Photographs by Sabrina Hyde

It’s “lucky money”, they say, in the sense that there was competitive tension in the sale process – three offers being negotiated right down to the end.

And also Lucky Money because the business has been a “great ride” rather than a hard slog; because they’ve worked with good advisers and mentors; and because they really identified with the buyer, listed New Zealand company Ecoya of Geoff Ross and The Bakery renown.

But whether this was luck earned, as opposed to luck just granted, is definitely up for debate. There’s a saying that luck is what happens when preparation meets opportunity, and also another that some people make their own luck.

Having made it out the other side and seen through the 31st of December as the last day of their earn-out period, there’s time to reflect on prevailing attitudes toward high profile New Zealand company sales.

“You know interestingly enough, people had a slightly negative tone about it [the sale],” Gibbs says. “But you say ‘well actually we’ve retained a significant shareholding in the new business going forward,’ and all of a sudden their whole attitude changes to ‘Oh, have you? Oh right’.”

This brings up a common New Zealand attitude that perceives selling as abandonment, or an inability to recognise the difference between selling up and selling out.

“They say, ‘Oh, so you’re not sort of selling out and running away and spending all your money overseas and buying yourself 10 new cars’.”

The sale process was a whirlwind – “the most fun I’ve ever had” according to Gibbs – set in motion by a common realisation from both sisters in February 2010 that it was time.

Knowing the process was likely to take a long time, and that a buyer would likely want to retain them for a while, they set about writing the information memorandum, assembling a team of commercial, mergers and acquisitions experts and lawyers who drew up a list of companies they thought could be interested, and then approached them.

“You don’t want to do something as big as sell your business without having someone that really knows what they’re talking about,” Gibbs says. “Everyone that wanted to buy us really knew what they were talking about as well. We weren’t selling it to our next door neighbour.”

The lively, entrepreneurial feel of that non-next door neighbour Ecoya, was a key deciding factor in the sale process with regards to their staff.

“We’ve spent the last 10 years finding all these people that are like-minded, positive, giving people,” De Groot says. “Our philosophy is that you always hire givers not takers and so they’re all really giving, generous people and they’ve given a lot to Trilogy. And you wouldn’t be a human being if you didn’t think ‘well, what was the impact on them of the sale of the business and how are you best going to give these guys a future’.”

Gibbs says the staff adjusted immediately and quite thoroughly to the idea of the sale, largely because it was being sold to other entrepreneurial people and not to a big corporate.

And while Gibbs and De Groot are sisters, they never thought of Trilogy as a family business, so they never considered implementing a family succession. They always knew Trilogy was a start-up, and one that would be either sold or passed to a new CEO.

The obvious question now presents itself – what’s next? They’re both taking some time for travel and contemplation before making the next business move.

“I think we’ve got to take that opportunity, it’s there for us, we’ve got the ‘free time’ if you like and why wouldn’t you?” Gibbs says. “We had to do it. You’d be silly to climb out of bed and go work somewhere else.

“I love business, and so I think something will come along, but it’s hard to force that kind of thing and make it successful so we’d prefer to let it happen. I do know I don’t want to be [involved in the] operational [side of business] ever again.”

De Groot adds that planning and taking a trip is a way of transiting – “If you just woke up suddenly and had nothing to do for the rest of the year it would be quite…It’s a way to give yourself a little project without making it too much.”

As for their return, they’re keeping an eye out on the changing business landscape – including the retiring baby boomers and the excess supply of traditional businesses that will likely come on the market in the next few years. “It will be really interesting to see if a few do sell and fresh eyes take them and renovate them, innovate them, then maybe that becomes the new paradigm for business growth. That you get hold of an old family business, dry cleaning business or something, and turn it into this cool service-orientated luxury brand,” De Groot says.

In November 1976 – when ABBA was top o’ the pops, Ford Zephyrs were the hoons’ choice and Muldoon was Prime Minister – a typical young Wellington couple packed their cords and headed to Australia.

They were in the first wave of a flood, soon joined by almost their entire group of friends.

Between that year and 1982, 100,000 Kiwis settled across the Tasman. By mid 2010, that number had soared to an estimated 566,815 – 14 per cent on top of our four million still at home.

