Business Plus August 2017 by EMA

ISSUE 150 AUGUST 2017

Exporters’ Champion 2017 Awarded for passionate support of the NZ exporting community. P31

Decongesting Auckland roads would boost economy by $1.3bn

Electric vehicle use taking off

Employee bonding to be two-way

P13

Unsung hero of America’s Cup build: Jackson Electrical Industries

P30

...AND MUCH MORE!

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On the cover:

BusinessPlus is published by The Employers and Manufacturers Association (Northern) Inc (EMA) EMA is the major shareholder of national lobby group, BusinessNZ. BusinessPlus is attached to EMA’s fortnightly email newsletter, e-report on August 9th.

Editor: Mary MacKinven T +64 9 367 0939 M +64 21 636 089 E mary.mackinven@ema.co.nz Designer: Ripeka Mikaere Printer: MHP Distributor: Orangebox Advertising sales: Colin Gestro, Affinity Ads, M + 64 27 256 8014 E colin@affinityads.com ISSN No. 1176-4953 EMA Head office – Auckland: 145 Khyber Pass Rd, Grafton, Auckland, NZ Private Bag 92066, Victoria St West, Auckland 1142. P +64 9 367 0900 E ema@ema.co.nz Hamilton: EMA/ExportNZ Waikato 103 Tristram Street, Hamilton. PO Box 490 Waikato Mail Centre, Hamilton 3240. P +64 7 839 2713 Tauranga: ExportNZ Bay of Plenty Smart Business Centre, 65 Chapel Street, Bay Central, Tauranga, 3110. PO Box 13202, Tauranga Central, Tauranga 3141. P +64 7 571 0600 AdviceLine: NZ 0800 300 362 AUS 1800 300 362 E advice@ema.co.nz Phone 8am-8pm weekdays for information about employment and more, plus referrals to EMA Legal lawyers and your local EMA consultant in employment relations and/or occupational health and safety. Visit www.ema.co.nz for owner and staff training programmes, conferences and other events, employer guides and templates, manufacturer services, media statements and submissions, export development and more EMA contacts Chief executive: Kim Campbell Membership manager: Kayne Franich Public Affairs and Communications manager: Val Hayes GM Business Services: David Foley GM Member Engagement: Mauro Barsi Employment Relations & Safety Manager: Paul Jarvie Finance & Technology manager: Paul Yeo Corporate & Building Services manager: Sheree Alcock ExportNZ manager: Catherine Lye

Heather Baigent (pictured) won the award category, Fairfax Media Exporters Champion for Exemplary Service to Exporters, at the 2017 Air New Zealand Cargo ExportNZ Awards.

ISSUE 150 AUGUST 2017

Exporters’ Champion 2017

She has run Interact Consulting specialising in trade facilitation, especially technical barriers to trade, for six years, all the while being an active member of ExportNZ Auckland’s executive committee. See more page 27

Awarded for passionate support of the NZ exporting community. P31

DECONGESTING AUCKLAND ROADS WOULD BOOST ECONOMY BY $1.3BN ELECTRIC VEHICLE USE TAKING OFF

P6 P8

EMPLOYEE BONDING TO BE TWO-WAY

P13

UNSUNG HERO OF AMERICA’S CUP BUILD: JACKSON ELECTRICAL INDUSTRIES

P30

...AND MUCH MORE!

Contents

“Helping business succeed”

Commentary EMA’s CEO Kim Campbell on: NZ’s prosperity and exporting success go hand-in-hand Decongesting roads would boost Auckland economy by $1.3bn

NZ business pushes the electric vehicle pedal BusinessNZ CEO Kirk Hope on: Innovation essential in business and sport Fastest turnaround surveys in the West: the PMI and PSI

Election 2017: Labour’s 2017 Workplace Relations Policy analysed

Seen @ EMA events in Auckland

6 9

Employment Case Law: Tricky issues: bonding arrangements and unlawful premiums

Recruitment: Steps to recruiting good staff

Learning: Discover the versatility in EMA training

Employment Chat – Q and A: Investigating bullying, repeated sickies and staff incompatibility

Health and safety: Multi-PCBUs: communication is key when safety responsibility is shared

PG news: Who gets what: personal grievance claims analysed

Wellbeing: Absenteeism costing business

In Business Selling/buying: The hidden value of goodwill

21 22

Compliance: Biosecurity in 2025: make it happen

IT: Powering the fourth industrial revolution: NZ advantage

International Trade What happened about the Panama Papers?

Very able bagel maker

Congratulating winners of Auckland and Waikato export awards

Export packaging to target supermarket streakers

Member Profile Jackson Electrical Industries: To make a cat fly

+ Inside

Training Plus insert detailing August training courses

BusinessPlus is free to EMA members BusinessPlus August 2017

advertorial

We’d like to get to know you well. At nib, we’re all about partnerships. Partnerships with our customers. Partnerships with our staff. And now, our brand new partnership as the EMA’s health insurer of choice. Our aim is to help make quality healthcare more accessible and affordable for EMA members like you, your business and your employees by truly understanding what’s important to you. So, very simply, when we meet with you, the first thing we do is listen. That’s because, in our experience, no two people or organisations have precisely the same needs. Put simply, the better we know you, the better we can do for you. Then, we work with you to create tailored health and wellness solutions that offer cover, overall launch and ongoing management processes that best suits your wider team. Our approach is built around six key pillars. 1. Choice. With nib you and your employees can choose where you go for treatment based on your preferences, not ours. In other words, you’re in control. 2. People. Our claims and customer care team will always treat you

BusinessPlus August 2017

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CEO Commentary By Kim Campbell

NZ’s prosperity and exporting success go hand-in-hand It’s been a month of exciting activity in the export world. We’ve hosted two fantastic awards events to celebrate the drive, determination and success of our exporters across the EMA region (see page 26). We congratulate Fonterra Global Foodservice that won the supreme award at the Auckland/Waikato event, and Dominion Salt that won Exporter of the Year in the Bay of Plenty awards. What always impresses me at these events is the great work our exporters do. From those in the emerging categories to the well established companies, their individual stories are a true inspiration. As a country we’ve come a long way since the first shipment of frozen meat left our shores in the 1800s destined for the UK. No longer are we the farm of the South Pacific. Our exporters have found new markets across Europe, the Americas and the Asia Pacific region. We’ve also grown immeasurably in how we add value to products and developed the robust value proposition around authenticity and integrity.

Clear benefits of trade to NZ In the recently-released report from the New Zealand Institute of Economic Research (NZIER) that was commissioned by ExportNZ, the benefits of trade are clearly laid out. We are a country with the same population as Melbourne. Therefore,

it’s unrealistic to think that we can produce everything we need and sell it to each other. The tradable sector accounts for $85 billion (43 per cent) of New Zealand’s real GDP and almost 750,000 jobs. Naturally, this has a flow-on effect to Kiwi households in relation to their incomes and the goods and services they purchase. Kiwis rely on trade. It’s vital for our nation and fundamental to how we build prosperity. It provides jobs, it improves efficiency in business and supports productivity growth and higher wages. And so we need to back our export and trade sector. Currently, exports of goods and services account for 28 per cent (NZ$70.9 billion) of New Zealand’s GDP. Our aim is to build this. One of the key ways the New Zealand Government aims to do this is to have 90 per cent of New Zealand’s exports covered by free trade agreements (FTAs) by 2030. These are vital to the way we trade now and in the future. But it is a balancing act: as you open your borders to others, you need to accept that some parts of your economy will be more competitive, and other parts less so. New Zealand has made some tough decisions and recalibrated our economy to be competitive. We benefit from cheaper goods where we are weak, and make money on goods where we are strong. In order

for this to work, we need markets to sell to. As tariffs reduce via FTAs, then it becomes more crucial to address the non-tariff barriers (NTBs) to trade. Non-tariff measures are regulatory tools, other than border tariffs, that can have potential economic effects on trade – either a decrease in quantities traded, an increase in their price, or some combination of both. Analysis by NZIER found the total number of non-tariff measures within APEC countries had increased by 74 per cent from 814 in 2004 to 1,414 in 2015. ExportNZ works hard to address these issues, actively engaging with exporters to help them succeed. While the team runs many educational and networking events in New Zealand to help exporters upskill and make new connections, they also help exporters build connections offshore. The team is organising a trade mission to Thailand and Vietnam this month (August 5-12). The point of trade missions is to immerse yourself in the market to gain valuable insights in a quick and effective way. The ExportNZ team is beside you all the way and you will gain opportunities to explore the market in a way that is difficult for an individual. You’ll be reaping the benefits for years to come.

Kim Campbell is chief executive of the Employers and Manufacturers Association. Email kim.campbell@ema.co.nz BusinessPlus August 2017

Decongesting roads would boost Auck A definitive study into the gains available from decongesting Auckland roads shows that productivity in the region would be boosted by nearly $3.5 million per day, if traffic could move at an average of just 50.5kph. An NZIER report commissioned by the EMA, Auckland International Airport Ltd, Infrastructure NZ, Ports of Auckland Ltd and the National Road Carriers Association took a detailed look at the social and economic costs of congestion to Auckland’s lifestyle and economy. The report confirms our belief that there is a pressing case for decongestion measures to be introduced in Auckland now, not in the 6-10-year time frame currently contemplated by both central and local governments.

However, expecting a free flow on the motorways and arterial roads of Auckland is no longer a realistic or achievable goal. The report shows congestion has worsened exponentially in the past three to five years and massive investment would be required to build enough new roading infrastructure to return traffic to a free flow scenario. But financially the returns don’t stack up; consents would be unlikely to be granted; and technology may create alternatives sooner rather than later. Summary of the benefits of decongestion $millions; 2016; Economic benefits are in real terms Capacity Benefits

Lower bound

Free-flow

Upper bound

Lower bound

Upper bound

$735

$1,266

The size of the productivity prize and liveability gains for Auckland and the scale of the problem demand action.

Economic

$488

Social

$439

$658

NZIER took a sophisticated model that can break down the impact of congestion per business sector and applied Auckland Transport’s latest 2016 traffic flow information to the problem.

