Auckland Business With Attitude

31 August 2001

Auckland businesses are almost twice as optimistic about their own business prospects than they are about those of the economy as a whole.

Sixty-four percent (64%) of Auckland businesses believe that their own business situation will improve over the next six months, while just 36% are optimistic about the general business situation improving over the same period.

At the same time, the overall level of optimism about business prospects over the next six months has increased by 11% to 36% on the findings of the previous survey in May, when just 25% said that they believed the business situation would improve over the next six months.

Also, just 16% believe that the business environment will get worse, compared to 26% in May, while those who believe the general business situation will stay the same remained constant at 47% and 46% respectively.

These are the main findings of a regular survey of Chamber of Commerce members on how they view business prospects in the period ahead.

The survey was conducted by internet over the last two weeks. Of 800 responses analysed, 45% indicated that they employ 5 or less people, and 46% employ between 6 and 50 in their business.

On interest rates over the next 12 months, 30% of respondents believe they will rise compared to 17% in the May survey. Forty-six percent (46%) of those surveyed predict interest rates will remain the same over the next 12 months, compared to 33% in the May survey. Just under twenty percent (18%) believe interest rates will decrease compared to 46% in the May survey.

Other findings remained consistent with the previous survey in May:
- While 38% of respondents indicated that finding skilled staff was harder today than three months ago, just 5% said it was easier, and 35% indicated it was the same;
- In terms of recruiting unskilled staff, just 9% said it was harder than three months ago, while 39% said it was the same and 7% easier;
- Thirty-seven percent (37%) of respondents indicated that demand was the single factor most limiting their ability to expand, while the next highest constraint was finance at 24%, followed by labour and capacity 10% each.

In terms of an industry breakdown, the difficulty of finding skilled staff in tourism has increased to 38% compared to 20% in May. In contrast, manufacturers at 35% compared to 52% in May and service businesses, 33% and 49% respectively, are finding it easier to recruit skilled staff.

Twenty six percent (26%) of respondents expect the amount of new investment in building to be the same over the next 12 months as the previous 12 months, and 14% expected to invest less and 18% more, which is also similar to the previous survey results.

Similarly, in terms of plant and machinery, 32% of respondents expect to invest the same in the next 12 months as the previous 12 months, while 27% expected to invest more and 16% less.

Chamber of Commerce Chief Executive Michael Barnett said that despite obvious concerns about interest rates and a raft of negative comments about the overall state of the business environment, it is very apparent that Auckland businesses are determined to "get on with the business of doing business as best they can."

"In one sense the government can take a comforting message from the survey -optimism has increased compared to the last quarter and it is very clear from both the survey data and comments that a lot of businesses are strongly resolved to do what it takes to make a success of what they do."

On the other hand, the comments on where the greatest threat to business will arise in the period ahead indicates that the government still has a lot of work ahead to demonstrate that it seeks a strong wealth-creating business community.

"Individual businesses with attitude are clearly determined to get on with doing business despite strong reservations about the government's performance to create a positive business environment," said Mr Barnett.

The range of comments offered on what single factor was most limiting their ability to expand included:
- A strong perception of political mismanagement on numerous issues but especially - resource management, electricity pricing, overcoming skill shortages, transport infrastructure, and regulatory hoops at local government level.

As in previous surveys, other areas of major concern included:
- Bankers lack of interest in lending to business, compared to lending on property;
- Inability or lack of time and commitment to get the business organised in order to take up expansion opportunities,
- Creditors holding back payment.

"Overall, this survey reinforces the impression that the business community wants to be optimistic about the future, to the extent that they are putting to one side their considerable concerns about the support they are getting from key institutions like government, banks and education on the cost of doing business and being able to source skilled staff."

Ends

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