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INSPIRING BUSINESS IN HAWKE'S BAY

MAY - AUGUST 2014

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Crafting great brews Meet Our Craft Brewers

Our greatest inventor still going strong at 90

Retirement sector booms in the Bay

PRO PRIMARY Farmer sees big upside in Dam Chook house hatches in CHB


Real People, Real Passion


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PRO features 8-11

HB’s greatest inventor - A.R. Turner

11-13

Meet our Craft Beer Barons

14-16

Business Profile - Dickey Boats

18-20

A high performance approach

24-26

The business of Retirement

Inside

8-11

24-27

PRO primary 28-31

Farmer gets set for water boost

32-33

Spotlight goes on animal welfare

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Chook House business hub

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On-job work training success

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Pro Food - Te Mata Figs

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Farmer of the Year Awards in pictures

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PRO experts 22

Pro Commercial Property by Bruce Emerson

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Pro HR by Kimberly McKay

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Pro Primary by Brent Paterson

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Pro IT by Wray Wilson

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Pro Legal by Edward Bostock

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Pro Property by Paul Harvey

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Pro Education by EIT

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Pro Finance by Nick Stewart

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Pro Business by Cedric Knowles

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PRO regulars 4-5

Pro HB - what’s happening in the Bay

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Q & A with Susan White

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Cellar Door: 1747 Korokipo Road, State Highway 50, Fernhill, Napier Tel: (06) 879 9737

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Present this advertisement at the cellar door & receive a 20% discount off all regular priced wines For over 20 years, Crossroads has brought wine lovers the very best of small parcel winemaking from Hawke’s Bay. In our vineyards and winery we nurture exceptional New Zealand wine with passion, expertise and unwavering dedication to quality. MAY - AUGUST 2014

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Editorial

CAN YOU PLEASE HOLD CALLER? The recent news of a major call service relocating from Wellington to Hastings is a big injection of vitality to the region. KiwiBank will move into the Hastings CBD and populate a currently empty building. It will house between 100 and 200 skilled staff, many who will relocate from Wellington and into the suburbs of Hastings and Napier. We’ve had stagnant population growth for some time and our residential property market has also been slow. Luring Kiwibank took a lot of work. I heard that Palmerston North was always the front-runner and most had given up hope of Hastings or Napier (which also put in a bid) of winning. The KiwiBank decision came about following a discussion by entrepreneur Rod Drury and Hastings mayor Lawrence Yule and this led to hatching a plan to attract high-end customer service centres to the region. When Kiwibank’s Wellington call centre building was deemed an earthquake risk, they cast the net out to look for a new home. Now I’m all for competition and the process would have helped form a template to attract other business to Hawke’s Bay but I do find it strange that both Hastings and Napier put together competing bids.

Editor Damon Harvey damon@theprofit.co.nz

Why? Because I believe that collectively Napier and Hastings and our rural towns all benefit regardless of where businesses are situated. I also believe that our bid would have been far more comprehensive and

compelling if it was an ALL of Hawke’s Bay approach. If you take a look at another large employer Unison and the makeup of its workforce. It doesn’t matter that the head office is based in Hastings. A significant majority of its people live in the suburbs of Napier and in other parts of the region. The economic and social benefits are shared throughout the region. Susan White, the chief executive of economic development agency Business Hawke’s Bay, also scratches her head at both city’s competing against each other. Susan is the one-on-one interview in this issue of The Profit and she says “from my perspective, it doesn’t matter where it [call centre] is located in Hawke’s Bay – a win is a win for the region.” Economic development is forever front of mind and has always been a challenge. I’ve been back in Hawke’s Bay for over 12 years and I think the major economic development agency has had three incarnations – Vision 20/20, Venture Hawke’s Bay and Business Hawke’s Bay. But at the same time Napier, Hastings and the regional council have continued to have their own economic development staff. To me this doesn’t make sense. I think we would be better to pool our resources – financial, brainpower, influence, skills and expertise backed by a robust regional strategy.

We have some good people working in economic development in the councils and at BHB. They meet regularly and they work on projects together. But would they be better to be working together all the time? Would they be more effective and more visible if they were in one building, where management of businesses like Kiwibank could walk through the door and get answers to all their questions. I know of some highly innovative businesses in Hawke’s Bay that still don’t know where to go for business support, whether that be knowledge or funding. A business hub will achieve this by having the best people, knowledge and expertise under one roof. In this issue of The Profit we meet A.R. Turner – possibly Hawke’s Bay’s greatest inventor. As he closes in on 90 years of age, Ray (A.R.) Turner continues to lodge patents and invent new products for the building sector. We look at the retirement industry and how local businesses are benefitting from our aging population. We welcome a new writer, Vivienne Haldane, a well respected agri-business reporter and photographer. In her first issue Vivienne profiles a farmer who has his fingers crossed that the Water Storage project gets the go-ahead. She also looks into animal welfare and meets fig growers and marketers Murray and Helen Douglas.

EDITOR/PUBLISHER: Damon Harvey 06 878 3196, 021 2886 772, damon@theprofit.co.nz, Twitter – @profithb

THE PROFIT is independently owned by Attn! Marketing PR and is published four times a year. Copyright ©2012: ATTN! Marketing PR

CONTRIBUTORS: Sarah Thornton, Vivienne Haldane, Wray Wilson, Nick Stewart, Cedric Knowles, Bruce Emerson, Paul Harvey, Brent Paterson, Kimberly McKay, Edward Bostock & Catherine Wedd.

All material appearing in THE PROFIT is copyright and cannot be reproduced without prior permission

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Taking Care of Business Environmental management and economic development go hand in hand. In these areas, our role is:

• • • • • • •

Water management Land and soil science Online irrigation data Pollution control Transport planning Resource consent advice and planning Biodiversity

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ACCOUNTANCY FIRM MAKES THE RIGHT DECISION A new accountancy firm has set up in Hawke’s Bay and it’s regional partner wants to “explode the myth about what businesses and individuals should expect from their accountant”. RightWay have established a local presence with Bronda Smith becoming the Hawke’s Bay Regional Partner. “It’s superb to be able to bring the RightWay offer to local business owners. Being part of an amazing group of people who are lighting fires in the accounting industry is just so refreshing. In fact everything we do works backwards from what small business owners want,” Bronda says. “My role as a regional partner is unique. I’m free to look after customers needs in their business, without the distractions other accounting firms have on a daily basis. “Of course we can just handle customers tax and accounting requirements, or go a lot further and really help grow businesses and make the owners more money.” RightWay like to ask, “Does your accountant know how to grow their own business? If not, then what credibility do they have helping you grow yours?” Tough but fair question! The firm is held in high regard, as proved when Kiwi software company Xero asked RightWay’s CEO Greg Sheehan to speak in Sydney and San Francisco recently about how accountants should operate in the 21st century. Greg sights Xero as being a key factor in their success. “It’s under the hood of everything we do at RightWay. Its beautiful software that allows us to get right alongside the business owner for the cost of the weekly drinks and nibbles”. Check out www.rightway.co.nz

DIGITAL RUGBY EDUCATION TAKING OFF AROUND THE WORLD A Hawke’s Bay innovation bringing digital education to the rugby field is attracting worldwide attention. The Rugby Site, the world’s leading online rugby education provider, is taking off around the world, attracting players and coaches from nearly 200 countries. The Rugby Site chief executive Brendon Ratcliffe (pictured right) recently signed a financial partnership with the USA. He says the partnership provides the USA direct online and mobile access to the coaching and playing expertise of some of the best players and coaches in the world including Sir Graham Henry, Warren Gatland, Wayne Smith, Victor Matfield, Sam Warburton, Richie McCaw, Dan Carter and Leigh Halfpenny.

The site currently features 21 world-class rugby players and coaches from 10 different countries with Joe Schmidt, Eddie Jones, Bismarck Du Plessis, Martin Castrogiovanni and Courtney Lawes also among the big names.

“This is a major milestone in the development of The Rugby Site as a global rugby education resource, and will be a catalyst for partnerships with many other national rugby unions.”

The Rugby Site’s content includes more than 50 videos and module courses for coaches and players of all levels. The site already has 25,000 registered members from over 170 countries.

“The USA partnership is significant because this country has chosen our unique site as its rugby education provider. It will give USA coaches credits towards their annual certification. We are currently working with a number of other unions around the world and the USA model has given us a good template that we can implement globally.”

All Black captain Richie McCaw says it’s important for the development of the game globally that knowledge and expertise is shared and the Rugby Site is providing the best platform to do this.

The partnership will see USA Rugby incorporate The Rugby Site into their coach education system to continue the development of coaches’ expertise and understanding across the country.

“It’s great to be working alongside the likes of Sam Warburton and Victor Matfield. The work we are doing together on The Rugby Site is making a difference and growing the game around the world.” “Rugby can only be a true global game if everyone passes on a bit of their experience,” he said.

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KIWIBANK FIRST SUCCESS FOR RELOCATION STRATEGY “There is not the upward pressure on salaries like there is in the big centres, the abundance of rental space at considerably lower prices,” says Austin. Both businessmen agree councils need to put packages together that will assist business relocations. “Hawke’s Bay councils should try to provide as much as possible to attract businesses. “There is obviously cost implications, however if they can help work the gap between potential new businesses to the Bay and property owners or developers or other like-minded businesses. “Some businesses reviewing a move to Hawke’s Bay require support or information around properties while others require support around staff. Hastings Mayor Lawrence Yule (above) hopes more high end customer centre’s will relocate to the region following the decision by KiwiBank to moves its centre to Hastings. Local business leaders are also praising the move and say it makes good business sense to operate from Hawke’s Bay. Big Save’s Tom McKimm says Hawke’s Bay stacks up as a fantastic location to be based for a number of reasons such as costs, people and location.

“Whatever is needed there should be a central entity that has different support packs depending on what businesses need. This entity needs to be fast to react as usually you don’t have a lot of time to convince a company owner or board that Hawke’s Bay is the place to be.” “If you own a business or manage a company you would be crazy to not cost and review a relocation to Hawke’s Bay, I would love to hear the down sides,” Tom says.

“The total cost of doing business is dramatically cheaper than the major cities like Auckland, Wellington or Christchurch. Big Save operates 23 branches nationwide with one of its major logistics bases in Napier. The land cost for buildings for both retail and warehousing is at minimum 50% cheaper than Auckland.

UnisonFibre General Manager, Mike McGarvey says the partnership would offer Hawke’s Bay, Taupo, and Rotorua customers a competitively priced option for ultra-fast business broadband and phone packages.

“We want to ensure that our customers have a range of competitively priced, ultra-fast broadband providers to choose from, which can support our value of delivering a high quality and reliable service. Snap’s service commitment and Lightwave UFB packages support those core values,” Mike says. Snap Business GM, Charlie Boyd says UnisonFibre was a natural fit for the company.

“We have minimal recruitment costs here as we are consistently approached by people to come and work for us. Xero chief executive and Havelock North resident Rod Drury (above) was involved in developing a strategy to attract high-end support centres to Hawke’s Bay. He says the key to regional development is attracting businesses that don’t need to be based in large cities. “Location independent jobs are the both the key to regional development and the balanced New Zealand lifestyle. “Lower total costs and loyal, committed, long-term staff are the key benefits for business. “For people with children there appears to be few opportunities in the regions so I think these sorts of opportunities provide stimulation to local employment but also attract new families – a virtuous circle.” Rod was impressed by the organised approach by Hastings and sees this as a great start to more contact centres relocating to Hastings or Napier. Fastway Couriers chief executive Austin Mortimer (above) says there is a “well of untapped potential from highly qualified local and expat people who have chosen to make Hawke’s Bay their home despite the lack of employment opportunities”.

UnisonFibre has announced that customers now have a new option for fibre services to their business, after signing a retail agreement with telecommunications provider, Snap.

“We’re very excited to announce our partnership with Snap.

“Hawke’s Bay has a proven strong history in a solid dependable work force. Staff are easy to find and they want to work, they believe in the strong ethics of work and enjoy working for a locally based business.

“We have just recently employed a finance manager who has moved his family from Wellington for the main reasons of the Hawke’s Bay environment and job opportunities within Big Save.

UnisonFibre Snaps Up New Ultra-Fast Broadband Provider

“I believe that this is just the beginning and that many New Zealand businesses and knowledge workers would now be thinking – ‘why not Hawke’s Bay’.

“Snap has built a reputation on working with the best national and local network providers, and UnisonFibre’s track record for network excellence, high quality deployment capability, and network service levels makes them a natural partner for Snap in the business and enterprise market. “We are now able to offer our users greater connectivity options across the state-of-the-art UnisonFibre network, with improved service levels, more flexible bandwidth options and in-region support.” The signing of a retail agreement with Snap follows a string of milestones for Hawke’s Bay-owned UnisonFibre. The company recently celebrated connecting its 500th customer, followed by a record month for new connections in February. “With the major network-build completed last year, we’ve been able to shift our focus to organically growing the network alongside our retail partners. “It’s fantastic to see both business and residential customers joining our network and benefiting from the quality and speed of a fibre connection, and the additional products and services enabled by fibre,” Mike says.

“So continuing to tell the success story and sharing experiences should see further opportunities. It builds on the work already done around tourism and lifestyle. Best place to visit, best place to live.” MAY - AUGUST 2014

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Feature Q&A

SUSAN WHITE –

A HIGH PERFORMER Susan White is CEO of Business Hawke’s Bay (BHB), the business-led economic development agency for the region. Her mission is to help lift Hawke’s Bay from its underperforming economic status by facilitating and delivering practical assistance and support that local business is in fact, asking for.

What is your career background? After completing a business degree at Victoria University, I spent a year on the road as a pharmaceutical rep, then enjoyed 10 years in the Wellington financial services arena. From there I made the leap to hi-tech manufacturing after watching a TV programme on Y2K that featured a Marton-based international company called PEC, a company that had projects in play to make their systems Y2K ready. PEC was purchased by Gallagher Group and I moved to Hamilton to work with them for some 10 years plus. Then I moved to Hawke’s Bay with NZTE as a customer manager. I left to take up a role with Tru-Test as Global Security Manager, remaining living in Hawke’s Bay with my family and commuting to Auckland. In 2013, I came to BHB because of the relationships I had developed in the region and for the opportunity to leverage and build on my NZTE experience. What do you see as success for BHB? We come at this from a business direction. So our success is linked to generating growth through businesses succeeding. Our mandate comes from business – our (voluntary) Board comprises successful business people; we have an inter-agency Advisory Group that meets monthly to discuss issues and opportunities; they wouldn’t give their time if we didn’t have their support; from Central Government who contracts with us to deliver High Performance Work (HPW); and from local government who helps us through support from their teams as well as financially. The introduction of The Icehouse into Hawke’s Bay is a success example – more than 100 companies are engaging through The Icehouse HB. Another success for BHB is every referral we make to the Regional Business Partners for support around training or innovation that leads to a positive outcome for that business.

