Pandemic pivots: The best of NZ business showing resilience in the face of adversity (The Spinoff)

Non-essential business has taken a hit over the past month, but innovative New Zealand companies are finding the silver lining.

Restrictions imposed by the Covid-19 lockdown have caused some businesses to consider closing up shop for good. While some have taken this route, others have used the restrictions forced upon them to pivot into areas they hadn’t before – either because they had never needed to, or they had never considered it.

One of the best examples of this is Nanogirl Labs, run by one of New Zealand’s best-known science communicators, Dr Michelle Dickinson. It was quickly apparent to Nanogirl Labs that its “old” business – live stage shows and performances at schools around New Zealand – was not viable in the near future.

“I looked at our staff, I looked at my husband and business co-founder and we knew there was a big decision to be made: accept defeat and wind the business up, or fight for something we believed in,” said Dickinson.

Within three days her team developed an online learning platform for those same kids they would normally reach through their shows who now needed to stay home. Each weekday, a “science adventure” is delivered to teach STEM (science, technology, engineering and mathematics) to New Zealand’s next generation using common household items. On top of that, Nanogirl Labs maintained its “buy one give one” model – meaning those who wouldn’t have been able to afford to take part can.

Waikato brewery Good George moved early to produce 1,000 litres of hand sanitiser from a distillery it had been using to make spirits. Co-founder Brian Watson says they had the idea after having trouble sourcing the liquid gold for its own staff: “We had our whisky and gin programme going for a while and we thought: the world needs hand sanitiser more than it needs gin and whisky right at the moment,” he said.

Similarly, dairy giant Fonterra made 250,000 litres of ethanol available to companies making hand sanitiser and has also increased the production of ethanol at one of its plants. Chief executive Miles Hurrell said in a webinar this week that this came at “a significant cost to our business, but we knew it was the right thing to do”.

Steve Nathan, chief executive of timesheet company TimeHub, says he was inspired by British technology company Dyson, which repurposed some of its production from vacuum cleaners to ventilators. He said it made him wonder, “How can we not pivot, but rather repurpose what we have for our new normal?”

His team created MyVisitorLog, an online service that allows customers to use their own device to record when they visit a business. This will be a long-term requirement for contact-tracing purposes – particularly for restaurants, cafes and bars – and this tech will allow it to happen contactlessly.

Responsive retailing

Supermarkets were among only a handful of retail outlets allowed to open during the alert level four restrictions and as such have been innovating since the beginning of the lockdown.

Foodstuffs has been trialling a virtual check-in for customers, where shoppers text the supermarket to be put into a queue and are sent a reply when it’s their turn to shop. This has made social distancing easier – customers can queue in their car – but has also meant that shoppers like me who live close to one of the supermarkets participating in the trial can queue virtually from home (and then get to the supermarket at pace to meet the 10-minute allowance!).

Clickandcollect, set up by George Czabania, automatically collates click-and-collect slots for all supermarkets across New Zealand, allowing customers to more easily hunt out available times (which have been incredibly scarce during lockdown).

Another website, How Long is the Line, built by developer Gareth Hayes, crowdsources queue times at supermarkets, helping customers avoid an unnecessary two-hour wait in their attempt to locate flour (often unsuccessfully). Customers feed data into the site to approximate the number of people waiting in the queue – the more people who update the site, the more accurate it is.

Countdown opened New Zealand’s first dedicated online store in Auckland to respond to the massive 300% surge in online shopping demand. The 8,800-square-metre store is located in Penrose, and is operating 24 hours a day, seven days a week to fulfil more than 7,500 orders per week.

The shift to alert level three has spurred on further innovation in retail, as brick-and-mortar stores look for ways to adapt that will allow them to continue to trade when restrictions won’t allow foot traffic.

New Zealand Made launched a custom website to help New Zealand retailers that have inventory ready but haven’t been able to open to take orders until now. These retailers were ready and waiting to send orders out at 11.59pm on April 27, as soon as the level four restrictions end. #ShopKiwi, New Zealand.

The Warehouse Group recently announced it is allowing contactless click-and-collect from The Warehouse, Warehouse Stationery, Noel Leeming and Torpedo7 outlets from this week.

“We wanted to offer Kiwis another way to shop safely as we transition into alert level three,” says The Warehouse Group chief executive Pejman Okhovat.

