Let the Mills die

Written By: - Date published: 1:03 pm, June 24th, 2021 - 13 comments
Categories: Economy, exports, food, tech industry, uncategorized - Tags:

From Kawerau to Nelson to Tiwai Point, our accelerated decline of heavy mass manufacturing factories continues.

You can still see hulking old dairy factories across Taranaki from pre-amalgamation days, and old concrete meatworks long dead from Balclutha to Patea. In many respects they built our nation.

Our economy is now burning off volumes of low-value precarious jobs by the thousand. Yet in regions double hit by tourism’s collapse and seasonal worker shortages such as Otago, Southland, and Nelson, headline unemployment is around or under 4%.

Measured by the marker of big factories closing, don’t be fooled into thinking that we’ve abandoned our heavy, bulk, low-value economy either. Here’s our big agricultural earners:

  • Dairy, at $19 billion of export revenue, heading for $20.4 billion in 2022.
  • Meat and wool, at $10.4 billion is going to decline again next year. Beef, lamb and venison will continue their growth, but far fewer projects using woolen carpets.
  • Forestry is still in a boom with an increase of 12.8% to $6.3 billion with a stronger harvest, high processing, and big demand from China and the United States.
  • Further strong growth in horticulture to $6.6 billion with bumper crops of Kiwifruit and Avocados.
  • Seafood will take a fall to $1.8billion with a big decrease in wild capture and weaker aquaculture export prices.
  • Broadly, food and fibre is a solid 82.6% of our merchandise exports, and a full 11% of our GDP.

On top of that is the refined agricultural products such as wine are going gangbusters at just under $2 billion exported by value last year.

Other than dairy, few of those industries need great big Kinleth-scale factories to keep on doing what they do so well for us.

Of those famous name paper mill factories we grew up with since World War 2 in Kinleith, Mataura and Nelson with companies like Oji, Orora, Norska Skog – none of them are going to survive. Industry revenue of pulp, paper and paperboard industry has fallen hard over the last five years: no one wants it. Consumers and publishers want their written content through digital channels, so out the door goes newspapers, magazines, and even books. That simply accelerated with the COVID-19 pandemic.

Compare this to our ICT sector, which at $2.1 billion early last year had already overtaken wine exports by value.

Does this require rural economic transition plans with local government, iwi, local service groups, and business to help find redundant workers and displaced families to find new futures elsewhere?

Or with headline unemployment to below 5%, regional unemployment to below 4%, and as per 2020 policies can be rolled out for time-specific redundancy: let the market do the work it’s already doing?

Of course, both.

Government and industry are neck deep in Industry Transformation Plans (there are bunches of them including Agritech, Construction, ICT, Food and Beverage, etc), the Tourism Futures Taskforce, NZScreen Production Grants, immigration policy settings, and more. A 1-page summary of the transformation plans and levers government is already operating can be see in this summary of sector-based economic development.

How different is this to the structural transition that laid waste to rural centres in the late 1980s and early 1990s (Kiln Operator for Crown Lynn was my first job out of school)? One difference is in current and forecast strong economic activity, which has already seen growth of 1.6% in the first three months of this year, better than when Treasury last forecast 2.9% growth this year and average 3.4% over the remainder of the forecast period. Unemployment is down to 4.7% trending down to 4.2%.

For the Reserve Bank printing $100 billion and government spending of $60 billion in recovery, arguably that’s not a massive national” inflection point” return on investment. Yet grow we do despite shortages of workers, energy, and supplies.

We have had towns addicted to factories generating bulk and low value exports, and in return those great factory shareholders have not left behind sparkling careers, nor vibrant towns, nor socialised benefits, nor on the whole clean rivers and land.

Let the old rural factories die.

13 comments on “Let the Mills die ”

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  1. Clive Macann 1
    24 June 2021 at 1:17 pm

    Places like Kawarau will always struggle even further than they have in the last 20 years. Trying to reinvent the mill is really a lost cause.

  2. Byd0nz 2
    24 June 2021 at 2:35 pm

    Let them all die eh, what, the people too? Sounds like your spouting Necro Politics.

  3. barry 3
    24 June 2021 at 3:20 pm

    The problem with letting the mills die is that they provide a steady source of employment for regional towns. A lot of the replacement jobs are seasonal and/or transient and nearly all poorly paid. The mill jobs are often semi-skilled, but still reasonably well paid, and there are a lot of secondary jobs depending on them.

    They are added-value sites. Instead of exporting our raw produce we are processing it in NZ. The exporting of raw produce leaves money in the hands of Fonterra, industrial diary/forestry/horticulture, and not much filters down to the ordinary people. It exacerbates inequality.

    Without regional employment sites we expect everyone to move to the cities where we spend our time in office buildings, with an army of support workers enabling our commutes and feeding us coffee.

    So perhaps "let the mills die", but make sure that there is a replacement regional strategy, that provides opportunities for people to live stable, fulfilled lives outside the main centres.

    • Hunter Thompson II 3.1
      25 June 2021 at 9:05 am

      If the mill dies the Tarawera river will cease to be a filthy black below the mill outfall.

      As I understand it, the mill was allowed to pollute the river by its special legislation.

      There will be environmental gains. We might come to resemble that "100% Pure NZ" you see in those TV ads.