What have you been busy working on in the early stages of being at the helm? First up, making the advisory group more effective; we had been meeting weekly, but it’s now monthly and there’s more structure to what we do. We now have three projects in train: creating a Business Hub for the region; extending the High Performance Work initiative and establishing a strategy to promote the growth of the Food & Beverage (F&B) industry in the region. BHB also supports initiatives that other agencies lead. An example is the International Student Attraction initiatives led by the team at HDC. You took over during a period of change. What was your approach to getting the ship heading in the right direction? I scoped up a simple plan by identifying the core resources needed and the agreed key projects. For example, a quick assessment revealed the need to continue HPW – I was already familiar with lean business through NZTE and the results that can be achieved by businesses changing how they work. What do you see as the region’s greatest opportunities for business and economic growth? Our ‘lowest hanging fruit’ is to work with businesses already in the region. That means identifying the gaps and addressing them. Businesses tell us that it’s not obvious where to go for help, hence the project on establishing a business hub.

We’re working hard to ensure continued focus and support around High Performance Work. Do you have any mentors? People that inspire you? I’m lucky. I have a small group of mentors, both men and women who reside in and out of the region; one of them is an Australian! Lots of people inspire me: Verne Atmore, the manager for NZ Tru-Test, introduced me to the world of exporting and has been a long-term mentor and friend. What is the single most important thing that would make business “hum” in the region? Change our terms of reference … we need to take the ‘fight’ out of the region, and stop sweating the small stuff such as the location of a call centre. No matter where you live in the region, we should all be celebrating HDC’s success with Kiwibank. We should be celebrating and asking ‘how can we support this?’ www.businesshawkesbay.co.nz

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Targeting specific opportunities by working in collaborative project teams e.g. attracting call centres to Hawke’s Bay. HDC did a great job with Kiwibank. What can we see as major developments/programmes coming out of BHB in the next 12-24 months?

Scan the QR code to watch the interview with Susan White or visit www.theprofit.co.nz

A business hub will be the most visible development that will have a strong presence in the region.

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MORE PATENTS THAN HIS AGE PRO

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By Damon Harvey

TURNER TURNS 90 & IS STILL INVENTING He may be closing in on 90 years of age, yet Hawke’s Bay’s greatest living inventor continues to submit product patents. A.R. (Ray) Turner just can’t stop inventing. He’s so prolific that in the past three years, he’s listed 36 patents with the Australian Patent Office. During his lifetime he’s patented more than 100 inventions. His first invention was in 1954, which was an automatic photographic radar speed detector. All his life he’s been coming up with ideas and problems solving. “If someone puts a problem before me, I will solve it because my mind works that way. I’m always thinking of ways of doing things. Ray rose to prominence for inventing products for the building industry, such as the spring door stop, the angle brace and nail plates. Pryda, the company which had its beginnings from his home in Taradale in 1964 and which he sold in 1986, is now part of a large international conglomerate, which still proudly has a manufacturing plant in Napier.

The email went on … “he invented products that revolutionised the building industry around the world, ending up with over 100 patents to his name. “He employed many people here in the Bay and would specifically employ the deaf to run the huge steel plate presses in Onekawa. “He is a fascinating man, who is very humble about his achievements.”

If someone puts a problem before me, I will solve it because my mind works that way. I’m always thinking of ways of doing things.

Ray Turner

Following this email Debra arranged for me to meet with Ray.

Ray will be guest of honour as the company celebrates 50 years this year.

When I arrived, I was warmly welcomed at the door by Ray and his partner Elva. He guided me out to the back of his home where he quickly produced folders of his achievements, product patents, media clippings and a bound book he was presented by his seven siblings on his 60th birthday.

Ray has been out of the spotlight for many years but his daughter Debra Malone read the feature on local inventors in the last issue of The Profit, which motivated her to contacted us to say we had left out “the greatest inventor of all time, who lives in Napier.”

At 89, Ray remains pretty mobile and agile of mind. He professed to not having the memory of yesteryear but still fondly retold many stories, along with sharing his ideas on solving some environmental issues, such as converting sea water into drinkable water and

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constructing houses on water, to overcome the risk of earthquakes and relieving pressure on land use. So why is Ray still inventing? He’s still hoping to strike it big with another invention but he says that in his late 80s he was getting bored and needed to keep his mind active. “I look up websites for manufacturing companies all over the world and look at what they are making and if I can do it better. “That’s why I started Decklock [his latest project] three years ago because I was bored and I had nothing to think about. I started inventing again but there’s not the demand here [for decklock], I’ve started it in the wrong country.” He still has high hopes for Decklock, for which he’s developed marketing collateral such as brochures, videos and a website, www.decklock.co.nz, but he’s struggled to convince hardware stores and builders to use the product. “I did get it right the first time [Pryda], it went off like a rocket.” Ray says his greatest achievement is the growth and success of Pryda, which he sold in 1986 for a “few million”, which enabled him to help buy homes for his children. He exclaims that the business was recently bought out again for $87 million!

Scan the QR code to watch the interview with Ray Turner or visit www.theprofit.co.nz


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Ray’s truss invention was used on his Onekawa site, a first of its kind.

FROM HUMBLE BEGINNINGS Pryda’s first factory (under the name A.R. Turner) was set up in the games room of his house in Church Road making spring door stops. As the demand for door stops increased and new products were invented, the business needed a larger factory and Ray moved to a block of shops he’d built in Gloucester Street, Taradale. Around the same time Ray, changed the company name to Pryde to avoid confusion with another hardware company, Stanley Turner Hardware.

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The product was so successful that Ray couldn’t source enough galvanised steel in New Zealand, and had to start importing it from Australia.

GLOBAL EXPANSION In the late 1960s, Ray undertook some joint overseas ventures in South Africa and Fiji. The South Africa venture stopped because of the political situation but Ray formed close relationships with hardware outlets in Fiji and also helped develop a school on Waya Island, which was named after him. “We sold many of our products to the Pacific Islands and in particular Fiji, where we became benefactors to an island group called the Yasawa Island and Waya Island.

He took advice from Oliver McKnight from a Hastings advertising agency to name the company Pryde, but a few years later the name was slightly changed to “We provided money for the classrooms Pryda, which in Norwegian means adorn. as well as furniture and we also supplied power generators and other materials.” “I kept getting introduced as Mr Pryde and Ray also got Napier residents involved by we then also found out that we couldn’t donating clothing and sewing machines. register the name as it was a surname, so we changed it to Pryda.” Products such as the claw nail plate, truss presses, jogs and the angle brace were At the same time he went into partnership patented and were in demand in New with toolmaker Bob Witham, who had the Zealand and other countries including ability to turn many of the inventions into Australia and the US. commercial reality. The company also established a testing laboratory, where Ray invented the angle brace, which has been an international success for more than 40 years. As the business continued to grow, Pryda needed more space and the business moved to 75 Niven Street, where the New Zealand operations are still located today. Ray bought six new truss presses and the company’s famous Claw Nail nailplate product was one of the first products to be manufactured from the factory.

In 1970 Ray sent his eldest son Daryl to Australia to set up Pryda in Dandenong. By 1972, Prdya had its first truss plant in Adelaide and by 1975 Daryl, had developed truss design technology using a four kilobyte memory Wang 2200 computer. Ray admits that in the mid to late 1970s he was a workaholic. The business had grown substantially and was a seven-day operation, and he was working up to 16 hours a day.

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MAKING HEADLINES Ray Turner made headlines throughout the 1970s and 80s for his many inventions and the local and global expansion of his business. Ray also developed close relationships in Fiji and helped establish a school in Waya Island. Media clippings kindly supplied by Ray Turner.

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Above: The early years of Pryda’s operation facilities in Napier.

THE FUTURE IS 3-D PRINTING Over the years Ray says he’s spent thousands of dollars on patenting and product development, including regularly visiting Napier firm Axia Design Group to develop 3D modelling of his inventions. Ray’s fascinated by 3-D printing. He says it’s the most exciting technology development and he quickly produces some information pulled off the Internet about a house being built by a 3-D printer. “I would be a little kid with a toy if I got one, but I think I am past it at 90 years. It would be just too difficult for me to master. “They’re wonderful. In the last week or two I’ve been looking up everything with 3D. It has a tremendous future for the building industry and for the world.

The opportunities are endless as you can even make human body parts and grow flesh around them.”

MORE INVENTIONS TO COME! Ray has no plans to stop inventing, although money is now more of an issue than back in the 1970s and 80s. His wife Elva admits it’s not uncommon for Ray to get up at 3am and go to his computer and start researching or mapping out another invention. Ray looks sheepishly as he shows off his latest inventions and talks about what else he’d like to invent. “It’s [inventing] made me poorer. I used to have a lot of money and owned houses, a motel and 12 companies, but I have no regrets … apart from wishing I still had 10 percent of Pryda!”

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A THIRST FOR CRAFT BREWING GROWING IN THE BAY Sarah Thornton The rise of the craft brewer in Hawke’s Bay over the past 10 years has resulted in a surge of boutique beer brands and new players on the beer block. For some home brewers, a weekend hobby has turned into something far more substantial and for a few commercial breweries, craft beer is now commanding a place in their beer line-up. New Zealanders love their beer; it’s the most popular alcoholic drink in the country. Each of us will consume around 75.5 litres a year and it’s likely to be from the three big players – Lion, Independent Liquor and DB who control around 80 percent of the beer market. However, there is a groundswell of demand in the craft beer industry and New Zealand now has more than 50 smaller breweries and brew pubs producing a vast range of beer styles. The definition of exactly what constitutes a craft beer is often debated. Most describe it as beer produced in a particular style, with deference to traditional European beers and with a distinctive and full flavour that sets it apart from the often homogeneous commercial brewery product. In Hawke’s Bay there’s a mix of old and new on the craft brewing scene; some have been established for decades, others are merely a few months’ old. Chris Harrison, owner of Roosters in Hastings, has been brewing beer for more than two decades. He and wife Jill own a 200-tonne winery in the Gimblett Gravels, a wine cellar door in Te Awanga for their Beach House wine brand and a brewery in Omahu Road. 12

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Scan the QR code to watch the interview with Chris Barber or visit www.theprofit.co.nz

Above: Chris Barber - Zeelandt Brewery “I set up Roosters in 1994, primarily to service the industrial workers in the area,” says Chris. Roosters produces 1,200 litres of beer every day, in eight flavours with some small run seasonal variations. Most gets sold locally, with the remainder going to pubs from Taupo to Wellington. All the beer is sold in kegs and flagons from taps, with not a regular bottle to be seen. “The economies of scale are prohibitive to bottle,” says Chris. “And with our good location, our flagon refill service and the ability to sell beer across the bar at full retail means we can make margin to survive. It’s a business model that works.” During the 20 years Chris has owned Roosters, he’s seen the craft beer market expand and mature, but he would like to see more brew pubs like his. “It used to be that one in five pubs used to make their own beer. Perhaps it’s time for that to happen again.” Chris sees the positive side of the larger breweries producing what they refer to as ‘craft beer’ but many argue doesn’t fit the brief. “It’s liberating the traditionalists and introducing them to new flavours. It’s like giving people licence to try new and different beers.” Basil Diack, director of Hawke’s Bay Independent Brewery (HBIB), agrees. “Big breweries have piggybacked on to the segment. But in doing that, they have introduced people to new flavours, which is positive for the craft brewing industry.” Chris Barber is the owner of Hawke’s Bay’s micro-brewery, Zeelandt. Based in Esk Valley, the brewery produced its first beer in 2012 and like Roosters, produces flagons and kegs but also bottles some of the beer onsite.

It’s about drinkability and I don’t go overboard on the hops or alcohol. It’s full flavoured – my interpretation of the style. Chris Barber

Chris came to craft brewing through his ‘OE’, working for micro-breweries in the UK, including St Austell Brewery in Cornwall. He completed his Diploma in Brewing Technology and returned to New Zealand in 2006 to work as assistant brewer at Hallertau Brewery in West Auckland. Chris says he’d “often pondered what beer from the provinces tasted like before it all became centrally produced and homogenous.” In 2007, Chris’s parents bought land in Eskdale and Zeelandt had its home. His first batch of beer was a Pale Ale, inspired by European beers he had enjoyed overseas. “It’s about drinkability and I don’t go overboard on the hops or alcohol. It’s full flavoured – my interpretation of the style,” he says. Basil Diack agrees that craft beer is about drinkability. “You’ve got to be able to enjoy it and go back for another”, he says. Established in 1995, HBIB produces in excess of 650,000 litres of beer every year, spread amongst five core


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Chris checks his latest brew.

Favourite tipples

Basil Diack - Hawke’s Bay Independent Brewery. range beers and seasonal flavours. Small volumes of seasonal beer are also produced for The Filter Room in Meeanee, next door to the brewery.

CHRIS ORMOND

India Pale Ale packed with hops – like they made back in the 1800s.

CHRIS HARRISON

Weissbeir, with hints of bananas and cloves – very refreshing.

CHRIS BARBER

Rodenbach Grand Cru, a Flemish brown sour beer from Belgium. Amazing.

BASIL DIACK

An ice cold, sugar-free pure lager.

Temporary and Permanent Staff

“We’re large but still honour the brewing techniques of craft brewers. Twenty hands touch the beer by the time it’s packed,” explains Basil. HBIB produces bottled beer, as well as kegs. Ninety-five percent of the beer ends up in restaurants or bars, with the other five percent on supermarket shelves. For Basil, volume is the name of the game to remain competitive in the sector. “To put it in perspective, with the commercial breweries producing the bulk of New Zealand’s beer, there’s only 20 percent left for the rest of us. So you have to produce enough to compete. It’s a constant balancing act but the advantage of our scale is that we have better buying power so we are able to make savings during production, enabling us to sell our product at a competitive price.” The company also provides keg beer to pubs around the country. Finding bars that will take its keg beer is often a challenge. “Most bars are tied up with the major breweries and craft beer brands simply can’t get in. Some bars are now rotating their taps and having ‘feature beers’ available. But it’s hard for new companies to get their beer on tap,” says Basil. At the other end of the production scale, is freelance writer and boutique beer brewer Chris Ormond, who would like to see his hobby become commercial on a small scale. “I moved back to Hawke’s Bay from Wellington in 2011 where I’d seen the craft beer industry grow like mad,” says Chris.

“We’ve all got day jobs so it is still a hobby, but we are looking at expanding it into a more commercial enterprise. It’s a very expensive process, especially with the regulations in place, but for the meantime we’re tinkering with recipes – there’s no time pressure.”