“While we can’t open our stores during this time, we can offer another safe and secure way for Kiwis to shop our complete online range that’s free, except for oversize items, and easy to use.”

It’s also trialling drive-through shopping at four of its Auckland outlets, which will also allow access to orders made through online retailer TheMarket. Bolstering its online offering, TheMarket has partnered with grocery and ready-made meal businesses FoodboxHyperMeat and Jess’s Underground Kitchen for this initiative.

Meals on wheels

New Zealand’s largest online restaurant table booking website, Restaurant Hub, has launched a new service to enable customers to order click-and-collect meals from restaurants. The service has had a huge amount of interest, with 140 restaurants and cafes opting in over the first weekend.

Uber Eats’ refusal to reduce its standard commission charge of 30-35% has caused public outrage. Responding to this, prime minister Jacinda Ardern encouraged New Zealanders “who may be looking forward next week to accessing takeaway food to look at your favourite local eatery – and I do encourage you to support local businesses – and just look at whether or not they offer delivery directly themselves”.

Tim McLeod says the desire to help his favourite cafes and restaurants caused him to “pivot away from my day job” as a digital tech consultant and create Eat Local NZ as an Uber Eats alternative. He says the platform will charge restaurants just 5% commission and will pay drivers more than Uber Eats.

Car rental business Snap Rentals pivoted by bringing its usual services to a complete standstill. It launched an app that pairs its rental cars with its staff to perform personal grocery shopping services for customers. Chief executive Jamie Bennett says the delivery service has been so popular that he has had to take on new staff. He expects the service to continue even after restrictions ease up, in parallel with its car rental business.

The era of the webinar

A plethora of webinars have been set up to help New Zealand businesses use the time they may not be able to work for their businesses to instead work on their businesses. The IcehouseNZTech and many others have created great resources. I have curated a list of upcoming webinars (using the help of crowdsourcing) here.

My favourite has been a series being run by the Trans-Tasman Business Circle, which has attracted fantastic speakers to discuss “resilient leadership in challenging times”, ranging from ANZ’s Antonia Watson to the Reserve Bank’s Adrian Orr and Auckland mayor Phil Goff.

In a similar vein, Manaaki has tapped into a network of successful New Zealand business experts – both local and offshore – and paired them up with New Zealand businesses needing help and advice, all for free.

Manaaki released a video love letter to small businesses featuring prominent New Zealanders including Jacinda Ardern, Stuart Nash, Stan Walker, Joseph Parker, UFC world champion Israel Adesanya and New Zealanders of the Year Jennifer Ward-Lealand and Lance O’Sullivan – all showing support for the platform and small business owners.

“We will not stand by and watch it happen. We are Manaaki – your support network of business experts. Give us your questions and frustrations, opportunities, fears. Share your burden, and together we will find solutions.”

We’ve got to think

While not strictly business-related, this deserves an honourable mention simply because of its mental health benefit.

I live close to Auckland’s best (personal opinion) and largest park: Cornwall Park. While the park is usually open to traffic and acts as a reluctant thoroughfare between two busy suburbs, for the duration of the lockdown the entry gates have been locked to cars and the gates throughout the park left open to minimise the need to touch anything.

This has created a huge open space with roads, footpaths and the many fields available for pedestrians, runners and cyclists to spread out and physically distance themselves – a much-needed reprieve for those of us subjected to hours of indoor Zoom conference calls.

A team of five million New Zealanders has united against Covid-19 and made it through level four with amazing levels of compliance. As we transition to level three, it’s my belief that many of our businesses will come through stronger than ever – because they used the time provided by the lockdown to work on their businesses.

In almost any New Zealand business presentation, there are two phrases that are commonly used.

One is the Māori proverb: “He aha te mea nui o te ao? (What is the most important thing in the world?). He tāngata, he tāngata, he tāngata (It is people, it is people, it is people).”

Another is one made famous by the father of nuclear physics, New Zealander Ernest Rutherford: “We haven’t the money, so we’ve got to think.”

Covid-19 is testing all businesses, but over the course of New Zealand’s lockdown, the spirit behind these two quotes has really shone through.

Miles Hurrell: Fonterra weathering the storm (NZ INC.)

Miles Hurrell, chief executive of Fonterra, gave a Q&A through the Trans-Tasman Business Circle on resilient leadership in challenging times. Tim McCready gives an overview of what was discussed.