In the mid 1970s Australia offered opportunity, more money, sunshine, better beer and an escape from the greyness of a hidebound outpost of England slowly awakening to a unique Pacific flavour.

Those economic factors and the weather still apply, although we have discovered wine and a vibrant Wellington has become Lonely Planet’s coolest little capital.

In the mid 1980s, the couple swam against the still strong tide and returned home with a newborn. But none of their compatriots did.

They are widely scattered, Aussies now. One is a multimillionaire property developer on the Gold Coast, another an Outback mechanic, one sells cars and drinks too much, another is a Perth-based project manager on oil rigs.

For the Wellington couple, the dream did deliver.

He went from earning a measly 80 bucks a week learning his craft on a suburban newspaper chain, covering potholes and progressive association AGMs, to half as much again plus expenses on Australia’s biggest circulating newspaper, the Melbourne Sun. That was thanks to an Invercargill-born chief of staff, Neddy Livingstone, who hired pretty much any Kiwi who walked in the door, however green.

She put 10c in a bulky red public phone in a café, rang a city hospital and was promptly hired as chief cardiology technician in the then infant field of echo imaging. Melbourne was marvellous then.

Now the couple visits often and revels in friends and the parks and markets and trams, but the relentless traffic, the endless urban sprawl, astronomical real estate prices and pressured jobs do not appeal.

One of those 1970s refugees recently made a wistful visit and took a lot of interest in local property prices. He complained of pre-dawn ramp rage among testy boaties queued up on an eight-lane launch ramp in Western Australia. The mood was not improved by the slim fishing prospects in over exploited waters.

He wants to return but is nervous about overcoming 30 years’ absence.

Maybe if we stopped beating ourselves up about our supposed poor economic performance and were happy to wear black but not let it darken our souls, more expats would be keen to return home.

If we were less inclined to gloominess, fewer might abandon ship in an oft elusive search for a better life.

Wellington was a dreary place until its weather beaten inhabitants decided to be positive about living there. There are shades of that in our wider attitudes to New Ziland, as our Prime Minister calls it.

God knows how Southland inhabitants put up with the sniggering from the rest of the country whenever Invercargill is mentioned. Maybe they’re too busy getting on with producing a disproportionate amount of the country’s wealth.

Palmerston North cops it too. And Hamilton. We are the masters at putting ourselves down, possibly top of the OECD in that regard.

Wealth and productivity are not the only significant measures. This country, so practiced at peering into a half empty glass, has much to be thankful for and could use some other comparisons.

America is a vibrant and diverse country, the world’s richest and most powerful. It is also debt-ridden, mean and vengeful, and 44 million of its citizens live below the poverty line. That is why so many thousands live on the streets and panhandling is rife.

Australia’s wealth is built on its mining and a two-tier economy is emerging, with the retail and manufacturing sectors struggling. The “lucky country” has a huge vested interest in continuing stability in China, their major market.

Autocratic government and human rights repression are good for business.

Any upheaval in China and disruption of its extraordinary growth will have a profound impact on Australia.

In Europe the Euro is sinking, Greece and now Italy are joining the porcine basket cases and Britain is on hard times.

Yes, of course we can and must do better; look beyond the boat, Beemer and beach house (although that looks pretty good to most of us) to nurture our innovators and build our prosperity, if only to keep the boomers in style. But simple economic rankings do not do

justice to our quality of life. This is a fair, tolerant country where we still care for our fellow citizens – witness the remarkable outpouring of support for a shattered Christchurch. It is hard to get rich – at least by legal means – but you do not have to step over the homeless and beat off beggars in the streets and no one starves.

The fishing is still pretty good too.

Tim Pankhurst is chief executive of the Newspaper Publishers’ Association.

–

Originally published in IN-Business March/April 2012

Words by Nina Fowler
Photographs by Sabrina Hyde 

Financial Literacy and Retirement Commissioner Diana Crossan has lived in the same house, on a narrow street above Wellington’s Botanic Gardens, for 32 years. And as it turns out, home ownership is one of the next items on her agenda.

Buying a house, that cornerstone of the Kiwi dream (and many Kiwis’ retirement plans), is about as far out of reach as it should be, she says. If housing affordability figures get worse, the commission will look into it as part of its next three-yearly review of New Zealand’s retirement income.

