-based approach .................................................................................... 8

2.3 Format of the Report ......................................................................................... 10

3 National and International Environment ...................................... 11

3.1 International Economy ...................................................................................... 11

3.2 National Economy ............................................................................................. 12

3.3 Global Megatrends ........................................................................................... 12

4 Bay of Plenty Economy ................................................................. 15

5 Industry Analysis .......................................................................... 19

5.1 Employment ...................................................................................................... 19

5.2 GDP .................................................................................................................. 21

5.3 Largest and fastest growing industries ............................................................. 25

5.4 Location Quotients ............................................................................................ 37

6 Review of Strategic Sectors ......................................................... 41

6.1 Approach .......................................................................................................... 42

6.2 Summary of employment and GDP in 2010 ...................................................... 44

6.3 Location Quotients ............................................................................................ 48

6.4 Relationships between regional and national sectors and sector strategies ..... 49

7 Business as Usual Projections .................................................... 51


August 2011

Tables and Figures

Tables

Table 2.1. Growth Sectors in New Zealand ..................................................................................... 9

Table 2.2. Some current national sector strategies .......................................................................... 9

Table 3.1. Global megatrends – some examples ........................................................................... 14

Table 4.1. Regional Structure ........................................................................................................ 15

Table 4.2. Key Economic Indicators .............................................................................................. 16

Table 4.3. Growth in Key Economic Indicators .............................................................................. 17

Table 5.1. Largest industries by employment by sub-Region, 2010 and 1995 ................................ 28

Table 5.2. Largest Industries by GDP by sub-Region, 2010 and 1995 ........................................... 30

Table 5.3. Rate and absolute growth by FTEs, 1995 to 2010 ........................................................ 32

Table 5.4. Rate and absolute growth by FTEs, 1995 to 2010 (cont...) ............................................ 33

Table 5.5. Rate and absolute growth by GDP, 1995 to 2010 ......................................................... 35

Table 5.6. Rate and absolute growth by GDP, 1995 to 2010, (cont...) ........................................... 36

Table 5.7. Bay of Plenty Location Quotients .................................................................................. 37

Table 5.8. Top 10 LQs by sub-Region ........................................................................................... 38

Table 5.9. Top LQs by local authority ............................................................................................ 39

Table 6.1. Bay of Connections 2007 sectors ................................................................................. 41

Table 6.2. Key sector industry composition ................................................................................... 43

Table 6.3. FTE employment in key sectors .................................................................................... 46

Table 6.4. GDP in key sectors ....................................................................................................... 47

Table 6.5. Key sector LQs – 1995 and 2010 .................................................................................. 48

Table 6.6. Key Sector Employment LQs by sub-Region, 2010 ....................................................... 49

Table 6.7. Relationships between key regional and national growth sectors and sector strategies 50

Table 7.1. New Zealand employment projections to 2026 .............................................................. 51

Table 7.2. BAU employment projections for Bay of Plenty to 2026 ................................................ 52

Figures

Figure 3.1. New Zealand GDP 1995 to 2010 ................................................................................. 12

Figure 4.1. Population, GDP, Employment and Businesses in the Bay of Plenty region, 2010 ....... 16

Figure 4.2. Population, GDP, Employment and businesses growth, 1994 - 2010 ........................... 18

Figure 5.1. Employment in Bay of Plenty by Industry, 2010 ........................................................... 19

Figure 5.2. FTEs by BOP sub-Region, 2010 .................................................................................. 20

Figure 5.3. Comparison of industry employment by sub-Region .................................................... 21

Figure 5.4. GDP in Bay of Plenty by Industry, 2010 ....................................................................... 22

Figure 5.5. GDP by BOP sub-Region, 2010 .................................................................................. 24

Figure 5.6. Comparison of industry GDP by sub-Region, BOP and New Zealand .......................... 24

Figure 6.1. Key sector employment and GDP in BOP region, 2010 ............................................... 44

Figure 7.1. Bay of Plenty BAU employment projections to 2026 .................................................... 53

Figure 7.2. Rate and level of employment growth .......................................................................... 54


August 2011

2 Introduction

The initial Bay of Connections Strategy “One Region. One Goal. One Future.” was implemented in 2008 as the

economic development strategy for the Bay of Plenty region. A large amount of consideration and consultation

went into the development of the Strategy. The strategy had clear purpose – a vision and a mission – and values

to guide activity. The Strategy had six high level outcomes, identified ten economic opportunities, and nine

guiding principles for strategy implementation. There were four themes based around globally competitive firms,

world class infrastructure and skills, environmental sustainability and innovation and productivity.

All of these components of the strategy remain valid. The purpose of the update to the strategy is not to change

the fundamental underpinnings of the strategy, but to explore what has changed, what is working and how we

might refocus the strategy to build on what has already been done successfully and to continue to work towards

achieving the identified outcomes. Indeed, actions identified in the strategy are still being implemented. Activity

continues in a number of sector strategies such as Aquaculture and Food Cultivation. New sector strategies are

being implemented in Energy, Forestry and Transport & Logistics. Activity is also continuing in the areas of

Broadband & Communications, Labour & Skills, and Māori Economic Development.1

2.1 Approach

In updating the Bay of Connections strategy, the focus is on clarity and simplicity. There will be clarity in that a

clear set of outputs are set as the goal of the strategy. There will be simplicity in that the outputs will be limited to

one key measure and a limited set of secondary measures.

First and foremost this is an economic growth strategy. That is, the end-game is an increase in economic

activity. Second the primary means of achieving or supporting economic growth is through a sector-based

approach. That is supporting and facilitating industry growth in areas where the region has a comparative

advantage and where the industry has national or global growth potential.

It is important to be able to clearly identify the outputs of the strategy and be able to relate them to the action and

measure the change. Our proposal is that the key measure of strategy success is an increase in employment

over and above what would be expected without an intervention. A secondary set of measures can be around

GDP, which can reflect increases in productivity or increased value add. It is these outputs that will allow the

region to achieve economic growth.

Ultimately to bring discipline and clarity to the strategy, there is a need to

a) focus activity into sectors where the region has a strong comparative advantage, and

b) identify clear and achievable (although stretch) targets for those sectors to achieve economic growth

outputs.

Thus, this update concentrates on the 13 areas of focus identified in the initial strategy to review, reconfirm or

refocus efforts.

1 This is not to say that the strategy fundamentals cannot change. These will be reviewed in the next stage of the update to

ensure that they are still consistent with what the region is trying to achieve with the Bay of Connections strategy. However, the focus of this report is on determining the sectors that should be supported through the Strategy.


August 2011

A sector focus does not necessarily mean that non sector focus areas in the current strategy such as labour and

skills, Māori Economic Development, or infrastructure projects (broadband & communications) are dropped.

These are extremely important focus areas for the region and often the actions or outcomes will affect a number

of sectors. The updated approach will consider the role of these non sector focus areas and identify how they

can contribute to each of the sector strategies.

Therefore, this analysis aims to identify those sectors that have the potential to make major contributions to

economic growth in the Bay of Plenty region. The analysis:

provides the context in which these industries operate, in terms of the regional, national and

international environment

looks at the current structure of activity both within the region as well as within New Zealand

compares industry performance, both against other industries, but also relative to the industry in New

Zealand.

From this analysis a set of sectors are identified that can be considered worthy of support to encourage and

enhance their growth.

2.2 A sector-based approach

Ultimately, a regional sector approach will be most successful where it:

is based on a regional capability or comparative advantage

is aligned with nationally competitive sectors

has strong sector buy-in and leadership

has areas/issues where intervention can support transformative growth.

The Ministry of Economic Development has prioritised a number of sectors as key to achieving the government’s

Economic Growth Agenda. These are:

Food & Beverage

Tourism & Major Events

Petroleum & Minerals

ICT

Screen Industry

Government Procurement

Finance Sector

The selection of these sectors is based on a combination of:

high levels of productivity and competitive advantage

significant scale

high rates of export growth

susceptible to government action.

A number of other agencies have considered sectors that have growth potential. These agencies include the

Foundation for Research, Science and Technology, the Ministry of Research, Science and Technology (now


August 2011

combined to form the Ministry of Science and Innovation), Investment New Zealand, and New Zealand Trade and

Enterprise.

A recent report by BERL looking at high growth sectors (BERL, 2010) identified the following groupings of

industry where New Zealand has a competitive advantage in a global market.

Table 2.1. Growth Sectors in New Zealand

Sector Industry areas

Agritech Dairy; Meat; Seafood; Fruit & Vegetables; Wine; Specialty Foods Forestry Silviculture; Wood Processing; Building & Interiors. Infrastructure Infrastructure Biotechnology Agricultural, Industrial; Animal & Human Health; Animal Derived Therapeutics; Natural

Products/Bioactives. Clean Technology Clean Fuels; Clean Materials Novel Materials Plastics; Composites; Metals Creative Sector Screen Production; Television; Music; Design; Publishing; Fashion; Textiles; Digital Content. ICT Productivity Improvement Tools; Data Management Tools. Health & Medical Technologies

Drug Discovery & Delivery Systems; Biomedical/Healthcare Research; Health IT; Diagnostic and Imaging Devices; Assistive and Rehabilitative Devices.

High Value Manufacturing – Software, Electronics, Sensors

High Temperature Superconductors; Specialist Wireless, Mobile Spatial Tracking, Monitoring & Remote Management Technology; Sensing Technologies; Nano-Technologies; Precision Instruments.

Engineering Light & Heavy Engineering Defence Defence Marine Marine Aviation Aviation Education Agriculture, aviation systems, tourism and hospitality.

There is some relationship between these growth sectors and the sectors identified by MED as the focus for the

Economic Growth Agenda.

Not unexpectedly, a number of these sectors have identified a strategy for growth, either through their industry

associations, or with the support of government. Industries that have developed strategies (that we are aware of)

include:

Table 2.2. Some current national sector strategies

Industry Strategy or Industry Analysis

Dairy Strategy for New Zealand Dairy Farming (Dairy New Zealand, 2009) Meat Red Meat Sector Strategy (2011) Seafood The New Zealand Aquaculture Strategy (LECG, 2006) Fruit and Vegetables Growing a New Future (Horticulture New Zealand, 2009) Specialty Foods Leveraging Growth in the Emerging Functional Foods Industry: Trends and Market

Opportunities (PriceWaterhouseCoopers, 2009) Forestry Wood Processing Strategy (2000-2003), Forest Industry Development Agenda (FIDA) Infrastructure National Infrastructure Plan (National Infrastructure Unit, 2010) Biotechnology Driving Economic Growth through Bio-based Industries (NZBIO, 2009)

New Zealand Bioenergy Strategy (Bioenergy Association of New Zealand, 2010) New Zealand Biotechnology Strategy (MORST, 2003)

Clean Technology A Clean Economy Vision for New Zealand in 2025 (PriceWaterhouseCoopers, 2009) Textiles Natural Fibre Export Strategy (New Zealand Textiles Association) Digital Content Digital Strategy 2.0 (Ministry of Economic Development, 2008)

New Zealand Software Development Industry (BearingPoint, 2007) Health and Medical Technologies

Global Lifestyle of Health and Sustainability (Moxie Design Group Ltd, 2008) Review of the Human Therapeutics Industry’s Economic Value to New Zealand (LECG, 2010) The Importance of New Zealand’s Human Therapeutics Sector in Future Economic Growth (NZBIO Health, 2009) In Pursuit of a Global Ambition. Strengthening the New Zealand Medtech Value Chain (NickBar & Associates, 2010)

Aviation New Horizons: A Report on New Zealand’s Aviation Industry (Knotridge Ldt, 2010) Tourism New Zealand Tourism Strategy 2015 (2007) Marine Marine Sector Feasibility Study (2009); NZ Marine Strategic Plan (2010)


August 2011

While not exhaustive, the strategies provide evidence that there is significant effort to try to grow particular

sectors. It is important that the Bay of Connections sectors are consistent with nationally competitive sectors, but

also that the sectors themselves are looking to grow. It is this synergy that will allow successful actions, outputs

and outcomes.