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One supermarket brewing kit later, Chris was making beer and considering a way to get into production on a more commercial scale, a step requiring significant investment. Together with his brother Tom and a friend, the trio pooled their resources and bought enough equipment to allow Chris to make more authentic beer.

Because a CV only tells you so much 06 834 3071 bossgroup.co.nz

Whether hobby, commercial enterprise or somewhere in-between, it appears there is a thirst for craft beer in Hawke’s Bay. MAY - AUGUST 2014

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Launching to international success by Sarah Thornton

Modelled on the classic American sport fisher cruisers and customised to super yacht standards, Dickey Boats are creations of beauty, and they’re being crafted right here in Hawke’s Bay.

A factory in industrial Pandora is the home of Dickey Boats, whose range of luxury vessels is getting noticed by local and international clients. The day I visited, there were four boats in production: one in the early stages of hull construction, one being flipped by a crane to work ‘above the waterline’, one out for painting and a half finished 60-foot-long range cruiser prototype parked outside. Dickey Boats is owned by husband and wife team Jason and Tristin Dickey. The company designs and builds Semifly Launches, Sport Range fishers and custom projects from long-range cruisers to super yacht tenders and charter vessels. The boats come in a range of sizes, from 7.5 metres long. Jason began his career as a powerboat technician in Napier, before spending 10 years working as a chief engineer on super yachts, circumnavigating the globe three times aboard the ‘floating palaces’. During his time working on super yachts, Jason also managed the building of tenders (the 10-12 metre boats that sit upon super yachts) in shipyards around the world. “Building tenders in shipyards meant we were building a different style of boat – effectively a small ship. The boats were built in aluminium, but finished to a super yacht standard that the clients expected. It was a method of construction that I have utilised in the production of Dickey boats – the aluminium construction makes them robust and the customisation makes them luxurious,” says Jason.

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It takes a year for an experienced boat builder to learn the Dickey way. We are not a production boat builder – ours is quite a different, high quality and design led process. It’s big boat technology applied to a small boat. Jason Dickey

In 2005, Jason moved back to Auckland and worked on his concept to produce a super yacht-styled trailer boat in New Zealand, capable of offshore conditions. “My concept was for the vessels to be design driven, but there could be no compromise on comfort or ride,” he says. Finding that the cost of production and facilities would be too high in Auckland, Jason and Tristin looked further afield to Tauranga and Napier for possible locations for their new boat building business, eventually deciding on Napier and moving here in 2005. “The recession was in full swing when we were ready to launch the business. It was a very difficult economic climate. Four launch companies had gone into receivership – big boat industry had died,” he explains. Undeterred, the couple launched Dickey Boats. “Therecessionhasallowedustodevelopourprocessesand find people who shared our vision. We didn’t know what a buoyant market was so we focussed our efforts and did things diligently.”

In 2007, the couple got their first ‘big break’, winning the Best Aluminium Boat of the Show at the NZ Hutchwilco Boat Show. “The award gave us credibility among our industry peers and in return helped sell our big launch, the Semifly 32 to a local client,” explains Jason. For the first three years, Dickey Boats was selling one boat at a time. Now the factory is in full production, with plans to extend the warehouse. “Our best business decision was to build our own factory, designed specifically for our workflow. We own the land next door also, and in the next 12 months we’ll need that space to accommodate the fit-out function. We need to double our floor plan,” he says. Dickey Boats’ staff has grown from two to ten, with three more expected to join the team this year. Staffing has been an issue for Jason and Tristin, who have found it difficult to find skilled boat builders in Hawke’s Bay. “It takes a year for an experienced boat builder to learn the Dickey way. We are not a production boat builder – ours is quite a different, high quality and design lead process. It’s big boat technology applied to a small boat.” The couple has also struggled to find people to create and manufacture the many components needed for the boats. “We’ve found that our suppliers have grown with our business and often it’s been a case of educating them. It’s also about finding people who share in our vision.”


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The majority of Dickey Boats are bought by New Zealand customers and can be found in the waters from Northland to Southland; however, the company is planning expansion into overseas markets. “We needed to get it right in New Zealand first,” explains Jason. “We’ve just scratched the surface internationally and have sold one in Switzerland and one in the Pacific. Our range of boats and launches is very distinctive so they get noticed. They really sell themselves!” In their marketing material it says, “to fully understand the Dickey Boat difference, you may just have to experience it”, and I think they might be right. www.dickeyboats.co.nz

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people to property

When buying, selling, or leasing commercial property it pays to deal with someone you trust. As a former owner of an award winning local business I learned that it takes time, commitment and consistency to build trust and that money can’t buy it. Trust is earned with effort and ethics. Here’s what you can expect when you choose to work with me. Honesty: I’ll act in good faith at all times. Reliability: I’ll do the things I say I’ll do. Communication: Often and clearly, listen more, talk less. Effort: Work hard to deliver results. Put me to the test. Call 0800 BE SOLD for a chat, the coffee’s on me!

BE confident BE ready

BE informed

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Bruce Emerson Commercial & Industrial Sales & Leasing Free Phone: 0800 BE SOLD (0800 237 653) E bruce.emerson@bayleys.co.nz Coast to Coast Ltd, Bayleys. Licensed MAY under the2014 REAA Act THE2008 - AUGUST

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HITTING THE HIGH NOTES

By Damon Harvey

From left: Duncan Bruce, Russell Nettlingham and Guy Lethbridge of Strata Group with High Performance Work Initiative deliverer Glenn Manahi.

High Performance is a buzz phrase within sport but local engineering design firm Strata Group has upped its game taking on business beyond Hawke’s Bay. Strata Group principal Russell Nettlingham admitted the Hastings-based firm had been “treading water” and although it was performing ok, there was plenty of room for improvement.

together to develop a new business delivery process. It was important not to complicate the business goals, so they adopted the 3 legged stool approach, which would focus on three specific business performance measures.

However, how to improve was posing some problems as the business had grown in staff numbers but “more people wasn’t adding to the bottom line”.

The first two steps were delivering projects in full at more than 95 percent of the time and ensuring the project was ‘done right the first time at least 90 percent of the time.

“Our outputs weren’t increasing. We weren’t meeting client deadlines and consistently our internal budgets on projects were creeping,” he says. Russell and his fellow principals Guy Lethbridge and Duncan Bruce knew the approach to the business needed to change, they were just unsure about how to go about it. Russell had met Glenn Manahi of Smarter Better Faster through as a result of their children attending the same school. “We were looking for some guidance on business strategy and how to get the best out of the team and Glenn was someone that I thought we could get involved.” What made it financially easier was that Glenn’s company was delivering the High Performance Work Initiative on behalf of Business Hawke’s Bay, Hastings District Council and MBIE. “The first intake was 10 businesses and when one withdrew at the start, we were able to join.” Over the next 12 months Glenn was able to develop an ‘all of team’ approach, whereby Strata’s 16 staff got 18

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“For example, we needed to make sure that we were providing comprehensive reports and that they were correct the first time around.” The last leg of the stool was for all staff to have a billing time recovery rate of 80 percent. “This had the potential of upsetting staff but they could see what was in it for them. “We now have greater focus on projects, greater accountability and staff are more prepared to offer support and share the workload. Strata also implemented new software systems and business processes to align with the three key result areas. “We looked at how we recorded and reported on projects and set up systems to monitor them. This enabled us to identify red-liners, jobs that needed to be completed and better reallocate resources.” Other minor changes made have also dramatically improved productivity such as using specialist time management software Workflowmax and phone

software that integrated landlines and mobile phones. “We were able to take on four revenue generating roles and reduce administration support.” While improving profitability was important the key driver was to demonstrate a regional firm has the skills and expertise to capture larger projects, which helps retain staff, entice new staff and provide job security. “We had hit a glass ceiling and to drive forward we needed full buy in from the team,” he says. Strata Group is a mix of professional engineers and engineering technicians and draughtsmen. “As a team we wanted to perform better and while we increased staff numbers it didn’t add to the bottom line nor did it increase outputs. A significant growth opportunity for the business over the past few years has been investigating the impact of earthquakes on buildings but the optimism within the region in 2014 has resulted in kickstarting some exciting local and national greenfield projects. After going through the HPW programme, Strata Group, is far better resourced and prepared to provide highlevel engineering advice. The firm has invested in employing engineers with international expertise and introduced 3D modelling software that identifies any structural issues with existing buildings. “We have been working closely with Auckland University to develop the latest thinking around unreinforced


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masonry wall strengthening and have already applied this knowledge to several earthquake strengthening jobs within the region. This knowledge was used when assessing the Hawke’s Bay Opera House. The internal expertise has led to Strata securing projects in Auckland, Palmerston North and Christchurch. The firm has also gained industry recognition, including being involved in the design of a local project that received the NZ Wood award for innovative connection design. “We proved that you can build a strong engineering business in the provinces by lifting skill base, increasing turnover, lowering operating costs and running a sustainable business model.” The company’s current premises in Queen Street, Hastings, is bursting at the seams and in the next year, a move to a larger shared complex is planned for the corner of Hastings Street and Queen Street. “We’ve got some like-minded businesses keen to move with us and we hope to be in there sooner rather than later,” Russell says. It’s thanks to the HPW programme and the role of Glenn that the company is now well positioned for growth. “The programme has been fantastic and we would recommend it to any business.” www.stratagroup.co.nz

THE RIGHT TRACK FOR BUSINESS SUCCESS Glenn Manahi was a big burly prop and when it comes to focusing on efficiency, he knows the best track for success. In rugby terms, it’s called the fat man’s track – probably something I wouldn’t say to him, but it’s about being smarter to be better. Glenn is head coach for the delivery of the High Performance Work Initiative (HPW). HPW is a government initiative now operated by Callaghan Innovation, providing practical support to firms wanting to introduce high performance working practices (HPW). Its goal is to promote wider implementation of high performance working among NZ enterprises, in order to secure higher productivity through effective employee engagement and improved workplace practices. In Hawke’s Bay, Business Hawke’s Bay and Hastings District Council have partnered to make the programme available to businesses in the region. Glenn’s business Smarter Better Faster has the HPW contract, which is running its second annual intake of local businesses. HPW focuses on the tactics that make a business operate more efficiently, improving productivity with better engagement with staff.

Glenn preaches Lean Management practices, having learned the Toyota approach of Lean Manufacturing in a previous roles with Unilever. He then honed these learnings as the New Zealand training manager for Heinz Watties, before setting up his own consultancy business eight years ago. “We’ve adapted the Lean Manufacturing programme to high performance and there are some great success stories within Hawke’s Bay. “What we’ve found are businesses that are strong and robust but with internal systems and processes. We fix these first and then focus on making them more productive. “We look at what they are doing, at how they are doing it and at smarter ways to improve their internal productivity but we also look at wider opportunities within the region for suppliers and customers. “The secret is effective staff, people understanding what their roles and responsibilities are and ensuring that they do it to the absolute best they can.

We’ve adapted the Lean Manufacturing programme to high performance and there are some great success stories within Hawke’s Bay. Glenn Manahi

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Book your next business meeting call Wayne Wootton, Commercial Manager Hawke’s Bay Airport Phone: (06) 834 0742

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Wrapped around this is good standard processes, better ways of working and greater opportunities for them to grow skill-wise inside their own company. Business Hawke’s Bay and Hastings District Council share a goal to put more than 50 businesses from CHB through to Wairoa through the government-funded initiative over the next four years. So far 22 businesses have gone through the programme. “It’s producing results and wouldn’t it be great if we could continue to play in this space and reach 900-plus businesses. Just imagine the economic benefits of that.” No one would disagree with Glenn, having seen the latest GDP report by Statistics New Zealand, which revealed Hawke’s Bay languishing at the bottom of the table with Manawatu-Wanganui, Northland and Gisborne. “There are so many fantastic businesses in the region and it’s about creating efficiencies and looking at the measures … ‘the glue’ that holds businesses together. HPW business owners have committed a lot of time and resources and they are now seeing returns both financially and productively but also in staff engagement. “Collectively, HPW businesses are far more improved than when they started. “The owners and managers have got together and presented formally to a group of peers. The flow on from this has also seen suppliers starting to become interested and starting to improve their efficiencies in how they work. “That’s going to flow on right through the supply chain in Hawke’s Bay and that’s where the region itself becomes more powerful.

The difference between ICEHOUSE AND HPW In simple terms, ICEHOUSE helps businesses develop growth strategies and looks longer term. For more on Icehouse visit www.icehouse.co.nz HPW focuses in the “tactical and operational space” and what needs to be achieved in less than three years. For more information on HPW visit www.businesshawkesbay.co.nz

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SMART NETWORK GROWING SMART MINDS A vision to deliver world-class network and energy solutions to customers requires a team with a passion for innovation and a high level of technical capability. Unison is proving its team has both these attributes in spades, with their employees invited to present technical papers internationally, and being approved by the University of Canterbury to offer its Masters of Engineering qualification through project-based distance learning. Electricity distributor Unison Networks announced its vision of establishing a smart network in the regions of Hawke’s Bay, Rotorua and Taupo in 2010. Since embarking on its journey, the company has been leading the deployment of world-class technology, in some cases being the first company globally to install the latest innovations in smart network technology. Unison General Manager of Networks and Operations, Jaun Park, explains leading the implementation of technology is not simply a case of ringing your usual supplier, and asking for the latest item they have in stock. “When we look for new technology, we’re looking for solutions that will deliver enhanced network performance and reduce our capital expenditure; ultimately benefiting customers through restraining increases in line charges. We’re focused on delivering world-class solutions, and to do that, we have a team of engineers researching and customising complex technology and ideas, and in some cases, developing solutions in-house.” It’s this in-house development focus that has earned the company the ability to offer Masters level education on-site. Although Unison and the University of Canterbury have worked together across a number of projects, it’s the ability to provide an academic environment for learning that was crucial to gaining approval from the University to offer its Masters programme via distance learning. “We have a team of engineers developing solutions not economically available on the market. The very nature of research and development programmes such as we have at Unison provides a fantastic opportunity for our engineers to have their work recognised academically, and with our Network team including a number of PhD holders, we have the inhouse expertise to provide the level of supervision required for this level of education.” Having already worked closely with the University through its innovation institute, NZi3, Unison had already established a track record for conducting leading edge, quality research in-house. NZi3 Director, Hamish House, said the ability to offer the programme to Unison’s employees was a testament to the strength and relevance of the University’s Electrical Engineering programme and the calibre of research and supervision at Unison. “Through working alongside the team at Unison, we’ve had first-hand insight into their research programme. “Unison was able to meet our standards in regards to research topic and supervision requirements for doing the Masters by project. For those not doing a Masters by project, we’ve also established a tool for the delivery of course work by distance learning. The impact of the earthquake prompted the development of an on-line course delivery system

for a number of courses, so it was relatively simple to transition the Masters of Engineering course work to a distance-learning format. First to undertake a Masters in Engineering based on a project relating to Unison’s innovative development work will be Asset Intelligence Engineer, Nu’man Rashid, who is working on a project that will change how Unison optimises its asset utilisation. “My Masters project focuses on integrating several in-house innovations on Dynamic Rating. We’ve developed some unique algorithms, and my research will look at the technological, operational and environmental requirements or limitations for introducing Dynamic Rating across the network.” The opportunity to complete study at Unison provides benefits to both the company and its staff. At a personal level, employees no longer need to uproot their lives or give up their income to further their career. This is important for Nu’man, who can still earn a full income and live in the sunny Hawke’s Bay while pursuing his study with the top engineering faculty at the University of Canterbury. “Obviously for us, the clear benefit is that we keep our talented employees. Before our partnership with the University of Canterbury, any employee wishing to better themselves through study would have to leave their job, and with a shortage of engineers in the industry, the risk of losing them to other companies is much greater,” said Jaun.