Giving good advice doesn’t mean the government will listen. On John Key’s refusal to lift the superannuation age (a recommendation of the 2010 review), Crossan, aged 62, says she’s happy just to have kicked off the conversation.

“I mean, I’ll be disappointed if I’m lying at the beach in 10 years time and somebody says ‘we’ve got to raise the age, why didn’t we do it in 2010?’,” she says, “but the fact that’s it now on the agenda, that it’s now being discussed, is the most important thing for me.”

The ability to work through bureaucratic systems to get things done is common ground in an unusual career path.

Crossan studied geography then spent 13 years as a probation officer, working in a system that carried with it some bizarre sexism – as she told NZ Management journalist Vicki Jayne a few years back, court protocol at the time meant she had to be addressed as “Mr Probation Officer”.

Many things have changed since then. Others haven’t. “We still have so few women on boards,” Crossan says. At a recent event for business magnate Sir Richard Branson in Auckland, she noticed about 20 people at the top table and just one woman. “I thought, ‘we just don’t get it, really, do we?’”

After leaving probation work, she helped draft equal employment opportunity rights into the 1988 State Services Act. She remembers it as a proud success but a hard one. The Public Service Association had called a general strike to protest the new legislation, and Crossan and her colleagues were torn on whether or not to join.

“I actually went past the protestors and into the building to help draft the legislation,” she says. “We made a call, as a small group of people, that it was better to get the words in the act so that people in the future could use it.”

In 1997 she switched to the private sector as a manager for AMP. “I went from one bureaucracy to another. They just have slightly different rules.”

In her first month there, she phoned up “the boss” and asked for a meeting about her job. “I said ‘have I got it right?’,” she recalls. “He said ‘no, no, this is this, that’s that’ and I said ‘well you should go down to the fourth floor and tell them’.”

It wasn’t the done thing then, probably still isn’t today, but it paid off. She went on to spend another four years with AMP, including a year in London managing a merger affecting 4.1 million customers.

Now settled in Wellington, she splits her time between the commission and several governance roles, including as chair for two non-profit organisations, Refugees in Business and the Orangi Kaupapa Trust.

Upcoming work, as well as more financial literacy tools for the “really, really old”, includes research into the implications that stages through a woman’s life can have for her retirement income. KiwiSaver’s “great”, Crossan says, but taking time off work to have children, plus the gender pay gap, means women are likely to end up with considerably less income than men in their retirement.

On home ownership, Crossan says there are two options: find a way to make buying a home more affordable for more people, or change the way we approach renting.

She has friends in Paris who’ve had the same rental apartment for 50 years. “There’s no suggestion that they’ll ever be kicked out. They can pass it on to their daughter,” she says. “We just haven’t got that thinking; we haven’t got the financial structure for that. So we either have to go one way or the other and we have to have that debate, that discussion. What do we want?”

Crossan has another year to get that conversation, and others, up and running before her current contract finishes up. After that, one thing is certain. “Like most people, I don’t intend to retire,” she says. “At this stage, I’ve got lots of things to do.”

–

Originally published in IN-Business March/April 2012

Words by Greg Bruce
Photographs by Isaac de Reus 

The project manager doesn’t seem all that convinced he should be showing us the robot research hub. “I’m not sure how tidy it is,” he says. “And I don’t know if you’ll be able to take photos.”

It turns out to be quite untidy, and also unlike anything at any resthome anywhere in the world, and therefore ideal for photos.

The robot research hub is a three-bedroom show home behind a residential block at Selwyn Village in Auckland’s Pt Chevalier and the base for a study into how robots can help care for the elderly. It’s a collaboration between the University of Auckland and four Korean organisations, including Korea’s largest government-funded research institute ETRI. This morning, there are around 10 people working in the house and only slightly fewer robots.

There are research nurses, research assistants, technicians, PhD students, project managers and content developers here, working with robots made by three separate Korean companies. At the moment, the robots are effectively clever computers that do things like taking your blood pressure and vital signs, making Skype calls and showing you funny cat photos or video clips of Susan Boyle.

But, if all goes according to plan, in a few years they might just put some New Zealand researchers and companies at the forefront of the enormous elder care industry – and they might also save your life.