While sectors should be aligned to national competitive advantages and a global market, ultimately, the selection

of sectors needs to be based primarily on the region’s comparative advantage. For example, in the case of

Auckland, sectors that have been identified include: high value manufacturing and services – Marine, Health

Technologies, Electronics, Machinery & Equipment, Technical Services, Metals/Metal Products, and Paper

Products; Business Services; Transport Services; Tourism; Processed Food & Beverage; Screen Production;

Export Education.

The identification and selection of these sectors is based on a number of factors including: the share of national

activity, research into Auckland’s areas of advantage and distinctiveness, the contribution to export growth and

value added, New Zealand’s areas of international comparative advantage, the presence of clusters, specific

issues that can be overcome through sector based support.

2.3 Format of the Report

The report is broken down into six sections. Chapter 3 looks at the international and national economy, as well

as global trends, to provide perspective on the economic environment within which the Bay of Plenty operates.

Chapter 4 provides a review of the Bay of Plenty economy, both in 2010 but also over the last 15 years. The

analysis is at a regional level, but also broken down into the three sub-Regions – Western Districts, Eastern

Districts, and Rotorua.

Chapter 5 provides an in-depth industry analysis of the region, looking current and trend activity broken down by

53 industries at a regional and sub-Regional level.

Chapter 6 focuses in on the key sectors, which have been identified through the existing Bay of Connections

strategy, but also incorporating the findings from the previous chapter.

Chapter 7 takes growth in the key sectors over the last 15 years and projects this forward to identify expected

growth in 2026. The analysis is based on a conservative national growth projection where the world economy

grows at 2.9 percent per annum.


August 2011

3 National and International Environment

The Bay of Plenty region does not operate in a vacuum. Activity is influenced by actions within the region. But

what happens within the north island, New Zealand and, indeed, the world, also has a bearing on the ability for

the Bay of Plenty region to enjoy socio-economic success.

Two of the themes noted in the 2008 long-term plan are:

more globally competitive firms in the Bay of Plenty and

world class infrastructure and skills to catalyse economic development.

Both of these themes suggest that the Bay of Plenty region is focusing on being a part of a global economy. The

strategy update needs to be considered in light of the national and international environment.

3.1 International Economy

The key words for international markets over the short and medium term are uncertainty and volatility.

Recent economic outlook reports by both the World Bank and the OECD suggest that, to an extent, the Global

Financial Crisis (GFC) is no longer the main dictator of economic activity in developing countries. Developed

countries, however, are still facing the fallout from the GFC, with the OECD identifying the key challenges being:

dealing with high unemployment and preventing it from becoming entrenched; sustaining growth and avoiding

stagnation; progressing fiscal consolidation; and managing global imbalances.

The effects of the earthquake and tsunami in Japan, and the political turmoil in the Middle-East and North Africa

have contributed to a modest slowing in global industrial production and trade.

More recently, issues around the US economy and European debt has seen global sharemarket falls similar to

2008 with some commentators suggesting a double dip recession for the world economy.

As always, the consensus going forward is for solid growth led by developing countries. Downside risks are

posed by high food prices, possible additional oil-price spikes and lingering post-crisis difficulties in high-income

countries.

The latest GDP forecasts from the World Bank suggest that GDP Growth will decline slightly over 2011 to3.2

percent before rising again to 3.6 percent in 2012 and 2013. Growth in Developing countries however, is

expected to be around 6.3 percent to 2013. The OECD expects GDP growth in the OECD area to be 2.3 percent

in 2011, increasing to 2.8 percent in 2012.

BERL has assumed that world GDP growth will average 2.9 percent per annum over the scenario period to 2026.

This is consistent with the above forecasts albeit slightly down on the world historical growth performance over

time. The reason a conservative estimate of world growth has been applied is the definite downside risk of the

fallout from the GFC, possibility of further spikes in oil prices, and rapidly rising commodity and food prices.

In any respect, we can expect continued change in capital markets and the availability of investment capital.

Both how it is allocated (regulation) but where it is allocated into the future.


August 2011

3.2 National Economy

The New Zealand economy has the

potential to benefit from the current

escalation in commodity prices and

indeed food prices, particularly as

agricultural products account for a

significant proportion of our exports. Oil

has passed Wood again to become our

third largest export after Dairy and Meat.

If further discoveries are found it isn’t

difficult to envisage oil becoming our

largest export industry by the end of the

scenario period.

The effect of the Christchurch earthquakes will be played out over the next five to ten years. In 2010, Canterbury

accounted for around nine percent of New Zealand GDP and FTE employment. However, it is about forty

percent of the South Island economy. It is the major city and is a major facilitator of a number of industries and

activity including ICT and tourism. If, how, and when it recovers will have a significant bearing on New Zealand’s

economic performance going forward. In the short term, however, it will be sucking up a large level of resources,

which will result in economic activity over the next five to ten years.

The two key factors affecting New Zealand's growth opportunities are global growth and access to markets,

particularly as New Zealand is primarily an export-focused economy reliant on international trade for growth.

Tied into this scenario, demand for commodities and food is also key to higher growth considering our current

industry structure and comparative advantages. Finally exchange rate volatility will impact on New Zealand’s

ability to compete, particularly in the price driven commodity market.

Issues arise around sustainability and environmental issues, with areas such as water, mining, energy supply

and resource management being potential opportunities or threats to growth.

In terms of the New Zealand economy, BERL expects real GDP growth to average 2.6 percent to 2026. This is

slightly lower than the average growth over the last 15 years of 2.75 percent but is predicated on having to

recover from the recent recession.

3.3 Global Megatrends

Finally, there are a number of trends that are occurring globally that will impact on how we do things and what will

be demanded from consumers in the future. In several cases these trends support the key sectors in the Bay of

Plenty region, but also provide focus for sector strategies going forward.

People are ageing, on the move, and demanding more

In general, the world is getting older, hungrier, more demanding, and more mobile. The populations of OECD

countries are ageing and experiencing lifestyle and diet related health problems. At the same time there are high

fertility rates and problems of not enough food for millions in poor countries.

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

source: BERL Regional Database 2010

Figure 3.1. New Zealand GDP 1995 to 2010


August 2011

This creates a number of issues around how we support an aging population, but also creates an opportunity

around how we interact and benefit from an older population that in many cases can continue to operate

effectively and contribute to an economy where there is a premium on knowledge, and physical ability does not

matter as much.

As well, the workforce is increasingly mobile. As noted by CSIRO “People are changing jobs and careers more

often, moving house more often, commuting further to work and travelling around the world more often.”

Within this, is a desire by people to live in a high amenity value community where they can enjoy “experiences”.

This is driven by changes where people are increasingly resource rich but time poor, and where the type of jobs

and technology is enabling work and life to overlap. They are also becoming more sophisticated consumers

demanding more personalised products and services. Growth of the services sector of western economies is

being followed by a second wave of innovation aimed at tailoring and targeting services.

There is a continuing trend towards Mega Cities, Mega Regions, Mega Corridors and, with accelerating

technological change and E-Mobility. With all these changes in technology and the more sophisticated, mobile

worker/consumer, there is a need for cities to be smart and connected globally.

The environment matters more

There are increasingly severe consequences of climate change and (arguably) an increasing number (or impact

due to increasing built environment) of natural disasters – Earthquakes, Tsunami, Flooding, Volcanic eruptions.

As well there is an increasing environmental pollution load as a result of increased population, consumption and

waste. This can create opportunity for the smart use of sustainable resources and building materials (such as

wood products).

Globally, natural resources are being used up unsustainably, led by increasing demand for those resources

through economic and population growth. Coming decades will see an increasing focus on resource use

efficiency. This creates demand for green energy (such as geothermal) and more efficient and innovative food

production such as farmed seafood and traceability.

Water is becoming increasingly scarce and will be an extremely important commodity going forward (as it is

currently). Sustainable water use as well as its storage, allocation and application will be important issues for

New Zealand.


August 2011

Table 3.1. Global megatrends – some examples

CSIRO (2010) Frost & Sullivan (2011) EEA (2010)

More from Less – a world of limited resources. This relates to

the world’s depleting natural resources and increasing demand

for those resources through economic and population growth.

Coming decades will see an increasing focus on resource use

efficiency.

A personal touch – Personalisation of products and services.

Growth of the services sector of western economies is being

followed by a second wave of innovation aimed at tailoring and

targeting services.

Divergent demographics – older, hungry and more demanding.

The populations of OECD countries are ageing and

experiencing lifestyle and diet related health problems. At the

same time there are high fertility rates and problems of not

enough food for millions in poor countries.

On the Move – Urbanising and increased mobility. People are

changing jobs and careers more often, moving house more

often, commuting further to work and travelling around the

world more often.

iWorld – Digital and natural convergence. Everything in the

natural world will have a digital counterpart. Computing power

and memory storage are improving rapidly. Many more

devices are getting connected to the internet.

Urbanisation: Mega Cities, Mega Regions, Mega Corridors,

Smart Cities

E-Mobility

Social Trends: Geo Socialisation, Generation Y

SPACE JAM: Congested Satellite Orbits

Future Robotic Technology

Virtual World: Fluid Interfaces and Haptic Technology

Innovating to Zero!

Social: Increasing global divergence in population trends;

Living in an urban world; Disease burdens and the risk of new

pandemics

Technological: Accelerating technological change: racing into

the unknown

Economical: Continued economic growth; From a uni-polar to

a multi-polar world; Intensified global competition for resources

Environmental: Decreasing stocks of natural resources;

Increasingly severe consequences of climate change;

Increasing environmental pollution load

Political: Environmental regulation and governance: increasing

fragmentation and convergence


August 2011

4 Bay of Plenty Economy

In 2010, the Bay of Plenty region has an estimated population of 270,400, accounting for six percent of

New Zealand’s population. The Bay of Plenty region generates $10.17 billion in GDP, five percent of

New Zealand’s total GDP. With 104,800 FTEs, it accounts for six percent of New Zealand’s

employment. There are 34,100 businesses in the Bay of Plenty region, accounting for seven percent of

all businesses in New Zealand.

Even within the Bay of Plenty region, industry activity is localised.2 Where required we have also looked

at the analysis by the six districts. This is particularly the case in the area of location quotient analysis.

To allow more accurate identification of activity, we have broken the region into three sub-Regions. The

groupings of region, sub-Region and Districts is shown in Table 4.1.

Table 4.1. Regional Structure

Region Sub-Region Local Authority

Bay of Plenty region

Western Districts

Tauranga

Western Bay of Plenty

Rotorua Rotorua

Eastern Districts

Whakatane

Kawerau

Ōpōtiki

Breaking the analysis down into the three sub-regions (see Figure 4.1), the Western Districts account for

57 percent of the Bay of Plenty region’s population and GDP; and 58 percent of its employment.

Rotorua accounts for 25 percent of the Region’s population; 26 percent of its employment; and 27

percent of its GDP. The Eastern Districts accounts for 18 percent of the Region’s population; and 16

percent of its employment and GDP.

2 For example, tourism in Rotorua, Kiwifruit production in Tauranga/Western Bay of Plenty, Forestry in Kawerau and

so forth.