UNISON’S DYNAMIC RATING RESEARCH Unison Network Investment Specialist Thahirah Jalal completed her Doctorate in Electrical Engineering with the University of Canterbury in 2013, and is part of a team that has led the company’s Dynamic Rating development. “Currently the industry approach to asset management is based on standardised information from the manufacturer; expected lifecycle of an asset, and a scheduled maintenance programme. However, asset utilisation is also based on varying parameters such as weather conditions,” said Thahirah. “We’re developing a new approach to determine asset loading capability, using real time data to provide ‘Dynamic Rating’ information. This ‘Dynamic Rating’ will form a basis for decisions on how hard we work that asset, which in turn will determine the remaining life of that asset. The company expects the Dynamic Rating development to improve network reliability through better utilisation of existing assets, deferring capital expenditure.

“With employees able to study within their role at Unison, they gain academic recognition for their work, and we also benefit from the results of their study.” Through the partnership between Unison and the University of Canterbury, Nu’man will continue on a steady path of progression, whilst ensuring that his innovation is relevant to the needs of Unison and the wider electricity industry.

Unison Contracting Services Faults Team Leader, Paul Jones, installs a weather station as part of the company’s Dynamic Rating project.

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THE WAR OF ATTRITION

In Hawke’s Bay we are blessed with a great place to live – so great that often people don’t want to leave. This has implications for a region with a somewhat limited job market.

By Kimberly McKay | BDO Central

With fewer career alternatives locally, people may stay with their current employer longer. Of course, this can be a two-edged sword, as some turnover is certainly desirable. While longevity can be desirable, businesses also need to bring in new skills, ideas and enthusiasm and have those people move on who are not the best fit with the job or culture, or whose passion for their work or industry may be waning. As the labour market frees up employee mobility is likely to increase compared with recent years, where employees have sat tight and held onto their jobs. This brings a focus back onto retention for many employers. We know that turnover is a significant cost to our businesses, in recruitment costs, lost productivity, time and cost to train new staff, and so on. So what can employers do to retain key staff? There will always be factors outside your control such as spouses transferring to other locations, health issues, and the lure of the big OE. However research shows there are a few key drivers of voluntary turnover that employers do have the ability to influence. Research by the Corporate Executive Board (CEB) for Quarter 3 2013 identified the top five drivers of attrition in New Zealand and Australia as (disappointment with):

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Future Career Opportunity People Management Development Opportunity Manager Quality Compensation

According to CEB “Departing employees consistently cite lack of future opportunities and poor management as the most common reasons for departure.” For small employers providing career opportunities through promotion to higher level jobs may not be feasible. However it may be possible to find other ways to keep the employee feeling as though they are learning new skills and progressing. Consider options for giving the employee additional responsibilities, new and challenging projects, the lead role in a new initiative, mentoring from experienced staff, or opportunities to develop professionally or technically. Encourage open discussion about career aspirations, often included in the performance review process, so you understand the employee’s future goals and can make sure they know what the business can offer.

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It’s no surprise that poor management is a key factor in employees’ decisions to leave jobs. At some point in our careers most of us have worked for a boss who diminished our job satisfaction. There are plenty of management books about the finer points of managing people but I believe the core principles are common sense. You will have your own list of what you think is important. These are some of mine:

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Treat people with respect, be fair, open and do what you say you will do Know your employees; show you care and are interested in them as people Share your vision and goals for the business Provide clear expectations, give constructive feedback and recognise performance Help them to learn and grow Have a few laughs

Understandably pay (compensation) is also on the list of factors influencing employee decisions to leave a job, but not at the top.

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Discuss their career aspirations so that you can be part of planning the employee’s next career move with them. This enables you to influence timing, be prepared, and ensure a positive transition for all parties. Make sure they know they are welcome back. Use your connections to help the person get a role that will keep them in your industry Explore options for a period of leave without pay from the current job or perhaps a secondment to another organisation Keep in touch after they leave and up to date with developments in your business. Large organisations often have structured alumni programmes to maintain connections with previous staff.

If you haven’t talked recently with the top talent in your business about how they are doing and where they want to be heading, do it today.

People will leave for more money but generally not for that alone. If they are developing new skills, engaged, well managed and enjoying meaningful work in their current job, it takes a lot to entice them away from you. Making time to manage people well, among all your other responsibilities as a manager or business owner, can be the greatest challenge. In particular we are often guilty of not devoting sufficient time to our best employees. It’s easy to get caught in the trap of spending most of your time and energy dealing with poor performers and forgetting to pay attention to the talent you need to retain. If a talented employee can’t be retained (they perhaps need to study, to get broader experience, see the world, or have a baby) consider what you can do to maximise the chance of getting them back at some point. We know that the grass is not always greener elsewhere and people may opt to return. At the very least it’s desirable to maintain their loyalty as a possible future referrer of business opportunities or potential recruits:

Kimberly McKay is a Human Resource Consultant at BDO Central. She has extensive experience assisting both small and large employers with all aspects of their HR needs. BDO Central are Chartered Accountants and Business Advisors, with offices in Napier and Palmerston North. We are able to support clients with a comprehensive suite of accounting, information systems and HR services.


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Commercial Property

TO SAVE OR DEMOLISH... Swing the wrecking ball or a stay of execution? How one owner chose to strengthen Napier’s historical Post Office. By Bruce Emerson | Bayleys Real Estate - Commercial

The Christchurch Earthquakes are impacting on building owners all over New Zealand, particularly so in areas which experience earthquakes. Hawke’s Bay, being the site of New Zealand’s most devastating quake, in terms of lives lost, is no exception. The ramifications of earthquake prone buildings and compliance with modern seismic performance has seen Napier’s heritage building stocks take a hammering. Many have been demolished or are under threat of demolition. In Napier’s CBD three buildings along Hastings St, which survived the 1931 earthquake, were deemed earthquake prone, after the Christchurch earthquakes. One has been demolished (Caledonian Hotel, built 1907), one is due to demolished (Williams Building, built 1911) whilst the third (The Central Post Office built 1930) has been spared from the wrecking ball, just, thanks to the efforts of the building owners Gerald Grocott and Chris Hart. The saving of the Central Post Office has given Napier’s world-famed architectural heritage a significant boost, at the sole expense of the owners. The building is a New Zealand Historical Places Trust Caption listed heritage building but since they have no money to assist property owners in preserving heritage buildings the cost to either demolish or rebuild sat firmly with Chris and Gerald. Law requires all councils to assess public buildings for earthquake resistance. Those buildings that will not withstand a moderate earthquake (built to less than one third of current design strength) are considered to be earthquake-prone. Following a brief 30 minute on site inspection, Napier City Council’s three engineers completed an initial assessment of Gerald and Chris’s building and the outcome had a devastating effect. Their building was now classified as earthquake prone. Chris and Gerald said initial engineering reports indicated the cost of upgrading the building to 100 per cent of national building standards would be “cost-prohibitive” and circa $1.5m more expensive than demolition. They wanted to keep the building even though knocking it over made more sense, financially. More assessment were completed and after an exhaustive process the building owners announced “excitement at the prospect of breathing new life into the Post Office building”.

The building is undergoing strengthening and a complete rebuild and is slowly being transformed into a high-quality development. It’s an awesome site seeing the guts of a building being torn out to be replaced by an intricate web of reinforcing steel and structural beams. Back in 2011 the future of the building was less certain. Despite having survived the 1931 earthquake it was, with the stroke of an engineers pen, now deemed earthquake-prone. This led to the buildings anchor tenants, New Zealand Post and KiwiBank, moving out. With little chance of attracting replacements tenants, something had to be done, but at the time Chris and Gerald considered that the initial engineering report from Napier City Council was “not a satisfactory method for the wielding of such a big axe.” In their minds the report seemed “superficial and was probably only aimed at mitigating liability.” Chris and Gerald had already invested a substantial amount of money when they purchased the building in 2003 but just a few years later they had to face a gut wrenching fact, they now owned a building which had little chance of attracting tenants and no income unless further (substantial investment) was committed to. They embarked on a long, painful and at times frustrating journey but their work is proof that the value of Napier’s heritage buildings can be protected, enhanced and enjoyed by generations to come. No doubt the business case stacks up but we should not under estimate the investment decisions being made at a time when market conditions are less than ideal.

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Like the wrecking balls that bring these buildings down, these commercial property owners are made of steel and a they possess a strong sense of optimism for the future of our city. The last words go to Gerald. He says “under the guise of earthquake risk the insurers, banks, construction and supply companies and engineers have all had a field day since the Christchurch earthquakes, at the expense of commercial building owners. “We cannot legislate the risk out of life in New Zealand but this is what were seem to be trying to do. Teach responsibility to people so they can manage risk but the elimination of risk by legislation will never work, he says.

Bruce Emerson sells and leases Commercial Property for Bayleys. A former business owner with years of practical hands on experience and a diverse knowledge of the local market. To contact Bruce email: bruce.emerson@bayleys.co.nz or free call 0800 BE SOLD

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RIDING the retirement wave

By Sarah Thornton

Like the rest of New Zealand, Hawke’s Bay’s population is aging. But that’s good news for the many businesses in the region that provide services to the retirement industry.

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The latest census statistics are out and confirm what we all know; New Zealand has an aging population, with more than 600,000 of us now aged 65 and over.

In Hawke’s Bay, there are several retirement villages either under construction or in the planning stage. The increasing number of retirement villages and the percentage of our population that live in them reflects our changing attitudes to retirement living.

For the past 13 years , Havelock North based Gemco Construction has been building facilities at Mary Doyle retirement village. Gemco director John Sarten says the work represents a “steady part” of the company’s annual business.

Ryman Healthcare owns Princess Alexandra in Ahuriri, home “There’s a huge amount of on-going construction work to 230 residents from independent living to hospital and at retirement villages around the region. We started at dementia care. It’s one of 26 villages serving more than Mary Doyle building a dementia wing in 2001 and have 7,000 residents that Ryman owns throughout the country. continued over the past decade developing the 12 hectare site. We supply the whole range of services from building Ryman managing director Simon Challies says Hawke’s through to painting and tiling – it’s good steady work for Bay has “been good” to Ryman and Princess Alexandra both our construction and trades divisions,” says John. To service this growth, the retirement industry - villages, has been a “terrific success”. Mary Doyle is one of Hawke’s Bay’s most comprehensive care facilities, specialist hospitals – must also grow to meet villages offering a full range of living and care options the expected demand. It’s also having a positive spinoff “We’re always looking for opportunities to add to our village portfolio, and if the right site became available including hospital, rest home and dementia beds, for local businesses and providers of support services and we would consider it.” apartments and villas. According to John, there are still a products that benefit older people. few more years left of development on site. Hawke’s Bay has echoed the national ageing trend, with the number of people of retirement age increasing 24 percent since the last Census, to more than 25,000. Based on the current rate at which the population of older people is growing in Hawke’s Bay, the DHB estimates that by 2026 there will be a 47 percent growth in the 65+ age group.*

*Quoted by Hawke’s Bay District Health Board director of population health, Dr Caroline McElnay. MAY - AUGUST 2014

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There’s a huge amount of on-going construction work at retirement villages around the region. We started at Mary Doyle building a dementia wing in 2001 and have continued over the past decade developing the 12 hectare site. Gemco director John Sarten

Completed Mary Doyle Unit “During the recession construction on villas effectively stopped or slowed down as there were some in stock to satisfy demand. But now there is a steady demand. People are getting better money for their homes, meaning they can afford to sell and move. Our schedule is busy with on-going construction in the village,” he says.

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120 Queen Street East | PO Box 482 | Hastings P 06 929 9050 F 06 650 6585 E info@knowles.net.nz W www.knowles.net.nz


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Feature

Jack and Melanie Harper own Driving Miss Daisy, a companion driving service that has seen an increase in demand for its services since it launched in 2009. “Without a doubt we’ve seen huge growth. We now have more than 50 franchises throughout the country. Franchises that started with one car are now running up to five, all day every day,” says Jack. Eighty-five percent of Driving Miss Daisy’s work is for the elderly, transporting people who no longer drive or have lost their independence in other ways. “One of the biggest problems we see facing the elderly is loneliness. It’s a huge issue. Thirty percent of our

Driving Miss Daisy

Keeping older people mobile is also a growing business for Bob Beattie of Heartway. He imports and distributes mobility scooters and a year ago, opened a retail store in Havelock North. “We started with scooters, power chairs and walkers. But over the past 18 months we’ve seen increased demand for a wider range of products that help the elderly or disabled and we have responded to that demand by expanding our offering. “We sell incontinence wear and a range of household equipment, such as bowls with lipped sides to make prevent food spillage for those with limited hand mobility or reaching tools designed to help access high cupboards. We also have a large range of products including electric beds, chair lifters and grab bars that are helpful for people in the bathroom. It’s about making life easier for older

customers are in retirement villages, the other 70 percent live independently. Family members are often outside town or working and unavailable to support their family members. Our service is a safe, secure option,” says Jack. Unlike a taxi service, Driving Miss Daisy drivers charge by time not distance and the service is pre-quoted and pre-booked. The relationships the drivers form with their passengers is a spin-off of the service. “Our franchise owners literally become surrogate sons and daughters. They take people to appointments, shopping, the hairdresser and medical centres. But there is increasing demand to take people on outings. It might be as simple as going to the beach with some friends for an ice cream or to the park in the autumn. It’s a side of the business that is growing steadily.”

