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Issue 110 – December 2013

$6.30

Publicat i o n o f t h e E m p l o y e r s & M a n u f a c t u r e r s A s s o c i a t i on Inc

Forestry poised for greater worldwide role

New management thinking With Prof. Clayton Christensen

In this issue: • • • • • •

It doesn’t get any better than this: Outlook 2014

When someone has an affair at work... Attractive electricity offer from Genesis Energy Latest tax bill explained Taking control of the NZ message in Oz Websites, search and mobile Great Member Noticeboard


Save 14% on a fixed term PowerFreeze electricity plan today.*

At Genesis Energy, we want to help EMA members get a great deal on their energy. That’s why we’re offering members a special 14% prompt payment discount on a fixed term PowerFreeze electricity plan.* We understand your energy needs and are committed to giving you better, simpler and smarter ways to manage them.

To switch and save call 0800 600 900

*This offer is only available to EMA Northern region members (EMA Members), who sign up to, or are currently signed up to, a fixed term PowerFreeze agreement with Genesis Energy for the supply of electricity. This offer excludes residential and time of use (TOU) customers, customers on standard electricity pricing plans, and customers of natural gas and LPG products. The Offer is a 14% prompt payment discount (PPD), provided their electricity account is paid in full by the due date. EMA members must contact Genesis Energy on 0800 600 900 and quote their membership number to receive this offer. Once the EMA membership is confirmed the 14% PPD will apply from the EMA member’s next electricity bill. Should the EMA member cancel their membership, the PPD will revert to Genesis Energy’s standard PPD. Genesis Energy reserves the right to change or revoke this offer at its discretion at any time. Eligibility criteria, early cancellation fee and Genesis Energy PowerFreeze terms and conditions apply.


BusinessPlus is published by : The Employers and Manufacturers Association (Northern) Inc 159 Khyber Pass Rd, Grafton, Private Bag 92066, Victoria Street West, Auckland 1142 Ph: 09 367 0909 or 0800 800 362 Email: ema@ema.co.nz Website: www.ema.co.nz Chief Executive: Kim Campbell Advocacy Manager: Bruce Goldsworthy Manager, Employment: David Lowe Manager EMA Learning: David Foley Manager EMA Membership & Marketing: Mauro Barsi

CONTENTS Advocacy 04 Speaking out 05 It doesn’t get better than this, with EMA CEO Kim Campbell

news 06 Attractive electricity offer

from Genesis Energy ups the ante

08 Focus on the job that there is to do

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The 2014 outlook for business

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Stepping up to support education in Auckland The comprehensive omnibus tax bill of 2013, with Jo Doolan

Waikato Denis Quigan 07 823 9311 Russell Drake 07 838 0018

mob 027 203 0694 mob 021 686 621

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Bay of Plenty Terry Arnold 07 575 8401

mob 021 662 656

22 EXPORT: Tauranga

Rotorua / Taupo / South Waikato / Whakatane Clive Thomson 07 348 0334 mob 0274 372 808

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engineer exports bulk handling equipment

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22 Giant liquor company likes our valves

BusinessPlus Editor Gilbert Peterson Ph: 09 367 0916 gilbert.peterson@ema.co.nz Writer Mary MacKinven mary.mackinven@ema.co.nz Published by Mediaweb Designer Bex Mikaere Advertising Sales Colin Gestro (09) 444 9158 colin@affinityads.com ISSN No. 1176-4953

22 Compac signs major expansion deal 23 Letter from Australia: NZ needs to take control of its Australian message

26 PROFILE: Scion - Forestry poised for greater worldwide role

26 Bill Buckley enters Hi-Tech Hall of Fame

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AUT wins at sustainability

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advice 12

EMPLOYMENT CHAT: Company

cars….errors with holiday pay, and an affair at work?!

14 When someone abandons their job… 16 Fines increase and everyone’s

responsible – The changes coming to OH&S

technology

BusinessPlus news

21 Websites, search and mobile. Don’t get left behind

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advice

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learning

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networking

Issue 110 – December 2013

$6.30

Publication of the Employers & Manufacturers Association Inc

Forestry poised for greater worldwide role

MEMBERS NOTICEBOARD 25 IT investment a boost for finance and carbon traders

25 Sistema: Big boxes for the big box

On the cover... Scion’s Jeremy Warnes and Damien Even finger the revolutionary wood fibre dice developed for using wood fibre in plastics. The story is on p26

New management thinking With Prof. Clayton Christensen

In this issue: • • • • • •

When someone has an affair at work... Attractive electricity offer from Genesis Latest tax bill explained Taking control of the NZ message in Oz Websites, search and mobile Great Member Noticeboard

It doesn’t get any better than this: Outlook 2014

BusinessPlus

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ADVOCACY

Speaking out on members’ behalf

All year EMA has been sending submissions to Government select committees on draft legislation and regulation changes. Eight submissions were lodged over the past month including to The NZ Productivity Commission on where and how to make improvements in the quality and effectiveness of government regulatory institutions and practices. We also contributed to the submissions lodged by BusinessNZ to: • Treasury on the Flexible Superannuation Discussion; • ACC on the Levy Consultation 201415; • The Commerce Commission on the Competitor Collaboration Guidelines. Living wage a feel good, but wrong idea

We said Auckland Council’s commitment to pay a Living Wage [$18.40 an hour] for low paid staff would open up a Pandora’s Box. “A living wage is simply a creative way to raise minimum wages,” said Kim Campbell, EMA’s chief executive. “But its knock-on effects would be far reaching, and are widely misunderstood. “The tax system would confiscate the benefits for the people it was intended to help as Working For Families payments reduced. Welfare payments such as accommodation allowances would rapidly disappear as incomes rose.”

and the general progress on labour, infrastructure and the Housing Accord. “The benefits of the Growth Agenda thus far are recorded in the PMI and PSI which are running at record high levels of 55.7 and 58.2 respectively. “Business does not want to see the gains being made dissipated through loose election year management. “The Government must keep up the pressure with its reform agenda.” On the law change proposed by MP Paul Goldsmith to allow high earners to contract out of the personal grievance provisions of the Employment Relations Act, EMA said this would save taxpayers money and help free up court time. “Mr Goldsmith’s Bill would give an employer and staff earning over $150,000 a year the ability to make their own arrangements, should they fall out,” Mr Campbell said. “High earners should be allowed to sort out things like this amongst themselves and at their own expense.

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New Zealand is in better shape than Australia economically and in fact compared to most of the world, Mr O’Reilly said. Here’s some of his comments: • In the US business has pretty much given up on President Obama. The Democrats are union-dominated and the President is essentially looking for a win, any win, as his legacy. The Republican’s “Tea Party” is way offside with the US business sector and there is little or no confidence in Washington generally. The US government and business interests are also split on international trade issues. West of the Rockies they are interested in the TPP; to the east they are interested in the US/Europe agreement under negotiation. The two are very different. The TPP is seeking a high ambition, comprehensive outcome; the US/European negotiations are unlikely to result in high quality.

Amy Adams VIsit

EMA exchanged ideas and views during a visit with Amy Adams, Minister for the Environment, and Communications and Information Technology and Associate Minister for Canterbury Earthquake Recovery. She discussed the ongoing changes proposed to the Resource Management Act and progress with the Ultra Fast Broadband roll out. End-of-year round-up

We also commented on the achievements listed in the Government’s report on meeting its own Business Growth Agenda. “Though good progress is plainly being made across a broad front of initiatives, there is still much to be done if our goal of creating 40% of GDP from exports by 2025 is to be met,” said Mr Campbell. “Especially pleasing is the energizing of the science community taking place with the advent of Callaghan Innovation,

New Zealand on top

BusinessNZ chief executive Phil O’Reilly gave his annual round up to EMA’s Policy Forum this month. During the year Mr O’Reilly travelled widely, representing members of BusinessNZ (of which EMA is the major stakeholder) as chair of the Business and Industry Advisory Committee (BIAC) to the OECD, and New Zealand’s employer delegate to the International Labour Conference.

