With the simultaneous decline of Southland’s Tiwai Point aluminium smelter,
the retrenchment of Waikato/South Auckland’s New Zealand Steel’s Glenbrook Steel mill (noting it was our own Sir Woolfe Fisher who cracked the code that would enable iron sand smelting),
and the near-total shrinking of NZ Refining in Whangarei’s Marsden Point – not forgetting the regular job-rich multi-hundred-million upgrades these plants always need
it’s not unreasonable to ask what will happen to the 10% of New Zealand who are employed in major manufacturing plants.
There are a few, just a very rare few manufacturers who remain New Zealand-owned and who return their profits locally to Kiwis. I’d like to give a shoutout to Douglas Pharmaceuticals in Henderson here.
For the regions that are affected, just as we went through in the early 1990s, the jobs there are well paid, often well unionised, and they will never be replaced by anything equivalent. The first full time job I ever had was as a kiln operator in Crown Lynn – fully unionised with triple time on a Sunday, and free dinners for the nightshift. Auckland’s New Lynn was a thriving centre of heavy manufacturing. Now, despite over $300 million of major town centre renewals in the 2010s, New Lynn is not an employment centre at all and is reduced to being a squalid little village of used car yards. That’s what awaits Waiuku, Bluff, Invercargill and Marsden Point unless pretty major intervention is taken.
What is noticeable in all three major businesses is that there has been plenty of market turbulence, commodity flatlining, and industrial warnings about their demise, but no plan set in place either locally or nationally to respond to the employment and social devastation that their shrinkage or closure will generate in their communities and regions.
All three businesses were specifically formed from policy groundwork in the late 1950s to promote a self-sufficient industrial and manufacturing base. As economist Brian Easton notes in The Nationbuilders, they “laid the foundation for the major export diversification which occurred in the 1970s” (p. 165). When W.B. Sutch talked about this possibility he gave New Zealanders the confidence that non-pastoral exporting could succeed.
Even if you don’t buy the need for even a modicum of New Zealand industrial self-sufficiency, these businesses have kept tends of thousands of hot meals served under rooves whose mortgages were paid by good industrial salaries. The fact that there is no plan to turn this highly skilled and paid workforce into new productive enterprises is a crime of the highest political order.
Enter the Provincial Growth Fund.
Have a trawl through its documents, purpose and successes. This is a $3 billion fund set up to “help grow economic development in the regions”. Post Covid, much of its unspent fund has been repurposed on shorter-term projects who (so their local government proponents claim) are “shovel ready”.
The successes of this fund have been massive for the smaller town centres and businesses that it was set up to serve.
In time we will be able to measure the collective impact of these projects as softening the terrible economic blow of our global economic crisis through highly targeted investment in stuff that was good for the jobs of our region.
But we are now facing the largest enforced economic restructure to beset us since the Great Depression. There is of course no one silver bullet to fixing our massive predicament. And we remain owned by our Australian-owned slavery within our Finance, Insurance and Real Estate sectors.
Yet we should be intensely proud of the degree of sector diversification we have achieved since the Knowledge Wave conference under the Clark government. Screen production, tourism, the ICT sector particularly gaming, biotech – each of these areas have seen industry bodies and policy responses evolve to respond to their massive growth.
But the regions are now in desperate trouble both with the collapse of tourism in some areas and the collapse of heavy industry in others.
MBIE needs to be instructed to redouble its efforts to expand, not contract, the mandate and funding of the Provincial Growth Fund in the new government to re-build after the economic earthquake we are in. It’s larger in scale and effect than the old regional industry programmes available in the last two terms of the Clark government. It’s larger in scale than anything since Think Big.
What we used to have in New Zealand was butter and logs – it was 90% of what we exported in the 1940s, and still farming was about 55% of our exports in the 1990s. Sixty years ago a really deliberate set of policy interventions led by strong bureaucrats and by cross-party leadership and with the inclusion of unions and industry led to alter our course, generating high quality jobs and thriving regions.
The era of those industries appears to be coming to an end.
What we need now, for this time and this crisis, is the bold policy framework that can forge that same degree of boldness, enthusiasm, and creativity to rebuild the Provincial Growth Fund to something truly up to the task that faces us as our remaining heavy industry closes down.