Without a doubt we’ve seen huge growth. We now have more than 50 franchises throughout the country. Franchises that started with one car are now Jack Harper - Driving Miss Daisy running up to five, all day every day.

people and helping them retain their dignity,” he says. Bob clearly enjoys the industry and the people he deals with. With other organisations such as OldsMobility, he organises scooter trips out and also rents the machines on a regular basis. “Scooters have really evolved over the years and can now handle any terrain. They’re great for events such as the Field Days, Horse of the Year or the A&P Show. It’s about getting people doing the things they used to do and enjoyed when they were younger. The point of our business is to keep people active and enjoying life.” Whether it’s a new safety invention such as a tracking GPS unit for scooters Bob is importing or a solution to the age old issue of loneliness from a companion driving service, Hawke’s Bay businesses will continue to develop products and services that help our people in their golden years.

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MONEY AND JOBS TO FLOW FROM IRRIGATION PLAN

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Catherine Wedd

PRO PRIMARY

It’s amazing how quickly the Bay’s brown pastures can turn green. A few days of rain and the results are instant. But it’s a shame that we have to rely on the weather to quench the thirst of the land as we experience drought all to often. However if we had a dam at our backdoor it would be a brighter picture – lush green grass and growth in the summer, a booming economy and a higher flowing river all year around. Having water on tap could be the future as the dam has overcome its first hurdle and got resource consents. However this green light comes with some tight environmental conditions around managing nitrate and phosphorus levels in the Tukituki River. The next few months bring some interesting developments as the council works to attract investment and encourage farmers to invest on their own farms with infrastructure and commit to buying the water on an annual basis. In this issue we take a closer look at what the dam means for the region.

Richard and Kim Dakins have been irrigating their property near Takapau for seven years and say it has helped double their annual turnover. They currently irrigate 75% of their land. The decision to irrigate was made after some consideration, “I had been on irrigated properties and seen what it could do. We also saw it as a way forward; like most family farms we are trying to extract two incomes from one property,” says Richard. It took 12 months until they knew that they had a reasonable water supply before they went ahead putting in the irrigation infrastructure. Two weeks after they began irrigating in 2006, they ran slap

bang into a drought. “It was very good timing,” says Richard. What they‘ve found since irrigating their crops – they grow maize for dairy support, malt barley, rye grass, peas and beans – is certainty in terms of yield and quality. What’s more, the current financial return on the irrigated crops is more than adequate to cover the cost of the water, he says. It has also given them more options around their sheep and cattle operation. “That first year we underestimated the amount of maize we were going to grow - we were blown away by the yields. While some was contracted, we also sold a lot on the free market.” “We’ve had several autumn droughts since then, so being able to irrigate has been a safety net. It also gave us the advantage of being able to trade stock when no-one else could.” Richard says, now he won’t grow maize on dry land. “I’ll do some grain and process peas, but for certain crops, the yield is so much better under irrigation.” ATTN14PRO17

Take a look at what Hawke’s Bay grower, John Bostock is doing to combat the ongoing labour shortage with an interesting new initiative.

A farmer, who currently irrigates and will expand his farming operation if the Ruataniwha Water Storage Scheme (RWSS) proceeds, is Richard Dakins.

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Hamish Galloway, dairy farmer, Central Hawke’s Bay

Adds Kim, “We had process peas here in September and went back into peas and beans just before Christmas for McCain’s.

advantage because we already know what we can do. We will just translocate our footprint further.

When it comes to making an informed decision as to whether to buy water, people will have to do their own homework he says. “Use the supplied budgets (from the HBRIC) as a guide and work out how it may work in your own system”

You can’t grow a double crop like this without irrigation. You could almost say it’s a triple crop as once the beans are harvested in March, we will turn around and direct drill it into winter wheat.”

Crops are easy to budget on because it is simple maths. If you are going to grow another 3 tonnes of barley, will that pay for the water? Yes it will.”

He also recommends talking to existing irrigators to see what they get yield wise.

“In my experience, you irrigate half the property and you double the properties’ total turnover,” says Richard. “And that money is going into the local economy. When you stand back and see the flow-on effect of some of those crops it is staggering: processing plants, contractors, retailers and schools, all benefit.” Richard thinks the Ruataniwha Dam will be beneficial. “For Hawke’s Bay, it’s a nobrainer and the footprint will be far bigger than this region. It’s about figuring out how to make it work for farmers.”

How does the price for water from the RWSS stack up at 23c per cubic metre? “It is certainly more than we pay for irrigation at present, but I think it is still possible to make it work for us with cropping which is not overly water intense: we use 2,500 – 2,800 cubic metres/ha (equates to 250-280mls of rainwater). So if you are going to convert a new area, that is what you would need to buy.” And he’ll have to pay for it whether he uses it all or not?

He’s been involved for the last six years as part of Tuki Tuki Liaison Group and the Ruataniwha Storage Leadership team.

“Yes, people will say in a wet year, you’ve spent all this money and not made a return, but I see it as an insurance policy.”

“For me, this involvement meant farmers had an advocacy role and could influence aspects of the project. It also helped inform the public about what was happening.”

Under irrigation, beans, beetroot, sweet corn and tomatoes will be the crops that have the biggest flow on effect into Hawke’s Bay, says Richard.

“The people who are going to make the RWSS work are the ones who haven’t already got irrigation. The existing irrigated area is small compared to what it eventually will be if it goes ahead. We are certainly looking positively on it (they are situated in Zone C, near the primary pipeline) and would like to expand. Obviously we’ve got an

“The potential is huge, compared to what we are doing now. The profitability for farmers and contractors from these crops and the return locally is one thing, but the processing of produce within the region

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“My goal has always been to try and ensure apathy isn’t the reason this project doesn’t proceed

– Duncan MacLeod

Doing the sums – how farmers can take advantage of the benefits of the RWSS.

processors sensibly look to locate themselves in areas with a consistent and high level of productivity.” “The best result for the community will be a diversity of farming systems and water users – we wouldn’t want to be solely exposed to any one industry, be it dairy, horticulture or any other specific industry.” Figures from the Opuha Scheme in the South Island reveal land use now at 46% dairying and 54% non-dairy, which includes mixed cropping, dry stock, vegetables and lifestyle. A break down of Expressions of Interest (EOI) for the RWSS so far, indicate a change of land use from existing to proposed as follows:

Duncan MacLeod

Duncan MacLeod has been commercial manager for the Hawke’s Bay Regional Investment Company (HBRIC), for the past year. Before that he worked for the Bank of New Zealand for 14 years, more recently as partner, Corporate Agri-business in the Waikato. Originally from Otane in Central Hawke’s Bay, Duncan sharemilked for three seasons on the family farm before joining the BNZ.

Dairy Dairy support Red meat production Arable Mixed Other

13% to 30% 8% to 6% 21% to 8% 18% to 15% 38% to 39% 3% to 3%

The EOI’s provide an indication as to where the demand might sit geographically although, Duncan says, “The actual secondary distribution, designed and installed will be determined by the parties that sign water user agreements rather than the EOI’s”.

These can be viewed in detail on the HBRC website, but at a glance, annual return on conversion investment reveals the following:

Livestock and Arable Conversion to Irrigated Dairy (light soils) Dairy intensification (heavy soils) Livestock and Arable Conversion to Orchard Dryland finishing Conversion to irrigated Arable and Process Vegetables Dryland Finishing intensification Livestock and Arable Conversion to Vineyard Livestock and Arable Converted to Mixed Arable and Dairy support Sheep and Beef Intensification

12% 11% 10% 17% - 11% 8% 6% 17%

An in-depth case study for converting from dairy grazing and cropping to irrigated dairy can be found on the HBRC website under the RWSS: Newsletter articles, Case-study - Ashley farm. One of the most recent developments for the RWSS is that water will be delivered under pressure to the farmgate. “Pressurised water is great news because operators won’t need the same capital and running costs regarding on-farm infrastructure.” “The original EOI talked about 10 metres of head to the farm gate, now we can deliver water to a minimum of 35 metres of head,” says Duncan. “That’s enough pressure to run a pivot or linear irrigator directly off the scheme in most cases.”

He says he’s been in the fortunate position of working with some of the largest and most successful family farming businesses in NZ. In his previous role he gained an appreciation of the benefits of irrigated farming systems as “a lot of Waikato capital went south when irrigation opportunities started to present themselves a few years ago.

“One of the challenges with running concurrent workstreams on consenting, financing, uptake, design and construction is that we are still determining some of the detail, as we work through the process. The majority of potential water users have worked with us in good faith, with the common goal of delivering the best proposition for both water users and investors. We are seeking consent for an area of 58,000ha as the potential irrigation footprint but we only have water for between 25-30,000 ha depending on the actual mix of land use.”

Irrigation will open up a whole new spectrum around what farmers are able to produce in Central Hawke’s Bay, he says.

The MacFarlane Rural Business (MRB) on-farm feasibility study gives detailed accounts of likely conversion figures for different farming operations.

EOI’s received so far indicate interest in buying 44 million cubic metres of water. HBRIC’s internal target was 36 million cubic metres.

Duncan has been approached by industries that are not currently operating in Hawke’s Bay but do have an interest in setting up here if the project proceeds. “Food

Hypothetical farms are modeled with their financial performance pre and post- irrigation assessed, productivity, modeled using FARMAX.

Water from the scheme is being sold on a volumetric basis, which means the per hectare water price will vary between farmers. This volumetric charge should

This background gives Duncan an all-round knowledge about the farming industry.

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There will be an additional variable energy charge of 3 cents per cubic metre charge. The 3 cents component is only payable on actual water used in any given season and is a reflection of the cost of pumps and power to provide pressured delivery.


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encourage water users to irrigate efficiently. Key factors in determining the water volume required on a specific property include rainfall, irrigation infrastructure, soil type and farming system. Irrigated pasture including Dairy systems on lighter soils would require 4,250 cubic metres per hectare (or 425 ml of water), based on the MRB case study, that would equate to $1,105 per ha (at the full 26c water price) for reliable water delivered under pressure. Farmers growing crops will generally require bit less water per hectare and their per hectare water cost would reflect that.

“I am comfortable we’ll make as much room in this investment as there is capital out there from water users and the public.”

A Preliminary Information Memorandum (PIM) was released by HBRIC in March this year and is available on the HBRC website. The PIM seeks expressions of interest regarding investing in the RWSS, its limited to ‘Wealthy Persons’ defined as having $2 million in equity, or $200,000 in gross income (or turn over) for the past two years, or deemed to be an experienced investor or have experience in the industry to which the investment relates. Duncan expects that most farmers and businesses in Hawke’s Bay would quality under the $200,000 turnover requirement.

“Hawke’s Bay’s climate helps make it a fantastic place to live but it also causes us issues in the farming sector; this project can add resilience and diversity to our local economy while improving the Tukituki River.”

Some of the strongest feedback I’ve had from farmers is ‘how do we invest in the RWSS?’ so the PIM is their chance says Duncan.

“There are those who have signed on and are looking to take advantage of the opportunities, others will sit back and see how it goes; some may sell and move on to make room for new owners interested in irrigating. “My goal has always been to try and ensure apathy isn’t the reason this project doesn’t proceed,” says Duncan.

ESTIMATED REGIONAL ECONOMIC BENEFIT OF THE RWSS • $4 GDP increase • 3.5% increase in employment • Improved resilience to drought

Bringing a world of experience to our region With local experience and knowledge, and access to a global network of more than 5000 professionals, GHD’s engineers, architects, planners and environmental consultants can provide integrated sustainable and innovative solutions for your civil infrastructure projects. GHD – principal designer of the Ruataniwha Water Storage and Irrigation Scheme. For more information and our Hastings office details please visit us at www.ghd.co.nz

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ANIMAL WELFARE IS TOP PRIORITY The spotlight on farmers and animal welfare is on the increase due to recent media exposure of bobby calf clubbing at a New Zealand-owned farm in Chile. By Vivienne Haldane The reputation of New Zealand as a supplier of food products to the world is on notice both from food safety standards and animal welfare practices. The Profit caught up with Dr. Caroline Robertson, Vet Services Hawke’s Bay, and Jason Roebuck, CEO of Farmers Transport, to see what their industries are doing to keep their respective reputations, as well as New Zealand’s, intact. When a truckload of stock carted by a transport company leaves a farmer’s yards, he (or she) needs to feel safe in the knowledge that their hard work is now in the hands of a trusted operator.

our responsibility for the humane treatment of animals seriously and recognise that our service and its delivery are key components of the greater story of New Zealand‘s food production capability.

We take our responsibility for the humane treatment of animals Jason Roebuck seriously

We view our function as a part of the food business, Many links in a chain make up the journey from rather than a mere transportation function.” farm to plate and each step, especially the welfare of animals, is essential for every operator in that chain. “Our drivers are experienced livestock handlers and At Farmers Transport, the team are specialists in we have an exemplary track record with adherence to handling stock, making sure they get safely from point animal welfare legislation. We are one of only a few A to B and are secure while in transit. They say the livestock transport operators that have their crates rewelfare of animals is their number one consideration. certified regularly during their lifetime as opposed to Farmers Transport, CEO Jason Roebuck says: “We take only at initial production. Crates are built to the correct

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heights for animal comfort. They are covered, well ventilated, and fitted with the right floor types. They are also well maintained and cleaned every day they are in use. The standard of our livestock crates is paramount after all, that’s what looks after clients’ livestock on the road.” Farmers Transport compliance and training manager, Craig Millar’s primary function is to ensure that the company’s systems are up to date and in line with legislative demands, domestic client initiated operational protocols or export/international trade protocols. In 2013, Farmers Transport became a NAIT-accredited information provider and is the only rural transporter in New Zealand to have this. “We believe we have a vital role to play in protecting New Zealand’s reputation as a high-quality primary producer, by ensuring complete traceability in the movement of animals from one location to another,” says Jason.


PRO

Primary Caroline is on the board of the NZ Veterinary Association (NZVA) and one of her roles is chairing the NZVA standards committee. This committee develops policy and guidelines for veterinarians. “It’s becoming more and more important that we have communication between different bodies such as transport companies, livestock agents, farmers and vets so we get agreement on key issues.

Jason Roebuck: CEO Farmers Transport

“One of the most complex loads that Farmers Transport handles is export dairy cattle. It involves a lot of NAIT scanning and livestock have to be collected from different properties from all over the country before arriving at a port. It is a massive logistics exercise.” Bobby calves, he says, are at the highest end of animal welfare consideration. There are readily available accreditation and compliance resources for stock transport including, the Code of Recommendations and Minimum Standards for the Welfare of Bobby Calves, Alliance Group Livestock Transport Accreditation, Animal Welfare (Transport within New Zealand) Code of Welfare 2011 - Issued under the Animal Welfare Act 1999. Dr. Caroline Robertson is a veterinarian with 30 years experience and is a director of Vet Services Hawke’s Bay (VSHB). She also runs a sheep and beef farm at Omakere with her husband, James Aitken.

leaders and their lamb processing company. That’s where we will get a lot more traction.” Partners working together to align messages have worked well in the past year on the subject of care and welfare of injured animals during transport.

