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Economic pinch is yet to come

An artist’s impression of the Eco Reef system, proposed for a trial on South Wairarapa’s coastline. PHOTO/SOUTH WAIRARAPA DISTRICT COUNCIL

MARCUS ANSELM

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Positive signs of Wairarapa’s economy holding up are being threatened by the looming end of central government subsidies, and warning signs over supply and demand.

Business across Wairarapa are holding up to the immediate post-lockdown challenge, but the real pinch may be yet to come.

Experts from the Infometrics forecasting company say outcomes may be better than initially feared because of the government’s wage subsidy.

It was “an appropriate immediate response to the pandemic, shoring up businesses’ cashflow through a period of restricted activity,” Gareth Kiernan, Infometrics’ chief forecaster, said.

“However, the scheme is now simply an expensive exercise in delaying inevitable job losses.”

Kiernan said, Infometrics expected further substantial job losses, with an unemployment rate of eight per cent by the end of 2020, and almost double figures during next year.

Some small businesses are thriving as people dip into their holiday funds to treat themselves, knowing a foreign holiday is months, if not years away.

But those companies relying on imports and exports are starting to feel the pinch.

Last week, Air Chathams general manager Duane Emeny said the likelihood of his company opening an Auckland-Masterton commuter service rested heavily on international flights returning to the City of Sails.

And some Wairarapa providers are now saying that the products they need from overseas, or opportunities to sell internationally, are in short supply.

Graham McClymont, Deputy Mayor of Masterton, owns a successful precast concrete business in the town, Deco Precasters.

He said it would be interesting what would happen regarding products sourced overseas.

McClymont said one example of the dependency was the parts his company used, such as lifting anchors for the heavy concrete items.

“The fibre we use comes from America.

“The swift lifts we use to lift all these heavy products with, they come from China. I actually jumped in before lockdown. There was 2000 in New Zealand, I bought 600 of them. I actually stocked myself up.

“A lot of the local suppliers actually can’t compete with cheap Chinese imports, so they’ve been struggling and downgrading.

“The thing with us is that if you just can’t get that one component, you can’t make the product.

“Ready Mix [concrete suppliers] may be able to come down with their truck and everything’s sweet, but what do I do [about lifting]? Put a twist of wire in the top which doesn’t meet any standard?

“Under health and safety, nobody can lift it. Those little supply chain things are really interesting, and how we sort them out.”

McClymont’s company has produced the concrete bases for the EcoReef, a trial coastal protection system backed by South Wairarapa District Council for Wairarapa’s south coast.

Brian Jephson, a Martinborough ward representative on South Wairarapa’s authority, manages the Palliser Bay Station, on that seaboard.

Jephson said prices on his dairy, meat, and wool products “went south a bit” when the international markets closed but had shown some resilience.

“In exports, where the premiums have gone, is in those quality restaurant cuts.

“Because the restaurants all over the world just aren’t open right now. Standard cuts are doing okay. It seems the freezing companies are probably just building up an inventory. Dairy is doing well.”

He said wool exports had been a problem with mills closed across the world.

“Covid-19 has contributed a major issue there, as the mills in Europe aren’t operating, and getting wool in, to process. They are slowly starting to come back on, but strong wool is in dire straits. When it costs you more to harvest the wool off the animal than what you’re getting for it, that’s not good.

“We’ve got a fine wool flock, and we’re doing all right. It’s slowed down a bit, for the same reason, the mills aren’t operating, but the demand is still there. That’s the advantage we have over the coarser wool.”

-NZLDR

Emily Ireland
Emily Ireland
Emily Ireland is Wairarapa’s Local Democracy Reporter, a Public Interest Journalism role funded through NZ On Air. Emily has worked at the Wairarapa Times-Age for seven years and has a keen interest in council decision-making and transparency.

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