Total

$927

$1,281

$1,392

$1,924

Headline economic benefits of decongestion by industry 2016; Nominal; Network at capacity; $millions; selected industries Industry

Lower bound

Upper bound

Manufacturing

$112

$206

Electricity, gas, water and waste services

$19

$31

Construction

$152

$210

Wholesale trade

$22

$37

Retail trade

$17

$25

Accommodation and food services

$12

$27

Transport, postal and warehousing

$33

Information media and telecommunications

$26

$46

Financial and insurance services

$44

$76

Rental, hiring and real estate services

$55

$91

Professional, scientific and technical services

$67

$140

Source:NZIER

Table 1: The costs in $millions per sector to the Auckland economy, a level of detail that was previously not available until NZIER applied its latest modelling tool.

The report found that productivity could be boosted by $900 million to $1.3 billion if the region’s motorways and arterial roads could flow at between just 50.5kph and 56.8 kph, a conservative speed range that the transport agencies define as at capacity. The only previous definitive attempt at quantifying the cost of Auckland congestion was carried out in the early 2000s under a free-flow scenario of traffic running at 80100kph. That quantified the cost at about $1bn. Under a similar scenario NZIER found the cost had nearly doubled to $1.9bn.

BusinessPlus August 2017

$842

% of Auckland GDP Economic

0.52%

0.90%

0.79%

1.35%

Social

0.47%

0.70%

Total

0.99%

1.37%

1.49%

2.06%

Source:NZIER

Table 2: The range of dollar costs per Aucklander per annum, both economic and social, of congestion on our roads, and the percentage of GDP that cost represents.

Under the upper range of the “at capacity” scenario, congestion has an economic cost of $842 for every Aucklander and a social cost of $439. In addition, up to 2300 jobs are possibly lost to Aucklanders through congestion constraints on productivity. The liveability of our city is declining, we are the 47th most congested city in the world and one of the most congested cities for its size in the world. The above figures are an average productivity loss per Aucklander but EMA members who took part in focus groups put the productivity loss in the range of 20-30 per cent in their businesses. Some of the highlighted costs from members of our focus groups were: • Hiring 20 per cent more staff to carry out the same volume of work; • Trucking firms making fewer runs over fixed routes over longer time frames to deliver less volume of product, despite using larger capacity vehicles, with a near 30 per cent productivity loss; • Service firms establishing depots around the city, at significant costs, to meet service promises such as one-hour replacements or deliveries; • Trucking firms refusing to deliver to some parts of the city described as “black holes” for their vehicles. What is also apparent is the productivity loss may be even higher as the model only measures congestion on five days

land economy by $1.3bn a week, and business is a seven-day-a-week activity. It is also likely that leisure trips and social impacts on lifestyle are undervalued. Another concern is that the Auckland Transport Alignment Plan (ATAP) only sets its sights on not making congestion worse in the next 30 years, while the report makes it clear to us that the Plan’s 10-year time-frame for introducing congestion charging is just too far away.

Mix of solutions required The social impacts are also becoming more apparent. One high-end export business owner we spoke to had been approached by his staff to move operations out of Auckland because they were sick of battling traffic. It was also apparent that people often don’t choose to live where they want to live in Auckland but choose to live where they can access work. Other businesses are finding it difficult to recruit staff because of difficult access to the workplace from various parts of the city. Matching skills to job vacancies is becoming more difficult because of congestion.

commentary By Alan McDonald

And lifestyle issues caused by congestion are adding to the problems the freight sector already faces in recruiting truck drivers. One business reported that five years ago a truck driver could make a good living on about 50 hours per week, but now with congestion, that’s up to 70 hours a week. And people do actually want to spend time with family and friends rather than sitting in Auckland traffic. Our report does not go into suggesting answers, as our focus is on identifying the gains available from decongestion. But it’s important to note this is not a case of finding reasons to build more roads. There must be a multi-faceted approach to reducing congestion to boost productivity. Some of the answers to Auckland’s problems probably haven’t been thought of yet, but we need to act now while also being much smarter about our thinking around the long-term future. There is no silver bullet but there will be a mix of technology, public transport, road transport, traffic management, congestion measures and freight options to achieve significant de-congestion on the road transport network and to boost Auckland’s productivity.

Alan McDonald is EMA’s policy director. Email alan.mcdonald@ema.co.nz

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BusinessPlus August 2017

commentary By Abbie Reynolds

NZ business pushes the electric vehicle pedal The adoption of electric vehicles (EVs) in New Zealand is accelerating. There are nearly 4000 on our roads, and every month that number grows exponentially. And there’s real interest and leadership coming from the private sector. Every week I talk to business leaders who are buying EVs, or are investigating integrating them into their fleets. When you look at the case for EVs, it’s easy to see the benefits to using this technology far outweigh the benefits of using conventional gas guzzlers.

Easy to maintain A year ago I bought a plug-in hybrid vehicle and it’s radically changed the way I drive. For a start, I’m paying the equivalent of 30 cents a litre of fuel. That’s because every time I drive into my garage and plug my car into the wall with a charging cable, I get an additional 50 kilometres in range. Studies show for every $20 I spend on power bills, I would have spent $100 on petrol or diesel. Then there’s the self-charging battery. Whenever I drive downhill or hit the brakes I’m boosting the battery. It’s so satisfying to watch your car gain another 20 km in range as you drive across town or country. EVs have great acceleration and are so quiet. And contrary to myth, the national EV charging grid is widespread; I never feel “range anxiety”. Companies such as Mercury, Meridian and Vector are constantly expanding the infrastructure, with fastcharging stations that top up your

battery in less than 30 minutes. And smartphone apps like Plugshare make them easy to find. EVs are also cheaper to maintain, as they only have 20 moving parts compared to 2000 in conventional cars.

The business case Many Sustainable Business Council members are adopting EVs as part of their work to reduce emissions and demonstrate leadership in the transition to a low emissions economy. Nearly 20 per cent of New Zealand’s greenhouse gas emissions come from cars and trucks. With our largely renewable electricity, EVs produce up to 80 per cent fewer emissions. They also reduce our reliance on fossil fuels and exposure to volatile international markets. And from a marketing perspective, EVs bring a point of difference in an extremely competitive market. If a company member drives one, they show they are embracing new technology and reducing their impact on the environment. Small businesses such as 4sight Consulting are trialling an EV and, if successful, will roll more out across their fleet. Larger businesses like Air New Zealand have started converting their fleet too. By 2020 the company aims to make 100 per cent of its ground vehicles electric where possible, saving 65,000 litres of fuel a year. Air New Zealand has also teamed up with Mercury, Westpac and 27 other businesses, making a commitment to convert at least 30 per cent of their fleet by 2019.

A private sector initiative like this normalises EV ownership and shows business leadership. In time, these fleets will kick-start our secondhand EV market too. Every year the cost of an EV drops. Some models are now cheaper than conventional cars, eg, a secondhand Nissan Leaf costs between $11,000 and $17,000. A new Nissan eNV200 van costs $39,000. And even if you do pay more for an EV upfront, you’ll soon recover the cost. Research suggests the average Kiwi driver travelling 12,500 km every year will save $2000 in petrol. And there are other benefits to being an early adopter. You get preferential parking at shopping centres and there are no road user charges.

Electric vans, trucks and buses In the past few years, the range of EVs has exploded. They are now fit for purpose. Electric trucks, buses, luxury cars and vans are being used across New Zealand. The Warehouse is trialling two electric delivery vans. The Department of Internal Affairs is also trialling hybrid BMWs for its VIP fleet carrying Government Ministers and dignitaries. Waste Management is trialling its first electric rubbish truck and, if successful, it plans to convert a large number of 200 cars and 800 trucks. The private sector has the agility to take on new technology and innovations quickly, including in the transition to a low emissions economy.

X Abbie Reynolds is executive director of the Sustainable Business Council. Visit www.sbc.org.nz 8

BusinessPlus August 2017

COMMENTARY By Kirk Hope

Innovation essential in business and sport New Zealand’s recent victory in the America’s Cup yacht race was a great testament to innovation. Sports fans were blown away by the amount of ‘new stuff’ on the Team New Zealand boat – foils, bikes and on-board tech; amazing advances in a sport that’s already innovated rapidly over recent years. That innovation included new skills, micro-skills and teamwork all combined to bring home the prize. The big win gave us lessons for business too. Business commentators like to talk about the benefits of innovation for enterprise because, in business as in sport, the payoff from innovation can be huge. I’d go further - I think innovation is not only desirable but essential. Looking at business trends here and overseas, it’s apparent that innovation is now the main way that companies succeed. In the recent past, companies used to compete through efficiency. They’d get market share by improving processes and cutting costs, producing products more efficiently and cheaply than their competitors. But beyond a certain point there’s no more efficiency to be squeezed out, no further costs to be cut. Anyway, customers don’t just want cheaper things - they want new things.

Successful consumer items today, like iPhones and electronic devices of all kinds, are successful because they are genuinely innovative, offering new features and benefits desired by customers. To succeed in business now, it’s necessary to develop, refine, improve and create new products and services – to innovate.

Funding issue It requires spending on research and development. Emirates Team New Zealand funded its ground-breaking innovations through significant sponsorship by major companies and investment by the Government’s research and development (R&D) agency Callaghan Innovation. Businesses wanting to innovate must also find the funding for development – a stumbling block for many. Fortunately there are now more sources of capital for development and innovation, including angel investors, start-up funds, peerto-peer lending and others, and Callaghan Innovation grants are available for many kinds of product development. New Zealand companies tend not to spend much on R&D – overall only half a per cent of GDP compared with 1-3 per cent of GDP in many other developed countries. Even though in typical kiwi fashion we tend to innovate without necessarily spending a lot, we could do better still by investing more.

Collaboration Another vital component of innovating is being around others doing the same. Being part of a developing industry is good for companies. Innovation often arises out of clusters of competing companies within the same industry. For example, many significant advances in consumer electronics stemmed from Silicon Valley where hundreds of tech companies operate. New Zealand’s boat-building sector is another example of a cluster industry, with individual boat builders generating a lot of innovation, sharpened through competition. New features in both Team New Zealand and Oracle boats came from that industry, developed by superb boat builders operating in different parts of New Zealand. Innovation in different parts of New Zealand within cluster industries is great for regional development and jobs in local communities. In celebrating the victory of Emirates Team New Zealand in the America’s Cup, we not only celebrate a great sporting achievement but also a magnificent example of business innovation. • You can read about our member company, Jackson Electrical Industries that was part of that innovation, on p29.