On the sensitive issue of bobby calves Caroline says, “There is always a significant amount of bobby calves “Most farmers want the best for animals in their care. not required within the food chain. People don’t really want to hear this, but it’s only a very small part of a They know that if they are unhealthy they will not be chain of how we look after animals. The important issue producing well .We want the most out of our animals but to do that we have to have good health and feeding, is the humane slaughtering of animals in our care and this, once again, needs all partners working together to otherwise it doesn’t work.” ensure clear messaging. I am sure that the industry as a The goal is also to find a balance between what is whole is working to communicate to farmers that blunt achievable, practical and sensible. force trauma is not acceptable and that farmers need to ensure that they and their staff know the best way to “Historically we have a low-input, outdoor grass-based humanely euthanaise animals and that they are trained system in New Zealand and that is one of our strengths. and competent to do so.” This is changing to higher input systems, for example, barn -type feeding systems. There are positives sides of that, such as protection in the winter but there are downsides of having animals closely housed and this is where everyone in the industry needs to find the right balance. ” With the government drive for export double and its support of Primary Growth Partnerships, a lot of work is being done and money spent to reach farmers and effect positive change with regards to improving the animal health, productivity and profitability of the farming sector. “Farmers receive a plethora of information from many different sources and it’s often hard for them to work out the right message. It comes back to the different partners working together to try and stop some of the background messaging noise and ensure that we have aligned and clear messages for farmers on important issues.” “Then you can say that farmers have the same message from their veterinarian, their fertilizer rep, farming

Dr Caroline Robertson: Veterinarian

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for your growing business

By Vivienne Haldane

Gretchen Bunny

Alex Walker

People who work from home are well acquainted with the many interruptions that can derail the flow of their day: the washing machine beeping, the clock signaling time for the school run or a friend popping in for coffee and a chat. On it goes and by 5pm you realise you’ve achieved very little.

The building has six rooms, of which four are offices and two meeting rooms. There is capacity for up to 10 desk spaces. “We could have more as some are only occupied part­-time.”

It can also be a safe platform from which to launch a new business without the risk of paying a big rent alone, she says. “We can mitigate that risk by giving them a chance to come in and build up before they take the next step.”

So far, three businesses have signed on and are now in residence and another is shortly to take on a full-time lease. Two part-timers, both students, use the premises on a monthly basis.

She also sees the possibility for the businesses in the shared workplace to offer seminars and workshops in future.

That was the dilemma Central Hawke’s Bay marketing consultant Alexandra (Alex) Walker faced. As a mother to three young children, Jemma 8, Emily 6 and Lucy 4, she felt she was forever running for the finishing line but not making it.

Alex is elated that her idea is catching on and is thrilled at how many people have knocked on the door and want to be part of it.

“I found, particularly in winter, after I had dropped the kids at kindergarten and school, I‘d arrive home and be faced with household chores as well as work obligations. It was easy to get distracted and spending time alone, I found my motivation waning. “I used to work in a busy corporate environment and while I now enjoy being my own boss, I missed sharing those ‘wow, I’ve clinched the deal moments.’

She had an inkling that this was an idea that would fly. “In this district there are a great bunch of people who work on their own in small businesses so I kind of knew who I was going to appeal to. “Effectively, my biggest competitor is working from home where you can make your own rules, so I wanted to make it as flexible as possible. I’ve set it up so residents can have their own access and can come and go and use it as they need to”

She thought there had to be a solution, so she created one. In December 2013, The Chook House opened its doors in Waipukurau.

Alex sees her venture as more than just providing a workspace. She hopes that this togetherness will stimulate productivity and creativity and be a motivator for driving business growth in Central Hawke’s Bay.

It is a shared office space with Wi-Fi and desks that Alex works from and leases out to others on a permanent or casual basis.

“It is already bringing new opportunities through the door, things like handing on business leads or bouncing ideas off one another. It is a very motivating atmosphere.”

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And how about strategies for coping with any potential ruffling of feathers in The Chook House? “Everyone is asked to respect each other’s space and if someone has a pressing deadline, there is always a spare room.” The day The Profit visited, Alex was at her desk in the front office. “Listen to the energy coming from the chook house,” she says as she smiles, pointing to the door behind her. Her dress and accessories match the vase of brilliant orange lilies and also the eye-catching logo on the building. “I wanted a punchy, modern splash of colour, something that stood out.” And that’s just what The Chook House will surely do. Oh, and why did she decide on that name? “It’s because chooks make such a contented chortling when they are busy pecking away.” The Chook House, 4 Northumberland Street, Waipukurau. Phone 06 858 5004 or 027 860 7752 www.chookbusiness.co.nz


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Who is who in The Chook House? Alex Walker is a marketing consultant who specialises in animal health products for veterinarians. Her clients are mainly in Wellington and Auckland. Opening the Chook House means she is able to add value to her marketing skills. “I have a passion for making Central Hawke’s Bay as vibrant as possible. If I can have an input by helping people with their business then that’s my next step.”

Mel Croad is an agri-market analyst and editor for iFarm – a livestock and agri-market

provider.

“With two children aged 2 and 3, I find I am getting a lot more work done and it has also cut down the amount of travel between the farm and town.”

Rochelle Alder owns Devol, a website development and design business. She is also an event manager for Startup, a business development seminar taking place in Hawke’s Bay this August. She says, “I found working from home was isolating so coming here is perfect for me. I like bouncing ideas around with the others.”

Gretchen Bunny’s business AgRecord, is a farm management software business that she bought six months ago.

From left to right: Mel Croad, Alex Walker, Gretchen Bunny,Rochelle Alder.

“At present we are busy developing AgRecord’s new generation software, Cloud Farmer. This enables farmers to share information between their farm and their staff. Cloud Farmer is so intuitive and easy to use.” Living on a farm in Porangahau, Gretchen finds having a perch at The Chook House suits her well.

GROW YOUR BUSINESS THROUGH

Better People. People are the primary connection between Performance, Productivity and Profitability.

PRIMARY SECTOR RECRUITMENT 06 871 0450

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LEARN MORE ABOUT RURAL DIRECTIONS’ CUSTOMISED SUITE OF BUSINESS SOLUTIONS

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Primary

Growing future success in the Bay

New Horticulture Industry Initiative Helps Combat Labour Shortage in Hawke’s Bay A new ‘hands on’ initiative, which brings the classroom into the orchard, is helping combat the labour shortage in the horticulture industry. The Eastern Institute of Technology (EIT), Work and Income and local iwi have teamed up with John Bostock, owner of JM Bostock Ltd, to help get people off the unemployment benefit and into permanent employment. The partners have worked together to establish an EIT level three sustainable fruit production course, which has both theory and practical modules. The theory mirrors the orchard cycle to enhance the student’s learning.

course says the programme is a high quality-training scheme that ticks the right boxes for growers with real job prospects at the end for graduates.

I got to a stage where I was going to throw it in, but I’m thankful I stayed determined and finished because it’s made me a lot happier and I’m actually getting out there and doing something with my life now.

John Bostock who provides an orchard for the training

Mahi Hauparoa

By Catherine Wedd

“The key for us is getting these trainees into fulltime employment rather than just seasonal jobs. We are helping up-skill them, so they can easily apply what they learn to a real job in the orchard.” Fourteen students completed in November 2013 and all gained employment. Jason Cunningham and his two sons graduated from the course and moved into permanent employment with JM Bostock Ltd. “We have job security now so it takes the stress away. I used to get really low when I knew the seasonal work was coming to an end and I had to go back on the dole. But this course now gives me more purpose in life and real direction.”

QR Code

(left to right) Bill Neilson, Mahi Hauparoa, John Bostock and Jason Cunningham working on Downs Orchard near Flaxmere

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Scan the QR code to watch the story or visit www.theprofit.co.nz


PRO

Primary

Left to right – EIT’s Erin Simpson presenting Javarne Tukiwaho Toheriri with his certificate, standing alongside John Bostock.

Jason Cunningham

Graduate Bill Neilson who also moved into a fulltime job with JM Bostock Ltd says the course has opened doors for him.

sequential through the season and means at the end of it all they have the right practical skills to get a job.

course in November there are plenty of jobs out there for them.”

“Two years ago, I was a dole bludger, doing nothing but sitting on the couch and now I’m out in the sun picking apples. I look forward to getting up each day. I’m setting a good example for my children by working. It gives them the incentive to get out there and work for a living too.”

“The timing is ideal because when the students finish the

Mahi Hauparoa says the course was challenging and there were times he wanted to give up.

EIT Horticulture tutor, Erin Simpson says that having the classroom on an orchard helps the students get beneficial hands on experience. While teaching the theory, Erin was able to take students from the classroom into the orchard to bring the theory to life. “Industry buy-in has been key to this course taking off. It ensures that we are providing programmes that meet industry needs. The students start with pruning, pest and disease control, tractor driving, orchard machinery usage, irrigation, maintenance, and then thinning, so it’s

If we all get together and each do a little bit we can make a big difference. Unemployment creates social challenges in Hawke’s Bay, so if we are all paddling in the same direction it will help.

John Bostock

“I got to a stage where I was going to throw it in, but I’m thankful I stayed determined and finished because it’s made me a lot happier and I’m actually getting out there and doing something with my life now.” John is encouraging other growers to get in behind the sustainable fruit production programme and as a result more growers are jumping on board and providing support. “If we all get together and each do a little bit we can make a big difference. Unemployment creates social challenges in Hawke’s Bay, so if we are all paddling in the same direction it will help,” says John.

FARMERS TRANSPORT - COMMERCIAL AND SIRE STOCK SPECIALISTS DELIVERING FOR YOU WHERE OTHERS WONT. Take advantage of our extensive North Island operational network - we have it covered. Into the South Island? We have a number of friendly carriers who can get the job done from Buller to Bluff.

UPCOMING NAIT MOVEMENT REPORTING? Utilising our service means you can be confident that EID Tag scans at pick-up and delivery are 100% accurate. At Farmers Transport we believe that you need to know that the animals you sent or received match the EID tag numbers reported to NAIT.

Call us for details of how we can help you with your Livestock Transport requirements: Hastings - 06 878 4040

Central Hawke's Bay - 06 857 8200 WWW.FARMERSTRANSPORT.CO.NZ INFO@FARMERSTRANSPORT.CO.NZ New Zealand’s First NAIT accredited transport operator. MAY - AUGUST 2014

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NO TO ‘STOCK UNIT’ TERM I say drop the term ‘Stock Unit’. I have a problem with people using the term ‘stock unit’ as a reference to the capacity of a farm. By way of background read the next paragraph. By Brent Paterson | Rural Directions

Evolution of the system in New Zealand. Crawford & Anderson (1994) reviewed the history of livestock standards and the SU system in New Zealand. In brief, the SU concept was first reported by Fawcett & Patton (1929) as a means to assess economic performance in agriculture. Some 30 years later Hutton (1954) defined SUs for measuring the carrying capacity of farms in Waipa County (Table 1). Jackson (1963) subsequently used these standardisation factors to assess the productivity of different pastoral areas in New Zealand. Examples of the variation in stock unit conversion factors reported in different sources. (Adapted from Crawford & Anderson 1994). I have applied the above theory’s to an 850Ha farm in Hawke’s Bay running a mixture of Sheep and Beef in a breeding and finishing program (4470 ewes, 1400 Hogget’s, 25 Rams, 120 cows and replacements, 65 R2 finishing cattle and 75 R2 finishing cattle). The huge discrepancy highlighted above speaks for itself. (I do appreciate I have used some very historical data). Why would a real estate agent use this terminology to market a place, is it because some information is better than no information, perhaps it’s just easy? If I’m selling this farm I’m going to be using the Top SU column and if I’m buying this farm I’m going to use the Bottom SU column. When will the marketers of farms and the market meet and be clear with the production from a farm, isn’t the way to measure the current capacity of a farm on how much grass it grows, how many kilos of product per hectare it is carrying. Let the market apply their own systems and variables onto the property and judge the capacity of the place. I think when we see an advertisement for a property with the headlines Outstanding 850Ha property with a five year historical average of growing 8750kg/dm/ha, currently supporting 687kg product/Ha, we will all be moving to a more productive and profitable place. What’s the relevance of a Stock Unit anyway, how often is it that a farm gets sold and the purchaser comes in and maintains the exact farming policy as the previous owner? Come on lads and lasses it’s time to lift our game here isn’t it? Views are my own and happy to take a call for or against.

Stock Class

Ewes

Hutton

Coop

NZMWBES

MAF

(1953/54)

(1965/67)

(1992)

(1993)

1.0

Hoggets

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Variance for ‘model farm’ Low

High

0.8 – 1.1

1.0

1.0

0.65 1.45

1.0

0.65 – 1 2905 .45

6481

0.6

0.7

0.6 – 0.7

0.7 – 1.2

0.7

0.7 – 1.2

1680

840

Rams

0.75

0.8

0.8

0.8

1.0

0.8

1.0

18

25

Beef Cows

5.5

6.0

5.5

6.0

3.7 – 6.3

5.5

6.0

444

756

Heifers

4.0

4.5

4.5

4.5 – 6.0

Weaners

2.0

3.5

3.5

4.0

3.5

2.0

Hinds

1.9

1.9

1.9

1.9– 3.0

Other deer

1.8

1.2 – 1.8

1.2 – 1.8

Stags

2.1

2.2

2.1

Goats 1yr +

0.8

0.7

Goats 1 yr 0.5 0.7

0.5

0.7

4767

9782

Dairy Cows

5.1 – 6.9

6.5 – 8.5

7.0

Differential

Brent Paterson is the founder and managing director of Rural Directions- Primary Sector Recruitment & HR. His rural credentials are impressive from running a sheep stud and beef operation in Patoka, through to his involvement in Rural Directions subsidiary company, Primary Industry Management. To contact Brent, email – brent@ruraldirections.co.nz.

Lincoln Beef and Farm (1991) Lamb Technical Manual (Lincoln Uni)

Information sources New Zealand Meat and Wool Board’s Economic Service, Wellington. SU values used in the MAF Policy Farm Monitoring Reports. Figures quoted in the Lincoln University Farm Technical Manual (Fleming & Burtt 1991). Beef and Lamb website(2013) Lincoln Farm Technical Manual (2012)

3.5 – 6.0

2.8 – 4.6

4.6 – 9.0


TE MATA FIGS

PRO Food

By Vivienne Haldane

It is harvest time at Te Mata Figs and in spite of ten days of incessant rain, co-owner, Murray Douglas sounds cheerful. “The fruit is all bursting but hey, horticulture is not for the fainthearted is it?”