In the show home’s tiny kitchen, two of the researchers are trying to make morning tea. One of the robots – known as a Guide – is right in the middle of the kitchen. It’s bigger than either one of them and is clearly in the way, but they seem not to even notice it.

Down the hallway, in one of the bedrooms, three Korean researchers are working with three partially assembled robots. Across the hall, the toilet and bathroom are piled floor to ceiling with empty boxes, packaging and other robot detritus. More detritus is scattered on the floor throughout the house.

The project manager, Ben Robins, speaks briefly with three Korean engineers, then turns back to us. “Yeah, sorry, no photos,” he says.

It’s a shame, because it’s an incredible scene: a small retirement village apartment packed with ambitious academics, engineers and robots.

–

It’s been called “the age quake” and ”the silver tsunami”: the rush of baby boomers into their retirement years. In New Zealand today, one in eight people is over 65. In 2025, it will be one in five. The numbers are similar around the developed world – in the case of the United States, they’re almost identical.

As we age, we often lose the ability to do the simple tasks that living alone requires: taking medication, turning off ovens, locking doors, closing windows. We solve the problem by putting our elderly into care, which is expensive and dislocating and difficult.

Elder care costs are already starting to spiral. By the middle of this century, an estimated 67 per cent of healthcare costs will come from the over 65s. Many developed countries are pursuing a strategy of “ageing in place” to allow the elderly to remain independent and reduce the burden, although at this stage, nobody is quite sure how this is going to work. The market, though, is huge. Already, in the United States, $100 billion is being spent annually on ”care in place”.

For organisations able to find ways of making the concept work, there is a massive opportunity.

As unlikely as it may seem, New Zealand has emerged as a centre of this effort and at the centre of that centre is Associate Professor Bruce MacDonald, a robotics expert from the University of Auckland.

When he first travelled to Korea to discuss robotics as part of a New Zealand trade delegation several years ago, it set in train a series of events that led directly to that robot-filled show home at Selwyn Village.

“I wasn’t keen to go,” he says. “I thought I would be talking for an hour, then spending the rest of the time listening to things I wasn’t interested in. I got dragged in, and I said ‘we’re working with robots and is anybody interested?’”

It turns out they were. Korea’s government funded research institute ETRI had been developing personal robots and were interested in developing a market. They were impressed with New Zealand’s expertise in delivery of health services and with the way the University’s research arm, UniServices, had been able to develop global products and get them implemented overseas.

An agreement was signed and the project was given an initial $5.4m funding from the New Zealand and Korean governments.

With the money secured, MacDonald began building a team, including specialists in robotics, engineering, psychology, gerontology and – crucially – outside companies who were interested in developing products and services around the robot.

He admits he’s biased, but thinks that the project is now the most advanced of its kind in the world. And the reason for that, he says, is collaboration.

The project is ultimately about creating a better quality of life for the elderly, but MacDonald says that’s a goal that can only be achieved by creating a system that is commercially successful and pervasive. It’s not just about science. It’s about science collaborating with business to create a product that is both effective and marketable.

“From a scientific view, it’s about gauging efficacy,” he says. “From a business view, it’s ‘does it provide value?’”

–

A woman shuffles into the Selwyn Village reception area on a walking frame. It’s a week or two after the robots have been brought in for their latest trial. She notices the robot in the corner and smiles: “Oh look! It’s Charlie!” she says, using the nickname researchers gave the robots that were brought here for their first research trials two years ago.

This robot, however, is actually not Charlie. It’s a new robot, made by a different Korean company. It’s nearly twice as big as Charlie, and where he was essentially a screen on a stick, this robot (researchers call it ”Guide”, although the factory paint job says ”Mr Aro”) looks like a slightly eccentric young woman, with its wide-set eyes, blushing cheeks and stylised Mohawk.

The woman stands in front of the robot for maybe a minute, staring, as if she’s just met an old friend. She calls it Charlie again and although she never stops smiling, she shows no desire to approach it.

Familiarity, though, leads to acceptance, and this is part of the reason why both Mr Aro and Charlie (known to researchers as Cafero) have been set up in public loca- tions around the village for this new trial and why other robots called iRobiQ are being set up in residents’ private apartments. When the study is fully underway, five different types of robot, 30 in total, will be in use at Selwyn, making it the biggest research trial of its type in the world.