• Europe is running a two speed economy. The UK is currently very confident with modest growth forecasts. It appears to accept the importance of trading globally, not just into niche markets. France is a basket case! Political leadership is abysmal and there is no confidence in the business sector. Spain is now more hopeful, coming off a very low low, with a long way to go, but at least there are signs of growth. • The big story in Asia is the integration within ASEAN. This has come as a surprise to many, but there appears a determination to push it through. New Zealand is “in the room” and is very much involved and welcome at their discussions. • The big story in China is its internal growth as it moves towards becoming a middle income country. This will present challenges but it appears to recognise them. New Zealand is well placed and is the only developed country to have free trade agreements with China, Hong Kong and Taiwan.


ADVOCACY By Kim Campbell

It doesn’t get better than this 2014 will prove a strong year for growth for our manufacturers, but only for those who have prepared themselves for the big chance that the year most certainly will offer. Those who are ready for it will have retooled, embraced Lean, explored and begun to adopt the latest additive manufacturing techniques such as 3D printing, and developed their online strategy for integrating processes and systems. Sustained investment of this sort is the key. If businesses haven’t been re-investing over the past few years they will need to play catch up fast; otherwise they may not be in business much longer. Those who have been investing steadily are already doing very well, and will do even better next year. But traditional, contract metal basher types who focus on serving eastern Australia customers will struggle. Of course the challenges coming up will be no less than for the year just ending. Again there will be volatility in all currencies. No one knows when the US or Japan will stop printing money. Europe’s focus will remain on rebuilding its broken balance sheet. The upside from the consequences is for manufacturers to use the strong NZ-US and NZ-Australian cross rates to retool.

“Those who have been investing steadily are already doing very well, and will do even better next year. ” They need to keep on doing this if they want to join the race at the top, and the type of success that comes with it, rather than scrap at the bottom of the market. To overcome the challenges

of currency volatility and other uncertainty, manufacturers will want to review all their supply chain and communication channels. Are they adding value, or are they a drag on the business? How close can they get to their customers? By honing relationships, skills and systems such as these, markets for them will expand in unprecedented ways. The green shoot signs of growth are everywhere, albeit in apparently isolated pockets, in areas such as green products, energy, food processing, biotech and transport. Compac Sorting Equipment and BBC Technologies are just two outstanding examples of local companies focusing intently on what they do so well and growing fast because of it. The Government’s contribution is important. Its vital for facilitating science to business linkages through Callaghan Innovation, the universities and other institutes. Continued Government leadership is needed in getting us Asia Ready, and the Government still needs to build a procurement programme designed to enhance our manufacturers’ competence and capability. Our manufacturing capability already demonstrates high level prowess on complex engineering projects; and we’re good at applying and adapting new technologies to a wide variety of technical challenges. Top priorities are in process control, systems integration, and finding new ways to take advantage of Ultra Fast Broadband. Getting the right skills to improve and expand a manufacturer’s product range is always a challenge, but labour and skills training should never be a problem for those who invest in their own people. There is never a skills shortage for businesses that

“There is never a skills shortage for businesses that hire people smart enough to invest in themselves. Pay them well, thereby making it really hard for them to leave.” hire people smart enough to invest in themselves. Pay them well, thereby making it really hard for them to leave. So what did our manufacturers learn this year? First, they should have learned that those waiting for a better time to invest went broke as Tachikawa Forest Products did. Second, they learned you can’t chase profits ahead of safety. Witness Pike River. We all learned we could live with a stronger dollar than we ever feared we might have to. And we learned that those who could survive the GFC would emerge more resilient, more determined and more successful than ever. As for New Zealand’s wider economic environment, we go into the new year with the prospect of a balanced budget, a very strong relationship with China, a repaired relationship with the US, low interest rates, and low inflation. It simply doesn’t get any better than this. Kim Campbell is chief executive of the Employers and Manufacturers Association kim. campbell@ema.co.nz BusinessPlus

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NEWS

Attractive electricity offer from Genesis Energy ups the ante If you missed the attractive Genesis Energy/EMA promotional offer presented at EMA’s Spring Briefings there’s still time to take advantage of it, but not for much longer. The offer is to give EMA members a $150 credit on your first electricity bill when you switch your business to Genesis Energy. Plus, in addition EMA members who qualify and sign up for Genesis Energy’s PowerFreeze Electricity Plan will receive a special 14% prompt payment discount off their power bill every month. Think how much that could cut from your bottom line! The offer was first made at the spring briefings when EMA members were introduced to the services and electricity delivery Genesis Energy has to offer. Members who attended the briefings also had the chance to enter the draw to win a $500 work shout. The winner of this prize has been notified. The offer of $150 credit and the 14% prompt payment discount is not available to natural gas or LPG accounts, time of use accounts or residential accounts. Some eligibility criteria, early cancellations fee and Genesis Energy Powerfreeze terms and conditions apply.

Genesis Energy’s Stuart McRae, left, was on hand with EMA’s Bruce Goldsworthy and Kevin Chambers to present the Genesis Energy offer to EMA members at the Spring briefings.

To take up this generous offer call Genesis Energy on 0800 600 900 and be ready to quote your EMA membership number.

Voluntary star rating for workplace safety Businesses will soon be able to volunteer to be rated for their workplace safety in a new Safety Star Rating Scheme, and rewarded financially if they rate highly. The rating system is being developed by ACC, WorkSafe New Zealand and the Ministry of Business, Innovation and Employment with businesses and workers’ representatives. A proof-of-

concept for the scheme is scheduled for mid-2014. Businesses with a good safety star rating will be rewarded with ACC levy discounts. ACC Minister Judith Collins says the scheme will initially be rolled out to the construction, forestry, and high hazard sectors, and eventually allow all firms in target sectors to join.

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BusinessPlus

The scheme will benchmark how a business’ workplace safety practices measure-up, and how they can be brought up to standard under the new framework for workplace health and safety. (See page 16) “If you’re a top performing business, you’ll be recognised for it – and your customers will know about it too,” she says.

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BusinessPlus

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FEATURE

Focus on the job that there is to do To stay in business, the simple rule is to keep your focus on the job to be done. The business’ job is to provide a way to help customers do the job that must be done, better. The simple message was at the heart of the presentation delivered by Harvard Professor Clayton Christensen in Auckland last month and co-presented by EMA. Prof Christensen is widely regarded as the world’s most influential business thinker. Over several hours his presentation discussed established or entrenched management practices and business models that are frequently threatened by the innovations of others. “Research and development in technology and science overwhelms R&D in management,” he began. “Worldwide there’s almost no research on management. [People] develop all this technology and hand it over to the business side [of things] and [still they] stumble.” Often product improvements

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overshoot what customers can make use of, he said. Disruptive innovation transforms products that were so costly that only the rich had access to them, and makes them affordable for a much larger group. New entrants to a market typically win at disruption – by making a product affordable and accessible for many new customers. A market entrant needs to pick a fight with a product that a giant competitor might want to leave (as their least profitable area). “Competitors are more motivated to flee in the face of your disruptive strategy than to fight you.” How do you know customers will buy the product? To be certain, harness the causal mechanism: develop a product that has a demonstrable job that needs to be done, not one that ‘I’m

going to convince you that you need’. Christensen gave several examples of how outsourcing can often set in motion business model liquidation. For example, Dell computers progressively outsourced everything except their brand. Then customers got any old brand at 20% lower cost anyway. Integrated steel mills in the US let mini mills make all grades of steel products for 20% less, progressively farther up the complexity and value chain where the bigger mills were making low margins and thought they didn’t need. Ultimately the integrated steel mills had no business left - yet not one integrated mill built a mini mill. Another example is as Toyota entered the US market by underpricing the established brands. Now Kia, Hyundai