  4. Pat 4
    24 June 2021 at 3:37 pm

    On the flip side, every time we lose one of these industries we increase our reliance on imports in a world where supply chains are becoming increasingly unreliable (especially to the end of the line) and expensive, and our skillset to maintain that which we need (and have) has diminished to the point of incapability.

    Rather than increasing this trend we should be redeveloping our ability to provide and maintain that which is critical to our society and leave the imports to the nice to haves….and toilet paper isnt one of those.

    • greywarshark 4.1
      24 June 2021 at 4:11 pm

      Pat Good to read an attempt at discussion on living to our needs and not some wild and wacky futurist notion. And I liked the portmanteau word 'necropolitics' from Byd0nz, The Douglas virus is developing a new deadlier variant it seems.

      Douglas and his fellow travellers would like the chink, chink sound of this:

      https://www.stuff.co.nz/business/116750610/feeling-wealthy-new-report-shows-you-should-be

      …At the start of the century, wealth per adult in New Zealand was US$71,630, placing it 24th among the leading 100 economies.

      But steady growth had lifted it to fifth, behind Australia, but ahead of Singapore and Canada. Median wealth of US$116,440 is also fifth highest in the world. …

      and

      https://www.stuff.co.nz/business/300340466/new-zealanders-fourthrichest-in-the-world

      The global number of millionaires increased by 5.2 million to 56.1 million. The ultra-high-net worth group with net worth of more than US$50 million, grew in number by another 24 per cent.

      Last year was the first time that more than 1 per cent of all adults were, in nominal terms, US dollar millionaires.

      New Zealand has 214,000 people in the top 1 per cent of global wealth and 1.97 million in the top 10 per cent.

      The all-singing, dancing economy – don't worry about the jobs, we can go on prostituting ourselves to the world – look in the right places, shine the light on the right figures, and everything looks good. Too bad about a huge mass of people – growing like a mass tumour – as tech and robotics replace humans.

  5. RedLogix 5
    25 June 2021 at 1:03 am

    In the meantime I got paid more last week than most of you earn in several months commissioning a big new heavy industrial plant.

    In another country of course.

    • Ad 5.1
      25 June 2021 at 7:54 am

      And the easiest way in New Zealand to make a medium sized company is…

      … give them a big one and wait a year.

      • RedLogix 5.1.1
        25 June 2021 at 9:14 am

        The best way to understand the closure of the old dairy, meat, paper and aluminum works is to look at the underlying tech trends in each industry.

        Newsprint (the backbone of the old paper industry) has been displaced by the internet.

        Amalgamations in the dairy and meat industry have been heavily driven by automation.

        Metals processing depends on the availability of both a skilled workforce and plenty of cheap (preferably clean) energy – both of which are a diminishing resource in this country. Lacking much of a mining resource NZ will never achieve the scale necessary to sustain this industry – compared to say Australia.

        I've seen all of these trends up close and personal – they speak to the specific circumstances and lifecycles of these particular plants and industries. They don't forecast the demise of heavy industry generally, which right now due to the predictable consequences of COVID, is causing massive supply chain shifts everywhere and a huge boom in new investment.

        Right now anyone with a decade or more of heavy plant automation experience is in serious demand globally – I literally get one or two phone calls a week from people trying to poach me out of my current project.

        [Removed “The” from user name]

        • greywarshark 5.1.1.1
          25 June 2021 at 12:10 pm

          Good old Red (I have the idea that you are over 55). You, and all the other deadheads can see into the future darkly (reference to a line from the Bible) when you say this:

          Newsprint (the backbone of the old paper industry) has been displaced by the internet.

          I respond, darkly, with a question; what will happen to our once busy society when everything is done through the internet? What will constitute society then? We'll be pale wishy-washy things attached to our computer, perhaps with it grafted to an arm, with no idea about humanity and its good and bad points, complaining to some Great Cloud in the Sky about our dislikes and receiving little homilies to cheer us up in return. We will have to set up little groups ourselves to do creative things, with, would you believe it Our Own Hands, physical stuff you know!

          The others who haven't sought healthy community through joint creation, salving desires for human connection with infrequent wild dancing and sensation-producing activity tingling their nerves, with brief interludes of sex that provide a modicum of human warmth.

          We will be afraid to go outside because of the mass of unemployed, unhappy people who can find no satisfaction or purpose in life, and no-one and no charity or religious body that actually cares.

          Why do I expound so confidently on this. Because it is already happening and we presume things will get better, yet keep doing the same old things. As the Daleks might say, Conform, conform, conform before they Exterminate .

          • Ad 5.1.1.1.1
            25 June 2021 at 8:48 pm

            It will look pretty much like the blog community you are commenting in.

            As well as communities on Teams and Zoom.

            Also Facebook, WeBo, Snapchat, and all those interwebby things.

            Analogue space is by comparison miserable.

        • Ad 5.1.1.2
          25 June 2021 at 5:19 pm

          Largely the NZ era of mega-factories is dead, and that's a good thing.

          We are increasingly a very different set of industry sectors to Australia.

          So you just keep doing your good work.

  6. Christopher Randal 6
    25 June 2021 at 6:27 pm

    Certainly get rid of paper mills (where will our toilet paper come from then) and replace them timber mills to process the logs in NZ so that we can build more dwelling units and get rid of Carters near monopoly

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