X Hope is chief executive of BusinessNZ. Email khope@businessnz.org.nz Kirk BusinessPlus August 2017

commentary By Steve Summers

Fastest turnaround surveys in the West The upshot of all this is that by the middle of the month, New Zealanders have a clear picture of the health of the manufacturing and services sectors for the previous month.

The business world is constantly hearing from multiple sources that we need information quicker and preferably in real time, to ensure people are fully informed when making decisions. But with most things in life there are always trade-offs. If the information is collected too fast it might be inaccurate; too slow and it becomes yesterday’s fish and chip paper. This means those who produce data, particularly from surveys, have to balance both timeliness and quality to ensure the best outcome for users. Back in 2002 when we started running the global, monthly Performance of Manufacturing Index survey (PMI) in New Zealand, our primary goal was to have a regular, up-to-date understanding of the manufacturing sector. Sure, StatisticsNZ produced (and still do) the quarterly Economic Survey of Manufacturing, which is a very useful and informative gauge of New Zealand’s manufacturing sector. However, in business a lot can happen in one quarter of a year. For many businesses, a turning point in the key drivers of activity can often mean the difference between identifying a new opportunity and suddenly falling well behind their competitors. The PMI that was being conducted in other countries - Australia, Japan, China, Europe, the US and

UK - had built a track record for timely and accurate information that had helped businesses, commentators and Governments alike, in key economic trend issues for the sector, so it was high time New Zealand also had that option. After all, we take pride in our ability to be nimble enough as a small country and to act fast.

Fast and useful results So how quick is quick, in PMI data terms? First off, the survey is in the field the first full week of each month, and is designed to be filled in within two to three minutes - asking questions that the respondent should generally know off the top of their head, regarding activity during the previous calendar month. Once the survey is closed off to respondents, analysis is conducted first thing the next week and media statements are drafted up so that the PMI results are released only five days after the survey finishes in the field (typically on a Friday). Then we release the Performance of Services Index survey (PSI) to the services sector on the Monday the week after. The upshot of all this is that by the middle of the month, New Zealanders have a clear picture of the health of the manufacturing and services sectors for the

Steven Summers is an economist at BusinessNZ. Visit www.businessnz.org.nz 10

BusinessPlus August 2017

previous month. These two broad sectors combined make up more than 70 per cent of New Zealand’s private sector GDP. To give an example of timeliness, StatisticsNZ’s June quarter manufacturing data is officially released on 8th September. Their June quarter GDP findings that incorporate both the manufacturing and services sectors are released a week later on the 15th. In comparison, the 15th of September is when BusinessNZ would release the August PMI result, so essentially two months ahead of the game. The speed at which the PMI and PSI are released begs the question, can the turnaround be faster? The answer is, technically yes, but at the same time it’s important that businesses are given enough time to fill in the surveys and ensure the data is not compromised in any way. No doubt further advances in technology will help speed up the availability of official data, but for the time being the PMI and PSI are literally months ahead of other sources in terms of informing us about levels of business activity in these crucial sectors of the economy. We encourage all manufacturers and service businesses to take part – the more responses, the more accurate the data. To get involved please email marketing@ema.co.nz

COMMENTARY By PAUL MACKAY

Election 2017: Labour’s 2017 Workplace Relations Policy analysed As we near the General Election on September 23, we present a range of views and party policies for your consideration. Taken together, the Labour Party’s workplace relations policies will not create what the party claims is a floor to prevent a “race to the bottom”. Instead, the race will become a sprint to create conditions reminiscent of the “bad old days” of the 1970s and 80s. Why a sprint to the bottom? Because the most significant changes are slated to be enacted within the first 100 days of a new Labour Government’s first term. Why so bad? There are multiple reasons. Looking at the nature of the various proposals it seems there are three separate, yet linked, strategies being pursued: wages, strengthening the role of unions and “normalising” conditions of employment around the idea of full time, permanent, work.

Wages theme The wages policies aim to lift the wage floor and close the gap between the “haves” and “have nots”. The proposals relating to minimum wages, living wage, pay equity, starting-out wages and the repeal of trial periods are all linked in this respect. However, removing incentives to hire inexperienced or untested young and other workers (especially 90-day trial periods and youth rates) will promote increased unemployment for young and unskilled workers. Dramatically increasing the minimum wage to 15 per cent below the

median wage (ie, to 66 per cent of the average wage) would distort the wage structure of the entire economy, making many businesses rapidly unsustainable and putting enormous pressure on other wages. The consequences would be significant, particularly given the increased availability of the right to strike inherent in Labour’s other proposals.

Proposals relate to dependent and independent contractors, labour hire, compulsory redundancy entitlements and the like.

Dramatic increases in paid parental leave may (as European research suggests) reduce the number of employees returning to work at the end of their leave, exacerbating shortages of skilled labour.

Quite apart from breaching international labour standards that protect the ability to form different kinds of relationships, this will reduce the flexibility afforded by “on demand labour” and significantly increase costs in industries that rely on such labour, such as construction. Ironically, this will make housing even less affordable than now.

Unions theme Labour would strengthen the role of unions and enable them to negotiate on an industry-wide basis, even where they have no members. The main features are easing union access rules, making the conclusion of collective agreements mandatory and granting arbitration rights to the courts, however, these changes contravene international labour law, which requires collective bargaining and settlement to be voluntary. Creating industry-level employment agreements will advantage “big labour” over small business, leading to the demise of many of the latter. It will also lead to industry-level industrial action not seen since the 1970s and 80s. The consequent damage to the economy was huge then and unlikely to be less now, given the globalised nature of trade and labour supply.

Work conditions theme Labour’s apparent desire is to “normalise” conditions of employment around the idea of full time, permanent, work.

To the greatest extent possible all workers, irrespective of the nature of their employment or contracting relationship, will be treated, remunerated and protected as if they were employees.

Creating a universal minimum entitlement to redundancy compensation will guarantee increases in business insolvency since contingent liabilities created by redundancy entitlements will make the restructuring and sale of businesses prohibitive. This has been the experience of European nations. Paradoxically, proposals to increase the number of groups offered protection from restructuring and contracting out will inhibit business sustainability, which will also flow through to increased risk of insolvency. Expansion of the right to strike to cover claims in support for redundancy agreements would simply add jet fuel to the fire. All three strategies arguably impose heavy costs and, based on history, will cost jobs. You can read the full, 14-page document in the “Election 2017” section of www. ema.co.nz

Paul MacKay is manager of employment relations policy at BusinessNZ. Email pmackay@businessnz.org.nz BusinessPlus August 2017

Seen @ EMA events in Auckland From left Jodie Millar, Stuart Kuus, Andrew Barclay, Monique Sollis, Stevee-Rose Theyers and Brent Irvine [Attache Software]

Wayne Thompson [Ports of Auckland] and Martin Pyke [Stevenson Group]

Annamarie Jamieson [ Fairfax NZ], Nicky Wagner [Minister for Disability Issues] and Kim Campbell [EMA]

Karlene Higgins and Lisa Murphy [RSM NZ]

Hannah Jenkins [Youth Horizons Trust], Jelena Zidov [Royal NZ Foundation for the Blind] and Sonja Johnson [Fairfax Media]

Karl Leonard-Rogers and Tracey Rissetto [Allcrane Sales and Services]

BusinessPlus August 2017

Fiona Fusitua, Selu Latu and Semisi Vunileva [Pasifika Consulting]

Neil Sayer [Globalise] and Paul Oâ&#x20AC;&#x2122;Brien [ExportNZ Auckland]

Laura Bester [The Skills Organisation] and Libby Woodhouse [Reckitt Benckiser NZ]

Arlette Farland [Computaleta], Dean Maney [Brand Partners] and Jared Percival [Onform]

EMPLOYMENT By KENT DUFFY

Tricky issues: bonding arrangements and unlawful premiums A bonding arrangement bonds an employee for a certain period of time, as part of the written terms and conditions of employment, and in turn the employer provides the person with something of value. Typically bonding arrangements are used where the employer pays for an employee’s formal training or qualifications. They are also common in situations where an employer pays for an employee’s relocation costs. Where the employee’s employment is terminated prior to the expiry of the agreed bonding period, the employee is usually required to reimburse either all or part of the employer’s costs under the agreement. The subject of premiums is an issue to be mindful of when considering a bonding arrangement, as the Wages Protection Act 1983 (WPA) precludes an employer from charging a premium for employment. Interestingly, the word “premium” is not defined by legislation but can be understood as a payment in order to secure employment, although it can potentially extend beyond this. Employers are often unsure as to whether bonding arrangements are lawful. The short answer to this question is: yes, they are. The law does not prohibit an employer from good faith bargaining and reaching agreement with an employee on a bonding arrangement. However, there are important considerations to be aware of when structuring these

… bonding arrangements that only benefit an employer are more likely to be considered an unlawful premium. types of arrangements, particularly in terms of drafting the details, eg, of the specific amounts associated with the agreement, operative timeframes, whether it applies on a pro-rated basis, linking it to the employee’s employment agreement and the provision of a deductions clause.