FEATURE

and Chinese-made vehicles are doing the same – at the lower end of the market. New management thinking

“There’s no stupid management as we define management, they just get out of their lowest value activities for improved profits.” he said. To thrive a business has to create a different business model comprising: • A value proposition for the customer; • Resources such as people, equipment, technology; • Processes for ways of doing things and using resources to do deliver the value proposition; and from which • A profit formula emerges (what you need to do to make money), which determines what you can and can’t offer the customer. Professor Christensen said

somewhat tongue-in-cheek that executives should forget the marketers and the finance teams; take the focus off profit, “off efficiency innovations that cycle capital around but create no jobs or growth”, and instead switch focus to developing market innovations that create jobs. He proposed the only way to understand what’s special about every customer is to understand what job they are trying to do by buying your product. “We buy something to do a job, not because of our attributes and characteristics.” Become a disruptive innovator, he challenged: knock the competitors out of the market by truly creating something that will do a job that really needs doing. People, and not money, need to be the focus to lift the world out of this ongoing, historically most sluggish, recession, he said.

Only ‘sustainable’ and ‘market’ innovations will grow the economy. The past four recessions have abated after six months, then 15 months then 39 and now 70 months and its not over yet. The four levels in the architecture of this ‘ job that needs to be done’ are: • What the job does: what functional, emotional and social dimensions does it have?. • What experiences in purchasing and use must we provide for the customer do the job perfectly? • What and how do we integrate these factors? • The purpose of the brand is to make the job and product choice very simple. He warned against revering financial formulae above hard cash, and hiding losses on the balance sheet.

BusinessPlus

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By Phil O’Reilly

The 2014 outlook for The business outlook has gradually improved throughout 2013. While the fortunes of individual companies may have varied during the year, business overall has been positive. New Zealand’s current annual growth rate is 2.7%, a solid result compared with many other developed countries that are showing annual growth of less than two or even one per cent. Unemployment in New Zealand is just over 6%, better than for example the US or UK where unemployment is over 7%, or the EU with unemployment over 11%. In many ways New Zealand has managed the recovery since the global financial crisis better than many other places. The environment for starting or growing a business continues to improve, and business and consumer confidence is high. There are particular grounds for optimism in the Auckland/

Northern region, where manufacturing and service sector indicators are significantly higher than the national average. The most recent PMI and PSI surveys (BNZ-BusinessNZ Performance of Manufacturing Index and Performance of Services Index) show the greater Auckland/ Northern region attained a score over 60 (scores above 50 denote expansion and scores above 60 are rare). This is outstanding, and a strong platform for continued growth in 2014. So how could the environment for business be improved? Skill shortages need to be addressed. Employers throughout New Zealand report difficulty in

recruiting staff with the right skills to allow businesses to innovate and grow. Skills shortages persist in engineering, IT and other technical areas, quantity surveying, trades, sales and other areas. EMA and BusinessNZ are advocating that Government needs to place more emphasis in the education and training system on applied skills such as these, and with better connections between business and education and training providers. Employers also report barriers to development through resource management processes, such as the costs, delays and uncertainties associated with achieving development consents.

Stepping up to support education A simple way employers can help raise education achievement in Auckland is to help their employees connect to their children’s education. Parents have a bigger effect on their children’s learning than class size or which school they go to. So EMA has signed on with Learning Auckland to promote the value of parent-teacher meetings in schools, and encourage our members to allow parents’ time off during the day to attend these meetings. EMA has committed to supporting learning by signing the Learning Auckland Accord for “Working together for education in Auckland” or “Whakakotahitanga Te Ara Matauranga”. The Accord is an acknowledgement of the importance of quality education for all, to improve Auckland’s social, cultural and economic growth. A group of cross-sector education leaders, the Learning Auckland

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Kaitiaki Group, has identified parent engagement as their focus to lift education and skills achievement in Auckland – and they are asking for employers’ help. Parent-teacher meetings are key events, where parents hear first-hand about their child’s progress at school. It’s there that parents, teachers and students can develop a shared learning programme that can be monitored and supported at home. But in some areas only 25-35% of parents attend these meetings, says Susan Warren, chief executive of COMET Auckland. So schools are changing their approach to parent-teacher

interviews to make them more effective and it’s here where they would appreciate the support of business owners and managers. The new approach involves a single extended meeting with the parent, child and one teacher to oversee the child’s progress, instead of a series of two-minute meetings with each teacher, which can be frustrating and daunting for parents, says Susan. Importantly, the meeting takes place during the work day and concentrates on the student’s overall academic progress and future goals. Using this process, schools have reported up to 80% participation


business Reform of the Resource Management Act is currently proposed, including a requirement for councils to ensure the restrictions placed on the use of private land are reasonable; requiring councils to ensure adequate land supply for projected growth in building supply; having a presumption in favour of development rather than against it; and requiring councils to monitor and report on their performance under the RMA. These and other reforms have much potential to improve development prospects for businesses in many parts of the country, and business will be watching the progress of this reform during 2014 election year. Associated with resource management barriers to development are costs imposed by local government through ongoing

rates increases, development contributions and business rates differentials. EMA and BusinessNZ would like to see further reform of local government to ensure a business friendly environment at the local level. A significant issue facing business in the north is the need to jump from servicing the local economy to taking part in the larger international economy. Moving from supplying goods or services in New Zealand to exporting is a major challenge for most of our businesses. But it is critical for all of us that they rise to the challenge because growth in exports is the main route for us to earn economic growth and higher living standards. This is well recognised by the Government with its challenge to the business community to increase exports from 30 to 40%

of GDP by 2025. The challenge is a key part of the Government’s Business Growth Agenda with its 200 actions being taken to improve the environment for doing business ranging from the development of mineral resources, co-funding irrigation schemes, providing more education funding for in-demand skills, completing more free trade deals, improving air links with trade partners like China and Japan, and rolling out ultra-fast broadband. Business success is on the political agenda as an enabler of New Zealand’s wider success - every business can play a part towards that goal. Please accept my best wishes for a successful and prosperous 2014. Phil O’Reilly is Chief Executive of BusinessNZ www.businessnz.org.nz

in Auckland – more than double the previous attendance rates. The new approach has been developed by a number of schools and is supported and researched by The University of Auckland’s Starpath Project. The intention is to expand the initiative from primary through to secondary schools and throughout the region from the beginning of 2014. That’s where you as the employer or manager can play a critical part in ensuring its success. Parents will be provided with a letter by the school in advance of the nominated day for the parent-teacher-student meeting. The parent will be encouraged to share this appointment information with their employer. The request we make of you is that your staff member be given sufficient time-

off to attend the meeting at the school. We believe going to a schoolparent interview is a valid and important reason for getting time off from work. We hope you agree and let your staff know you support their attendance in advance, so they feel able to approach you when the time comes. We need your support and the support of the Auckland business community generally to give this

initiative traction. Many of you are parents as well as business owners and managers. We hope you will support a family-friendly approach to school-parent interviews. Visit the Learning Auckland website www.learningauckland. org.nz to view further material on how the business sector can improve and advance educational opportunities and outcomes in Auckland. BusinessPlus

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EMPLOYMENT CHAT

Company cars….errors with holiday Q. Company cars over the holidays. I suddenly thought, I can’t afford having staff drive all over the place on the company. How do I get this across at short notice without dampening their Christmas? - Russell Dear Russell