ABOUT TE MATA FIGS There are 20 fig varieties grown at Te Mata Figs. This allows for a range of maturity times, flavour, colour and size. They grow the ‘sugar’ figs such as Brown Turkey but predominantly grow the Black Mission style Brunoro Black’, which is great fresh and the classical deep red flesh Adriatic varieties which have good market acceptance by both commercial customers, such as restaurants and caterers, and the general public.

Taking on and developing an orchard business has been a huge learning curve for both Murray and his partner Helen but in the seven years since they bought the orchard on the outskirts of Havelock North, their business is growing steadily. The former Sydney residents had a complete change of lifestyle when they began to grow figs. It was while living there that they acquired a taste for eating figs, available from their local market in the Italian Quarter. “Figs were so common and people really knew what to do with them,” says Murray. On returning to New Zealand to live, they missed being able to buy this delectable fruit but hadn’t thought of growing them for a living. That is, until they came across their property – a rundown orchard – in 2007. Out came the nectarines and most of the cherries that had grown there for a number of years. In went the figs and Te Mata Figs was born. They currently have 1,000 trees on their property and 3,000 on other properties. “You require no machinery, no spraying and the trees only need to be tidied up once a year – it’s an ideal crop for a lifestyle block,” says Murray. But he adds, “Growers have to have a keen intention, not just a wish. Although figs are relatively straight forward, preparation, picking and post-harvest management has to be carefully done as they are very fragile.” “We operate as a grower’s co-operative, with Te Mata Figs as the sole marketer and buyer within that group. It’s a risk for us but it guarantees supply for both fresh fig and processed fig markets. In order to be successful with a niche crop you need a large number of trees. Te Mata Figs have a growing area that extends from Wairoa to Poukawa and now Bay of Plenty.

This strategy of expanding the number of growing locations spreads the weather risk and expands the growing season at both ends. “We have also developed the processing side – we’ve expanded the range and extended into retail as well as selling fig ingredients to bigger players who use it in production of products that go into the Australian market. This allows us to use figs that would otherwise be processed into jams.” All products are made at their commercial kitchen, which is on-site. They employ a staff of six. Their products can be purchased on-line which “enables them to reach around the world” and the couple still sells through Farmers Markets in Hastings and Napier as well as at The Figgery. “It gives us very immediate feed back and allows us to experiment with our new products.” They also market their products at food shows in Wellington, Auckland and Tauranga as well as at the Fine Food NZ trade show. “We have heaps of things lined up for the future with new products and new markets. We are talking to some serious commercial marketing people about how we should do things because we need to continue to expand market opportunities, both locally and overseas. We have a huge number of trees coming on stream and we have to move that product. Te Mata figs is committed to buying the figs, so we need to sell them either in fresh or processed form.”

“The MasterChef programme has assisted us in many ways because figs are often used on it. Chefs in Hawke’s Bay and around New Zealand who use figs are also trailblazers. Where a chef is doing interesting things and people like what they’ve seen, they come to us to buy that particular type of fig. We also pair up figs with other products such as cheese. A particular cheese from a supermarket sold out because of that idea,” says Murray.

“The fresh market is only a certain size but we can’t keep up with demand by a country mile. We have more orders than we have figs. Growing figs is the easy bit. The hard bit with fresh figs is in ensuring quality and efficient distribution channels.” “There’s a lot of good experience that we’ve tapped into with horticulture in Hawke’s Bay and some of the processors have given us some excellent advice and been willing to assist us. We’ve been able to go to engineers and production people and tell them what we need, because fig equipment doesn’t exist anywhere. They’ve come up with some really useful practical solutions.” “We are currently working with the Havelock North Business Association to develop an epicurean trail with other producers like ourselves.

FOOD HUB CONCEPT DESIGN

GROW YOUR BUSINESS HERE • 16ha of land zone 7 for food related industry • Modern and purpose built manufacturing,

processing and associated industry facilities

Call Trevor Taylor 027 247 7939 or Logan Taylor 027 577 7045

ATTN13PRO1405

• DESIGN - BUILD - LEASEBACK • Share the benefits of clustering and full logistics - storage, handling, transport

www.tomoanafoodhub.co.nz MAY - AUGUST 2014

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Primary Clockwise from left: Hugh and Sharon Ritchie (with Silver Fern Farms chairman Rob Hewett) from Drumpeel Farm, Otane won the 2014 Silver Fern Farms Hawke’s Bay Farmer of the Year at the Hawke’s Bay A&P Showgrounds. Guests enjoy the sumptuous food by Orton Catering. Mike Barham (left in photo) is presented the Laurie Dowling Memorial Award by Roy Fraser. Hugh and Di McBain of Otane won the Pan Pac Hawke’s Bay Farm Forester of the Year award. Patrick Crawshaw is presented the Lawson Robinson HB A&P Society Scholarship by Mathew Lawson.

ATTN14PRO16

Like a good harvest we add value

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PRO IT

HEY! HEY! YOU! YOU! GET ONTO MY CLOUD!

With the advent and increasing availability of high speed internet there are now more cloud based storage options than you can shake a data stick at. By Wray Wilson | Need a Nerd

Cloud storage takes files from your hard drive and synchronises them with online storage and is well suited to the needs of SMBs. If you make changes on your local hard disk they are quickly replicated to your cloud storage and can be accessed across the internet. Cloud storage should not however be confused with online backup – they are different beasts with different purposes. Cloud storage has its benefits, drawbacks and a fair number of myths associated with it. Some of the things you need to be aware of are:

Versioning

Make sure you are able to have versioning of your stored documents and that you can step back to a previous version if you make an editing mistake.

Retention

Redundancy

Depending on what you get there should be options to retain your data for long periods of time. For instance you may have deleted a file a day, a month or a year ago but need to retrieve it. A good cloud storage option will allow you to step back to a point in time and get it.

It is worth making enquiries as to the redundancy (or backup systems) of the provider you are looking it. There’s probably no point in using a single site local provider if they are going to be affected by the same natural disaster as you and the data becomes irretrievable.

Security

Pricing

Storing confidential or sensitive information in the cloud is often more secure than storing it locally, especially for businesses. With many online storage services, data is encrypted both during transmission and while at rest, ensuring no unauthorized users can access the files. That said, make sure you know the ‘who, what and where’ when it comes to your data – we place a lot of trust in faceless online corporations that we often have no idea about.

Most cloud storage schemes have an amount of free storage but there is always a hook. The free storage probably doesn’t come with all of the features mentioned above and therefore you are driven towards the paid options. That said, a lot of the paid options are fairly economical to use with, for example, some starting at under $10.00 per month to store up to 60GB of data (personal use). It pays to shop around and read the online reviews as what looks attractive initially might not suit you in the longer run. Work out what your requirements are and get pricing based on that.

File size

We come to your business / home and take care of all your technology.

35476

Product sales, set-up, advice and ongoing support.

Examples of a few of the well know providers are:

OneDrive – this is Microsoft’s recently renamed offering (formerly SkyDrive). It is built directly into Windows 8 and 8.1 which makes it very attractive for users of those platforms. There are a myriad of other options on the market and like most things (to quote a well-worn military phrase) time spent in reconnaissance is seldom wasted.

Dropbox (www.dropbox.com) – perhaps the best known of the freebees. It offers the new user 2GB and adds additional free storage for every additional person you cajole into joining. There are paid professional versions available which are more suited to business use.

Google Drive - Google Drive is interesting in that it allows users to store a lot more files in its cloud for free if the files are Google Docs – up to 15GB for free.

0800 NeedANerd (0800 63 33 26) www.needanerd.co.nz service@needanerd.co.nz

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Some providers have limits on the size of files you are able to upload so check out the restrictions.

Box – This is possibly one of the stronger business based offerings in the market being feature rich. The Box interface is easy to use, intuitive and comes with many built in tools for collaboration and privacy control.

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Wray Wilson is the chief nerd and franchise owner of Need a Nerd Hawke’s Bay. Need a Nerd is a nationwide technical sales and support business to the SME and residential market. Email - wwilson@needanerd.co.nz


PRO

Legal

LVR CHANGES LOOM In the latest Westpac Weekly Commentary, their economists said that “in our minds, if high-LVR (loan-to-value) spending remains low the RBNZ (Reserve Bank of NZ) might consider relaxing the restrictions so the portion of low-LVR lending is closer to what was originally intended”. By Edward Bostock | Bramwell Grossman Lawyers

Any change to the regulations will be welcome news to those homebuyers that have struggled to borrow money since the regulations have been in force. The regulations, which came into force on 1 October 2013, imposed restrictions on banks whereby they are only allowed to lend (in most cases) to potential home buyers if they have at least a 20% deposit. Prior to this, the level of deposit required was not so stringent and traditionally as a potential borrower you would expect to need a 10% deposit. The result of the regulations is that there has been an impact on the housing market with would-be first-time buyers being those hit hardest. When you consider that under the new regulations, a deposit of $61,000.00 is required to purchase a $305,000.00 house, which is the median house price in Hawke’s Bay (as published by REINZ in February 2014) saving up a deposit of that size could take countless years for some to achieve and result in some feeling that a goal of purchasing a house is unachievable.

Guarantees should not be entered into lightly as ultimately the guarantor can end up “on the hook” to fulfil all the obligations of the loan Edward Bostock It is important to note that banks can lend, in some circumstances, to those without a 20% deposit, such as via the “Welcome Home Loan Scheme” which is available to first home buyers who meet certain criteria and that some lending institutions are not restricted by the regulations (although the pay off is invariably more prohibitive interest rates). In addition to this, alternative arrangements are being utilised such as the potential borrowers receiving assistance from others by way of a gift or a guarantee. This article seeks to highlight some areas to be aware of if you are approached to assist someone who is trying to purchase a property. Invariably the first port of call for potential borrowers will be their parents. As parents we want what is best for our children but it is important not to feel obligated to assist in all circumstances. Clearly your own financial circumstances and the implications of the assistance sought need to be carefully considered. Usually the first form of assistance sought will be a simple gift. The Banks will generally require it to be a gift and not a loan, as they will not want the borrower to have outstanding obligations to third parties even if the obligations to pay the bank will take priority. If you have some involvement in a discretionary family trust then the concept of making gifts may be well known to you, however the person making the gift (the donor) needs to give careful consideration to the potential implications:

Reserve Bank might consider relaxing loan to value restrictions

A gift cannot be conditional (i.e. be paid back at a later date) or be subject to the donor receiving interest. Once the gift has been made the donor has no claim to that money and significantly, if the donee is in a relationship, the money given may well end up as part of their shared relationship property.

Following the abolition of Gift Duty, there are no tax implications with gifting but it could impact the donor in other ways. For example if it becomes necessary for you to have long-term residential care then your eligibility for the Residential Care Subsidy may be affected by any gifts made in a particular year over $13,500 (if you are part of a couple) or over $27,000 (if you are single).

Another option is for a potential borrower to seek assistance via a guarantee. This option would be available if you are what is known as “equity-rich” and may result in the extra interest margin and low equity fees being avoided by the borrower. Guarantees should not be entered into lightly as ultimately the guarantor can end up “on the hook” to fulfil all the obligations of the loan including its repayment and it could also affect the guarantors own credit rating and ability to borrow. If a guarantee is proposed, independent legal advice should be sought at the earliest opportunity and particular attention should be given to the type of guarantee sought – a limited or an unlimited guarantee. Unlimited Guarantee • As guarantor you will be guaranteeing not only the loan sought at the time but also any other current or future lending the borrower has with the lender (including credit card debt); • The guarantee will continue indefinitely;

The lender will have no obligation to notify you of further lending with the result being that you, as guarantor, could be guaranteeing significantly more than first envisaged.

Limited Guarantee • This is where the guarantee is limited in some way, i.e. to a specific loan facility and/or to a specific part of a loan. For example, the guarantee could be limited to say 10% of the loan, being the amount required to get the applicant to the 20% deposit threshold. In advising clients, a lawyer will generally be wary of guarantees as the guarantor could possibly have no control over the situation and may end up as the “borrower” in the eyes of the lender. It is usual practice for a lawyer to advise that any guarantee be limited as far as possible. This has the potential to be an emotional area especially if you, as a parent, know that without your help your child will not be able to own his or her own home. However it is essential that all the consequences and implications are thought through prior to any irreversible steps are taken. We hope that the RBNZ relaxes its regulations but in the meantime, it might pay to seek some advice.

Edward Bostock is a solicitor at Bramwell Grossman Lawyers in Hastings. He has a Bachelor of Laws from the University of Sheffield in the UK. To contact Edward, email edward@bglegal.co.nz

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THE NEW AUCKLAND DISTRICT LAW SOCIETY (ADLS) LEASE –

PRO

Property

WHAT IT MEANS TO YOU

While many types of leases cross our desks, the most commonly used are those produced by the Auckland District Law Society (ADLS). The Society’s last lease document was the Fifth Edition 2008. This edition has now been superseded by the Sixth Edition 2012. By Paul Harvey | Williams’ Harvey Registered Valuers

This latest edition was prompted by a need to reflect changing lease practises and to address some of the problems that arose out of the Christchurch earthquake. Becoming familiar with this document is worthwhile because this document could be the one you choose to use as a basis for leasing a property for the foreseeable future, either as a tenant or a landlord. The main changes to the lease follow: CPI Rent Reviews The first change is in the First Schedule. Under Rent Review Dates there is an additional option to allow Consumer Price Index (CPI) rent review dates as well as Market review dates. Whereas the old lease allowed for only Market rent reviews, the new lease allows for either CPI-adjusted rent reviews or a combination of both. As with the old lease, the new lease has ratchet clauses that prevent both a CPIadjusted rent review and a Market rent review from falling below the commercial rent levels. The CPI adjusted rent review relies on indexing the rent based on the difference in quarterly Consumer Price Index figures between reviews. The indices are published by the Department of Statistics. The method is relatively inexpensive to operate and is unlikely to result in disputes as the figures are a given and the maths is relatively straight forward. Which rent review method will be best for you and your specific lease will be the big question. In recent times with little real rent increases, using CPI would have given rent growth. In preGlobal Financial Crisis times, though, CPI growth lagged well behind market rental increases, and the Market rent reviews would have been better for the landlord.

Outgoings The next change in the new ADLS lease occurs under “Outgoings”. The “Outgoings” lists costs that the landlord may charge the tenant for in addition to the rent. The list hasn’t changed much but has been varied: Insurance - -tenants are now liable for insurance excess up to $2000. Previously this excess was $500.