Fonterra started to become aware of the escalating Covid-19 situation in China in January, says chief executive Miles Hurrell. Fonterra mobilised its team to consider the impact Covid-19 would have on the cooperative’s business – including a large piece of work early on considering the New Zealand context.

“That is where it ramped up, as we started to see that the impact on New Zealand was going to be real,” he says.

“We really mobilised our crisis team – about a dozen people across our entire business came together.”

Hurrell says Fonterra responded quickly to the Covid situation, moving most of its workforce to Level Four working arrangements well ahead of government requirements.

“We decided to get people working from home early. Everyone is mobile now with communication.”

That was relatively straightforward with the corporate office and with farmers who are easily able to work remotely and often already operate in a situation where self-isolation is not much different – but a little harder for those working in Fonterra’s factories.

“Since we are making food, all our facilities around the world already have stringent food safety and quality controls in place. It was just a step up to add a two-metre separation and record the temperature of staff.”

It was these strict measures that Hurrell attributes to keeping cases within Fonterra’s workforce low. There has been less than ten Covid cases across its global network of 21,000 staff, with most cases being the result of people returning from an overseas holiday.

“The early intervention by Fonterra, and making sure that people come nowhere near a factory or office, meant that there was no cross-contamination,” he says.

Regardless of any shift in Covid alert level from the Government, Fonterra will continue to operate as if under Level Four conditions.

“We can’t have risk of disruption. We will stay with Level Four for quite some time,” says Hurrell.

Dealing with crisis

The crisis team is well versed. Hurrell says as unfortunate as it sounds, Fonterra has two or three significant events on an annual basis – although most of these do not hit the media.

“We see an emerging issue, we get on top of it, and we manage it 99 out of 100 times. The way the team is geared up now, it is almost second nature.”

One of the early risks identified early on from a New Zealand context was the impact on shipping containers and space availability through the ports. But Hurrell says Fonterra’s long-term relationship with Maersk and the Port of Tauranga meant they were able to get a commitment they wouldn’t be impacted.

Hurrell and the senior management team at Fonterra works alongside the crisis team to clear the runway – allowing them to make decisions on behalf of the business. Hurrell says that although he wouldn’t call work right now ‘business as usual’, there is a sense of calm whenever he goes down to visit the crisis centre.

Weathering the storm

Fonterra has been through a rough couple of years, with billions of dollars of shareholder capital wasted on its failed transformation strategy under the leadership of former chief executive Theo Spierings.

Hurrell says Fonterra got “a bit ambitious”, and under his leadership has reduced debt significantly and changed to be more targeted in what it does and focused on taking New Zealand’s goodness to the world.

He says this will help Fonterra weather the upcoming storm, and will put it in good stead as it refines its strategy.

“We’ve just started to look at what Fonterra looks like on the 5-10-year horizon,” he says. “That has completely changed. Some things will still be there, but Covid has made us recognise the world will be different.”

Hurrell says despite some commentators saying Fonterra should only be in a single category or in single markets – it is this spread and diversity that has helped it. He points to restaurant trade, and says if Fonterra was solely focused on those businesses it would now be in significant strife:

“But because we are in base ingredients, advanced ingredients that go into medical foods, retail products, as well as those food services that are now starting to come back on in China, we have had the flexibility when we see something fall over and that has really helped us.”

Hurrell says his main role in navigating New Zealand’s largest organisation through Covid is providing a sense of calm across the business – giving commitment and confidence to the team that although there will be bumpy roads along the way, Fonterra is well placed to get through the crisis.

He says that providing that sense of calm is important. “But you also have to let your hair down and have a Zoom call with your mates on a Friday and Saturday night – you need that outlet.”

Central-local urban growth partnerships needed for Covid-19 response (NZ INC.)

Infrastructure NZ’s Paul Blair tells Tim McCready that infrastructure investment and construction will play a major role in New Zealand’s economic recovery programme – but central and local government collaboration is required to make it happen.

Infrastructure NZ – New Zealand’s peak infrastructure body representing 140 public and private sector industry members – says the Government’s response for the infrastructure and construction sector has been quick, clear and commendable, but says now is the time for regional and central government to collaborate and tackle projects that will improve outcomes for the bulk of New Zealanders who live in major centres.