First check your vehicles policy what does it say about private use of company vehicles? If the policy permits full private use, you can stick with that or consider reviewing your company policy. You can generally change a company policy more easily than a specific term of an Employment Agreement (EA), although the private use of a company vehicle may be a contractual term that requires the Agreement to be changed. But it’s difficult to take away a benefit without replacing it with its monetary value. If you need to change clauses in the EA you must get the employee’s agreement to the change, requiring a renewed and signed EA. And when you change conditions of work of course you might risk losing the employee. But if vehicle use is defined in a policy separate from the EA, and car use is less than ‘full and free’, you should reiterate the permitted distances and who pays for petrol, etc as outlined

“It’s difficult to take away a benefit without replacing it with its monetary value.” in the policy. If you believe a staff member plans to drive to Invercargill or take the vehicle off road against your wishes, for example, say this is more than you expected and outline what you think is reasonable. It is important to outline your expectations in writing to avoid trouble enforcing them. If you have no policy, write one pronto. Cover all areas of use, maintenance and insurance. Make sure all relevant staff receive and sign the policy. Q. I have discovered our payroll clerk has been making mistakes with holiday pay. How do I handle this little panic? - Rhys

Your first priority is to correct any mistakes of the past and prevent future mistakes in staff pay packets. Then you can deal with the clerk’s performance in her role. If she has overpaid staff you cannot automatically claw that money back from payments made, or ask your clerk to cough up! Tell staff you will correct any shortcomings, and get help. Supervise her to correct the payroll with help from other staff or from your payroll company, or external accountant. The longer term issue is the clerk’s performance: does she need to go on a training course? Is she adequately

“You cannot automatically claw that money back from payments made, or ask your clerk to cough up!”

Dear Rhys

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www.ema.co.nz 23/09/13 1:21 PM


EMPLOYMENT CHAT

pay, and an affair at work?! supervised? You need to undertake a formal performance management process. Hopefully the mistakes will be easy to correct and not lead to the discovery of wider problems such as theft or fraud….. Q. My secretary caught me out in a compromising position with a client in my office. She’s a great secretary but very embarrassed around me now. How do I discuss this and keep her on board? - Paul

EMA members can start with our free AdviceLine team at phone 09-367 0909 or 0800 300 362 (within New Zealand), and 1800 300 362 (from Australia), 8am-8pm weekdays. Alternatively, email advice@ema.co.nz or read or print information such as the A-Z of Employing – a manager’s guide on more than 100 specific employment topics, at www.ema.co.nz

“Explain…ask her to keep the matter to herself, and if you can rely on her discretion.”

Dear Paul,

This depends very much on the circumstances, in terms of what happened and whether the rumour mill at work is already underway! I’d recommend meeting the issue head on and having a chat with your secretary. Explain…ask her to keep the matter to herself, and if you can rely on her discretion. If she spreads the news this could become an issue for you – though you can’t necessarily stop that. How well do you know your team? Can you ask them for privacy? What affect might your intimacy with a client have on the business, and the team’s hard work to secure a contract, for example? What other actions might you need to take now to prevent further damage to your

relationships at work and/or the business as a whole? (No, flowers aren’t enough….). Paul, it’s your right to have a consenting relationship with anyone you like. But intimacy with a client could be seen as unfair and even detrimental, and you have to face the consequences of your actions …as I’m sure your dad once said. By the EMA Advocacy 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.

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ADVICE By Brent Torrens

When someone abandons It’s a common enough situation – an employee resigns without giving or working out the required notice period they agreed to in their employment agreement. Or they disappear without trace and are deemed to have abandoned their employment. Not only is the employee in breach of their employment agreement, but the inconvenience and potential cost to a business can be considerable. It could mean having to find a replacement in a hurry, redirecting other employees to cover the vacancy, unexpected recruiting costs, and training a new person. By not working out their notice an employee would be in breach of their employment agreement and could be subject to a penalty. But apart from taking action in the Employment Relations Authority, what else can the employer do? There is a common misconception an employer can withhold holiday pay if an employee resigns without working out their notice. Bu though an employer is unable to restrict an employee’s Holidays Act entitlements in this way, many employment agreements include what is commonly referred to as a ‘forfeiture clause’. These provide that in the event an employee does not work out their agreed notice period, the employee will forfeit an amount of money equal to what their earnings would have been over the notice period. Clauses like this usually go further and act as an authority for the employer to deduct the amount from the employee’s final pay, including holiday pay. A forfeiture clause in a signed employment agreement seems to allow the employer to make a deduction, but while employers often do make deductions from the final pay owing under the authority of forfeiture clauses, two recent Employment Relations

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Authority determinations show that getting the Courts to uphold them may be a bit of a lottery. Ms Livingstone (Livingstone v G L Freeman Holdings Limited [2013] NZERA Christchurch 90) resigned from her hotel receptionist position by giving two weeks’ notice rather than the six weeks required by her employment agreement.

“Many employment agreements include a ‘forfeiture clause’ in the event an employee does not work out their agreed notice period; they would forfeit an amount of money equal to what their earnings would have been.” Relying on the forfeiture clause, her employer withheld Ms Livingstone’s accrued annual leave and payment for alternative holidays from her final pay, a sum of $1,943.50. The Authority noted the common law principle that a forfeiture clause could only be upheld if it was a genuine preestimation of damages resulting from the required notice not being

given. If a forfeiture clause is an attempt to make an employee work out the notice period by imposing a fine or penalty, then the forfeiture clause is unenforceable. But in this case, the Authority did not consider the amount sought by way of forfeiture was justified. The Authority considered that the cost of hiring and training a new person were costs incurred when any employee resigns, regardless of whether they worked out their notice period or not. Furthermore, any cost from diverting other staff from their normal duties to assist in training a new employee was said to be offset by the employer not having to pay wages to the employee who just left. The Authority concluded therefore that the amount sought was “out of proportion and extravagant” when compared to the likely loss arising from the breach. In this case the clause was in the nature of a penalty and unenforceable, and the employer was ordered to pay back the amount withheld. However the Authority did order Ms Livingstone to pay a penalty of $500 for breach of her employment agreement. Contact Centre tutor, Ms Pio (New Zealand Management Academies Limited v Pio [2013] NZERA Auckland 260) failed to work out four weeks of her six week notice period. Her employer sought an order that Ms Pio be required to pay the remainder of her notice period under the forfeiture clause in the employment agreement. But the employer was unable to make any deductions from the final pay because Ms Pio had been paid in advance and her final pay was insufficient to cover the amount owing. In contrast to the Livingstone case, the Authority simply


ADVICE

their job… concluded that as Ms Pio had breached her employment agreement by not working out the notice period, she owed her employer for the unworked notice period and ordered Ms Pio to pay her that sum of $3,439. A careful drafting of a forfeiture clause will not reflect an intention for it to be a penalty and will help if any deduction or forfeiture is challenged, but employers may also need to show the genuine pre-estimated damages arising from an employee not working out their notice period. As the Authority has stated, normal costs associated with recruitment and training new staff may not be enough to justify forfeiture. However if an employer can show that a sudden departure gave rise to

AdviceLine hours  over Christmas and New Year

Tel 0800 800 362 Or 09 367 0900 adviceline @ema.co.nz Monday 23 December Tuesday 24 December Wednesday 25 December Thursday 26 December Friday 27 December Monday 30 December Tuesday 31 December Wednesday 1 January Thursday 2 January Friday 3 January Monday 6 – Friday 10 January Monday 13 January onwards

extraordinary expenses, such as having to pay a higher hourly rate through a temp agency, they may be in a stronger position. Employers should also think about what their potential losses could be and ask whether forfeiture of the whole notice period is justifiable. In any case an employer should