August 2011

Figure 4.1. Population, GDP, Employment and Businesses in the Bay of Plenty region, 2010

Table 4.2 presents the key economic indicators for the sub-Regions, the Bay of Plenty region and New

Zealand as at March 2010.

Table 4.2. Key Economic Indicators

GDP per capita and GDP per FTE are lower in the Bay of Plenty region than nationally. GDP per capita

of $37,600 is 84 percent of national GDP per capita, and GDP per FTE of $89,775 is 95 percent of

national GDP per FTE.

GDP per capita and GDP per FTE are lower in each sub-Region than nationally. However, they are

highest in Rotorua. Eastern Districts has the lowest GDP per capita, which is likely a reflection of the

New Zealand, 4,204,945, 94%

Western Districts, 155,256, 3%

Rotorua, 66,395, 2%

Eastern Districts, 48,755, 1%BOP, 270,406, 6%

Population

source: BERL Regional Database, 2010

New Zealand, $187,802, 95%

Western Districts, $5,792, 3%

Rotorua, $2,725, 1%

Eastern Districts, $1,658, 1%BOP, 270,406, 6%

GDP ($m)


New Zealand, 1,835,706, 95%


Rotorua, 26,994, 1%


FTEs


New Zealand, 505,685, 94%


Rotorua, 7,147, 1%


Businesses


Key Economic Indicators

(2010)Western Districts Rotorua Eastern Districts

Bay of Plenty

RegionNew Zealand

Population 155,256 66,395 48,755 270,406 4,204,945

GDP ($m) $5,792 $2,725 $1,658 $10,175 $187,802

FTEs 60,634 26,994 17,129 104,757 1,835,706

GDP per Capita $37,303 $41,049 $34,000 $37,627 $44,662

GDP per FTE $88,287 $93,324 $89,451 $89,775 $94,559

Businesses 21,645 7,147 5,354 34,146 505,685

Business Size 2.8 3.8 3.2 3.1 3.6

Source: BERL Regional Database 2010


August 2011

high proportion of the population not in the work-force; and Western Districts has the lowest GDP per

FTE, which is due to relatively higher employment in lower value added industries.

Businesses in the Bay of Plenty region, with an average of 3.1 FTEs, are smaller than nationally, where

the average business has 3.6 FTEs. However, businesses in Rotorua are larger than nationally, with an

average business size of 3.8 FTEs.

The economic performance of the Region is considered over the short, medium and longer term. Table

4.3 shows the growth in the key economic indicators over three periods – one year, 10 years and 15

years.

Table 4.3. Growth in Key Economic Indicators

The Region has not performed as well as nationally across all indicators in the latest year. Considering

the greater focus of the region on exports, the effect of the recession needs to be factored into the

analysis, particularly over the latest two periods.

In general the Region has tended to perform slightly better than nationally over the longer terms (10 and

Western

DistrictsRotorua

Eastern

DistrictsBOP region

New

Zealand

Resident population growth 1.5 0.6 0.1 1.0 1.2

Real Value Added (GDP) growth -1.7 0.3 -1.8 -1.2 -0.4

Employment growth (FTEs) -1.9 -1.7 -2.2 -1.9 -1.7

GDP per capita growth -3.1 -0.3 -1.9 -2.2 -1.6

Labour productivity growth 0.1 1.9 0.3 0.6 1.1

Business units growth -1.5 -2.5 -2.0 -1.8 -1.3

Resident population growth 2.0 0.3 -0.1 1.2 1.2

Real Value Added (GDP) growth 3.1 1.5 2.0 2.5 2.3

Employment growth (FTEs) 2.9 0.8 1.5 2.1 1.9

GDP per capita growth 1.1 1.3 2.1 1.3 1.1

Productivity growth 0.2 0.9 0.6 0.5 0.5

Business units growth 3.0 0.8 1.1 2.2 2.2

Resident population growth 2.6 0.2 0.0 1.4 1.3

Real Value Added (GDP) growth 3.7 1.5 1.6 2.7 2.6

Employment growth (FTEs) 3.1 0.7 1.0 2.1 1.6

GDP per capita growth 1.0 1.3 1.6 1.2 1.3

Productivity growth 0.7 0.9 0.7 0.7 1.1

Business units growth 3.8 1.3 1.6 2.8 2.6

Source: BERL Regional Database 2010

%pa for 1995 - 2010

Key Performance Indicators

%pa for 2010 year

%pa for 2000 - 2010


August 2011

15 years) although change has been relatively consistent with national.

As the line graphs in Figure 4.2 show, the majority of growth has occurred in the Western Districts. Both

Rotorua and the Eastern Districts have not performed as well as nationally. However, because the

composition of the Bay of Plenty region economy is skewed due to the size of the Western Districts,

stellar performance in the Western Districts has tended to pull the Bay of Plenty region performance up.

Figure 4.2. Population, GDP, Employment and businesses growth, 1994 - 2010

Eastern Districts and Rotorua have tended to perform below the New Zealand average over the longer

term. The greatest contrasts in performances are around population growth and business growth.

The most marked variation has been in population, where growth in the Western Districts has been at

double the national average, whereas population numbers in Rotorua and the Eastern Districts have

remained constant to falling.

800

900

1000

1100

1200

1300

1994

19

95

1996

1997

19

98

1999

2000

2001

20

02

2003

2004

20

05

2006

2007

2008

2009

2010

ind

ex

20

00

= 1

00

0

PopulationRotorua Western Districts

Eastern Districts Bay of Plenty Region

New Zealand


600

800

1000

1200

1400

1600

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

ind

ex

20

00

= 1

00

0

GDPRotorua Western DistrictsEastern Districts Bay of Plenty RegionNew Zealand

source: BERL Regional Database, 2010source: BERL Regional Database, 2010

600

800

1000

1200

1400

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

ind

ex

20

00

= 1

00

0

FTEs

Rotorua Western DistrictsEastern Districts Bay of Plenty RegionNew Zealand


600

800

1000

1200

1400

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

ind

ex

20

00

= 1

00

0business units

Rotorua Western DistrictsEastern Districts Bay of Plenty Region



August 2011

5 Industry Analysis

This section provides a detailed analysis of the sectors and industries that contribute to the Bay of

Plenty economy. Industry activity by employment is split broadly across 477 industries as defined by

ANZSIC (Australia New Zealand Standard Industrial Classification 1996). At the more aggregated 53

industry and 17 industry levels, BERL has been able to estimate the contribution of industries to GDP.

Our analysis looks at current and trend (1995 to 2010) employment and GDP contributions at the 17 and

53 industry level by sub-Region, Region and national groupings.

5.1 Employment

Figure 5.1 shows employment in the Bay of Plenty region in 2010 broken down by 17 sectors.

Figure 5.1. Employment in Bay of Plenty by Industry, 2010

The biggest employer in the region is the primary sector (Agriculture, Forestry & Fishing), which

accounted for 14 percent of employment in the economy. Retail Trade accounted for 12 percent of

employment, followed by Manufacturing and Property & Business Services (both 11 percent) and Health

& Community Services (10 percent).

The sector employment pattern in the Bay of Plenty region is relatively consistent with national

employment, although the region has relatively higher employment in the Agriculture, Forestry & Fishing

industry and relatively lower employment in the Finance & Business Services Sector.

Ag, Forestry & Fishing; 15,116; 14%

Mining; 144; 0%

Manufacturing; 11,942; 11%

Elect, Gas & Water

Supply; 419; 0%

Construction; 8,457; 8%

Wholesale Trade; 5,535; 5%

Retail Trade; 12,561; 12%

Accom, Cafes & Restaurants; 5,291;

5%

Transport & Storage; 4,165; 4%

Communication Services; 860; 1%

Finance & Insurance; 1,807; 2%

Prop & Business Services; 11,203;

11%

Govt Admin & Defence; 2,594;

2%

Education; 7,555; 7%

Health & Comm'y Services; 10,833;

10%

Cultural & Rec Services; 2,763; 3%

Personal & Other Services; 3,511;

3%

Bay of Plenty



August 2011

However, the variance in employment becomes much higher when we consider the sub-Regions.

Figure 5.2 shows the absolute employment in each sector broken down by sub-Region.

Figure 5.2. FTEs by BOP sub-Region, 2010

As expected, the Western Districts account for the largest absolute employment in each sector apart

from Cultural & Recreational Services. Rotorua employs almost as many FTEs as the Western Districts

in the Accommodation, Cafes & Restaurants Industry. This reflects the importance of tourism to

Rotorua.

The relative importance of sectors to the sub-Regions is clearer in Figure 5.3, which shows the

proportion of employment in each sector to total employment in that sector. The sub-Region analysis is

also compared to the wider Bay of Plenty region and New Zealand.

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

FTEs

Western Districts Rotorua Eastern Districts



August 2011

Figure 5.3. Comparison of industry employment by sub-Region

Agriculture, Forestry & Fishing is strongest in the Eastern and Western Districts. Agriculture, Forestry &

Fishing accounts for 45 percent of employment in both the Ōpōtiki and Western Bay of Plenty Districts.

Within Kawerau District, however, Agriculture, Forestry & Fishing accounts for less than two percent of

employment.

Manufacturing is strongest in the Eastern Districts, driven by Kawerau District, where the Manufacturing

sector accounts for half of all employment. In contrast, Manufacturing accounts for less than two

percent of employment in the Ōpōtiki District.

The Accommodation, Cafes & Restaurants sector accounts for over eight percent of employment in

Rotorua, compared to 4.7 percent nationally. Similarly, Culture & Recreational Services accounts for

over five percent of employment in Rotorua compared to 2.8 percent nationally.

The Bay of Plenty region as a whole, and across all sub-Regions, has a low proportion of employment in

the Finance & Insurance, and Government Administration & Defence sectors.

5.2 GDP

The flow through of employment to GDP is slightly different due to the value added per FTE in the

different industries, as shown in Figure 5.4.

Rotorua

Western Districts

Eastern Districts

Bay of Plenty

New Zealand

0%

5%

10%

15%

20%

25%

FTEs



August 2011

Figure 5.4. GDP in Bay of Plenty by Industry, 2010

The Property & Business Services sector is the largest contributor to GDP, accounting for 22 percent.

Manufacturing is the second largest sector at 14 percent; followed by Agriculture, Forestry & Fishing at

13 percent.

Again, the Western Districts stand out in terms of contribution, particularly in the Property & Business

Services Industry. The absolute sector contributions to GDP by sub-Region are shown in

Ag, Forestry & Fishing; 1,294; 13%

Mining; 33; 0%

Manufacturing; 1,411; 14%

Elect, Gas & Water

Supply; 211; 2%

Construction; 475; 5%

Wholesale Trade; 616; 6%

Retail Trade; 718; 7%

Accom, Cafes &

Restaurants; 174; 2%

Transport & Storage; 456; 4%Communication

Services; 423; 4%

Finance & Insurance; 472; 5%

Prop & Business Services; 2,219; 22%

Govt Admin & Defence; 335; 3%

Education; 366; 4%

Health & Comm'y Services; 671; 7% Cultural & Rec

Services; 162; 2%

Personal & Other Services; 139; 1%

Bay of Plenty



August 2011

Figure 5.5.


August 2011

Figure 5.5. GDP by BOP sub-Region, 2010

Western Districts is the largest contributor to GDP in all sectors apart from Cultural & Recreational

Services, where Rotorua contributes slightly more. As well the difference between the Western Districts

and Rotorua is small in the Accommodation, Cafes & Restaurants Sector.

The relative importance of industry GDP to each sub-Region is shown in Figure 5.6.