Light regulation It is also important to note that there are no statutory provisions that provide for specific obligations in terms of bonding arrangements in the context of employment relationships. However, the WPA may apply in terms of deductions from an employee’s salary or wages and/ or final pay. More pertinently, this piece of legislation precludes ‘’unlawful premiums” or, in other words, premiums being charged for employment such as some consideration paid or demanded as the price of a contract or paying to acquire a job. This is particularly relevant as the Employment Court has recently clarified that a “premium” extends to apply to an employer recouping, or attempting to recoup, recruitment-

related costs or other expenses that would ordinarily be borne by an employer. In the recent case of Holman v CTC Aviation Training (NZ), the Employment Court had to assess whether training fees Mr Holman was required to pay for qualifications to become a qualified flight instructor amounted to an “unlawful premium” in breach of section 12A of the WPA. The terms of his agreement with the company stated that Mr Holman was to repay the remaining balance of a loan over a four-year period following the commencement of his employment. Mr Holman started work as a flight instructor in November 2012. However, he resigned in 2014 following a disagreement with CTC about the training fees. Following termination, CTC made a claim for the balance of the training fees. The Employment Court stated there were two requirements for a payment to be a “premium” for employment: a. “the payment is a condition for the obtaining of employment. The employment will not be obtained prior to payment; and b. the payment does not benefit the employee in any way other than obtaining employment”. In this case the Court held that it was not the payment of the training fees that was a condition that needed to be met prior to employment; it was obtaining the qualification itself. Continued pg31

Kent Duffy is a solicitor at EMA Legal. Email kent.duffy@ema.co.nz BusinessPlus August 2017

EMPLOYMENT BY MYRIAM HEYNEN

Steps to recruiting good staff Gone are the days when employers were swamped with quality job applicants after advertising vacancies in the ‘paper. And the replies they get from Seek or Trade Me today are not always appropriate. In these cases, consider if your recruitment methods are appropriate. What are the factors to consider and the best ways to connect with potential candidates in today’s environment? Your starting point is to reflect on the qualities of your target candidate and walk a little in their shoes: where would they go during work hours, what might they do in their spare time, what form of media would they use? Then you can start to brainstorm where you might possibly place your advertisement so that they might connect with it. A little creative thinking goes a long way to find low-cost solutions, such as: the local newspaper (so they don’t have travel issues to connect with you); the local gym, sportsclub or church noticeboards; your industry magazine or conference; business training providers; new immigrant groups, etc. If you’ve analysed your recruitment

data, you will know that your strongest source of quality candidates is your existing staff. Do you have a means of letting them know you are looking, whether that’s a noticeboard in the staffroom or your intranet? Social media is another version of the same premise, as like will refer like. A robust position description is the cornerstone of a solid recruitment process. Later, it’s a key tool for managing staff. Most of us will write into this description what will be required of the role (skillsets and knowledge). But have you defined the way you expect your staff to interact with others, both within and outside of the business? The most common problem managers report about poor hiring decisions is that the person “didn’t fit”. What questions will you ask to assess how the candidate works and therefore will fit into your environment? I recommend managers ask themselves what three words they would use to summarise their workplace, which is doing a kind of reference-check on their business. Then ask themselves, “what

questions could I ask to find out whether these applicants would work that way?”

Two interviews A quick chat over a cuppa is not the most effective way of choosing your staff, and a 90-day trial period is not as fool proof as employers would like to think. You will reap the rewards of a better hire by taking the time to develop quality questions, based on your position description and behaviour expectations, and holding two interviews with a different focus each time. The first interview would be to check the veracity of their CV and gauge the level of their skillsets. The second interview would focus on “fit” and therefore could include that casual cuppa - with the candidate’s potential work team, so staff also have a hand in providing feedback into your process. If your recruitment process is in need of an overhaul, EMA has developed a course, “Recruiting the Best”, designed to increase the knowledge and confidence of business owners, human resource managers and others who may be at the coal-face in the recruitment process.

Myriam Heynen is an EMA employment relations consultant. Email myriam.heynen@ema.co.nz

Source the best person for your team. www.ema.co.nz 14

BusinessPlus August 2017

EMPLOYMENT BY DEBORAH LAW

Discover the versatility in EMA training It’s a curious fact that most members of a club or organisation never make use of all it has to offer. The classic is the New Year gym membership that gets used twice before the sofa beckons. Others may not know all the benefits that can be had, nor understand how to use them. Some organisations, like gyms, rely on members not taking up what they’ve paid for, because they could never cater for them all. But it’s not like that at EMA, especially when it comes to the training services on offer.  As an EMA member, one of the most valuable benefits is the opportunity to access tailored training. If it sounds like a custom-fit operation that’s because it is, but that doesn’t mean what we offer has to be complicated. The team at Tailored Solutions offers pretty much every course on EMA’s books, from the simplest

workshop to a comprehensive certificate. But we can also tailor it to your specific requirements, if necessary, and even deliver it on your premises. It really couldn’t be easier. Best of all, as an EMA member, you can access all these courses and additional services at a significant saving over the cost for nonmembers. If you didn’t know about Tailored Solutions (TS) and what we offer, you’re not alone. The team has been in constant demand by those members who do know about our courses and the added value they represent. But the time has come to share the love, ensuring all members are aware of TS training and can take advantage of our services. That means a ‘gearing-up’ is in progress, enabling more courses to be offered right across the membership base. The same significant advantages apply:

choose from the best of EMA training (with guidance on hand), have it tailored as required to the needs of your organisation and team, then get it delivered where it suits you best – including at your premises if there’s a group to train. And all at a lower price than that paid by non-members for a standard course. The choice is enormous and many courses benefit greatly from being delivered in-house. One example: health and safety training. Risks and hazards can be assessed by your team in the workshop then reviewed on site. Our leadership coaching is another example, where it’s not just about individual performance but establishing leadership teams that work together for better results. Plus, across the board, it’s often more convenient and efficient than travelling to a separate venue (although there are plenty on offer).

Visit Tailored Solutions at ema-co.nz/services or contact Deborah Law, who heads up the team, directly. Email deborah. law@ema.co.nz or call 021 636 799.

BusinessPlus August 2017

EMPLOYMENT

Investigating bullying, repeated sickies and staff incompatibility Q. I’ve been told by a senior staff member, Joe, he is being bullied by his manager and is ready to leave. I want Joe to stay but he doesn’t want me to investigate for bullying. What can I do to keep him, or discipline his manager? – Ant

claim. Not to mention that would be a breach of good faith and unfair.

Dear Ant It sounds like Joe is going to leave anyway – he’s probably had enough and wants to avoid the stress and conflict. It could be easier for him to just slip out. Perhaps to the detriment of the business.

However, you could encourage Joe to reconsider, and emphasize you will investigate if he changes his mind. Offer him enticements to stay, such as changes to his remuneration or work conditions – can he work remotely at least some of the time, to avoid contact with the manager, for example?

But his manager might continue his bullying ways, so you do need to deal with that. Of course you need evidence and detail to make any accusation of bullying or harassment. However, in the interests of privacy you cannot yet name Joe as a complainant.

Perhaps there are casual ways to indicate to the manager that you are aware he is a bully, without making an accusation.

Ensure you have a bullying and harassment policy in place and that staff know about it, to deter future incidents.

Consider what evidence you have – from other staff? And are there performance issues with the manager that you can raise with him?

Q. Frequent sickness on Fridays is starting to annoy me. It’s not that much work is left undone; it’s just bad for morale in the wider team, and frankly pisses me off. What are my rights to combat this abuse of my trust? – Nigel

You also cannot begin a campaign of ousting the manager – that could lead to a constructive dismissal

Dear Nigel Everyone has “pulled a sickie” at some point. But it’s the repeat

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BusinessPlus August 2017

‘sickies’ from the same person that make it hard for all involved, both in the short and long term. Everyone suffers when the team isn’t at full capacity and it keeps happening: production falters, mistakes happen, deadlines are missed and stress levels rise. If you have a medical certificate justifying the sicknesses, that should put your mind at ease on the trust factor. You can request a medical certificate after the person is absent for three or more consecutive calendar (work) days due to sickness. You can also ask for a medical certificate sooner than that if you inform the employee as early as possible that proof is required, and if you pay for reasonable expenses incurred in getting that medical consultation and certificate. But a person’s repeated illness (“medical incapacity”) that interrupts business activity is an issue you need to address. There is a process to follow. In a small company it would be reasonable to review after six to eight weeks of constant absence

Pay only

319

+GST

No matter how many staff you employ

EMPLOYMENT

due to illness, or maybe 12 weeks in a larger firm, with a view to finding a temporary or permanent replacement. Terminating their employment must be based on a business need due to operational difficulties. The reason for termination should be stated as the person’s inability to fulfil the requirements of their role, not the illness or injury per se, and notice given as in the employment agreement. Q. The culture has become toxic; the mix of individuals isn’t working. While I obviously take responsibility, it can’t go on. What can I do, when it’s not about performance or output per se, though it will affect customer service in the end…. - Bob Dear Bob Yes you are right …yes it happens…. Of course, you might want to reassure yourself with some data analytics, in case staff are just in a phase…..Is the problem real? Is it showing up in sales volume, revenue, verbal feedback? Some very successful companies thrive on what others might see as “dysfunctional relationships”! But if the data shows a glitch or downturn, look for the cause. Perhaps there is only one person at the heart of the unrest in your business, which makes the solution simpler! Which is…taking the identified person aside and presenting factual evidence of their disruption. In collecting this evidence you might have to ask other staff for their views of what is happening and of who is behaving badly. They must agree to your naming them if you present their comments to the problem person.

You can then instigate a formal disciplinary process, with warnings, that could lead to termination. The reason could be that the selected employee is exhibiting misconduct, according to your company policy and/or the terms of their employment agreement. There is also the option of termination for “incompatibility”. However, the threshold to meet this test is onerous on the employer and involves a high level of proactivity taken to manage and resolve the conflict at an early stage. In order for the dismissal to be justified an employer has to meet the requirements of substantial and procedural fairness and if any of the principles of incompatibility are missing, it would be held as an unjustified dismissal. It would be best to call AdviceLine before exploring this as an option. • By the EMA communications team in consultation with EMA Advice, and loosely based on real calls to EMA’s AdviceLine. All names are fictional. The information in this article is a guide only and not to be used as business advice without further consultation. EMA members can start with our free AdviceLine team at phone 09-367 0909 or 0800 300 362 (within New Zealand), and 1800 300 362 (from Australia), 8am-8pm weekdays NZ time; or email advice@ema.co.nz You can also find information at www.ema.co.nz such as the A-Z of Employing – a manager’s guide on more than 100 specific employment topics, or the detailed Employer Guides on 12 popular topics.

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BusinessPlus August 2017

EMPLOYMENT By PAUL JARVIE

Multi-PCBUs: communication is key when safety responsibility is shared The holders of duty to carry health and safety functions in New Zealand workplaces are clearly-defined as Officers, PCBU’s (entities or businesses), workers and others.