8am – 8pm 8am – 5pm Christmas day Boxing day 9am – 5pm 9am – 5pm 9am – 5pm New Year’s day                 2 January Holiday                             9am – 5pm 8am – 5.30pm 8am – 8pm

always advise an employee should they intend to rely on any forfeiture clause before making any deduction. Brent Torrens is an Employment Advisor with EMA’s AdviceLine Ph 0800 300 362 advice@ema.co.nz

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ADVICE By Paul Jarvie

Fines increase and everyone’s responsible

Changes coming in 2014 to health Legal requirements for the safekeeping of all people on a work site become far more detailed and carry far tougher penalties if you fail to comply, from April 2015. The lesson right now is to make sure you evaluate the risk areas in your business and take ‘reasonably practicable’ steps to remove those risks. They include causing physical or mental harm including occupational disease to any worker or indeed visitor to your workplace - or the consequences will be costly. Showing that you are making an effort goes a long way in the eyes of staff and officials of Worksafe New Zealand, should you need an incentive! The occupational health and safety (OH&S) changes being legislated are designed to protect workers and visitors at workplaces. Voluntary associations are largely excluded as are home owners who engage contractors. The rules will apply to all sorts of business: manufacturers, designers, suppliers, installers, importers, etc. And the enhanced responsibilities for health and safety are not just for an OH&S manager or other staff person but for all general managers, and including the board and directors. It’s become a collective responsibility. There’s new terminology too: duty holders, and decision makers in companies and partnerships (but not limited partnerships) are referred to in the new legislation as ‘officers’ of organisations called a ‘persons conducting a business or undertaking’ (a PCBU). The officers (of a PCBU), are required to exercise due diligence to ensure the risks of the business are identified, that resources are made available to remedy any risks, and preventative systems put in place. In addition, all the

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actions of the officers will need to be verifiable. While the high workplace injury rate and death toll (700-1000 deaths a year) certainly required a shakeup of New Zealand’s OH&S system, the changes coming are going to be very onerous and costly for many businesses.

“The employer will need to be able to show they genuinely considered the likelihood of hazards or risks and mitigated them.” Focus goes on risk management, collective responsibility

After 20 years of the Health and Safety in Employment Act 1992 which was non prescriptive, selfregulating and outcome based, we are moving to the opposite. From requiring labour/accident inspectors to look ‘at’ things they must now look ‘for’ things; from checking for compliance they must check safety systems in detail; and they are to be empowered to do more than give advice. The new regime is based on risk and prevention of harm with each industry sector to have its own guidelines and codes of practice. Now there will be a more reasonable approach to risk management if you can justify

your decision making processes. And each workplace and each work group within that workplace may need to a have health and safety representative. There will be increased worker participation with extended powers and responsibilities for them, and a specific obligation for employers to support them and take their complaints/issues seriously. Companies will be expected to do what is ‘reasonably practicable’ to prevent harm to people. The employer will need to be able to show they genuinely considered the likelihood of hazards or risks and mitigated them. The new Crown agency Worksafe New Zealand coming into force from December 16, 2013 will replace the Department of Labour; it will handle all health and safety functions of the Ministry of Business, Innovation and Employment, and its main focus is prevention. WorkSafe NZ will work collaboratively with employers and employees to embed and promote good workplace health and safety practice, and enforce workplace health and safety regulations. The agency will be able to recommend law changes as well as play a major role in the development of a health and safety strategy for your business. The Health and Safety at Work law is expected to be enacted in April 2015 to govern its approach to OH&S and define the enforcement of Codes of Practice and other regulations, and penalties. In the meantime the EMA will be requesting improvements to make the law as practical as possible.


ADVICE

and safety requirements at work The toughest new crime will be ‘reckless conduct’ that could deliver five years in jail and $300,000 fine, or both, for a person who is not a PCBU; five years and/or $600,000 for a person who is a PCBU; and as much as a $3 million fine for an organization. There are steep penalties for people and organisations who don’t notify events or keep accident records, or don’t preserve accident scenes, for not having a license to perform certain work, for not being qualified or experienced, for inadequate employee consultation, or for not having a list of OH&S representatives in your company. All of this even before a harmful event occurs! Employers will still be able to insure against reparations but not against fines.

“The toughest new crime could deliver five years in jail and/or a $600,000 fine for a PCBU, and as much as a $3 million fine for an organization.” What you need to do: • Identify OH&S work that has been “planned” and redo your risk assessment. • Check your board of directors is involved.

Keep an eye out for revised Codes of Practice. • Consider how safe your workplace is: what features are risky for injury, disease or stress? Create policies and processes to reduce the risks. • Attend an EMA course on the changes! Visit www.ema.co.nz Get your free, 30-page directors’ guidelines, Good Governance Practices Guideline for Managing Health and Safety Risks, written by the Ministry of Business, Innovation and Employment and Institute of Directors, from www.iod.org.nz/Publications/ Healthandsafety.aspx Paul Jarvie is EMA’s Manager of Occupational Health and Safety Paul.Jarvie@ema.co.nz

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NEWS By Jo Doolan

The comprehensive omnibus In an early Christmas present a comprehensive tax bill has been introduced - if you want to get all official and impress your dinner party guests the formal title is Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill. Our new Revenue Minister Todd McClay rightly described it as an omnibus. The range of issues covered in it include things like employee allowances, thin capital changes, black hole expenditure, rules for charities who are deregistered, sale and purchase agreements, land lease payments, debt substitution rules with debentures, withholding tax on inflation indexed bonds, and for those in specialised areas tax treatment of underground gas storage facilities, and the extension of tax exemptions for non- resident oil rig and seismic vessels. If the last one does not rattle a few cages we also have changes to enable us to comply with an intergovernmental agreement between the United States and New Zealand. One of the biggest impacts may be from the employee related changes to allowances and while some of these do not apply until 1 April 2015 getting an understanding of these will be important when you are renegotiating employment contracts. There is also a choice of applying the new rules for accommodation arrangements put in place after 1 January 2011 providing you have not taken a tax position before 6 December 2012. For the Canterbury earthquake recovery work the new rules apply from 4 September 2010, the date of the first earthquake. 
 Accommodation allowances


To meet the general requirements for paying an exempt accommodation allowance your employee has to be required to

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“Getting an understanding of these changes will be important when you are renegotiating employment contracts. ” work in a location that is not within a reasonable travelling distance from their home, for two years or less. If someone who lives in Auckland was posted to Wellington permanently and made a choice to not move their family for two years then this would not be exempt. If someone was required to work in Wellington for 18 months then the accommodation allowance could be exempt. The time period can extend to three years if you are working on a particular project, or capital asset, or up to five years if you are working in Christchurch. The time frame for Christchurch phases out over time. If you are required to work in more than one place on a regular basis then there is an exemption for accommodation costs and this does not have a time limit. 
If you post an employee overseas and the employee remains a New Zealand resident then the taxable value of any employer funded accommodation is capped at the average rental value of accommodation as if the employee remained in New Zealand.

Negotiating with an employee that they trade off a salary increase in exchange for a tax free accommodation allowance or similar could land you in hot water as there are tax avoidance rules and, as we all know, avoiding PAYE is an absolute no go zone. So the best advice is apply the rules to the factual circumstances rather than make the factual circumstances fit the rules. Meal allowances

Meal payments that result from work related travel will be tax exempt with a three month maximum time for a work location. Meal payments or light refreshments for events like conferences will be tax exempt without a time limit. This also includes reimbursement payments and allowances. The existing exemptions for overtime meal payments and sustenance allowances also remain. Meals provided by an employer are not subject to these rules though they may be subject to fringe benefit tax. Again if you negotiate a salary trade-off then the payments will not be exempt The crowning benefit comes with an exemption for payments such as tea, coffee, water or similar when the employee normally works at least seven hours a day, and the nature of the work means they have to be away from the employer’s premises. The employer would normally provide these types of refreshments and it is not practical for the employer to provide them on the day. (If you are starting to think this is getting into the nonsense of stilts area I am tempted to agree.) 