Figure 5.6. Comparison of industry GDP by sub-Region, BOP and New Zealand

0

100

200

300

400

500

600

700

800

GD

P (

$m

)Western Districts Rotorua Eastern Districts


$1,341m

Western Districts

Rotorua

Eastern Districts

Bay of Plenty

New Zealand

0%

5%

10%

15%

20%

25%

GD

P



August 2011

The importance of Property & Business Services, Agriculture, Forestry & Fishing and Manufacturing is

apparent across all sub-Regions. Of particular note is the relative importance of Agriculture, Forestry &

Fishing, and Manufacturing to the Eastern Districts.

In Rotorua, the Cultural & Recreational Services and Accommodation, Cafes & Restaurants sectors

stand out. In the Western Districts, the Transport & Storage sector accounts for a significantly higher

proportion of GDP than in other jurisdictions.

5.3 Largest and fastest growing industries

Analysis of the largest and fastest growing industries is at a more detailed level, where the sectors are

broken down even further into 53 industries. This allows for even more detailed analysis of activity and

performance. The analysis of largest and fastest growing industries is by FTE only.

5.3.1 Largest industries


August 2011

Table 5.1 and


August 2011

Table 5.2 show the largest industries by employment and by GDP for the Bay of Plenty region and sub-

Regions in 2010 and also in 1995. New Zealand is also shown for comparative purposes.


August 2011

Table 5.1. Largest industries by employment by sub-Region, 2010 and 1995

2010 2010 1995

Business Services

Accommodation, Cafes

and Restaurants

Education

Health Services

Agriculture

Personal and Household

Good Retailing

Wood and Paper

Product Manufacturi

ng

Construction Trade

Services

Sport and Recreation

Food Retailing

other; 11,153; 41%

Rotorua


Rotorua FTEs

Business Services 2,447 9.1%

Accommodation, Cafes and Restaurants 2,275 8.4%

Education 2,164 8.0%

Health Services 2,081 7.7%

Agriculture 1,381 5.1%

Personal and Household Good Retailing 1,221 4.5%

Wood and Paper Product Manufacturing 1,130 4.2%

Construction Trade Services 1,121 4.2%

Sport and Recreation 1,019 3.8%

Food Retailing 1,003 3.7%

Forestry and Logging 879 3.3%

General Construction 806 3.0%

Motor Vehicle Retailing and Services 770 2.9%

Community Services 713 2.6%

Road Transport 663 2.5%

Rotorua FTEs








Forestry and Logging 1,000 4.1%

Government Administration 991 4.1%

Food Retailing 943 3.9%


Construction Trade Services 837 3.5%

Food, Beverage and Tobacco 711 2.9%



Business Services Health

Services Services to Agriculture; Hunting and

Trapping

Agriculture

Education


Good RetailingConstruction

Trade Services

Food RetailingAccommodat

ion, Cafes and

Restaurants

General Construction

other; 24,458; 40%

Western Districts


Western Districts FTEs



Services to Agriculture; Hunting and Trapping 4,520 7.5%







General Construction 2,213 3.6%

Community Services 1,868 3.1%

Food, Beverage and Tobacco 1,863 3.1%

Motor Vehicle Retailing and Services 1,685 2.8%

Road Transport 1,436 2.4%

Property Services 1,414 2.3%

Western Districts FTEs












Machinery and Equipment Manufacturing 1,145 3.0%




AgricultureEducation

Wood and Paper

Product Manufacturi

ng

Health Services

Business Services

Services to Agriculture; Hunting and

Trapping

Food Retailing


Good Retailing

Construction Trade

ServicesAccommodat

ion, Cafes and

Restaurants

other; 6,043; 35%

Eastern Districts


Eastern Districts FTEs





Business Services 916 5.3%

Services to Agriculture; Hunting and Trapping 862 5.0%


Personal and Household Good Retailing 730 4.3%


Accommodation, Cafes and Restaurants 593 3.5%

Other Services 593 3.5%



Machinery and Equipment Manufacturing 519 3.0%


Eastern Districts FTEs





Health Services 808 5.5%











Business Services

Agriculture

Health Services

Education


Trapping


and Restaurants


Good RetailingConstruction

Trade Services

Food RetailingGeneral

Construction

other; 43,653; 42%

Bay of Plenty


Bay of Plenty FTEs





Services to Agriculture; Hunting and Trapping 5,521 5.3%











Bay of Plenty FTEs













Government Administration 2,343 3.0%


Forestry and Logging 2,109 2.7%

Business Services

Education

Health Services

Agriculture


Good Retailing


and Restaurants

Construction Trade

Services

Food Retailing

Food, Beverage

and Tobacco

Government Administrati

on

other; 796,453; 43%

New Zealand


New Zealand FTEs













Personal and Household Good Wholesaling 49,076 2.7%

Other Services 45,358 2.5%


New Zealand FTEs















Machinery and Motor Vehicle Wholesaling 33,499 2.3%


August 2011

Business Services

Consistent with New Zealand, Business Services is the largest industry by employment in Rotorua and

Western Districts, as well as the Bay of Plenty region as a whole. However, the proportion of

employment is lower than nationally (around nine percent vs. 12.3 percent nationally). Employment in

Business Services is relatively low in the Eastern Districts at 5.3 percent.

Agriculture

Agriculture is the largest industry in the Eastern Districts and the fourth and fifth largest in Rotorua and

the Western Districts respectively, making it the second largest industry by employment in the Bay of

Plenty region. Nationally, Agriculture is the fourth largest employer at 6.1 percent. Employment in

agriculture is above the national average in the Eastern and Western Districts, but below the national

average in Rotorua District. In 1995, Agriculture was the largest industry in terms of employment within

two of the three sub-Regions, the Bay of Plenty region, and Nationally. In 2010, only the Eastern

Districts has Agriculture as the largest employer.

The obvious change in industry composition has been the relative employment in Agriculture across all

sub-Regions, the Region and Nationally. This has not necessarily seen an absolute decline in

agricultural employment but more an increase in employment in other industries (such as Business

Services) and a change in how agricultural employment is classified (for example, in Services to

Agriculture, Hunting & Trapping).

Accommodation, Cafes & Restaurants

In 2010, Accommodation, Cafes & Restaurants is the second largest industry in Rotorua accounting for

8.9 percent of total employment. It is only the ninth largest employer in the Western Districts and the

tenth largest employer in the Eastern Districts. Combining the results, Accommodation, Cafes &

Restaurants accounts for 5.1 percent of employment, making it the sixth largest employer in the Bay of

Plenty region. Nationally, Accommodation, Cafes & Restaurants account for 4.7 percent of

employment, also the sixth largest employer.

In1995, Accommodation, Cafes & Restaurants was the largest employer in Rotorua and so has dropped

one position. This is in spite of its relative employment in the industry increasing to 8.4 percent from 7.9

percent. The reason behind this is the faster growth in Business Services. Relative employment in the

Accommodation, Cafes & Restaurants industry has increased between 1995 and 2010 in all sub-

Regions, the Bay of Plenty region and nationally reflecting the growth in this sector.


August 2011

Table 5.2. Largest Industries by GDP by sub-Region, 2010 and 1995

2010 2010 1995

Property Services

Forestry and Logging

Business Services

Wood and Paper

Product Manufacturin

g

Health Services

Education

Agriculture

FinanceGovernment Administratio

n

Communication Services

other; 1,022; 37%

Rotorua


Rotorua GDP, 2010$m

Property Services 403 14.8%



Wood and Paper Product Manufacturing 181 6.6%


Education 107 3.9%

Agriculture 105 3.9%

Finance 90 3.3%


Communication Services 84 3.1%



Machinery and Motor Vehicle Wholesaling 68 2.5%


Sport and Recreation 60 2.2%

Rotorua GDP, 2010$m






Education 104 4.7%


Agriculture 83 3.8%




Finance 58 2.7%

Machinery and Motor Vehicle Wholesaling 56 2.5%


Basic Material Wholesaling 52 2.4%

Property Services

Business Services

Health Services

Agriculture


Food, Beverage

and Tobacco

Finance


Good Retailing

EducationServices to Agriculture; Hunting and

Trapping

other; 2,478; 43%

Western Districts


Western Districts GDP, 2010$m







Finance 222 3.8%


Education 180 3.1%

Services to Agriculture; Hunting and Trapping 165 2.8%



Services to Transport 156 2.7%

Electricity and Gas Supply 155 2.7%


Western Districts GDP, 2010$m






Education 118 3.5%



Finance 96 2.9%







Property Services

Wood and Paper

Product Manufacturi

ng

Agriculture


Health Services

Education

Business ServicesGovernment

Administration

Food, Beverage

and Tobacco

Finance

other; 528; 32%

Eastern Districts


Eastern Districts GDP, 2010$m






Education 79 4.7%




Finance 60 3.6%






Eastern Districts GDP, 2010$m





Education 70 5.3%








Finance 29 2.2%



Property Services

Business Services

Agriculture

Health Services

Wood and Paper

Product Manufacturi

ng



FinanceFood, Beverage

and Tobacco

Education

other; 4,262; 42%

Bay of Plenty


Bay of Plenty GDP, 2010$m








Finance 373 3.7%


Education 366 3.6%






Bay of Plenty GDP, 2010$m






Education 292 4.2%




Finance 183 2.7%






Property Services

Business Services


Finance

Health Services

Agriculture

Food, Beverage

and Tobacco

Government Administrati

on

EducationPersonal and

Household Good

Wholesaling

other; 76,077; 41%

New Zealand


New Zealand GDP, 2010$m



Communication Services 12,249 6.5%

Finance 9,944 5.3%












New Zealand GDP, 2010$m








Finance 4,951 3.9%


Communication Services 4,028 3.1%


Electricity and Gas Supply 3,148 2.5%





August 2011

Property Services

The major difference in the industry analysis when comparing by GDP rather than employment is the

appearance of Property Services as the number one contributor to GDP for all jurisdictions. Property

Services includes the economic contribution of home ownership, which does not employ people and is

not necessarily a productive industry in its own right (and which is why it does not appear in the largest

industries in the FTE analysis). Ownership of occupied dwellings accounts for around half of the

Property Services industry GDP at the national level or around eight percent of total GDP.

However, the Property Services industry also includes property operators and developers, real estate

agents and machinery and equipment hiring and leasing, which are productive occupations. Based on

national proportions, taking Ownership of Occupied Dwellings out of the Property Services would see

the contribution of the industry at around half its reported size which, in several jurisdictions, remains

significant.

Business Services

The Business Services industry is the second largest contributor to GDP, accounting for 9.4 percent at a

National Level, up from 6.9 percent in 1995. In the Bay of Plenty region, Business Services is the

second largest contributor to GDP accounting for 6.9 percent, up from 5.2 percent in 1995. As expected

with the main centre of Tauranga, Business Services is strongest in the Western Districts, accounting for

7.5 percent of GDP. This contrasts with the Eastern Districts, where Business Services account for 4.3

percent of GDP. This suggests that many of the required services for businesses within the Eastern

Districts are obtained in either the Western Districts or Rotorua. Indeed, Rotorua businesses appear to

be supported locally, with the Business Services industry accounting for 7.0 percent of GDP.

Agriculture

Nationally, Agriculture is the sixth largest industry, accounting for around 4.5 percent of total GDP. In

the Bay of Plenty region, Agriculture is relatively more important being the third largest contributor to

GDP at 6.0 percent of the Region’s GDP. Agriculture is particularly important to the Eastern Districts,

accounting for 10.5 percent of GDP; whereas in Rotorua, the Agriculture industry only accounts for 3.9

percent of GDP. Since 1995, the relative contribution of the Agriculture industry to GDP has been

declining across all jurisdictions apart from the Eastern Districts. However, as noted in the employment

growth area this is partly explained by a change in classification or activity, with the Services to

Agriculture, Hunting & Trapping industry now accounting for 2.8 percent of GDP in the Western Districts.