In a letter sent to infrastructure minister Shane Jones earlier this month, Infrastructure NZ chief executive Paul Blair recommends the Government establishes a $20b ‘national recovery programme’ of funding, over and above identified projects able to be accelerated by the Infrastructure Industry Reference Group.

It suggests that this programme of work – as yet undefined – could be rapidly co-designed and funded using rapid deployment techniques used post the Christchurch and Kaikoura earthquakes. The North Canterbury Transport Infrastructure Recovery (NCTIR) alliance and the Stronger Christchurch Infrastructure Rebuild Team’s (SCIRT) were award-winning, speedy and well-regarded programmes. It would allow the Government to have flexibility and co-design for the ‘new normal’, as opposed to only accelerating existing shovel-ready projects.

Blair says the priority for the national recovery programme long-term is to establish a “North Star” against which immediate and intermediate options can be assessed to ensure they align with a longer-term strategic direction. The letter outlines five components that will be critical to the strategy:

  1. A vision for where the Government sees New Zealand’s future, especially with the significant Covid-19 changes
  2. Long-term strategic planning to achieve the vision
  3. Funding and finance
  4. Regulations and incentives
  5. Delivery capability and capacity.

Partnering with councils

Blair says one of the ways this strategy could assist, is by partnering with councils which have a significant need for infrastructure investment but face substantial funding issues.

Rates provide an average of only 60 per cent of council revenues – which some councils are already choosing to freeze or cut. The rest comes from more commercial sources like developer contributions, fees for public services, or dividends from airports, ports, or stadiums. These too are being severely hit by Covid-19.

“Hard-hit councils require financial support from central government that is tied to shared priorities through urban growth partnerships,” says Blair.

To put the challenge they face into context, he explains that individually, New Zealanders pay roughly $1125 per year to council, but $15,250 to government.

“It’s easy to see that is not equitable when local government owns roughly 40 per cent of the country’s infrastructure – the same as central government – but only has about a tenth as much money to maintain and upgrade it.”

He says the growth councils – Auckland, Wellington, Tauranga, Queenstown, Hamilton – make up a majority of our population, and should be expanding their operations at this time.

“Under an all-of-government approach, councils should be the very definition of shovel-ready. But instead their revenues are going down, and unlike central government they can’t go and borrow more.”

He points to Tauranga City Council as an example, which recently announced that its revenue would be reduced by between 15-25 per cent.

The looming funding issue for Tauranga could see some $300m of housing-related infrastructure stopped. It cannot fund long-term planned capex due to cost increases, population growth and leaky building claims that would mean it would breach its debt cap without politically unachievable rates rises.

An NZIER report shows the 10-year impact of Tauranga City Council’s failure to invest in local pipes and roads could be:

  • a housing shortfall of 8,436 units
  • cumulative GDP foregone of $2,547 million
  • 1,580 – 2,320 construction jobs lost, worth an additional $118-$174 million of GDP foregone
  • house price rises of $702,082.

“If you give $1 of new income to a council, they can go and borrow $2.50. But if they lose a dollar, they also lose the ability to fund $2.50,” explains Blair.

In addition, the loss of this infrastructure would see significant lost opportunity for Crown revenues, impose further costs on the Crown (assuming accommodation supplement and other housing-related costs rise) and would lead to spiralling wellbeing losses.

Blair says the counterfactual is that if Crown gave $100m of new income to TCC, it could borrow an additional $250m, creating enough headroom for the capex to continue. The cumulative GST on $2,547m of GDP is $382m – significantly exceeding the Crown’s initial $100m investment.

He says that while central government funding is urgently required, this shouldn’t be seen as a ‘free lunch’ for councils. As with all good partnerships, both the government and councils will need to show partnership behaviours, and rapidly align on win-win national, regional and local objectives and outcomes.

“We all share a common goal to re-inflate the economy and adapt to the new normal. Urban growth partnerships are a core part of the Government’s urban growth agenda, we now call for these to be funded and delivered at pace.”

Infrastructure NZ says if the Government can replace, or even enhance, lost council revenue, then local works in local communities can restart at great speed.

“Local government is where some of the greatest need is and where the greatest leverage can be exerted,” says Blair.

“In these times partnership will be essential. Central and local government need to be working together, not at cross-purposes – he waka eke noa.”