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:
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.