NEWS

tax bill of 2013 Uniforms


From 1 July 2013 a tax exemption for distinctive work clothing such as uniforms applies. This has been applied in practice by most people however it has been subject to uncertainty so the changes are welcome since they clarify the approach. The main word of caution is if your employee wears the clothing you provide for private purposes then the exemption will not apply. 128 pages with 200 pages of commentary

The Bill is 128 pages long and the IRD commentary on the Bill is nearly 200 pages long. For those who want extra reading during their Christmas holidays it is a great read and may even hit number one. Other than to wish you all a fantastic Christmas

and New Year I will leave the last word to our Revenue Minister Todd McClay “A well targeted, responsive and efficient tax system is an essential part of the Government’s broader economic aspirations for New Zealand. ... I expect the proposals in this Bill to make a real difference for businesses and taxpayers, as they contribute to an efficient tax administration, one that delivers the services to people that they need to enable them to manage their tax affairs. That’s something the Government will be increasingly focusing on as Inland Revenue’s programme of business transformation gathers momentum.” More information on the bill is available on Inland Revenue’s tax policy website, www.taxpolicy.ird.govt.nz 


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technology Jonathan Mountfort

Websites, search and mobile. Don’t get left behind Internet and technology trends are causing businesses to take drastic action on their online presence. In Part II of our series we discuss the business implications of internet search, it’s optimisation for mobile, and the growing importance of having a high performing website that is easy to use and presents relevant information. higher return on investment online are: • Responsive design. If your website doesn’t adapt well so you can read it on your phone, chances are it’s costing the business in many areas, not just sales.

Search

Search has changed the way people buy and make decisions. It represents a significant advantage for business. Internet search engines such as Google have become one of the most important components for your business success. Search makes your business accessible to a worldwide audience, while opening up you and your customers to competition on a worldwide scale. In a recent Google survey, 89% of consumers used Internet search engines to make purchasing decisions. Knowing where your customers are searching, and being found, are vital ways for acquiring new customers, making sales to existing customers, and not losing customers to the competition. It doesn’t matter if you’re in B2C or B2B, selling stamps or rocket ships. Learning how to gain advantage of Search and influencing buyers is a most critical area to move on. Your customers are browsing websites, comparing suppliers, researching products online and forming critical opinions before making contact with you. In the B2B world, business buyers make 57% of the buying decision before contacting suppliers directly. Businesses without an optimised/effective digital presence will have weak influence with buyers. You need to make sure your digital channels and brands back up the information about you, and that your offers are found by buyers and are influential during their decision-making processes.

Search Engine Marketing. If you haven’t already, look into using Google Adwords. It’s affordable, pay per click and targeted (you can customize to who, where, when and how much), and measurable.

Website Analytics. One of the best untapped resources for businesses to take gain advantage online is to run Analytics. From it you can gain insight into areas such as website advertising performance and also how customers are interacting with your business. Analytics can deliver access to crucial metrics including cost per sale, and average website conversion rate (what does your website convert, and the value of that conversion to the business). And it helps identify areas which might be costing the business money.

Mobile

Customers want your business to be ‘mobile’ friendly - easy to find and read about on smart phones and tablets. Check yours out on a mobile device, if you haven’t already. Mobile use is big and moving fast. You should care because your existing customers and potential new customers do. A recent Google survey found 50% of users stated they feel frustrated, annoyed and less likely to engage with a company if its website is not mobile responsive. It’s costing you in sales if it’s not mobile friendly. Google found customers would use those websites less often just because a mobile website wasn’t mobile friendly; 40% of buyers would abandon a purchasing decision and buy elsewhere after a bad mobile experience. 61% of users said if they didn’t find what they were looking for right away on a mobile site, they’d quickly move on to another site. Developing high performing sites

Some areas where business can gain greater advantage and achieve

Jonathan Mountfort is CEO of Mi Business, a New Zealand technology firm that helps businesses drive growth and profitability online. +6421 084 05128 e. jono@mibusiness.co.nz www.mibusiness.co.nz BusinessPlus

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TECHNOLOGY

Equipment for handling bulk cargo grows exports for Tauranga engineer Discharge hoppers designed and built by Page Macrae Engineering in the Bay of Plenty to transfer bulk cargo from ship to truck have increased the company’s export revenue by 15% over the past four years. Company managing director Ian Macrae says their materials handling division changed from maintaining hopper units to producing them. The hoppers weigh 38t and are 9.7m high by 9m wide on each side. Special discharge spouts automatically adjust according to the height of the load in the waiting truck, sucking dust back up into the hopper rather than losing it to the atmosphere. Their solution reduced spillage by almost 99%, says Macrae. ”It works efficiently with any bulk cargo that contains dust such as fertiliser, flour or cement.” Page Macrae has delivered eight hopper units, six of them

to Australia and this year, two to Port Taranaki. Another two are to be delivered to Australia by the end of the year. MacRae says “We are particularly proud of the strong relationships we have built with all of our clients, including a 24-hour service and we can dispatch service personnel as required.” “The key is our drawings and designs. We can manufacture almost anywhere with our proprietary designs and the skills our people have developed over the years.”

Giant liquor company likes our valves Hamilton valve company Pentair has won an order for US$1.6 million from a global spirits company in its first venture into semi-automated spirits blending. The Te Rapa plant, which is US-owned Pentair’s hygienic valve operation in the Southeast Asia/Pacific

Pentair’s valve manifold capable of simultaneously handling different liquid streams for blending rum and ethanol.

region, has made its biggest valve manifold: multifunctional, multi-directional processing equipment capable of simultaneously handling different liquid streams such as high and lower quality rum and ethanol. The equipment has been broken down and loaded into a container bound for the spirits company’s US$120 million rum distillery expansion in the Caribbean. Pentair is a global business providing water, fluid, thermal management, and equipment protection solutions. In New Zealand the company, which took over Tyco’s operations in this country last year, employs 200 people and has revenues of around $80 million, says Noorland. Pentair in Hamilton has 60 staff and $16 million in annual revenues. 70% of its valves and controls are exported.

Compac signs major expansion deal The world’s largest and most advanced postharvest facility is set for further expansion to be designed and manufactured by Compac Sorting Equipment of Auckland for Paramount Citrus of California. Sorting capacity is to be increased by 75% to process more than 52 million mandarins a day. The Paramount site stretches over 14 acres. Having already supplied the world’s largest electronic fruit sorter, a 40 lane 97m long pre-grader, Compac is adding a further 30 lanes to it taking the total width to 70 lanes. Compac solutions are the industry standard for machine vision technology and performance. They apply an advanced

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suite of software using high definition digital cameras which take up to 30 images of each individual fruit to build a 3D model of it in seconds. The software is then able to assign each individual mandarin to its correct packing destination. The Paramount facility is by far the largest and most advanced postharvest facility in the world and exclusively uses Compac technology for automated sorting. The company is now planning to take on 60 more staff. Compac won the 2012 New Zealand Hi-Tech Awards Company of the Year, Exporter of the Year and NZ Exporters Deal of the Year for 2012. It has a global headcount approaching 400 and turnover in excess of $80million a year.