•

The recent legislation also made it clear that these duties could not be transferred to others. However, the situation arises where more than one person has the same duty, when there are one or more businesses working together at the same site, or a worker from another business is working on your site. This is termed the multi-PCBU workplace. Examples are when a courier is on your site or you are meeting with another person, say, in a coffee shop, or when you engage a contractor to work on your site. Where these situations arise, the persons must discharge all their duties as fully as they can. The law requires that the multiple PCBUs consult, co-operate and co-ordinate their activities as far as reasonably practicable. This sounds easy but in fact and in operation is quite problematic. To date there have been no clear decisions from the courts (including in Australia) to help us understand the extent of the duty. WorkSafe NZ has produced a singlepage information sheet introducing another layer to the defined legal duty. Here they talk about: • Control over work activity: If a business is in control of the work activity, then it may be in the best position to control the health and safety risks.

•

Control of the workplace: The person who has control over the workplace (and/or plant and structures at the workplace) will have some influence and control over health and safety matters relating to work carried out by another business. Control over workers: A business will have more influence and control over its own employees and contractors than those of another business.

Another but significant consideration noted is: “what is the risk profile of the work being done by whom, where and when?” WorkSafe also has publically said that whoever creates the risk is more than likely the best person to mitigate that risk. What is clear is there is no easy solution, except to say the higher the risk the more the parties would be expected to do. The duty is still within the context of being reasonably practicable and is therefore not a strict liability provision.

• • • •

Agree on the degree of influence and control each business has; Agree on who will manage what, and how it will be managed; Agree on the use of shared facilities; Monitor and check how things are going, on a regular basis.

There are many mechanisms enabling this to occur, from sign-in procedures, inductions and site tool box meetings through to joint JSAs (job safety analyses), statements of “safe systems of work”, and joint communications, training and supervision. The size of the business has no bearing on its discharge of the duty. All businesses must decide who is best-placed to discharge the health and safety responsibility for the particular project.

Communicate with other parties

We suggest the more complex the work, or the higher the level of risk, the more formal the approach you take. Remember, just formalising rules and processes does not limit the duty but rather creates a clear definition of the duty to be exercised. You cannot contract out of these duties by creating paper systems.

In real terms this duty is about communication between the parties to define and agree who is doing what, where, how and when; plus, to clarify where there may be exposures to hazards and risks introduced by the contracting or other parties.

Many companies are using risk matrices to help understand their risk profiles for various types of work. The same system could be used to understand the level of control and influence you may have in any given multi-PCBU situation.

Parties to multi-PCBUs need to: • Discuss what work activities are being carried out;

The test will always be: “What would you change or improve if something had gone wrong?” This possibility is now the risk you are managing.

Paul Jarvie is EMA’s manager of employment relations and safety. Email paul.jarvie@ema.co.nz 18

BusinessPlus August 2017

Who gets what: personal grievance claims analysed Awards to employees for hurt and humiliation are increasing after numbers remained static for a number of years, as noted in EMA’s annual analysis of the personal grievance (PG) determinations made by the Employment Relations Authority. Each year we analyse the PG statistics to get a sense of trends, in terms of the number and types of grievances, awards, costs, and success rates. The information below refers to the PG statistics for the 2016 calendar year.

Types of grievances and awards EMA’s analysis divides all personal grievance decisions of the Authority into five categories: • Constructive Dismissal, • Redundancy, • Misconduct, • Performance, and • Disadvantage. Where a determination is made in favour of an employee, the Authority is able to order the employer to make payments to the employee under the Employment Relations Act 2000.

Hurt and humiliation These awards vary widely in value, depending on the evidence showing that the employee has suffered stress, hurt feelings or loss of dignity. And as mentioned above, there seems to be a recent trend of increased numbers of hurt and humiliation awards. In 2016 the average national award for hurt and humiliation was $7,007, compared to $6,344 in the previous year. The Christchurch jurisdiction had the highest average award of $8,459, then Auckland at $6,415 and Wellington at $6,325. Hurt and humiliation awards were generally higher where the case involved constructive dismissal, with a national average award of $7,958. At the lower end of the scale were disadvantage cases, where the national average award was $4,797.

Claims’ success rate EMA membership improved an employer’s chances of defending a claim, with 33 per cent of members experiencing success compared with 28 per cent of non-members.

The most common award types are: • lost wages; • compensation for hurt, humiliation and injury to feelings; and • loss of benefit.

The 2016 statistics show employees’ rate of success in winning cases was 72 per cent nationally. Wellington employees had a 77 per cent success rate, compared with Aucklanders at 71 per cent and Christchurch at 69 per cent.

In the analysis, we divide the determinations into the different jurisdictions of the Authority: Auckland, Christchurch and Wellington.

The most difficult grievances for employees to establish were disadvantage, with which they had a 61 per cent success rate. The easiest claims to establish were

Hurt and humiliation awards (2012-2016) 2016

2015

2014

2013

2012

Average award Average award Average award Average award Average award

Auckland

$6,415 (+13%) $5,673 (+10%) $5,134 (+16%) $4,421 (-11%) $4,941 (+12%)

Wellington

$6,325 (+16%) $5,470 (+19%) $4,597 (-13%) $5,270 (+16%) $4,545 (-12%)

Christchurch $8,459 (+13%) $7,488 (+31%) $5,702 (-2%) National

$5,798 (-10%) $6,465 (+6%)

$7,007 (+10%) $6,344 (+21%) $5,242 (+4%) $5,042 (-10%) $5,610 (+13%)

employment

Cost for an employer to lose Cost for an employer to win 2016 average Hurt & Humiliation $7,007 Lost wages $15,470 Employer Legal Costs $17,269 Employee Legal Costs $10,755 Total $50,501 2016 average Employer Legal Costs $17,269 Less employee contribution $5,488 Total $11,781

Cost for an employee to lose Employee’s total gain if they win 2015 average Employee Legal Costs Contribution to Employer Legal Costs Total

$10,755 $5,488

Hurt & Humiliation Lost wages Employer Contribution Less Employee Legal Costs Total

$7,007 $15,470 $4,093 $10,755 $15,815

$16,243 2015 average

performance-related, with 82 per cent of claimants being successful. Most personal grievances occur in relation to the first 12 months of employment, and an employee’s chances of success are highest within the first six months (at 82-83 per cent on average).

Cost to win/lose Employers pay an average of $50,501 in total including legal costs, hurt and humiliation and lost wages awards, if they lose in the Authority. Employers still pay an average of $11,781 to successfully defend a personal grievance. Employees risk losing an average of $16,243 if they are unsuccessful, but stand to gain an average of $15,815 if they win their personal grievance cases. For specific assistance regarding your situation, please contact EMA Adviceline, consultants or Legal services: phone NZ 0800 300 362 or AU 1800 300 362.

BusinessPlus August 2017

employment By kirk hope and nick astwick

Absenteeism costing business The results of the latest Wellness in the Workplace Survey, conducted by Southern Cross Health Society and BusinessNZ, have revealed the current picture of workplace health and wellness for Kiwi workers. BusinessNZ chief executive Kirk Hope says trends are now forming about workplace absence and its causes, after this third biennial survey. He says that in 2016 New Zealand lost an average of 6.6 million working days to absence and, reflecting over the life of the survey, that loss is an average of 6.1 million to 6.7 million days annually. Mr Hope says that level of absence comes with a significant price tag for the economy, of around $1.51 billion in 2016 and $1.41bn a year on average over the past five years. For employers the direct cost of an absent employee is typically between $600 and $1,000 annually. According to the survey findings the primary causes of absence are non-work related illness or injury, followed by taking time off to care for a family member or dependent due to illness or injury, with the average rate of absence per employee being 4.5-5 days. The survey, of 109 private and public sector businesses representing more than 93,000 employees (about 5 per cent of New Zealand’s workforce), also revealed that stress levels, though moderate, are on the rise for the second consecutive time, with general workload being the main cause of anxiety. Southern Cross Health Society chief executive Nick Astwick says the findings are concerning, but not surprising. He says, “Last year we surveyed more than 500 of our corporate

BusinessPlus August 2017

It’s estimated around 38 per cent of the world’s workers are suffering from excessive pressure on the job.

customers and for those that have a wellbeing initiative in place, their top motivator for doing so is to reduce stress. Unfortunately New Zealand is by no means unique in this area. It’s estimated around 38 per cent of the world’s workers are suffering from excessive pressure on the job.” The good news in the survey findings is that both larger and smaller businesses are now more likely to have some form of employee assistance programme to help staff manage stress - the figure for businesses with fewer than 50 staff has more than doubled since 2014 to 32 per cent.

Tailored packages for employers And Southern Cross Health Society’s newly launched BeingWell Hub is a direct response to businesses seeking help to resource and implement a workplace health and wellness programme. Mr Astwick says the digital hub allows businesses to work with Southern Cross to tailor a package to suit their needs and budget, ranging from free on-line starter kits through to bespoke coaching and expert seminars. An app that calculates a personal health score for each individual will follow later in the year. “There’s recognition now that wellness programmes can boost factors like staff engagement, productivity and retention. “During our lifetimes most of us will spend about 90,000 hours at work so it makes sense for employers to support the health and wellbeing of

their staff while they’re on the job it’s a win-win.” Health insurance often forms part of an employee’s remuneration or workplace wellness package and the survey’s history shows more than a third of businesses offer this, with larger businesses still being more likely to have some form of health insurance for their staff. But while the importance of workplace health and wellbeing is being increasingly recognised, including an improving trend toward recognising work-life balance and providing a family-friendly workplace, the latest Wellness in the Workplace Survey has revealed there is more work to do when it comes to older workers. Mr Hope says three out of four businesses still don’t have policies or arrangements in place for older workers, although there has been gradual improvement since the first survey in 2012. He says, “The concerning thing is that we have a perfect storm swirling with an ageing population that’s living and working longer, a declining birth rate, an increasing skills shortage, greater levels of debt and falling home ownership.” The survey results show around 60 per cent of staff in large businesses are likely to retire in the 65-67 age bracket, but the picture is different for businesses with fewer than 50 staff.