Forest Industry

Neither Forestry & Logging and Wood & Paper Product Manufacturing appear in the top 15 industries in

New Zealand in 2010 while, in 1995, Wood & Paper Product Manufacturing was the 15th largest

contributor accounting for 2.1 percent of national GDP. In the Bay of Plenty region, Wood & Paper

Product Manufacturing (5th

) and Forestry & Logging (6th) together account for close to 10 percent of the

Region’s GDP (5.0 percent and 4.6 percent respectively).


August 2011

In Rotorua, Forestry & Logging is the second largest contributor to GDP at 11.0 percent and Wood &

Paper Product Manufacturing is the 4th

largest contributor to GDP at 6.6 percent. The contributions are

even higher in the Eastern Districts where Wood & Paper Product Manufacturing accounts for 12.2

percent of GDP and Forestry and Logging accounts for 6.7 percent.

The rates of growth but also the absolute growth by FTE and GDP for each of the sub-Regions, the Bay

of Plenty region and New Zealand are shown in Table 5.3 through to Table 5.6. This provides a clearer

picture of the industries that have been growing fastest, but also the industries that have been making

the greatest contribution to growth in the various jurisdictions.

Table 5.3. Rate and absolute growth by FTEs, 1995 to 2010

Bay

of

Ple

nty

New

Ze

ala

nd

Focussing on the region, there are five industries that are on both the ten fastest growing and the ten

largest contributions to employment. The growth does appear to be population related with Community

Services, Sport & Recreation, and Health Services making up three of the five. However, the two

largest increases are in Business Services and Services to Agriculture, Hunting & Trapping which

together have added 8,800 jobs over the last fifteen years. The growth in Business Services is

consistent with nationally. However, the growth in Services to Agriculture, Hunting & Trapping

experienced in the Bay of Plenty is not a national phenomenon.

0 10 20 30 40

Defence

Services to Agriculture; Hunting and Trapping

Water Transport

Community Services


Libraries, Museums and the Arts

Business Services

Services to Finance and Insurance

Health Services

Other Services

%pa change 1995 to 2010source: BERL Regional Database, 2010

0 2,000 4,000 6,000

Business Services


Health Services

Education

Community Services

Construction Trade Services

Accommodation, Cafes and Restaurants

Food Retailing

Personal and Household Good Retailing


Additional FTEs, 1995 to 2010Source: BERL Regional Database, 2010

0 10 20 30 40

Other Transport

Services to Mining

Community Services

Storage


Business Services



Other Services



0 50,000 100,000 150,000

Business Services

Health Services

Community Services

Education



Other Services


Food Retailing



Fastest Growing by FTE Absolute increase by FTE


August 2011

Table 5.4. Rate and absolute growth by FTEs, 1995 to 2010 (cont...)

Fastest Growing by FTE Absolute increase by FTE

Ro

toru

a

We

ste

rn D

istr

icts

Ea

ste

rn D

istr

icts

In Rotorua, seven of the ten fastest growing industries are also on the ten largest contributors to

employment. Petroleum, Coal, Chemical & associated Product Manufacturing was the second fastest

growing but also the tenth largest contributor to employment in Rotorua. Metal Product Manufacturing

was the eighth fastest growing industry, although it wasn’t one of the ten largest contributors. The

absolute size of the Accommodation, Cafes & Restaurants industry made it the fifth largest contributor to

0 5 10 15

Community Services

Petroleum, Coal, Chemical & Assoc Prod Mfg



Business Services

Health Services


Metal Product Manufacturing

Personal Services



0 200 400 600 800 1,000

Business Services

Health Services

Community Services



Education






0 10 20 30 40

Defence


Community Services

Air and Space Transport

Business Services



Health Services




0 1,000 2,000 3,000 4,000


Business Services

Health Services

Education


Community Services



Food Retailing

Road Transport


0 20 40 60

Water Transport

Community Services

Food, Beverage and Tobacco




Other Services


Metal Product Manufacturing

Business Services


0 100 200 300 400 500 600 700


Education

Health Services


Community Services

Business Services

Other Services

Food Retailing





August 2011

FTE growth even though it wasn’t one of the ten fastest growing industries (13th

fastest).

In the Western Districts, five industries appear in the top ten for both fastest growing and largest

contributors to employment. Sectors of interest include Services to Agriculture, Hunting & Trapping,

which had the second fastest growth rate and was the largest contributor to employment; and

Accommodation, Cafes & Restaurants, which was the tenth fastest growing and the seventh largest

contributor. Other industries of interest that appeared on the fastest growing list were Air & Space

Transport, and Services to Finance & Insurance.

In the Eastern Districts, there were again five industries in the top ten for both fastest growing and

largest contributors to employment. Food, Beverage and Tobacco was the third fastest growing and the

fourth largest contributor. Services to Agriculture, Hunting & Trapping was the largest contributor to

employment growth and the fifth fastest growing industry (although there wasn’t much in the growth

rates between 2nd

and 5th

). The interesting industry in the Eastern Districts was the more than 40

percent per annum growth in the Water Transport industry.

Table 5.5 and Table 5.6 show the fastest and largest growing industries by the same regional groupings

but by GDP rather than employment. The trends are relatively similar to the FTE analysis although

there are some interesting additional industries that appear.

Both Communication Services and Property Services appear when looking at GDP contribution.

Property Services GDP is related to Owner Occupied Dwellings (with no related employment) and is not

necessarily and industry per se, which means it can be discounted in relation to importance.

Communication Services, however, appears due to the high GDP contribution per FTE, which means

that smaller increases in GDP are unlikely to show through in employment.

Other industries that made a significant contribution to GDP over the last 15 years at a regional level

include Agriculture, Forestry & Logging, and Food, Beverage & Tobacco. Both Agriculture and Food,

Beverage & Tobacco also appear in the top ten GDP contributors at a national level. These industries

are therefore significant to the economic growth of the Region and nationally.


August 2011

Table 5.5. Rate and absolute growth by GDP, 1995 to 2010

Ba

y o

f P

len

ty

New

Ze

ala

nd

Looking at the sub-Regions (Table 5.6) the industries that stand out from a GDP contribution

perspective are:

Forestry & Logging and Petroleum, Coal, Chemical & Associated Product Manufacturing in

Rotorua

Services to Agriculture; Hunting & Trapping in the Western and Eastern Districts

The Food, Beverage & Tobacco industry in the Eastern Districts, and

Communication Services in the Western Districts.

In terms of GDP contribution, the Forestry & Logging industry in Rotorua has contributed more than

double the GDP growth of the next largest industry, Business Services.

In the Western Districts, the largest contributors to GDP are mainly population-growth related.

In the Eastern Districts, the primary sector is the largest contributor with Agriculture, Food, Beverage &

Tobacco and Services to Agriculture; Hunting & Trapping are all in the top ten.

0 10 20 30

Defence

Water Transport




Personal Services

Finance

Other Mining


Health Services

%pa change, 1995 to 2010source: BERL Regional Database, 2010

0 100 200 300 400

Business Services

Property Services

Health Services


Finance

Agriculture





$m, 1995 to 2010Source: BERL Regional Database, 2010

0 5,000 10,000

Business Services


Property Services

Finance

Health Services

Government Administration

Agriculture





Fastest Growing by GDP Absolute increase by GDP


August 2011

Table 5.6. Rate and absolute growth by GDP, 1995 to 2010, (cont...)

Fastest Growing by GDP Absolute increase by GDP R

oto

rua

We

ste

rn D

istr

icts

Ea

ste

rn D

istr

icts

0 2 4 6 8 10

Non-Metallic Mineral Product Manufacturing


Personal Services


Community Services




Finance

Health Services


0 50 100 150


Business Services

Health Services

Wood and Paper Product Manufacturing

Property Services

Finance



Agriculture



0 10 20 30

Defence


Trapping



Other Mining


Business Services

Health Services

Finance

Personal Services


0 100 200 300

Property Services

Business Services


Health Services

Finance



Agriculture

Services to Transport



0 10 20 30

Water Transport



Insurance




Other Services


Finance


0 20 40 60

Agriculture


Health Services

Finance

Government Administration

Business Services

Property Services


Food Retailing

Motor Vehicle Retailing and Services



August 2011

5.4 Location Quotients

The Location Quotient (LQ) is a measure that helps analysts examine the relative concentration of

industry employment in a particular area relative to another larger, or base, area. In this case, New

Zealand is the base area. The measures provide a potentially valuable insight into a local labour

market’s industry structure, relative to the larger base area.

When the LQ ratio is larger than 1.0 the percentage of the employed in the industry locally is higher than

the percentage of the employed in the larger area. Likewise, when the LQ ratio is smaller than 1.0 the

percentage of people employed in this industry locally is smaller than the larger area.

Generally, when the LQ is larger than 1.0 analysts need to be concerned with national or larger

economic pressures on this industry. When the LQ is less than 1.0 the industry is likely to be driven by

local factors. That is, when the LQ is less than 1.0, it can be assumed that the industry is not meeting

the basic needs of its area, whereas an LQ greater than 1.0 suggests that the industry is supplying

outside areas or is a net exporter.

Table 5.7. Bay of Plenty Location Quotients

Table 5.7 shows the industries in the Bay of Plenty region that have location quotients greater than 1.2,

of which there are eight. Also included in the table are the location quotients for that industry by sub-

region.

The primary sector focus is apparent in the LQs, with primary sector activity and transport accounting for

seven of the eight industries. Two sectors stand out, the:

agriculture sector – Agriculture, Services to Agriculture; and Hunting & Trapping; and

forestry sector – Forestry & Logging; Wood & Paper Product Manufacturing.

Transport in relation to these sectors, including the Port, is the likely reason for the high LQs for Other

Transport and Road Transport. Similarly, Basic Material Wholesaling is likely high in support of these

industries.

Looking more closely at the sub-Regions, both Rotorua and the Eastern Districts have high LQ’s within

the forestry sector industries, while Western and Eastern Districts have High LQ’s in the agriculture

sectors. Within transport, Other Transport is high in Eastern and Western Districts, while Road

IndustriesBay of

PlentyRotorua

Western

Districts

Eastern

Districts

Services to Agriculture; Hunting & Trapping 4.1 0.4 5.8 3.9

Forestry & Logging 3.5 8.9 0.7 5.2

Wood & Paper Product Manufacturing 2.8 3.8 1.2 6.8

Other Transport 2.5 0.8 2.2 6.3

Agriculture 1.3 0.8 1.2 2.2

Motor Vehicle Retailing & Services 1.2 1.2 1.2 1.3

Road Transport 1.2 1.4 1.3 0.6

Basic Material Wholesaling 1.2 1.1 1.3 0.8



August 2011

Transport is high within Western Districts and Rotorua.

The final industry, Basic Material Wholesaling is largely in the main centres of Western Districts and

Rotorua.

Table 5.8. Top 10 LQs by sub-Region

Taking a closer look at the industry LQs by sub-Region, the tourism sector becomes apparent in

Rotorua. Sport & Recreation, Libraries, Museums & the Arts, Accommodation, cafes & Restaurants, all

appear in the top 10.

The Logistics sector becomes obvious in both Western and Eastern Districts with Other Transport,

Storage, Services to Transport, Road Transport, Water Transport, and Rail Transport all in the top 10.

The other sector that is identified through LQs is around energy, with Electricity & Gas Supply and Other

Mining in Western Districts; and Petroleum, Coal, Chemical & Associated Product Manufacturing in

Rotorua.

