SMEs in the front line

Director General of the Auckland Regional Chamber of Commerce, Michael Barnett also manages all the New Zealand Chambers of Commerce. He is President of the Equal Employment Opportunities Trust which aims to achieve a better balance between professional and private life. He has also been elected to the Auckland Regional Council and is President of Auckland Plus, the region’s economic development unit.

Commerce International: How is the current economic crisis affecting New Zealand?
Michael Barnett: “The New Zealand economy is reasonably well placed and our banking system is fairly sound. That said, in just three months, some 10,000 people have been made redundant here, mainly unskilled workers or those with few skills. In Auckland, the clothing industry is suffering, building permits are down by 40% and vehicle sales by 35%. Consumer and business confidence has fallen dramatically. Consequently, consumption has slowed. This lack of confidence can only exacerbate the situation in the coming months. By living the prediction and not the reality, companies will be tempted not to invest, develop and hire and risk missing the opportunities which will appear despite, or because of, the crisis.”

What effect is the crisis having on SMEs in particular?
M. B.: “In New Zealand, 95% of companies are SMEs. The past ten years have been favourable for them. They have developed and hired staff... and have allowed themselves to lack rigour in managing their operations. They must now adapt to survive. Many will have to reduce their workforce and tighten their belts. They will not all succeed.”

The Conservative government of Prime Minister John Key came to power last November. What do you expect of him?
M. B.: “The Government will first have to invest in projects that will create jobs and benefit the economy in the long-term. An example is infrastructure: many road-building projects, once finished, will contribute to easing congestion problems and will increase the mobility of individuals. Investing in the energy sector may also help us improve the security of our supplies. Innovative projects in the high-speed Internet connection sector are finally possible. The Government, moreover, has a duty to reflect on how it can help people remain in the world of work and before the situation gets worse, to ensure companies benefit from a more favourable environment in terms of administrative and tax constraints.”

What is the role of the Chambers of Commerce in this context?
M. B.: “We have collaborated with the Government in the rapid creation of plans to support employment and training. We have put the case for corporate health checks to be made within companies so they can assess their strengths and address their weaknesses. Some of our suggestions have been reflected in the packages announced to date. The latest example of this is the support plan weighing on small companies. It will allow companies to release liquid assets – a key element of survival today.”

In the longer term, which areas do you deem important for the New Zealand economy?
M. B.: “Employers in New Zealand have had difficulty over the past ten years in finding staff with the appropriate experience and skills. Confronted with this problem, a favourable immigration policy would be one short-term solution. Companies and Government must nonetheless collaborate in raising the level of qualifications in this country. Another field is productivity gains. In the past ten years, these have been weak and have only been obtained thanks to the increase in the working population. Companies must invest in technologies and the improvement of skills if they are to achieve more significant gains. Lastly, we are a small country whose growth will always be restrained by the size of its economy. Although we suffer from our distance from the world markets, we must export in order to grow. Companies and Government must find solutions to incite entrepreneurs to integrate export fully into their development plans.”