Continue pg23

in business By david spratt

Powering the fourth industrial revolution: NZ advantage A new era of computer-based business known as cyber-physical systems is characterised by the merging of physical, digital, and biological realms in profound ways. Artificial intelligence (AI) serves as the primary catalyst of this transformation. The World Economic Forum founder and chair, Klaus Schwab, writes: “We are at the beginning of a revolution that is fundamentally changing the way we live, work, and relate to one another. In its scale, scope and complexity … the fourth industrial revolution is unlike anything humankind has experienced before.” We have all heard this kind of hyperbole before. But it matters because we have already seen our lives changed by these tools in the most dramatic fashion. The last presidential election in the USA was affected by the use of AI. These tools were used in identifying and directly addressing electors who were undecided or felt strongly about key issues. These powerful computer engines, combined with good old-fashioned phone calls and door knocks, meant voters were either encouraged to vote by “people like them” who knocked on the door (eg, young mum talking to young mum) or to not vote, through messages directed at them about the futility of “rigged” elections. Politics and business are uneasy bedfellows, so I will get back to the brief. How do Kiwi companies respond to international and

local competitors who already understand and are leveraging AI and bringing it to our competitive landscape?

Energy input as strategic issue Let’s start with energy - one of the most fundamental parts of any business. Most of us just focus on getting a cheap price for electricity or gas and then move on to running the enterprise day to day. This approach just won’t work when machines are making the micro decisions that can mean success or failure. Some major New Zealand computer companies are in a life or death struggle with public cloud providers like Microsoft, Amazon and Google. These gigantic multinationals have access to all the tools mentioned above and even deliver them “as a service” to companies everywhere. Competing with organisations like this is not just a question of having good people or getting the best price for inputs. It is about innovation and very careful monitoring of all the inputs and outputs, including energy. One of the most brutally competitive battlegrounds is over providing business with data centre services that require huge amounts of energy to keep them running. New Zealand has a natural advantage because more than 80 per cent of our energy is created via renewable sources, which

will be increasingly advantageous strategically and economically. As the fourth industrial revolution unfolds, it is New Zealand’s energy advantage that will drive our strategic advantage in data centres. Don’t believe me? Microsoft recently announced that a key new measure for its Azure data centres was energy inputs in relation to data outputs. Thus Microsoft has directly linked energy usage as a means to define its computing power efficiency in terms of services delivered. Kiwi companies Datacom and Spark use tools like AI to monitor, control and measure their energy inputs. Historically that was simply a case of installing a few sub meters and a cost calculator (macro energy measurements). Today these companies aim to measure and monitor right down to the light bulb (micro monitoring). The rise of the Internet of Things has made micro monitoring even easier. Architects are being required to include tools and products that embed Internet of Things, AI and micro monitoring in the very fabric of the design of data centres and factories. Companies building factories in this country that do not think micro monitoring of energy use is a strategic tool should be reminded that in the past few decades we exported more manufacturing jobs than we created in all of the IT sector. Ignorance of the strategic possibilities of micro energy monitoring is wilful blindness in a world where the fourth industrial revolution is not only upon us, but rapidly transforming the competitive landscape we work in.

David Spratt is a director of Total Utilities. Email david@totalutilities.co.nz BusinessPlus August 2017

in business By Michael Fokkens

The hidden value of goodwill Goodwill has been called many things – very few of them good. Many excellent and profitable businesses have few tangible assets, so potential buyers might feel they are being asked an “arm and a leg” - because values are based on their intangible assets such as goodwill. In today’s world, goodwill is more than just the hard work and effort a business owner has put into building the business. The website name alone may be worth a lot of money. Consider Amazon, which surely is one of the most recognised brands in the world. The technology behind the name has a lot of value, but it is important to remember that the name or brand recognition, which is known all over the world, is also where the big bucks lie.  The goodwill of a business can include patents, copyrights, its website and/or domain name, licenses, trademarks, proprietary software, secret recipes (what is the value of the secret recipe for KFC?), royalties – the list goes on and on. Would a Burger King business, assuming the same sales and profit, have the same value if the name and franchise were not included? These days, buyers are beginning to realize that much of the value of a business in today’s world is not found in the hard assets such as the fixtures and equipment, but in the intangibles that create the income. Take the Burger King example: the business may have beautiful stainless steel equipment, but the equipment is only worth the income it can produce. The real value is the name and what it represents to the public. Business owners who are considering selling their businesses soon should consider that this new emphasis on goodwill means some business procedures might need to be changed. For example, operations

manuals should be copyrighted, websites and domain names should be protected, product and specific service names should be trademarked, inventions patented. There needs to be emphasis placed on intangibles that must be earned, such as name recognition, brand names, employees, business relationships with suppliers and customers, long-term advertising and reputation. Don’t let anyone tell you that goodwill doesn’t have value – for a well-run business, it is most likely the most valuable asset of your business. For those who are considering buying a business, make no mistake about it, in many cases what you are really buying is the goodwill of the business, and it is not uncommon for the goodwill to be the largest portion of the sale price.

Best time to sell   Many experts say that the best time to sell is when the business is better than it’s ever been. This may be good advice, but few follow it. Why sell when business is good? You may have suffered through a few not-so-great years and now the experts are telling you to sell.

Right or wrong, good or bad, the decision to sell is generally driven by a particular event. You may be experiencing declining health, a partnership break-up, personal issues, too much competition, a change in the succession plan where a family member elects not to purchase the business, or a myriad of other reasons. You might wish to retire and enjoy the fruits of your labour. However, one thing that a seller can do, without creating any pressure about selling or not selling, is to take a bit of time every year and prepare – just in case, as you never know what is around the corner. This means tying up loose ends. Make sure financial records are current and complete, leases reviewed and renewed if necessary, any litigation resolved if possible, licenses and permits updated, agreements and contracts renewed and updated if necessary. You could call this “eliminating the surprises”, and you could also call it good business. By doing this, if a potential sale comes out of nowhere – you’ll be ready.

Michael Fokkens is a business broker at LINK Business Broking (Licence REAA08). Email michaelf@linkbusiness.co.nz 22

BusinessPlus August 2017

in business

Biosecurity in 2025: make it happen Strategic Direction 2: A toolbox for tomorrow

Business is invited to help develop New Zealand’s strategy for managing biosecurity risk.

Harnessing science and technology to transform the way we do biosecurity.

The Ministry for Primary Industries (MPI) is leading a collaborative process to put together the detail for the Biosecurity 2025 Implementation Plan, which is expected to be completed by the end of this year.

Strategic Direction 3: Smart, freeflowing information Tapping into the wealth of data available, building intelligence and using powerful data analysis to underpin risk management.

The Minister for Primary Industries Nathan Guy launched the Biosecurity 2025 Direction Statement late last year, and this is the basis of consultation. MPI’s Roger Smith, chief operations officer and chair of the Steering Group which oversees the Plan implementation process, is keen for businesses to play their part in managing their own biosecurity risk. He says, “New Zealand businesses play a huge role in growing and protecting our way of life. “This direction statement is very relevant for EMA members, especially those who work in the agriculture, education, transport, science and technology industries.” MPI is setting up five Working Groups made up of participants from across the biosecurity system. Each group

Strategic Direction 4: Effective leadership and governance will be tasked with developing a work plan that will set a course of action for each of the five strategic directions out to 2025. You can read about the strategic directions below. The individual plans will make up the Biosecurity 2025 Implementation Plan. The five Strategic Directions (the focus of each working group) are: Strategic Direction 1: A biosecurity team of 4.7 million A collective effort across the country: every New Zealander becomes a biosecurity risk manager and every business manages its own biosecurity risk.

System-wide leadership and inclusive governance arrangements support all system participants in their roles. Strategic Direction 5: Tomorrow’s skills and assets A capable and sustainable workforce and world-class infrastructure provide the foundation for an effective system. Find out more about Biosecurity 2025 and how to take part at http:// www.mpi.govt.nz/protectionand-response/biosecurity/ biosecurity-2025/

Continued from pg20

Absenteeism costing business Among those small firms, staff are more likely to work beyond 65, to the extent that more than 13 per cent of smaller businesses will have a typical retirement age of 71 or older. The most common steps businesses are taking include offering reduced or flexible hours of work, providing retirement information packs and undertaking age-neutral recruiting. But Mr Hope says it’s crucial that all businesses ensure they have the right balance of policies and practices

in place so they maximise older workers’ contributions, don’t lose skills and experience prematurely, support their older staff effectively, and have succession and retirement planning options in place.

“We hope businesses can use the findings as a basis for tweaking or introducing policies and procedures that positively benefit the health and wealth of their employees and themselves.”

Mr Hope and Mr Astwick say the Wellness in the Workplace Survey is one of the most comprehensive assessments of New Zealand’s position when it comes to absenteeism, stress and wellness in the workplace.

· A copy of the full Wellness in the Workplace Survey report can be found on the BusinessNZ website under the Resources tab (then Surveys & Statistics).

BusinessPlus August 2017

international By Brendon Wilson

What happened about the Panama Papers? Following the sensational Panama Papers leak in 2015, New Zealand was named as a desired destination for foreign trusts and was suspected of potentially hiding funds from tax and other agencies. In these trusts the true owner of the assets was not identified and could not be discovered, so New Zealand was rightly or wrongly seen by many as complicit in helping to protect money launderers and tax evaders. Widespread concern in business and the public, and with strong advocacy from Transparency International New Zealand (TINZ), a previously disinterested New Zealand government appointed worldrecognised tax figure, John Shewan, to conduct an inquiry.

That resulted in the Shewan Report a year ago, with detailed findings including “there is a reasonable likelihood that the regime is facilitating the hiding of funds or evasion of tax”. The government enacted many of his recommendations in law which became effective in February, with a compliance deadline of 1 July 2017. As a result, there has been a significant drop in registrations of foreign trusts, from 11,675 in April last year to only 3,000 at the 1 July deadline under the new disclosure laws. Of the trusts that have not reregistered – and so cannot operate legally in New Zealand – some 3,000 have indicated to Inland Revenue they will no longer be registering. The IRD has yet to hear from the remaining 5,000.

TINZ chair Suzanne Snively says, “The sharp decline in registrations strongly suggests that there are a number of foreign trusts involved in activities that couldn’t stand scrutiny.” By any measure, the logic in these new registration numbers indicates a large number moving away to avoid the disclosure that the new law requires. One step the new law did not take was to establish a centralised register of beneficial ownership of companies and trusts, open and available to all reporting entities. This would promote greater transparency and public confidence, and would be consistent with the Anti-Money Laundering and Countering Financing of Terrorism Act. It is still a worthy objective. Has the new law improved the New Zealand financial landscape and international reputation? We think so.