Letter from Australia from Marketing Specialist Bella Katz based in Australia

New Zealand needs to take control of its Australian message Manufacturers are too often the quiet achievers in the world of brand and marketing. Where consumer brands come out singing and waving their hands to be noticed, many manufacturers operate so far under the radar that a $100 million company could go unnoticed by the average Joe for its entire existence.  But not right now. Manufacturing is having a huge moment in the spotlight in Australia, unfortunately for all the wrong reasons. Company closures and question marks are daily headlines. Over the last few months, the news seems to be about one factory closure after another – Simplot, BAE, Holden and Qantas to name a few. There’s speculation that Holden’s departure will remove $1.34 billion out of the South Australian economy. Increasingly, New Zealand has become a frequent part of this narrative. Heinz-owned Golden Circle recently made headlines by announcing impending factory closures in Victoria and Brisbane, moving part of the operations to New Zealand. It seems Heinz is just one of many international and Australian companies

“Australia is debating whether it is pricing itself out of the global market and should be reducing wages”

taking advantage of the lower labour costs on your side of the Tasman and apparently a business environment with less red tape. Australian trade unionists are having a field day on talkback grumbling about New Zealand, even intimating that New Zealand is becoming the dumping ground for substandard food, which is then rebadged and on-sold to Australia as New Zealand Made. New Zealand’s response thus far has been not to respond at all. Perhaps they weren’t listening to the news that week. The irony is that while New Zealand papers lament the growing influx of low value jobs, Australia debates whether it is pricing itself out of the global market and should be reducing wages. Where does this leave New Zealand companies like yours, trying to establish stronger business ties with Australia without rocking an alreadyshaky boat? I spoke with Kim Palsenbarg, General Manager and Partner of corporate affairs and issues management consultancy Senate SHJ. Having the advantage of offices on both sides of the Tasman, I asked Kim whether New Zealand was rightly keeping its head down on this topic (pretty much being beaten up by Australia in local Australian press) or whether there needed to be more control of the message. Senate SHJ has extensive experience with media relations and reputation management and Kim believes New Zealand companies need to address the issue openly yet delicately. “From a communications perspective, New Zealand companies have to debunk the myth [that we are taking the best manufacturing jobs away from Australia] and engage in more sophisticated dialogue. It’s up to the individual companies as well as the government and business associations to

“We should join forces to promote our collective competitive advantage... rather than having a go at each other, how about us against the world?” respond to these issues,” says Kim. She believes that while you can’t get away from the cultural competitiveness between New Zealand and Australia, you also can’t ignore the issue. “New Zealand still needs to attract jobs, but must find a balance in communicating the benefits of sharing the language, culture and time zone while playing down the lower wages angle. “And, given the nature of globalisation and the trend towards multi-lateral free trade agreements, maybe New Zealand and Australia should join forces to promote our collective competitive advantage in terms of manufacturing IP, skills and quality.  So, rather than having a go at each other, how about us against the world?” 

+61 (0) 410 400 657 bella@bellakatz.com.au Bella on LinkedIn
 www.bellakatz.com.au BusinessPlus

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members noticeboard

Brian Watt, MD of OMF

IT investment boost for finance and carbon traders

Auckland-based brokerage firm OM Financial (OMF) has become instrumental in developing the New Zealand carbon and wholesale electricity to the extent it is now dealing on behalf of some of the world’s largest companies, says carbon and energy broker, Daniel Crawford. The carbon trading market captures about 20 million tonnes of greenhouse gases from 50 large emitters and many small ones in New Zealand. Hundreds of small and large forestry companies grow trees for carbon offsets. The 27 year old company has made a significant investment in IT over the past year. Managing director Brian Watt says, “It is this commitment that led OMF to develop OMF cTrader, a sophisticated and intuitive online facility for margin trading (borrowing money from a broker to purchase stock) that allows clients secure access to the major foreign exchange markets from any location. “The feedback received, from the complete novice through to the seasoned pro, is extremely positive. Clients are commenting that the

platform intuitively guides them to trade with the same risk/reward practices as professional traders. “As technology developments change the way that people trade, we must respond and be innovative and creative. We constantly search for opportunities to add value to our clients, and our investment in IT over the past 12 months is a reflection of this.” Also, global anti-money laundering measures have resulted in big changes to the way in which they manage their client information and dealerclient interactions. OMF aren’t finished here. The next 12 months will see the company deliver an online foreign exchange payment solution and develop its offering across the equity and futures desks. ‘cTrader’ - Screen shot of OMF cTrader developed by OMF to facilitate margin trading.

Big boxes for the big box Plastic storage container manufacturer Sistema Plastics has developed a new range of home and office storage products exclusively for The Warehouse. Sistema’s business has evolved from a simple backyard garage operation 30 years ago to employing 540 people and exporting to more than 65 countries including the US, the UK, Europe and South Africa. It recently imported two injection moulding machines – amongst the biggest in New Zealand at 1,300 and a 650 tonnes - allowing the company to create the new range, says Sistema’s managing director Brendan Lindsay. “This equipment is a one-of-akind industrial machine. I have not heard of any other company

bringing in a similar machine to manufacture products like this in New Zealand. “This investment has allowed us to diversify our product offering and produce heavy duty storage containers ranging in capacity from 14 to 90 litres. The range will include utility trays and organiser tubs, filing clips and removable wheels, making them the most sophisticated plastic box storage system on the market. We are committed to keeping our manufacturing in New Zealand,” he says. Warehouse Group chief

executive Mark Powell says, “We have formed a long term partnership with Sistema to support the development and manufacture of this product, which reflects our commitment to stock New Zealand made products.”

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PROFILE In our regular snapshots of EMA members, we profile the business of Scion

Forestry poised for greater New Zealand’s forestry research institute Scion is on a mission to attain its vision: ‘Prosperity from trees’. Scion’s science, technology and thought leadership serve the industry on all fronts, from forest product exporters seeking to expand their global markets, to forest growers needing protection from disease and biosecurity attack. Chief executive Dr Warren Parker says other opportunities for Scion are arising from an increasing world-wide investment in renewable materials and energy. For example, market leaders such as Proctor & Gamble, Unilever and Virgin Group are all positioning for a low carbon, more resourceefficient future. The Maori economy’s growth too includes forestry. Scion, the trading name of the Forest Research Institute Ltd based in Rotorua employs 298 staff specialising in research, science and technology development for forestry, wood products, wood derived materials and other biomaterial sectors. Last year their revenue was $45.5 million, up 3.7% on the previous year. Scion’s job is to drive innovation and growth. Examples include developing

Scion’s materials scientist Damien Even (right) and business development manager Jeremy Warnes with the revolutionary wood fibre dice, which is creating global opportunities for using wood fibres in plastic products.

and applying the Woodscape model, a study that identified several bioproducts with the potential to generate a step change in the economic returns from a log, making possible the evaluation of new and existing wood processing systems and to highlight investment options. Dr Parker says it may seriously change the role of wood processing in New Zealand. The increase in global demand for bio-products offers opportunities to

invest in material composites, renewable chemicals and packaging based on forest biomass. Another recent success is the Primary Growth Partnership (PGP) investment proposal, ‘Stump to Pump’, with Norske Skog and Z Energy. The partnership may see the commercial production of renewable biofuels products using forest biomass. Scion provides the research and technology support for the feasibility assessments required.In all Scion’s innovation park is home to 25 further

National award for high tech achievements The newest inductee to New Zealand’s Hi-Tech Hall of Fame is Bill Buckley, founder and president of Buckley Systems Ltd. He has become the 2013 Flying Kiwi, an award recognizing his lifetime of achievement in engineering, business and exports as the founder of Buckley Systems (BSL). The company is the world’s leading supplier of precision electromagnets used in the manufacture of silicon chips, flat-panel screens, high-end medical machinery and particle accelerators. It supplies machinery used in the manufacture of more than 90% of the world’s silicon chips. NZ Hi-Tech Trust chairman Wayne Norrie quoted Bill saying ‘It’s no good doing what anyone can do. You have to go after the stuff that is too complicated for the average engineer so you can be Johnny on the spot when the demand hits.’ In 1986 Bill setup Buckley Systems Ltd with the intention of pursuing a global market opportunity in the supply of precision electromagnets. Now the company employs 300 people and is a global technology leader.