The researchers want residents using them as much as possible so they can gather data with which to improve the robot but – just as importantly – so they can pass that data to their commercial partners to create applications and devices that will make the robot as useful as possible.

–

CEO of UniServices, Peter Lee has a favourite catchphrase: “Research is not just good for business. Research is good business.”

Research is certainly big business. UniServices has 700 staff and $125 million in revenue last year and it’s set for $150m this year, according to Lee.

It exists to commercialise research carried out at the University of Auckland by bringing together business and academia, and it has been a critical link in the robot project from the beginning.

“We said, ‘this is an opportunity for NZ Inc.’,” Lee says. “We’ll get a cluster of companies developing apps and devices around the framework of the robot and between the two of us [New Zealand and Korea], we’ll take the solution into the United States.”

So UniServices set up a website, Kumanu (Māori for care), to attract business involvement, and business development manager David Cotter then set about finding businesses who could both benefit the project and benefit from the project.

One of the companies he signed up is Lifetime Health Diary, a Kiwi company which produces software to bring together all of a person’s health information into one integrated page that can then be electronically shared among doctor, pharmacist, nurse, caregiver and whoever else needs to see it. It’s envisioned that the robot will guide the patient through the process of recording vital signs, then automatically transmit the updated Lifetime Health Diary document to the relevant people, exponentially improving the quality of their care.

Another Kiwi company, Pulsecor, is working with the project to test its high tech blood pressure monitoring equipment. The Pulsecor equipment is in use on many of the public robots in Selwyn Village and measures arterial stiffness as an additional way of determining cardiovascular health. Researchers are getting almost as many blood pressure readings from staff as from residents, but they’re not unhappy about that. It’s all data.

What the companies get from the project is the benefit of research feedback, allowing them to develop and improve the product for the elder care market. What the university gets is a smarter robot, with more applications and functions and therefore more research possibilities and more chance of success.

But, as much as the mutual benefits are obvious from the outside, academia and business are not always happy bedfellows. Even UniServices, whose role it is to bring the two together, acknowledges that their different goals – research outputs versus profits – can make for awkward interactions. But Bruce MacDonald has made it a personal mission to ensure that is not a problem with the robot project. He recognises the crucial role business investment has to play in the project’s success.

“We [researchers] might have good ideas,” he says, “but getting them into the marketplace is hard work. Sometimes people stand back and blame either business or the university for not crossing that gap. I just think we need to do it together. Not every innovation is going to make a product. It needs a partnership. We all need to try to make it happen.”

–

In one of Selwyn Village’s many communal lounges, there’s a modest chapel. Three or four rows of chairs face a table featuring a small, framed picture of Jesus. To the right of the table, amongst a tangle of wires and laptops, three Koreans are talking and tapping on their keyboards. In the roof, an electronic ZigBee network is being installed, which will allow robots to navigate their own way around the building.

Soon after the network is complete, when a resident falls a specially designed bracelet will send a signal to a robot – designed and built by Koreans, developed and tested by New Zealanders, using software and hardware from New Zealand companies, with input from psychologists, gerontologists, engineers, programmers, research assistants – which will then use the network to find its way to the injured person anywhere in this building, and will check to see if that person is okay. If they’re not, it will call for emergency help.

When the robot is commercialised and it saves its first life, as it surely will, chances are nobody will mention UniServices or Lifetime Health Diary or Pulsecor, or any of the countless researchers and academics that worked together to create it. Teams aren’t that sexy and “collaboration” doesn’t read well in a headline. But they won’t care. If successful, their work won’t just save lives; it will change the way we think about ageing. It’s not a stretch to say their work will change the way we live. That will be reward enough.

–

Originally published in IN-Business March/April 2012

Words by Katie Foley
Illustration by Rebecca Walthall

The Chinese are credited with the invention of paper money, which they named “Feiqian” or “Flying Money” because it was light and could be caught by the wind.

China’s modern day legal tender, the “Renminbi” (RMB) has been making headlines for the past three years. China’s historical currency restrictions, set in place to avoid “capital flight” – or rapid devaluation if investors were all to pull their money at the same time – are waning, creating opportunities for businesses both big and small.

With the meteoric rise of China as an economic power, the world’s largest exporter, second largest and fastest growing economy and all the other oft-quoted statistics, the RMB is being hailed as the next alternative in trade, investment and reserve currency, akin to the Greenback.