Brendon Wilson is a director of Transparency International New Zealand. Visit www.tinz.org.nz

BusinessPlus August 2017

Very able bagel maker International success is all about going deep into markets, rather than simply exporting to them, says ABE’S Bagels general manager, Wade Gillooly. He says, “I don’t like using the word ‘export’ – it implies you’re just putting a product in a container and forgetting about it. Whereas what we’re trying to do – and what I think most New Zealand exporters are aiming for – is to have a deep, inmarket presence, to understand our customer a lot better and to control our sales better.” This is part of the strategy Wade employs at ABE’S – the company he joined after running Pitango in Australia and previously working at Heinz in New Zealand.

The bagel occasion “The long-term goal is for people to understand the bagel occasion – to enjoy them with coffee, enjoy them with friends and family – then when they’re shopping in the supermarket they can buy the ABE’S bagel and have that café experience at home. “This all helps us get deeper into the market and have a deeper understanding of our customers in the long-term – we’re recruiting new bagel consumers! That’s the purpose of the Smoking Gun bagel café. It’s about promoting bagels as a food and lifestyle choice.” Wade says this is one of the differences between simply exporting and having an in-market presence.

Originally he was invited to join ABE’S’ advisory board to help with a strategy for growth; then he got asked to execute that plan!

Also, Australia is a quick commute, so he sees it as an extension of the company’s New Zealand market, and good for initial growth.

ABE’S is now leading the bagel category in New Zealand, and aiming to lead in Australia too, growing mainly through supermarket chains.

Partnering with topping partner brands such as Philadelphia cream cheese, Nutella and Vegemite is helping to raise awareness.

Says Wade: “It’s about controlling and managing the supply chain, as well as getting the product onto shelf in the right location, at the right time; then supporting products in market, with a really strong promotion programme and marketing support package.

Wade says one of the keys to their success is to focus purely on bagels. “It’s all about a passion and singleminded focus on making the best bagel and best bagel crisps.”

“It’s about the locus of control – integrating and growing into other markets.” ABE’s helped set up a bagel café in Sydney last year, called Smoking Gun, backing two young Kiwi guys. “We’re now making an authentic Montreal-style bagel in downtown Sydney, and showcasing them to Australians along with all the topping experiences you can have with them.

international By Catherine Beard

ABE’s Bagels won the Ports of Auckland Exporter of the Year (export revenue $10 million - $25 million) Award in the 2017 Air New Zealand Cargo ExportNZ Awards. The judges said the company demonstrated a clear knowledge of its market and had a well thought-through plan for future growth. It began life as a café in Auckland and now sells its product to Australia’s Woolworths, Coles, Costco and IGA stores nationwide.

Justin Maddock (l) from sponsor Ports of Auckland presents the export award to Wade Gillooly of ABE’s Bagels.

Tips and learnings from Wade Gillooly: •

Before developing overseas markets, you need a strong home market. Focus on building strong brand equity through having a highly differentiated product offering. Don’t be a “me too” product. This is especially important when competing against supermarket own-brand products.

•

Have fun! As a brand, we’re keen to have fun and vibrancy in our culture. For example, our marketing team – who are crucial to what we do – are called “The Colouring-In Department” and the sales guys are known as “Sales Ninjas”.

•

Make sure your people fit your culture, and delegate so people can get on and do their jobs. A flat hierarchy and flexibility means we can make decisions quickly. I love the fact we’re all passionate about getting things done.

•

Have a strong strategic threeyear plan that everyone is on board with. We’re always talking about where we are relative to the plan – and that gives us focus for growth and seizing opportunities.

Catherine Beard is national executive director of ExportNZ, a division of BusinessNZ. Email cbeard@businessnz.org.nz BusinessPlus August 2017

international trade

Her [Heather Baigent’s] foresight and entrepreneurial nous means she spotted the potential of Indonesia as a tier one export market, well before others.

Congratulating winners of Auckland and Waikato export awards Fonterra Global Foodservice has taken the supreme award for the 2017 Air New Zealand Cargo ExportNZ Awards for Auckland and Waikato regions. Judges were impressed with the $1.6 billion foodservice business (with 80 per cent derived from exports) and growing at around 20 per cent per annum, returning strong margins and true added value to the dairy industry and New Zealand. In the annual awards organised by ExportNZ Auckland and ExportNZ Waikato, Fonterra also won the Westpac Exporter of the Year (export revenue over $25 million) Award. “These awards demonstrate the vibrancy of our export sector. Our winners and finalists show the diverse nature of exporting and the high calibre of talent and innovation that represents New Zealand on the world stage,” says Catherine Lye, Regional Manager of ExportNZ Auckland, Waikato and Bay of Plenty. “We’re all about building a community of exporters to help each other to prosper through collegial support, inspiration and sound advice. We need to celebrate the success of our exporters and these awards are just one way we do this,” says Catherine. Seven category winners were announced from 24 finalists, at the awards evening held in Auckland. The supreme winner was judged from these category winners.

BusinessPlus August 2017

Winner of Westpac Exporter of the Year (export revenue over $25 million) Award - Fonterra Global Foodservice (l-r) Miles Hurrell, Neil Pollock, Nigel Little and Christine Van Asten

In addition the Fairfax Media Exporters Champion for Exemplary Service to Exporters Award was presented to Heather Baigent, director of Interact Consulting.

And the winners are…..2017 winners for the Air New Zealand Cargo ExportNZ Awards Supreme Award, and Westpac Exporter of the Year (export revenue over $25 million) Award WINNER: Fonterra Global Foodservice, which is renowned for innovation in dairy nutrition

and the preferred supplier of diary ingredients to many of the world’s leading food companies. It drives value for shareholders by converting more milk into higher value products to supply bakeries, restaurants and hotels in more than 50 countries. Fairfax Media Exporters Champion for Exemplary Service to Exporters Award WINNER: Heather Baigent, director of Interact Consulting Helen Baigent has been recognised for her exemplary service to exporters and exporting. She is described as a passionate, fearless and a well respected member of the

Supreme winner, Fonterra Global Foodservice (l-r): Christine Van Asten, Malcolm Baily, Neil Pollock, John Monagahan, Miles Hurrell, Ian Farrelly, Nigel Little, Jillian Lang, Micahel Spaans (Dairy NZ), Helen Moore, Philip Turner.

export community. She is a former diplomat and corporate international manager.

now sells its product to Australia’s Woolworths, Coles, Costco and IGA stores nationwide.

Her foresight and entrepreneurial nous means she spotted the potential of Indonesia as a tier one export market, well before others.

New Zealand Trade & Enterprise Services Exporter of the Year (export revenue over $10m) Award

Another critical area she has driven is advocacy around technical barriers to trade. She has championed on behalf of small-to-medium exporters the lack of investment in this area, in particular the need to bolster the Technical Barriers to Trade Enquiry Point, which is a valuable resource for the export community. Heather runs her own export-related business, Interact Consulting Ltd, and is always willing to help the wider export community through her service on many export-related councils. Ports of Auckland Exporter of the Year (export revenue $10m - $25m) Award WINNER: ABE’s Real Bagels, which demonstrated a clear knowledge of its market and had a well thoughtthrough plan for future growth. It began life as a café in Auckland and

WINNER: WhereScape, which is a global success story in data warehouse automation software. It helps its customers get value and business intelligence from data. Its global customers include Nike, Tesco, Volkswagen and McDonalds. BDO Exporter of the Year (export revenue $5m - $10m) Award WINNER: Powershield, which specialises in the design and manufacture of permanent battery monitoring systems and services for critical applications. This provides risk management in the event of power failure and an early identification system on the integrity and life of the batteries. DHL Exporter of the Year (export revenue $1m - $5m) Award WINNER: ENZO Nutraceuticals, which manufactures an extract from pinus radiata bark called Enzogenol.

Human clinical trials were used to show that this product improves brain function. This product is exported to more than 14 countries and is used in beverages and health supplements. Endace Services Exporter of the Year (export revenue $1 million $10 million) Award WINNER: Company X, a creative software specialist which helps customers solve their business challenges. Its project managers, business analysts and developers design, build, test and deliver cutting-edge software applications for specific business needs. Baldwins Intellectual Property Best Use of Commercialisation of Innovation for Export Award WINNER: Invenco Group, which is a global provider of self-service payment solutions with a range of products focused on the petroleum industry. The company is among the top five providers of outdoor payment terminals globally, with existing markets in Southeast Asia and Europe.

BusinessPlus August 2017

international trade By nada young

Export packaging to target supermarket streakers front side of the box, also listing the wrong distributor.

A wise professor by the name of Sam Ham (yes, that’s his real name) once taught me that people are either streakers, browsers or students.

Functional packaging When preparing products for export, keep in mind breakage and spoilage, and the weight.

Professor of Communication Psychology at the University of Idaho, Ham’s theory of captured attention applies well to supermarket shopping. When selecting products for the trolley, “streakers” take three seconds, “browsers” 30 seconds and “students” three minutes. Most supermarket shoppers in Southeast Asia are streakers. So it’s necessary to capture their attention; make them stop and browse the new brand on the shelf. For imported products with no brand recognition, good packaging is as important as the quality of the product itself. This is particularly true for export markets across Southeast Asia, Hong Kong, Korea and Taiwan where I work. However, in addition to being attention-grabbing, the packaging must comply with local regulations and be functional. These three elements often act as opposing forces, but must come together before your goods are ready for export.

Packaging design In order to grab someone’s attention in a few seconds you cannot afford to ignore good design - whether you’re in retail or food service. Resist the urge to change your design drastically in an effort to make it more attractive to Asian consumers. Despite what you’ll hear about market-specific packaging design, there is simply no need to design completely new packaging for each market.

Cold Storage supermarket, Singapore

The best thing you can do is keep your brand integrity intact and easily recognisable. You don’t see bottles of Coca-Cola with panda bears on them when you open the chiller in Taiwan, or Merlions on a Coke can in Singapore. You don’t want to confuse your customer. Authenticity means everything in a region that is plagued by food safety scandals and counterfeit goods.