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Bill Buckley


PROFILE

worldwide role forestry-related businesses involved in forest management, training and wood processing. They’re expecting them to generate more opportunities and employment.Dr Parker says forestry is also poised to take a greater role worldwide for stabilising steep hills, mitigating flooding, filtering water, nurturing biodiversity, and storing carbon. “The world’s appetite will continue to grow for wood and wood fibre products; chemicals and energy from forest biomass; and a myriad of new applications such as

Forestry is poised to take a greater role in solving multiple challenges in the world.

medical technologies derived from tree cellulose.” Background

Scion’s beginnings date back to the 1800s when a nursery headquarters for a large government afforestation programme was established there. Now it is an international forestry researcher contributing to the local Rotorua community as well as the national economy and the global wood and biobased marketplace. Over the past century New Zealand’s plantation forestry expanded to 1.8 million hectares, supporting some 22,000 jobs. Its the country’s third largest exporter with $4.8 billion in earnings in 2011-12. The goal is to more than double exports to $12 billion per annum by 2022, which in turn supports the Government target of growing exports as a percentage of GDP from 30 to 40% by 2025. Over the next decade log harvest volumes could rise from the present 25-26 million cu m to 30-35 million cu m per year. Dr Parker says, “With effort, market development and innovation, export earnings could more than double. “Our role is vital in ensuring exporters can expand their global markets, and that forest growers are protected from risk.

seedling up close

“In addition, we develop new technologies aimed at increasing the value and productivity of forestry, wood and biomaterial manufacturing. But Dr Parker points to New Zealand’s dominance of low margin, high value primary commodities and low levels of investment in R&D and incentives to rectify this. Challenges in New Zealand business include the exchange rate volatility making investing in value or marginadding manufacturing and services relatively risky. “This in-turn contributes to under investment in R&D and innovation, promotes short-termism (cost efficiency rather than top-line driven productivity gains), stifles job creation and reduces long-term strategic advantage,” he says. Dr Parker’s recommendations for new businesses is to tap into and use the best advice possible, manage cash closely, and continue to refresh its business plan/model.

AUT wins at sustainaibility AUT University has won the ‘Mega Efficiency Impact Award’ for its approach to recycling, energy saving and transport solutions.  AUT installed parking spaces for 63 bicycles and 80 motorcycles, and pay-and-display at both its North Shore and Manukau campuses to discourage car travel. Its large scale recycling projects increased recycling by 40% between 2009 and 2012 leading to a 20% drop in waste.  Deputy Mayor Penny Hulse says,“I acknowledge them and all the businesses supporting council’s vision for a sustainable and waste-wise Auckland.”  The businesses’ programmes align with the council’s aspiration to be zero waste by 2040, as stated in the council’s Waste Management and Minimisation Plan.

AUT University’s winning team with Auckland Council Deputy Mayor Penny Hulse (second from right; l-r): John Birkin, Kevin Hodges, Merlin Scott-Smith, Russell Baillie and Lucy McKenzie.

BusinessPlus

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Out & About EMA’s Annual General Meeting – Auckland

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| 1 Margaret Brown [Cogita Holdings, EMA board] | 2 Richard Pearson [Ports of Auckland, EMA board], Charles Black [Goodwood Industries, EMA board] & David Thomas [Winstone Wallboards, EMA board] | 3 Angela & Kim Campbell [EMA] & Laurie Margrain [Open Country Cheese, EMA board chairman] | 4 Graham Cleghorn [EMA Life Member], Bruce Goldsworthy [EMA] & Graham Mountfort [Permark Industries, EMA board] | 5 Jeff & Wendy Williamson [Mainprice King] | 6 Colleen Stairmand [SWL Plumbing, EMA board] & Marie Hasler [EMA] | 7 Heather Gurney [ASG Education Program NZ] | 8 Fabian Meier [Ernst & Young] & Catherine Lye [ExportNZ Auckland] | 9 Brandon Brown [EMA], Niven Brown [kanDo Innovation] & Andrew Hunt [Kinetics Group, EMA board] | 10 Stuart McCutcheon [University of Auckland] | 11 Steve Bullock [Rheem], Andrew Corbett [Independent Building Supplies]

ExportNZ Auckland AGM and Christmas party

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1 Rex Alder [ElectRex] | 2 Elizabeth Gollan [ATEED] & Lance Sheppard [Cableways Group] | 3 Peter Atkinson [EMA] | 4 Natalie & John Gore [Eurofair] | 4 Bob Walters [ExportNZ] | 6 Chris Barton [Westpac] & Linda Budd [Saito NZ] | 7 Kirsty Reynolds [NZ Sugar] | 8 Graham Kearns [York Paper Company] & Peter Ashford [Eurofair] | 9 Parry Auger [Babcock NZ] & Rob Grimsey [Telstrom]


JANURAY

EMA Alert Finance & 12-13 Accounting The Fundamentals

Great Customer Service Over the Phone

Developing your knowledge of accounting fundamentals will enhance your financial understanding for a better bottom line.

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Health & Safety Representative Training Stage 1

Customer service over the phone is an important feature of business today, however it can be fraught with hidden challenges without the benefit of facial expressions and gestures to effectively support your communication.

Auckland | Caryn

Learn to better manage health and safety issues in your organisation by improving workplace communication and gaining understanding of relevant employment statutes.

Nationwide Online | Kelly

Training Contacts Deborah Carruthers | 09 367 0947 deborah.carruthers@ema.co.nz Kevin Chambers | 09 367 0958 kevin.chambers@ema.co.nz Craig Garner | 09 367 0907 craig.garner@ema.co.nz Caryn Leitgeb | 07 839 2710 caryn.leitgeb.@ema.co.nz Kelly Walden | 09 367 0957 kelly.walden@ema.co.nz

Presentation Skills 11 Getting Your Message Across Learn the fine art of effective presenting to become a more confident and persuasive speaker. Auckland | Kevin

Auckland | Craig

over 2013

t he best We wish you asllt ive season, dur ing t his fe f or ward and look ou t o seeing y ! again in 2014

FEBRUARY

Thanks

upport s r u o y r o f e n o t o ever y

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Safety Leadership Programme Not On Our Patch

This award winning Safety Leadership Programme will help develop safety leaders who are able to foster and sustain a strong safety culture and improve health and safety performance. Auckland | Craig

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Health & Safety For Managers & Supervisors An Introduction

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“We call for an urgent, sustainable stepchange in harm prevention activity and a dramatic improvement in outcomes to the point where this country’s workplace health and safety performance is recognised among the best in the world in 10 years’ time.” Report of the Independent Taskforce on Workplace Health and Safety, (April 2013). Nationwide Online | Craig

Employment 12 Relations Act 2000 & Employment Relations Amendment Bill 2013 Gain an understanding of the critical elements of the Employment Relations Act as they relate to your organisation and the rights of your employees. Auckland | Kevin

offers you a holistic look at your business and the training needs you have. Whether it be standard training or specialized, we can meet with you, discover your needs, and structure a training plan specifically for you Contact Deborah Carruthers

deborah.carruthers@ema.co.nz Ph 09 367 0947 | Mob 021 636 799

www.ema.co.nz | learn@ema.co.nz



BusinessPlus December 2013