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Building Maintenance – repair costs due to defects in design or construction, inherent defects in the building and renewal or replacement of building services are now specifically excluded. Yard and Car Parking Maintenance – costs for repaving or resealing are now specifically excluded. Building Act – apart from costs to supply a Building Warrant of Fitness and obtaining reports under section 108 and 110 of the Building Act 2004, costs for upgrading or other work to make a building comply are now specifically excluded. These changes appear to be driven by the Christchurch earthquake experience and protect the tenant from a landlord who may be tempted to unfairly pass on capital costs. Additionally, the landlord must vary the proportion of outgoings payable to ensure the tenant pays a fair proportion of the outgoings. Previously, this change was optional.

Insurance The wording of this section of the lease has largely been left as it was, but reorganised within the lease for clarity. Landlords must still insure their building for damage and destruction from fire, flood, explosion, lightning, storm, earthquake and volcanic activity. The tenant is still responsible for insurance premium costs and related valuation fees unless otherwise varied. What the new ADLS lease does, however, is move some of the optional additional risks from the main text into the First Schedule where it can be plainly identified. The additional risks include: 12-month indemnity in respect of consequential loss of rent and outgoings Loss, damage or destruction of any of the landlord’s fixtures and fittings

“Damage and Destruction of Premises” called “No Access in Emergency”. This section addresses the post- Christchurch earthquake experience where leased premises were undamaged but couldn’t be accessed because of a cordon, for example. Under this scenario the new lease affords the tenant a fair proportion of rent and outgoings reduction commencing on the date when access was stopped through to when access resumes again. In the case where access continues to be impossible for an extended period of time, the new lease allows either party to terminate the contract after a specified time – the “No Access Period”. The default in the First Schedule is set at nine months, but the landlord has the option of entering their own time frame.

Maintenance and a Premises Condition Report Changes have been made to both the landlord’s and tenant’s maintenance requirements under the new lease. Wording has been introduced specifically requiring landlords to keep and maintain buildings so they are waterproof. Additionally, the landlord’s responsibility has been extended. Where building services cannot be maintained in good order and repair, the landlord shall replace them with similar type and quality. The biggest change to the tenant’s obligations is around a Premises Condition Report that forms the Fifth Schedule of the new lease. Tenants are required to maintain the premises in the same clean order, repair and condition as at the commencement of the lease. The Premises Condition Report provides the evidence of what the condition was, so there is less room for potential dispute.

Public liability

Note, though, that the tenant shall not be liable for fair wear and tear arising from reasonable use.

Insurance is a tricky area in any lease, and this is one area in which the existing lease may need to be tailored to meet specific circumstances – it will need modification, for example, if earthquake cover is not available.

The Premises Condition Report is also useful at the termination of the lease where tenants may be required by the landlord to reinstate the premises. The report provides evidence of what level of reinstatement is required.

No Access Period

Landlord’s Access for Inspections Work

Included in the First Schedule is a new item – a “No Access Period” with a default of nine months or the option of entering your own timeframe. In the main lease a new section has been added under

The landlord is still entitled at all reasonable times to enter the premises to view their condition or undertake repair, but the new lease specifies access may

occur only after written notice has been given, except in the case of emergencies. Additionally, where the old lease was silent, the new lease allows the landlord the ability to give the tenant notice to vacate the whole or part of the premises to enable work to be undertaken; for example, building strengthening or post-earthquake repair. Naturally, the tenant gets a fair proportion of rent and outgoings reduction.

Legal Costs Under the old ADLS lease the tenant paid for the landlord’s solicitors reasonable costs of preparing the lease and for any variation or renewal. The new lease is more equitable requiring each party to pay their own share.

No Improvements Rent A tenant is no longer liable for an “Improvements Rent”. Under the previous lease, a landlord could charge for work required by legislation and could pass some of that cost on at a fixed percentage until the next rent review. Some landlords used this provision to pass on costs for earthquake strengthening. In conclusion the new lease contains many important changes, better reflecting the current leasing environment. It is important, whether you are a landlord or a tenant, to become familiar with this document. It may be the document used for your next lease or may contain some good ideas that could be incorporated into your next tailor-made lease. As with any legal document, proper advice should always be sought on the implications of the lease to your own circumstances and how it may be best modified to better match your specific requirements. Paul Harvey is the Director of Williams’ Harvey Registered Valuers. He has a diverse and broad knowledge of the HB property market. To contact Paul, email paulharvey@williamsharvey.co.nz


EIT GRADUATES FLY MANY FLAGS As has become the norm for EIT, this year’s record number of graduates included achievers from countries throughout the world. All had different reasons for choosing to study in Hawke’s Bay and many have decided to settle here, contributing to the region’s economic well-being.

PRO

Education

Having completed a Bachelor of Recreation and Sport, Philip Shambrook is now enrolled in EIT’s Master of Health Science programme.

By Mary Shanahan

Fifty of the 865 who completed diplomas, bachelor and honours degrees,postgraduate diplomas and master degrees last year were supported by EIT’s International Centre. Most were Chinese and Indian nationals, while other overseas graduates were from the Philippines, Nepal, the USA, Russia, Thailand and Japan. Most of the international graduates staying in New Zealand either have jobs or are undertaking further study at EIT. EIT’s International Centre markets the institute’s programmes abroad and currently has around 420 international students enrolled in programmes offered on the Taradale campus. From the UK and recently capped with a Bachelor of Recreation and Sport, EIT valedictorian Philip Shambrook and his wife Louise met as officers in the Royal Air Force. After leaving the services, the sporty couple earned a placed in the Guinness Book of Records for the distance they logged over three years exploring countries worldwide on their tandem bicycle. Philip and Louise initially settled in Auck-

land and Philip worked in computing and laser imaging systems. However, he found commuting and juggling sports training commitments was becoming increasingly stressful. So, seven years ago, the couple brought forward their retirement plan by some 15 years, building on an acre of land they had bought in Waipukurau. “We got fed up with Auckland and said let’s see if Hawke’s Bay is as nice as people say it is.” The Shambrooks welcomed the easier pace but were still committed to a fulfilling way of life. Three years ago they moved to Havelock North and established a business and sports mentoring company. Philip, who gained an engineering degree while in the Royal Air Force and an MBA through the Open University, enrolled for EIT’s Bachelor of Recreation and Sport. Mentoring other students on the programme, he organised numerous revision and group sessions. This year, he started studying EIT’s newly-launched Master of Health Science. Israeli Shiran Atira moved to Hawke’s Bay to be with her Kiwi boyfriend Ben Hazelwood. But five years ago, after starting work at the first Piccolini centre,

established in Havelock North, she observed other students on practicum and felt she could train as an early childhood educator. Shiran enrolled for EIT’s Bachelor of Teaching (Early Childhood Education) and completed her degree studies last year. Graduating this year was part of a back to back celebration, with her parents flying out to see her capped one day and marrying Ben the next. Shiran is now working in the recently opened Piccolini Nursery and Private Kindergarten in Greenmeadows, where she enjoys the feedback from teaching the over threes. Ben, a qualified builder, and Shiran married the day after she graduated and the couple are now working to build up a secure financial base. Born and raised in Rhodesia, Annatjie Pretorius returned to her homeland after nurse training in South Africa. As was usual for women who married and had families, she hung up her nursing shoes when she and husband Dewet had their two children.

“That was the lifestyle in Rhodesia,” she says. “The men worked, the women stayed at home, had children and managed the household. It was a home life with tea parties and socialising.” The new order in Zimbabwe changed all that. Under Robert Mugabe’s rule, the country has lost traction and the last straw for Annatjie was the unreliable supply of medication which allows the couple’s son Munnik, a haemophiliac, to lead a normal life. After moving to New Zealand, Annatjie completed an EIT course to update her nursing competencies and prepare her for nursing practice in this country. More recently, working in the emergency department at Hawke’s Bay Hospital, she completed her Postgraduate Diploma in Health Science and then a Master of Nursing – both through EIT. The committed upskiller is now a candidate for Nurse Practitioner and is also involved in an EIT research project on skin cancer screening.

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Finance

ENHANCED ‘TOP-UP’ DEATH BENEFIT Oscar Wilde once said nothing in this world is certain – except for death and taxes.

By Nick Stewart | Stewart Group

One of the many benefits of being a member of our two Asset Class funds in the Fidelity KiwiSaver Scheme is an entitlement to a free Death Benefit. Our members could also be entitled to an enhanced top-up death benefit. Members of the Fidelity KiwiSaver Scheme are entitled to a free death benefit that applies, under certain circumstances, in the event of a member’s accidental death.

The high cost of a funeral can be a shock for grieving families.... the average cost of a funeral is a staggering $8800. Nick Stewart

If your death was an accident and the value of your KiwiSaver account is less than $10,000, Fidelity Life will top up the payment to the estate to $10,000. However, when an employer has chosen the Fidelity KiwiSaver Scheme as their Employer Choice provider, eligible employees are entitled to an enhanced version of this death benefit. After six months’ membership of the Fidelity KiwiSaver Scheme, if an employee dies from any cause and the value of their KiwiSaver account is less than $15,000, Fidelity Life will pay an enhanced death benefit that will top up the payment to $15,000.

The crux here is that not many deaths are accidental, and also that the enhanced top up death benefit can be worth an extra $5000 to the family of a member who passes away, a welcome sum at a difficult time. It may seem like an unlikely scenario, but we have had two members pass away suddenly, both were healthy and only in their 50s. According to Statistics New Zealand, of the 29,568 people who died last year, a total of 5541, or 19%, were aged between 20 and 64 (below the age of eligibility for Superannuation). We don’t know how many of these were KiwiSaver members, but we can guess that a large portion would have been. The average KiwiSaver balance, as at June 2013, was just $8013. For all of these people, their estate would be nearly $2000 better off with the death benefit and almost $7000 better off with the enhanced top up. The high cost of a funeral can be a shock for grieving families, with suggestions the average cost of a funeral is a staggering $8800. What appeals to many of our members, particularly those who are new to KiwiSaver and don’t have a large balance, is that this benefit will at least mean there is something for their kids or money to pay for their funeral. When it comes to claim time, we will also be here to fight your corner and ensure your loved ones get the payment as quickly as possible. This enhanced death benefit is not

widespread among providers, so it could pay to ask your provider if this benefit applies to your scheme. There are some conditions that apply to the enhanced death benefit. The payment will be reduced by any payments already made due to significant financial hardship, serious illness, or first home withdrawal. Disclaimer “The opinions expressed in this article are those of Stewart Group’s advisers and should not be considered as advice. Investors should obtain professional advice regarding their own financial circumstances and objectives before making any investment decision. Under the Financial Services Act 2008 a copy of our Disclosure Statement is available on request and free of charge.”

Nick Stewart is an Authorised Financial Adviser (FSP21383) and specialises in providing advice to wealth management clients. To contact Nick email: Nick@stewartgroup.co.nz

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Business

Business

INTEREST RATES AND PROPERTY The residential property boom has implications for business owners.

By Cedric Knowles | KNOWLedge Accountants

From 2002 to 2007, average house prices in New Zealand increased by 164 percent and you had to be a complete hermit to avoid newspaper headlines and BBQ conversations that revolved around property and the latest, greatest capital gains that were being made. Of course, that all went pear-shaped in 2008 after the global melt-down and prices dropped 7.5% on average. Now it all seems to be starting again, with that usual suspect Auckland leading the charge, along with Christchurch for fairly obvious reasons of demand versus supply. So the Reserve Bank has come out swinging with its usual interest rate increases and the first-time use of low equity loan restrictions. As an accountant to small business, primarily in Hawke’s Bay, this has always frustrated me, as I see the impact of increased interest rates on business profitability and investment, but very little of the supposed benefit of increased housing prices (which can never be the basis for a strong sustainable economy anyway). As well, I don’t actually believe interest rates have any significant impact on house prices – they simply prop up our dollar to the detriment of exporters, and reduce productive investment. I believe migration-based demand is the biggest determinant of house prices, but I thought I’d better back that up with some facts. So I charted four different trends over the time period from December 1990 to December 2013 – net migration into New Zealand, interest rates, house price changes and for good measure, the CPI index. Impact of Interest Rates According to the Reserve Bank, higher interest rates should reduce property prices, and vice versa. So in the graph above, you would expect to see the lines moving in opposite directions but there is in fact no real correlation, and more often than not house prices are lower when interest rates are lower – and this seems obvious to me: interest rates are often lower when economic activity and the CPI are lower, and this will usually happen when a country is losing rather than gaining population.

10 years compared to 2.25% over the entire 23 years). Further analysis of the data shows that house prices rose 14.39% per year over the best 10 years and only 0.82% over the worst 10 years (best and worst depending on your perspective!!) – interest rates for the same periods averaged 9.04% pa and 8.40% pa respectively – hardly a big enough difference to influence behaviour. The final evidence is that migration turned around by over 2,000% in 2013 and when did Auckland house prices start to take off? Draw your own conclusions. Interest Rates and Investment While homeowners and businesses benefit from low interest rates, investors in cash deposits do not fare so well. By the time tax and inflation are taken out of the term deposit rate, there is not much left and this more often than not affects those on fixed income e.g. retirees, with the result that they either chase riskier investments or deplete their capital. Interestingly, the dividend return from the top 20 yielding companies on the NZSX (per www.dividendyield.co.nz) is 8.04% on current share prices, and that is after relatively tough times for company profits from which dividends are paid. However, the New Zealand investment environment has changed dramatically over the last 25 years, with shocks and collapses in the sharemarket and finance company sector driving people to the perceived safety of bank deposits and residential property. There is also a perceived tax advantage from investing in residential property, compared to any other form of investment, but this is in fact totally incorrect. All investments are treated exactly the same: the income derived (rents/interest/ dividends) are all taxable, the expenses of owning the investment are all claimable, and if you bought the investment, whether it be property or shares, with the primary intent of selling at a profit, the gains are taxable. The former ability to claim depreciation on a (generally) appreciating asset was the only “unfair” advantage, but that has been removed.

Impact of Migration The tables (far right) shows quite clearly the trends in house prices in New Zealand over the last 20 years – when we have net migration into New Zealand, house prices will rise at a much greater rate. Ten of the years in which we had the highest migration were eight of the years in which we had the highest house inflation. And interestingly, in the 10 years we had the highest interest rates, we also had 7 of the highest house price increases (inflation can be discounted as it only averaged 2.55% over those same

Cedric Knowles is a director of KNOWLedge Accountants, Hawke’s Bay. He has worked as an accountant in the Bay since 1987. Contact Cedric by email: cedric.knowles@knowles.net.nz

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Profit issue 17 - May - August 2014