But before that can happen, serious changes need to occur with their restricted currency to make it more attractive and “convertible” from one currency to another. The upside is that change is already happening – fast.

Large multinationals the likes of McDonalds, Unilever, IKEA, Nokia, Volkswagen and Caterpillar have raised millions since relaxed regulations have allowed them to issue so called “dim sum” bonds to raise RMB for their Chinese expansion and investments, allowing them to reduce their reliance on the volatile US dollar.

Closer to home, Fonterra raised ¥300 million (NZ$56million) in June 2011, the first Australasian corporate to raise RMB via the capital market.

Head of Trade and Supply Chain at HSBC Gary Cross says this move by Fonterra is key to showing the Chinese their commitment to the market.

“The Chinese particularly respond well to that because they’re showing that they’re there for the duration, they’re not there to come and go,” he says.

Most New Zealand companies so far have a “wait and see” mentality about the potential RMB offers their company, despite the rate at which progress is happening.

“A lot of people are just seeing it as some- thing that is going on, and we’ll worry about it at a later point,” he says.

The key potential benefits for New Zealand companies of using RMB are both hard measures around pricing advantage and access to a wider, more diverse buyer base, as well as a softer side – showing commitment to China by dealing in their currency.

Early experience has shown that exporters who put up two prices – an RMB price and a US dollar price – in order to test the waters for pricing advantage may find they avoid the currency fluctuation premium that’s factored into invoices to allow for movement between RMB and USD.

“A lot of companies are heavily, heavily reliant on the success of China, so if they can eke some advantage out of that, it helps to offset some of the risk by being so reliant on one market,” he says.

This is particularly pertinent for smaller companies, where small gains made in pricing have more of an impact because of their scale.

“In a lot of respects, the advantages that are to be had probably have more of an impact on the small guy. They’re the ones that can really leverage it for all it’s worth.”

And when it comes to buyers, not all Chinese companies have access to foreign exchange – they may trade only domestically in RMB. Being in a position to deal in RMB could potentially give New Zealand companies access to a wider and more diverse array of buyers.

It’s a sentiment shared by Asian Sales Manager Adrian Gray of lumber exporter LumberLink, who is currently “keeping an eye on it [RMB] and we will see how it unfolds.”

They started investigating the potential to use RMB to settle their cross border trade with China several years ago.

Currently the business they do with China is split approximately 40 per cent with companies that manufacture for domestic Chinese consumption and 60 per cent with companies that use LumberLink’s product for re-export, while allowing for the many companies that do both.

With the intense squeeze on margins for re-exporting companies, it’s likely more Chinese manufacturers will turn inwards to their own burgeoning middle class.

“I think as the world unfolds we will hopefully see more internal because the re-export to economies like the US is pretty tough,” Gray says. “We know the Chinese margins for the manufacturers that are exporting is appalling, they’re under huge pressure all the time. The retail sector in the US just pounds those guys down on pricing, so they’re running pretty skinny and we are seeing more of those people are going towards more domestic.”

But for LumberLink, every initiative they take on must be customer driven, and they aren’t seeing Chinese importers knocking on their doors asking for prices in RMB – yet.

The 2011 HSBC RMB Cross-Border Trade Settlement Survey showed that nearly eight in ten businesses in Mainland China that had not yet started to use RMB to settle cross-border trade were planning to use or adopt it conditionally in their future transactions.

And HSBC in-house estimates predict that more than US$2 trillion or 50 per cent of China’s total trade flows with emerging markets will be settled in RMB by 2013 to 2015.

All indications are that this is a fast moving space. The Chinese Government’s initial toe in the water came in April 2009 when they started a pilot scheme allowing specific exporters and importers in Shanghai, Guangzhou, Shenzhen, Dongguan and Zhuhai to use RMB to buy and sell their wares. In June 2010 the scheme was expanded to cover 20 provinces.

July 2010 saw the foundation of the offshore RMB market in Hong Kong that allows the likes of Fonterra to raise millions of dollars worth of RMB for their Chinese expansion. In January 2011 it was announced that all mainland enterprises were now allowed to make overseas investment in RMB.