Finally, Commercial Fishing in Western Districts has a LQ of 1.7, while Education and Other Services

are important in the Eastern Districts.

The strength of the Bay of Plenty region in the Forestry and Agriculture sectors are even more apparent

at the individual Local Authority level.

Rotorua LQ Western Districts LQ Eastern Districts LQ

Forestry & Logging 8.9Services to Agriculture; Hunting

& Trapping5.8

Wood & Paper Product

Manufacturing6.8

Wood & Paper Product

Manufacturing3.8 Other Transport 2.2 Other Transport 6.3

Sport & Recreation 2.5 Commercial Fishing 1.8 Forestry & Logging 5.2

Libraries, Museums & the Arts 1.9 Storage 1.7Services to Agriculture; Hunting

& Trapping3.9

Accommodation, Cafes &

Restaurants1.8 Services to Transport 1.6 Water Transport 2.2

Road Transport 1.4 Other Mining 1.6 Agriculture 2.2

Motor Vehicle Retailing &

Services1.2 Electricity & Gas Supply 1.3 Education 1.4

Petroleum, Coal, Chemical &

Assoc Prod Mfg1.2 Basic Material Wholesaling 1.3 Other Services 1.4

Water Supply, Sewerage &

Drainage Services1.2 Road Transport 1.3

Motor Vehicle Retailing &

Services1.3

Property Services 1.2 Property Services 1.2 Rail Transport 1.3



August 2011

Table 5.9. Top LQs by local authority

Tauranga LQ Western Bay of Plenty LQ Rotorua LQ Whakatane LQ Kawerau LQ Opotiki LQ

Other Transport 2.5

Services to

Agriculture; Hunting

& Trapping

16.7 Forestry & Logging 8.9 Other Transport 8.4

Wood & Paper

Product

Manufacturing

29.3

Services to

Agriculture;

Hunting & Trapping

12.2

Commercia l

Fishing2.2 Other Mining 5.8

Wood & Paper

Product

Manufacturing

3.8 Forestry & Logging 4.8 Rai l Transport 7.0 Forestry & Logging 7.1

Services to

Agriculture;

Hunting & Trapping

2.2 Agriculture 3.8 Sport & Recreation 2.5

Wood & Paper

Product

Manufacturing

3.7

Machinery &

Equipment

Manufacturing

5.7 Agriculture 4.3

Services to

Transport2.1

Wood & Paper

Product

Manufacturing

2.1

Libraries ,

Museums & the

Arts

1.9 Water Transport 3.2 Forestry & Logging 4.7Commercia l

Fishing3.3

Electrici ty & Gas

Supply1.8 Storage 2.1

Accommodation,

Cafes &

Restaurants

1.8

Services to

Agriculture;

Hunting & Trapping

2.7

Water Supply,

Sewerage &

Drainage Services

3.0 Other Transport 2.8

Storage 1.5 Forestry & Logging 1.9 Road Transport 1.4 Agriculture 2.1Metal Product

Manufacturing2.5 Education 1.5

Bas ic Materia l

Wholesa l ing1.5 Other Transport 1.5

Electrici ty & Gas

Supply1.9 Other Services 2.3

Road Transport 1.4Food, Beverage &

Tobacco1.4 Education 1.5



August 2011

Table 5.9 gives us a clearer picture of the concentrations of activity within local authority areas. LQs are

particularly relevant in smaller areas, where there isn’t the breadth of activity associated with larger

populations and single industries can account for a large proportion of activity.

The overwhelming importance of the forestry sector to Kawerau is evident, with the top seven industries

in terms of LQ all associated to the sector. The LQ of 29.3 for Wood & Paper Product Manufacturing is

extremely high, with workers in Kawerau 29 times more likely to work in that sector than nationally. The

forestry sector is spread throughout the region. Forestry & Logging (7.1) is important in Ōpōtiki; both

Forestry & Logging (8.9) and Wood & Paper Product Manufacturing (3.8) in Rotorua; Forestry & Logging

(4.8) and Wood & Paper Manufacturing (3.7) in Whakatane, and Forestry & Logging (1.9) in Western

Bay of Plenty.

In Western Bay of Plenty, the role of Agriculture is strong, with Services to Agriculture, Hunting &

Trapping (16.7) and Agriculture (3.8). The focus on food crops is reflected in the LQ of 1.4 for Food,

Beverage & Tobacco. Interestingly, Other Mining has an LQ of 5.8.

Ōpōtiki also has very high LQs in Services, to Agriculture, Hunting & Trapping (12.2), Agriculture (4.3),

and Commercial Fishing (3.3). Education also has a high LQ, a reflection of a commitment to improving

social outcomes in the area.

Commercial Fishing (2.2) also appears in Tauranga, although Logistics is the sector with high

employment ratios in the area – Other Transport (2.5), Services to Transport (2.2), Storage (1.5), and

Road Transport (1.4).

In Whakatane LQ ratios are spread between transport (Other Transport - 8.4 and Water Transport - 3.2),

forestry (Forestry & Logging - 4.8 and Wood & Paper Product Manufacturing - 3.7) and agriculture

(Services to Agriculture, Hunting & Trapping – 2.7 and Agriculture – 2.1).


August 2011

6 Review of Strategic Sectors

The Bay of Connections Regional Economic Development Strategy was implemented in 2007. As such,

a number of sector strategies have already been initiated. To date there are a number of actions that

have been completed, and a number that are in progress as this update to the strategy is being

developed. The current status of sector strategies is shown below in Table 6.1.

Table 6.1. Bay of Connections 2007 sectors

Sector Status

Forestry To be launched – September 2011

Energy To be launched – September 2011

Food Processing Current

Aquaculture current

Tourism Current - with the RTOs

Transport and Logistics TBC

Niche manufacturing TBC

Marine Current – Led by Priority One

As part of this industry analysis we look more closely at the focus areas identified as part of the proposal

process and initial meeting. These sectors are aligned to perceived comparative advantages and/or

existing activity in the Bay of Plenty region and nationally.

The analysis in chapter 5 supports the selection of the majority of these industries, although a few are

based on factors other than relevance, growth and concentration. For example, aquaculture is based on

recent activity and comparative advantage, which has presented an opportunity to develop an industry

in the Region. Similarly the marine precinct, emerging technologies and ICT are based on either an

identified opportunity in the Bay of Connections region or a smart technology that can be expanded

internationally.

Combining the existing strategies with the industries that stood out in the previous chapter, 13 sectors

have been identified that warrant further analysis. The strategic sectors that are assessed in more detail

are:

Kiwifruit

Dairy

Meat


Processing

Forestry

Energy


Tourism

ICT

Tertiary Education


Marine

Aquaculture

The sectors are made up of a number of industries and some industries are included in more than one

sector. Where industries are spread across in more than one sector (i.e. Services to Agriculture) the

activity has been split proportional to the size of the sectors. The proportion of industries related to

Tourism are calculated based on 2010 Tourism Satellite Account ratios.

There are still issues around where specific industries sit, particularly where there is sector overlap in


August 2011

terms of the activity. For example, Forestry overlaps with Energy, such as where wood biomass can be

used to generate energy. We have not been able to address this issue and have placed the industry

into the sector that it is identified. In the above case activity would be captured under Forestry.

For most sectors, the industry composition is obvious, for example, Meat, Dairy, Kiwifruit, and Forestry.

However, for other sectors the industry composition is less clear. For the ICT and Marine sectors we

have used the industry classifications identified in the Auckland Economic Futures report and made a

judgement on the proportion related to Marine in the Bay of Plenty region.

In other areas such as energy, the traditional industries of Electricity Supply; and Gas Supply, are no

longer the mainstay or the focus of the sector going forward. We expect that a portion of the sector will

likely sit in the manufacturing, technical services and even processing sectors. As our understanding of

the sectors improves, and particularly as sector strategies are developed, we will be better able to define

and measure these sectors. In the first instance, however, these groupings will suffice to provide a

“stake in the ground” or benchmark from which to develop measures of activity.

6.1 Approach

Each of the sectors are analysed in terms of their historical performance (employment and GDP) and

LQs.

This section will benefit from more detailed sector analysis that is occurring in the next stage of this

refresh. In particular, summary templates will be developed for each sector providing an overview of the

sector, its relevance to the region and country, and a review of the key issues or opportunities for the

sector. Then their relationship to existing national growth sectors along with each sector’s efforts to

encourage growth are explored.

Table 6.2 provides a breakdown of the industries that contribute to, or make up, each of the 14 sectors.


August 2011

Table 6.2. Key sector industry composition

Key Sector Industries

Aquaculture Aquaculture; Seafood Processing (50%).

Forestry Plant Nurseries (10%); Forestry; Logging; Services to Forestry; Log Sawmilling; Wood Chipping; Timber

Resawing & Dressing; Plywood & Veneer Manufacturing; Fabricated Wood Manufacturing; Wooden

Structural Component Manufacturing; Wood Product Manufacturing nec; Pulp, Paper & Paperboard

Manufacturing; Solid Paperboard Container Manufacturing; Corrugated Paperboard Container

Manufacturing; Paper Bag & Sack Manufacturing; Paper Product Manufacturing nec.

Kiwifruit Plant Nurseries (30%); Kiwi Fruit Growing; Aerial Agricultural Services (60%); Services to Agriculture nec

(50%); Fruit & Vegetable Processing (75%).

dairy Dairy Cattle Farming; Aerial Agricultural Services (10%); Services to Agriculture nec (50%); Milk & Cream

Processing; Ice Cream Manufacturing; Dairy Product Manufacturing nec.

Other Food

Cultivation &

Processing

Grain Growing; Poultry Farming (Meat); Poultry Farming (Eggs); Beekeeping; Tobacco & Hops Growing;

Cultivated Mushroom Growing; Crop & Plant Growing nec; Hunting & Trapping; Rock Lobster Fishing; Prawn

Fishing; Finfish Trawling; Squid Jigging; Line Fishing; Marine Fishing nec; Poultry Processing; Oil & Fat

Manufacturing; Flour Mill Product Manufacturing; Cereal Food & Baking Mix Manufacturing; Bread

Manufacturing; Cake & Pastry Manufacturing; Biscuit Manufacturing; Sugar Manufacturing; Confectionery

Manufacturing; Seafood Processing (50%); Prepared Animal & Bird Feed Manufacturing; Food

Manufacturing nec; Soft Drink, Cordial & Syrup Manufacturing; Beer & Malt Manufacturing; Wine

Manufacturing; Spirit Manufacturing; Tobacco Product Manufacturing; Plant Nurseries (50%); Cut Flower &

Flower Seed Growing; Vegetable Growing; Grape Growing; Apple & Pear Growing; Stone Fruit Growing;

Citrus Growing; Berry Fruit Growing; Other Fruit Growing nec; Fruit & Vegetable Processing (25%).

Energy Electricity Supply; Gas Supply.

Transport &

Logistics

Road Freight TransportLong Distance Bus Transport (75%); Short Distance Bus Transport (including

Tramway) (75%); Taxi and Other Road Passenger Transport (75%); Rail Transport (75%); International Sea

Transport (75%); Coastal Water Transport (75%); Inland Water Transport (75%); Scheduled International Air

Transport (16%); Scheduled Domestic Air Transport (16%); Non-Scheduled Air and Space Transport (16%);

Pipeline Transport (72%); Transport nec (72%); Parking Services (72%); Services to Road Transport nec (72%);

Stevedoring (72%); Water Transport Terminals (72%); Port Operators (72%); Services to Water Transport nec

(72%); Services to Air Transport (72%); Travel Agency Services (72%); Road Freight Forwarding (72%); Freight

Forwarding (except Road) (72%); Customs Agency Services (72%); Services to Transport nec (72%); Grain

Storage (72%); Storage nec (72%); Courier Services; Other Transport Equipment Leasing (83%).