Labelling compliance Food and beverage (F&B) is a highly sensitive sector where public health and safety are concerned. Generally speaking, it’s very easy to comply with local labelling regulations by simply affixing a small sticker with the necessary information, to your packaging. Your distributor can assist and often even print and affix the sticker in-market. Just be mindful of how the sticker will affect appearance. In Hong Kong recently I saw a great kiwi brand rendered almost unrecognisable by a huge white distributor sticker covering the entire

Nada Young is a director of Incite. Visit www.exportincite.com 28

BusinessPlus August 2017

Consider your mode of transport. Oceanbridge Shipping chief executive Scott Wilson says the packaging must be designed to handle repeated loading and unloading in warehouses, trucks and containers – maybe stacked, pushed, shoved, dragged or dropped, on its voyage. Sea freight will be subject to different types of weather en route. Depending on what you are exporting, consider whether precautions are necessary for hot, humid climates such as those common to Asia. A clever dairy exporter client solved their spoilage issues by installing a high-tech thermometer inside the container with each air shipment to their distributor in Malaysia. They found that too much time on the hot tarmac was spiking the temperature above the appropriate range, and they worked with their distributor to mitigate this. International freight is expensive from New Zealand and bulky items generally cost more to ship. I’ve seen major brands forced to cut some of their best SKUs (stock keeping units) from their export portfolio because the freight component pushed the price above the competition. If you are able to combine all of the elements above into a neat little package you will not only captivate the attention of the supermarket streaker, you will have a sustainable platform from which to expand your export business across Asia.

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Industries Ltd - developed its Lifeguard power distribution technology, as well as a range of other electrical equipment. Many of these components are geared to improve safety. Its Residual Current Devices (RCDs), for example, are now legally-required in a range of electrical installations in New Zealand and have become an industry standard.

MEMBER PROFILE

Today, the company employs more than 50 staff. Jim attributes the company’s growth to an uncompromising commitment to research and development (R&D), and giving staff the freedom and opportunity to develop – though that often presents its own challenges. The Jackson Industries team that worked in secret on the winning Emirates Team NZ America’s Cup boat

To make a cat fly When millions of fans cheered the high-flying Emirates Team NZ catamaran across the finish line in Bermuda last month to lift the Amercia’s Cup, staff at Onehunga’s Jackson Industries had more reason than most to celebrate. The company’s Onehunga site had become the facility where Emirates Team New Zealand (ETNZ) and Jackson staff were responsible for building the components for the catamaran’s high-tech, carbon fibre foils. As is standard procedure with the international yachting Cup’s campaigns, the technology involved in creating go-fast yachts remained top secret until racing actually started. Jackson Industries was described by ETNZ chief executive Grant Dalton as one of the “unsung heroes” of New Zealand’s campaign. Jackson Industries founder and managing director Jim Jackson says, “It was a huge responsibility to keep everything under wraps for so long. It’s an enormous relief that we won – but an even greater relief that we can now relax and talk about it. I feel like a man who’s just received a reprieve from the gallows!” Creating the yacht’s appendages – as they are called – was funnelled through the company thanks to its sophisticated CNC-machining 30

BusinessPlus August 2017

facilities and composite engineering expertise. These facilities include some of the country’s largest fiveaxis machining centres, crucial for producing the large precision moulds in which the foils were made. With the moulds completed, says project manager Paul Flett, each foil took some three months to make – and there were multiple sets of foils. Says Paul, “Building a carbon fibre foil is a pain-staking process where the layers of carbon fibre have to be cured in stages. It’s a complex, lengthy sequence, and once complete, they were returned to the CNC machine for precision machining the upper surfaces. It was an incredibly nerve-wracking project – but enormously rewarding and satisfying.”

He says, “Finding good people is not easy. We have signs outside our premises, advertising for skilled, enthusiastic, realiable workers with a good work ethic who want to be part of a team – but the conversion rate isn’t great. We pride ourselves on our long staff tenure – and unfailingly, those that stick around are excellent team players.” He still has strong ties with the Onehunga High School, which he himself attended. Jim has also enjoyed a long involvement with tertiary institutions such as Auckland University, AUT and Massey University, asssisting with the

In addition to the foils, Jackson produced the rudders and elevators (at the bottom end of the rudders), as well as components for the wing and the innovative cyclors. While Jackson Industrial’s reputation is now firmly anchored in the marine industry, its origins lie in a different industrial sector.

It started with the Lifeguard Its history extends back some 40 years, when the company – then known as Jackson Electrical

Jim (l) and Mark Jackson oversee the final surfacing of an organic rock face, using Jackson’s largest 5-axis CNC machining centre. The master mould will be used by the client to produce a large quantity of 2.7-tonne concrete blocks to be used as retaining walls throughout the South Pacific region.

Innovation with our work in developing an appropriate resin for complex indstrial components, and we needed to bring in specialist skills and niche software. That help was invaluable.”

development of advanced concepts. One recent project was Auckland University’s award-winning humanpowered submarine, Taniwha.

built in-house. They had to be; they were created to tackle a specific problem and there were no off-theshelf solutions.”

It is these relationships that identify future engineers and apprentices for the company.

The ability to think creatively and innovatively is the key to sustainability, he insists.

Community outreach

The technology developed for manufacturing Jackson’s electrical equipment served as a powerful springboard for the work it tackles today – much of it in composite engineering – and specifically the machining of the precision moulds.

“And it’s particularly important because, as any manufacturer will agree, you have to be able to weather the bad times, and chances are bad times are always around the corner.”

While Jim is constantly developing and delivering new business ideas, he is also firmly committed to philanthrophy and supporting the community in any way he can.

He warns that Australia – one of New Zealand’s biggest trading partners – is going through turbulent times, and New Zealand has and will continue to feel the impact.

So attached is he to the America’s Cup, for example, that he keeps the AC72 from the 2013 event on a site near Jackson’s Onehunga premises. His ambition is to have it displayed at the recently-decomissioned Port of Onehunga. He also dreams of the site hosting a high-end composites school to train people in production to meet the requirements of the areospace industry and to develop problem-solving skills for the rapidly developing high end composite industry.

High-profile projects range from the production of carbon fibre components for the areospace industry through to the moulds for the massive fibreglass cows recently erected in Morrinsville, to the decorative concrete slabs used in the recently-opened Waterview tunnel. These slabs were cast from moulds machined by Jackson and similar structures include its awardwinning Point Resolution pedestrian bridge on Tamaki Drive and many of the architectural concrete motorway sound barriers around Auckland. Much of the company’s competitive edge hinges on its development of robotics to streamline the efficiencies of its production lines, says Jim. “All of our robots were designed and

“Our exports to Australia totalled $9.5 million in 2015 but in the past 12 months that’s fallen to $2.4m – mainly because of the slump in the price of oil, from $100 to $30 a barrel. There has been carnage in Western Australia due to the price of oil, gas and ore, but already there are signs that this market is starting to rebuild again.” Fortunately, he says, New Zealand provides a supportive environment for the R&D and innovation required to rise above the bumps in the road. “This recent America’s Cup campaign is a perfect example. We received help from Callaghan

“In reality, I guess my approach to life is indistinguishable from my approach to business. I don’t believe in saying ‘no’ to anything. There are 24 hours in a day available for getting a job done – and if necessary we will use all of them. But at the end of the day a good work ethic and long-term relationships will bring success.,” says Jim.

Continued from pg13

Tricky issues: bonding arrangements and unlawful premiums Balancing benefits In terms of the second requirement, the payment substantially benefited Mr Holman. This was due to the fact that once Mr Holman obtained the qualification, he retained it permanently and it was of substantial use in his career advancement. While this case did not involve a bonding arrangement, rather an agreement securing the payment of the balance of training fees, it does provide guidance in terms of understanding the meaning of “unlawful premiums” under the WPA, which is an important consideration to be aware of when structuring a bonding arrangement.

In order for an employer to be able to recover monies owed by an employee who fails to pay the agreed amount, the bonding agreement should be: • clearly documented; and •

the employee provided with a reasonable opportunity to seek independent advice prior to entering into the agreement.

In addition to these requirements, it is recommended that there be a clear nexus between whatever the bonding arrangement represents, and the employment relationship. This means that any costs paid for and recognised under a bonding arrangement should be agreed

between the parties for the purpose of the employment relationship. Any such costs need to be an actual and reasonable reflection of the cost incurred in providing the arrangement. Additionally, a bonding arrangement should also be to the benefit of the employee. This is because bonding arrangements that only benefit an employer are more likely to be considered an unlawful premium. Finally, an employer must not use a bonding arrangement as a means to recover recruitment-related costs, or costs that it reasonably ought to bear as part of running a business.

Kent Duffy is a solicitor at EMA Legal. Email kent.duffy@ema.co.nz BusinessPlus August 2017

Winter Member Briefings 2017 Day/Date

Time

Venue

Auckland Tues. 1 Aug. Tues. 1 Aug. Weds. 2 Aug. Weds. 2 Aug.

9.30am - 11.00am QBE Stadium, Stadium Drive, ALBANY Bruce Mason Centre, 1 The Promenade, TAKAPUNA Rainbows End Conference Centre, Clist 9.30am - 11.00am Crescent, MANUKAU Ellerslie Event Centre, Ellerslie Racecourse, 3.00pm - 4.30pm 80 Ascot Avenue, REMUERA 3.00pm - 4.30pm

Thurs. 3 Aug.

9.30am - 11.00am Counties Inn, 17 Paerata Road, PUKEKOHE

Fri. 4 Aug.

7.30am - 9.00am

Fri. 4 Aug.

2.30pm - 4.00pm

Mon. 7 Aug.

9.30am - 11.00am Butterfly Creek, Tom Pearce Drive, MANGERE

Tues. 8 Aug.

9.30am - 11.00am

Aotea Centre, Limelight Room, Level 3, Mayoral Drive, AUCKLAND CITY

Tues. 8 Aug.

2:00pm - 3:00pm

Webinar: www.ema.webex.com

Thurs. 10 Aug.

9.30am - 11.00am

Woodlands Conference Centre, 126 Kerikeri Road, KERIKERI

Thurs. 10 Aug.

1:30pm - 3:00pm

Distinction Whangarei, 9 Riverside Drive, WHANGAREI

EMA, Room A&B, 145 Khyber Pass Road, GRAFTON EMA, Room A&B, 145 Khyber Pass Road, GRAFTON

Northland

FREE for all EMA members | To register call AdviceLine on 0800 300 362 (from NZ), 1800 300 362 (from Australia) or email advice@ema.co.nz Visit www.ema.co.nz