Cross says with New Zealand’s vested interest in China’s economic success, investigating RMB and its potential uses needs to happen sooner rather than later. He predicts 2016 will be the year the RMB becomes fully convertible with no restrictions and 2020 as the year the RMB will become a reserve currency alongside the Greenback and Euro.

“We’re a nation built on trade, and we’re reliant on the success of China to be a successful nation,” he says.

“The fact is that our exporters are not competing against other New Zealand exporters, they’re competing on a global stage, so any advantage, anything that enables them to be more competitive on the global market, is going to be advantageous for them.”

–

Originally published in IN-Business March/April 2012

Story by Carolyn Brooke
Photographs by Justin Aitken 

Buyers started knocking just months after Piako Gourmet Yoghurt’s small factory opened in January 2009. Some serious, some not but the bigger the company got, the bigger the callers were. Owner Shaun Jacka says selling just isn’t an option yet. “I’ve always had a strategy in mind, I’ve always wanted to get it to a certain level and then look at my options,” Jacka says. “It’s basically a four point strategy and we’re just starting stage three/ending stage two.”

Flying under the radar as much as possible was an initial strategy but proved difficult when Fonterra tapped Jacka on the shoulder. “When they come calling you don’t ignore them.” Fonterra liked what they saw and were keen to get involved. “They recognised we were young guys, making mistakes and finding our way but who also didn’t just want to sell out.”

A distribution deal with the dairy giant was a year in the making but Jacka says it is a perfect arrangement as Piako keeps its identity. “We do what we do well which is make a great little gourmet product and they do what they do well which is take that and get it onto as many shelves as possible and into as many mouths as possible.”

Keeping the gourmet factor is important no matter how big the company grows. Just four of Piako’s 11 flavours are sold in supermarkets with the rest saved for gourmet stores such as Nosh Food Market and Farro Fresh Food. It’s unlikely to change anytime soon either.

“It’s a nice way to support our small gourmet stores that have supported us – if they can have flavours that others can’t have,” he says. “We’ve worked very hard to keep our Noshes, Farros and our small gourmet stores on side. People discover us in the small stores.” Exclusive limited edition flavours and specials are also done from time to time.

Jacka started the company after licensing a recipe from the Queensland Yoghurt Company while living there. Initially he imported and repackaged it. With 250 kg going in the first weekend at the Takapuna market it became clear people were willing to pay a good price. About five other gourmet makers have also since entered the market.

“Before it was charging $4 to $5 a kilogram, we were charging $12 a kilogram and no one ever thought you could do it,” he says. “We knew the gap was there but we didn’t know just how big it was.” Jacka says it’s particularly satisfying to see the frozen yoghurt range selling well as this is a product the company can truly claim.

The company’s namesake is the river that runs behind the neigh- boring farms in Ngatea where Shaun and head yoghurt maker Hamish Pye grew up. Shaun’s mum and brother-in-law also work in the business while Shaun’s brother Logan was initially involved too. Most of the factory workers are also related to each other.

So holding out is not just about strategic reasons. “I can’t just look at it as taking care of myself – family and staff need to be taken care of as well.” The father of one also likes the flexibility and lifestyle of being his own boss. But looking after 20 staff, 14 here and six in the United Kingdom, along with capital, bank, audit and compliance requirements can be tough going. “When you are a small, growing business you have to do it all,” he says. “As you get bigger then you bring in specific people to take care of these things and then you’re able to work more on the business.”

While the next phase is concentrating on getting more exposure and developing the business, there is also much happening overseas. Piako is in about 30 stores in London with sales growing 10 to 15 per cent each week on average. Revenues from deals in Japan, including merchandise like cell phone covers with the brand’s animated logo image, will also kick into play. The aim is for sales in New Zealand to be less than 20 per cent of total revenue in two years and less than 10 per cent in three years. “Our goal is lots of little gourmet plants around the world producing a great product run under one umbrella that is tweaked for each market place.”

But Jacka can’t completely rule out selling. “There are those offers out there – where it would just be irresponsible not to take them.”

–

Originally published in IN-Business March/April 2012

My full name is Ganesh Rajaram Nana Ahirao and I am a first generation New Zealander. My parents recently became great-grandparents, so the family here is up to generation number three. I can’t speak for us all but I’m certain that several generations into the future my family will still have a presence here in this part of the world.