ICT Professional & Scientific Equipment Manufacturing nec (50%); Computer & Business Machine

Manufacturing; Telecommunication, Broadcasting & Transceiving Equipment Manufacturing (20%);

Electronic Equipment Manufacturing nec (50%); Electric Cable & Wire Manufacturing (25%); Professional

Equipment Wholesaling (50%); Computer Wholesaling; Business Machine Wholesaling nec (50%); Electrical

& Electronic Equipment Wholesaling nec (50%); Telecommunication Services; Data Processing Services;

Information Storage & Retrieval Services; Computer Maintenance Services; Computer Consultancy

Services.

Tertiary

Education

Higher Education; Technical & Futher Education; Other Education

Marine Synthetic Fibre Textile Manufacturing (10%); Textile Finishing (10%); Made-Up Textile Product Manufacturing

(10%); Rope, Cordage & Twine Manufacturing (20%); Synthetic Resin Manufacturing (10%); Spring & Wire

Product Manufacturing (10%); Nut, Bolt, Screw & Rivet Manufacturing (10%); Metal Coating & Finishing

(10%); Fabricated Metal Product Manufacturing nec (10%); Shipbuilding; Boatbuilding; Professional &

Scientific Equipment Manufacturing nec (10%); Telecommunication, Broadcasting & Transceiving

Equipment Manufacturing (20%); Electrical Equipment Manufacturing nec (10%); Pump & Compressor

Manufacturing (10%); Business Machine Wholesaling nec (10%); Machinery & Equipment Wholesaling nec

(10%); Marine Equipment Retailing (90%); Consultant Engineering Services (10%).

Tourism Retail (10%); Cafes & restaurants (40%); Road passenger, rail & water transport (40%); Air transport (84%);

Other transport, storage & transport services (28%); Machinery & equipment hiring & leasing (17%);

Cultural & recreational services (13%).

Emerging

Technologies

Structural Steel Fabricating; Architectural Aluminium Product Manufacturing; Structural Metal Product

Manufacturing nec; Metal Container Manufacturing; Sheet Metal Product Manufacturing nec; Medical &

Surgical Equipment Manufacturing.

Meat Grain-Sheep & Grain-Beef Cattle Farming; Sheep-Beef Cattle Farming; Sheep Farming; Beef Cattle Farming;

Pig Farming; Deer Farming; Mixed Livestock; Livestock Farming nec; Meat Processing; Bacon, Ham &

Smallgood Manufacturing.


August 2011

6.2 Summary of employment and GDP in 2010

Together these 13 key sectors account for a third of regional employment and 35 percent of regional

GDP, in 2010. The contribution these sectors make to regional employment and GDP is shown in

Figure 6.1. The largest sectors in the region in terms of employment are Dairy, Kiwifruit, Tourism,

Forestry, and Transport & Logistics. In terms of GDP, the largest sectors are Forestry, Dairy, Kiwifruit,

Tourism and Transport & Logistics.

Figure 6.1. Key sector employment and GDP in BOP region, 2010

6.2.1 Growth

FTE employment over the last 15 years for key sectors and all sectors are shown in

Aquaculture, 219, 0% Forestry,

4,566, 4%

Kiwifruit, 5,396, 5%

Dairy, 6,001, 6%


Processing, 3,290, 3%

Energy, 359, 0%

Transport & Logistics, 3,589,

4%

ICT, 1,150, 1%

Marine, 491, 1%Tourism, 5,363,

5%

Emerging Techs, 840, 1%

Meat, 1,549, 2%

Tertiary Education,

1,492, 1%

non-key sectors, 70,453, 67%

Aquaculture, 26, 0%

Forestry, 976, 10% Kiwifruit, 306, 3%

Dairy, 382, 4% Other Food Cultivation &

Processing, 320, 3%

Energy, 201, 2%

Transport & Logistics, 458, 4%

ICT, 265, 3%

Marine, 39, 0%

Tourism, 315, 3%

Emerging Techs, 72, 1%

Meat, 153, 1%

Tertiary Education, 72, 1%

non-key sectors, 6,590, 65%



August 2011

Table 6.3. The fastest growth over the 15 year period has been in Other Food Cultivation & Processing

at 3.7 percent per annum followed by Dairy and Marine, both at 3.4 percent per annum.

The next fastest growing sectors are aquaculture (3.3 percent per annum) and Kiwifruit (3.2 percent per

annum). These compare to growth of 2.5 percent for all non-key sectors. However, across all key

sectors, the average employment growth has been 1.3 percent per annum.


August 2011

Table 6.3. FTE employment in key sectors

Over the last five years the fastest growth has been in ICT (9.7 percent per annum), Dairy (5.5 percent

per annum), Aquaculture (4.2 percent per annum), and Kiwifruit (4.1 percent per annum). Non-key

sectors have been growing at 0.7 percent per annum over the same period.

Four of the key sectors have had negative employment growth over the last 15 years. These sectors

are Energy, Forestry, Horticulture and Meat. Over the last five years, six of the key sectors have

experienced negative employment growth – Forestry, Emerging Technologies, Horticulture, Meat,

Marine, and Tertiary Education.

Employment in the key sectors has grown faster than the non-key sectors over the last five years.

However, over the last 15 years, employment growth in non-key sectors has been almost twice as fast.

Regional GDP growth over the last 15 years for key sectors and all sectors is shown in Table 6.4.

The most rapid growth over the 15 years has been in Other Food Cultivation & Processing ICT (3.7

percent per annum) followed by Dairy and Marine (both 3.4 percent per annum). Aquaculture and

Kiwifruit grew by 3.3 percent per annum and 3.2 percent per annum respectively. Regional GDP in

sectors outside the key sectors grew by 2.5 percent per annum. GDP in the Meat sector has been

falling by 0.3 percent per annum over the last 15 years.

1995 2008 2009 2010 1995-2010 2005-2010

Aquaculture 134 188 205 219 3.3% 4.2%

Forestry 6,404 4,979 4,661 4,566 -2.2% -4.7%

Kiwifruit 3,387 5,099 5,527 5,396 3.2% 4.1%

Dairy 3,622 5,466 5,967 6,001 3.4% 5.5%

Other Food Cultivation & Processing 2,657 3,440 3,252 3,290 1.4% 0.6%

Energy 537 320 306 359 -2.6% 2.7%

Transport & Logistics 3,040 3,468 3,464 3,589 1.1% 0.4%

ICT 779 1,080 1,087 1,150 2.6% 9.7%

Marine 298 583 549 491 3.4% -1.8%

Tourism 3,790 5,401 5,264 5,363 2.3% 1.2%

Emerging Technologies 566 988 907 840 2.7% -2.8%

Meat 1,935 1,658 1,524 1,549 -1.5% -2.1%

Tertiary Education 1,145 1,429 1,453 1,492 1.8% -0.9%

key sectors 28,293 34,100 34,165 34,304 1.3% 1.0%

non-key sectors 48,941 73,874 72,646 70,453 2.5% 0.7%

Total Industry 77,234 107,974 106,812 104,757 2.1% 0.8%


%pa GrowthKey Industries (FTE employment)

FTEs


August 2011

Table 6.4. GDP in key sectors

Over the last five years, the fastest GDP growth has been in ICT (28.5 percent per annum) and Dairy

(3.5 percent per annum). Emerging Technologies, Tertiary Education, Meat, and Horticulture have all

seen GDP contributions fall over the last five years.

Over the last five years, non-key sectors have grown by 0.4 percent per annum, compared to 1.8

percent per annum for the key sectors. Over the last 15 years, key sectors have grown slightly slower

than the non-key sectors.

The Forestry and Energy sectors have seen an increase in GDP growth at the same time that

employment in those sectors has fallen. This suggests improvements in labour productivity.

1995 2008 2009 2010 1995-2010 2005-2010

Aquaculture 15 23 25 26 4.0% 3.0%

Forestry 804 994 946 976 1.3% 1.5%

Kiwifruit 196 307 314 306 3.0% 1.9%

Dairy 238 363 381 382 3.2% 3.5%

Other Food Cultivation & Processing 195 343 314 320 3.4% -0.2%

Energy 177 177 167 201 0.9% 1.0%

Transport & Logistics 321 447 440 458 2.4% 1.5%

ICT 101 218 231 265 6.6% 28.5%

Marine 21 50 46 39 4.4% -2.9%

Tourism 203 323 312 315 2.9% 0.5%

Emerging Technologies 47 102 84 72 3.0% -6.5%

Meat 157 173 154 153 -0.2% -3.5%

Tertiary Education 65 73 71 72 0.7% -4.6%

Key Sectors 2,539 3,592 3,483 3,585 2.3% 1.8%

non-key sectors 4,321 6,956 6,814 6,590 2.9% 0.4%

Total Industry 6,861 10,549 10,297 10,175 2.7% 0.9%


GDP, 2010$mBay of Plenty

%pa Growth


August 2011

6.3 Location Quotients

FTE and GDP LQs of the 13 key sectors are shown in Table 6.5. Of the 13, the six of the seven sectors

have both FTE and GDP LQs greater than one. Of these, Kiwifruit, Forestry and Dairy stand out with

FTE and GDP LQs both greater than 1.5.

At the other end of the scale, ICT, Meat, and Tertiary Education have low FTE and GDP LQs.

Table 6.5. Key sector LQs – 1995 and 2010

Interesting observations from the LQ analysis are:

Aquaculture, Other Food Cultivation & Processing and Marine LQs have increased rapidly for

both FTEs and GDP. In fact, Aquaculture now has LQs for FTEs and GDP above 1.0.

Forestry and Dairy FTE and GDP LQs have fallen between 1995 and 2010.

A number of the smaller sectors don’t necessarily have high LQs. However, there has been rapid

growth in either FTE or GDP LQs. Sectors that fall into this category include:

Aquaculture (which now has LQs greater than 1.0


Marine

1995 2010 1995 2010

Aquaculture 0.7 1.2 0.7 1.4

Forestry 3.2 2.9 3.4 3.2

Kiwifruit 4.7 5.2 3.9 5.0

Dairy 1.7 1.9 1.7 1.6

Other Food Cultivation & Processing 0.7 0.9 0.7 1.0

Energy 1.0 1.0 1.0 1.1

Transport & Logistics 1.1 1.1 1.0 1.0

ICT 0.5 0.4 0.5 0.6

Marine 0.7 0.9 0.7 0.9

Tourism 1.0 1.0 0.9 0.9

Emerging Technologies 1.0 0.9 1.0 1.0

Meat 0.6 0.5 0.6 0.5

Tertiary Education 0.6 0.5 0.7 0.6

Other 0.9 0.9 0.9 0.9


FTEs GDPKey Sector LQs


August 2011

6.3.1 Regional LQs

Activity in key sectors is geographic. Looking at each sub-Region it is apparent where each key sector

is active. The geographic breakdown of LQs for employment by sub-Region is shown in Table 6.2.

Table 6.6. Key Sector Employment LQs by sub-Region, 2010

At a sub-Regional level it is clear that Aquaculture is predominantly active in the Western Districts and

close to non-existent in Rotorua and Eastern Districts. Forestry is strong across all sub-Regions, but

mainly in Eastern Districts and Rotorua. Similarly, Kiwifruit is based in the Western and Eastern

districts, with little activity in Rotorua. Dairy is strong across all sub-Regions, but is strongest in the

Eastern Districts. Other Food Cultivation & Processing is focused mainly in the Western Districts.

Transport & Logistics is concentrated in the Western Districts. Tourism is very active in Rotorua, but not

in the Western and Eastern districts.

6.4 Relationships between regional and national sectors and sector strategies

As noted early in the report, regional sector strategies will be most successful where they:

are based on a regional capability or comparative advantage

are aligned with nationally competitive sectors

have strong sector buy-in and leadership

have areas/issues where intervention can support transformative growth.

The relationships between the regional key sectors, nationally identified growth sectors and industry

based sector strategies are shown in Table 6.7.

Employment LQs (2010)Western

Districts

Eastern

DistrictsRotorua

Aquaculture 2.0 0.1 0.1

Forestry 1.1 6.2 5.0

Kiwifruit 7.2 6.2 0.3

Dairy 1.7 3.6 1.2

Other Food Cultivation & Processing 1.1 0.7 0.5

Energy 1.3 1.3 0.1

Transport & Logistics 1.3 0.5 1.0

ICT 0.5 0.1 0.2

Marine 1.0 0.9 0.6

Tourism 0.9 0.8 1.4

Emerging Technologies 1.1 0.3 0.8

Meat 0.4 0.5 0.6

Tertiary Education 0.4 0.8 0.8

Other 0.9 0.8 1.0



August 2011

Table 6.7. Relationships between key regional and national growth sectors and sector strategies

BOP Sector National Growth Sector Sector Strategies

Aquaculture Food & Beverage (EGA); Agritech - Seafood The New Zealand Aquaculture Strategy (2006)

Forestry Silviculture; Wood Processing; Building &

Interiors

Wood Processing Strategy (2000-2003); Forest

Industry Development Agenda (FIDA)

Kiwifuit Food & Beverage (EGA); Agritech – Fruit &

Vegetables

Zespri; Turners and Growers?

Dairy Food & Beverage (EGA); Agritech - Dairy Strategy for New Zealand Dairy Farming

(2009)

Other Food

Cultivation &

Processing

Food & Beverage (EGA); Agritech – Wine,

Specialty Foods

Food & Beverage (EGA); Agritech – Fruit &

Vegetables

Growing a New Future (2009); Leveraging

Growth in the Emerging Functional Foods

Industry: Trends and Market Opportunities

(2009)

Growing a New Future (2009)

Energy Petroleum and Minerals (EGA); Clean

Technology – Clean Fuels

New Zealand Bioenergy Strategy (2010); A

Clean Economy Vision for New Zealand in

2025 (2009).

Transport &

Logistics

Infrastructure National Infrastructure Plan (2010)

ICT ICT (EGA); ICT – Productivity Improvement

Tools; Data Management Tools.

Digital Strategy 2.0 (2008)

Marine Marine Marine Sector Feasibility Study (2009); NZ

Marine Strategic Plan (2010)

Tourism Tourism & Major Events (EGA) New Zealand Tourism Strategy 2015 (2007)

Emerging

Technologies

Clean Technology; Novel Materials; Health &

Medical Technologies; High Value

Manufacturing; Engineering; Defence

Meat Food & Beverage (EGA); Agritech - Meat Red Meat Sector Strategy (2011)

Tertiary

Education

Export Education in New Zealand (2001);

The key sectors identified at a regional level are consistent with the important sectors from a national

perspective. Further, a large number of these sectors also have industry buy-in in terms of having

active sector growth strategies.

The two sectors where there are not clear cases for inclusion are Meat and Tertiary Education. Tertiary

Education, however, has benefits outside pure employment and GDP contribution as, properly

harnessed, it can support and underpin economic and social outcomes within the region. It is an

enabler industry. Therefore, strategies to ensure a strong, aligned, inclusive and pro-active tertiary

sector will provide benefits to a number of industries.

The meat sector has the potential to become a key sector, particularly with global demand and a clear

industry strategy to add value to exports. However, whether this is an area where the Bay of Plenty has

a comparative advantage and requires strategic support is questionable.

Ultimately, any of the identified sectors would warrant support under a Bay of Connections strategy.

However, with limited resources it is unlikely that all can be [supported]. What is likely is that the final

set of sectors supported will come from within this group.


August 2011

7 Business as Usual Projections

Business As Usual (BAU) projections provide a scenario of employment in the Bay of Plenty region out

to 2026. The scenario is based on the New Zealand economy growing at 2.6 percent per annum out to

2026, and industries in the Bay of Plenty regional economy growing at the same relative rate to national

industry over the last 15 years. That is, the scenario uses the 15 year historical performance of the

region’s industries to determine 15 year forward projections based on projected national growth.

The CGE projection used in this analysis is consistent with the one utilised in an earlier report to the Bay

of Plenty Regional Council on the State of Readiness of Bay of Plenty Local Government Infrastructure,

which was released in June 2011. However, the method of calculating regional industry growth is

slightly different to incorporate strategic sectors.

Table 7.1. New Zealand employment projections to 2026

Being a CGE projection, the analysis does not consider activity that is underway already. For example,

the projection suggests zero growth in aquaculture when, based on the New Zealand Aquaculture

Strategy, the sector aims to reach $1 billion in exports by 2026. An initial step will be to review and

confirm the likely growth outcomes for each of the key sectors agreed.

The projections suggest that FTE employment in New Zealand will increase by 307,000, from 1.84

million FTEs in 2010 to 2.14 million FTEs in 2026. There appears to be little difference in the growth

rate between key sectors and other (non-key) sectors. Fastest growth is projected to be in the

Emerging Technologies, Marine, Tourism, Forestry, ICT and Dairy sectors. The majority of growth is

expected to be in Tourism, Dairy, ICT, Meat and Forestry.

Based on the relative employment growth rates of the respective sectors, the BAU Projections for the

FTEs 2010 2026 difference %PA FTEsPA

Aquaculture 3,214 3,214 0 0.00% 0

Forestry 27,294 32,780 5,486 1.15% 343

Kiwifruit 18,030 20,074 2,044 0.67% 128

Dairy 56,623 66,884 10,261 1.05% 641

Other Food Cultivation & Processing 64,057 68,884 4,827 0.46% 302

Energy 6,244 6,863 619 0.59% 39

Transport & Logistics 57,582 68,339 10,758 1.08% 672

ICT 51,940 61,442 9,502 1.06% 594

Marine 9,483 11,526 2,043 1.23% 128

Tourism 95,324 114,836 19,511 1.17% 1,219

Emerging Technologies 15,767 19,281 3,515 1.27% 220

Meat 56,462 64,694 8,232 0.85% 515

Tertiary Education 48,000 55,628 7,627 0.93% 477

Total Strategic Sectors 510,018 594,445 84,426 0.96% 5,277

Other (non-key) Sectors 1,325,688 1,548,657 222,969 0.98% 13,936

Total All Industries 1,835,706 2,143,102 307,395 0.97% 19,212

source: BERL Regional Database and CGE Forecast to 2026


August 2011

Bay of Plenty Region are shown in Table 7.2.

Table 7.2. BAU employment projections for Bay of Plenty to 2026

Employment in the Bay of Plenty region is projected to grow at 1.54 percent per annum, which is slightly

faster than the 0.97 percent per annum growth nationally. Employment is projected to increase by 1,820

FTEs annually, reaching 134,000 by 2026.

Employment in the Strategic Sectors is expected to grow at an even faster 1.89 percent per annum,

which is 1.2 times faster than employment growth across all industries and 1.4 times faster than the

Other (non-key) Sectors in the Region.

The fastest growth is expected to occur in the Emerging Technologies sector, followed by Aquaculture

and Marine. Other Food Cultivation & Processing and Transport & Logistics are both expected to grow

at more than two percent per annum.

Energy, ICT, Meat and Tertiary Education are all forecast to grow slower than Other (non-key)

Industries.

The greatest growth is forecast to come out of the Kiwifruit sector, adding 116 FTEs per annum,

followed by Dairy with 112 FTEs per annum. Emerging Technologies is projected to add a further 110

FTEs annually, while Other Food Cultivation & Processing adds 103 FTEs annually. The next largest

are Transport & Logistics (96 FTEs pa), Tourism (80 FTEs pa), and Forestry (72 FTEs pa).

Employment growth in the key industries is shown in Figure 7.1.

FTEs 2010 2026 difference %PA FTEsPA

Aquaculture 219 441 223 4.49% 14

Forestry 4,566 5,719 1,153 1.42% 72

Kiwifruit 5,396 7,247 1,851 1.86% 116

Dairy 6,001 7,792 1,791 1.65% 112

Other Food Cultivation & Processing 3,290 4,941 1,652 2.58% 103

Energy 359 405 46 0.76% 3

Transport & Logistics 3,589 5,123 1,534 2.25% 96

ICT 1,150 1,245 95 0.50% 6

Marine 491 752 261 2.70% 16

Tourism 5,363 6,638 1,275 1.34% 80

Emerging Technologies 840 2,595 1,756 7.31% 110

Meat 1,549 1,698 149 0.58% 9

Tertiary Education 1,492 1,681 189 0.75% 12

Total Strategic Sectors 34,304 46,279 11,975 1.89% 748

Other (non-key) Sectors 70,453 87,574 17,121 1.37% 1070

Total All Industries 104,757 133,853 29,096 1.54% 1,818



August 2011

Figure 7.1. Bay of Plenty BAU employment projections to 2026

Figure 7.1 provides a relatively good picture of the sector structure of the region. A large proportion of

employment is in the primary and processing sectors, namely Dairy, Kiwifruit, Forestry, and Other Food

Cultivation & Processing. There is a strong Transport & Logistics that supports the primary and

processing sectors and then a large Tourism Sector based, which is largely based around Rotorua.

Energy, Marine, and Aquaculture are relatively small sectors in terms of employment.

However, the rate of change across the industries and the impact on employment are clearer in Figure

7.2 below.

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

FTEs

2010 2026



August 2011

Figure 7.2. Rate and level of employment growth

Based on the current projection, there are four key groups of sectors. Emerging Technologies sits alone

in the upper right quadrant and is forecast to have high growth rates and high absolute employment

impacts.

The second group is made up of Other Food Cultivation & Processing, Transport & Logistics, Kiwifruit

and Dairy. This group has high employment impacts and relatively high growth rates.

The third group, Aquaculture and Marine, have high growth rates but relatively low employment impacts.

The fourth group, Forestry and Tourism have relatively high employment impacts but low employment

growth rates. The remaining four sectors – Energy, Meat, Tertiary Education and ICT will all require

significant support if they are to achieve greater levels of growth or make major contributions to regional

employment.

The key thing to note in this analysis is that these forecast growth rates are what could be expected and

would likely occur even if the Bay of Connections did “nothing”.

However, the purpose of Bay of Connections is to encourage growth in the Bay of Plenty region and any

intervention should result in an increase in activity “above” what could be expected. Therefore

assuming that these are the expected employment outcomes, the objective of the strategy would be to

move these sectors up and to the right.

It is this “aspirational” growth that underpins the strategy and forms the next stages of this project. The

level to which the Bay of Connections strategy can achieve this for each sector is what will determine

the sectors supported.

Aquaculture

Forestry

KiwifruitDairy


Energy


ICT

Marine

Tourism


Meat

Tertiary Education

0%

1%

2%

3%

4%

5%

6%

7%

8%

0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000

% P

A I

ncr

eas

e

Additional FTEs to 2026source: BERL Regional Database and CGE Forecast to 2026

average growth rate of non-key industries


August 2011

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any of its employees accepts any responsibility on any grounds whatsoever, including negligence, to any other

person.

While every effort is made by BERL to ensure that the information, opinions and forecasts provided to the client are

accurate and reliable, BERL shall not be liable for any adverse consequences of the client’s decisions made in

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