For me, that was reinforced when, on the recent passing of my mother, decisions had to be made on where to sprinkle her remains. While it was entirely appropriate that we reunited her with her birthplace far away, it was also non-negotiable that she be close to family here, now, and into the future.

I relate this because it reflects my perception that we, my family, are “here to stay”. It follows that I should take a long-term view, and give weight to the benefits of my decisions even if they don’t arise until long into the distant horizon. This suggests the answers to many of the decisions we now face will be very different – along with the questions themselves. If you do not view yourself as being “here to stay” then your perspective may well differ.

Take food and population. Apparently, the world’s human population has just topped seven billion. This immediately raises issues around the sustainability of the use of resources – land, water, nutrients, energy, and the like. And this is central to an economy, such as New Zealand’s, that is based on the “wise” use of land and water resources.

Wise, to me, implies decisions that are cognisant of impacts both now and into the distant future.

As a nation blessed with relatively ample land and water resources, New Zealand has an obligation to use those resources wisely. In a future that will increasingly demand more and more food, our contribution – to the community of nations – is to ensure our food is produced efficiently. And, in doing so, that our efforts do not erode the land and water resources we hold so dear. To close the circle, wealth created from food production activities will need to be utilised in a manner that maintains, replenishes, and, indeed, improves the value of land and water resources. Economists call this investment, others refer to it as sustainability.

Challenges facing iwi and the broader Māori economy bring this starkly to the fore. During recent projects that I have contributed to, I heard consistently that “Māori are here to stay”. The need to lift yields on their land-holdings, not only to provide income today but also to build wealth for tomorrow’s generations, is broadly accepted. The option of “doing nothing” with the resources and taonga endowed by our tupuna is to ignore the obligations that came with such an inheritance.

Influencing these decisions is what attracted me to economics. If you are here to stay, then critical decisions about resource use (how, what, where and why) take on a different complexion. Rather than the archetypal coloniser whose primary goal is to wantonly pillage a land and its resources before departing, wise decisions mean thinking carefully about next year, next decade, next generation, next century.

This is probably the critical challenge facing New Zealand today. Whether it be challenges concerning the rebuilding of Christchurch, the use of land and water, or the distribution of income from Māori land holdings to iwi members, the answers (and questions) at hand are very different if we see ourselves as being “here to stay”.

So, perhaps now, in the development of our nation, is a good time to really ask that question. Are we here to stay?

Dr Ganesh Nana is chief economist at BERL.

–

Originally published in IN-Business March/April 2012

Story by Nina Fowler
Illustration by Rebecca Walthall 

Lifting the superannuation age wasn’t an election winner last year but the fact it was even suggested is a sign of the times. Like it or not, New Zealand’s population is ageing, and it could affect everything from taxes to business succession.

The impact of the baby boomers (those born between 1946 and 1964) reaching superannuation age will be as diverse as the group they represent. We do know it’s going to be big. By 2031, the number of New Zealanders aged 65 and over will top 1 million, almost double what it is now. In 2006, there were five New Zealanders aged between 15 and 64 to every pensioner (65 plus). By 2030, that ratio will be three to one.

Demand for aged care and the cost of paying out pensions are relatively easy to predict. The impact an ageing population will have on labour markets is less clear.

As leader of the National Institute of Demographic and Economic Analysis (NIDEA) at Waikato University, Natalie Jackson says we have to think about it regionally.

She says that last year 42 per cent of territorial authorities already had more people at labour market exit age (55-64) than entry age (15-24). “How do you take an excess labour supply of young people from Auckland down to Gore each day? You can’t.”

We’re not alone in facing these kinds of issues. Most OECD countries are ageing. New Zealanders are among the most fertile in the OECD, which is helpful. We lose a relatively high proportion of our population to migration, particularly to Australia, which is not.

Jackson argues more investment in today’s young is needed to increase pathways into work and help keep young workers at home. “We’re going to need absolutely every kid working in the labour market in the next five, 10, 15 years.”

We also need to make the most of older workers. Many of those currently nearing super age have no plans to retire and have a wealth of skills and experience to offer.

A 2011 Ministry of Social Development report, The Business of Ageing, points out that New Zealand already has one of the OECD’s highest labour participation rates for those aged 65–69. Lifting the labour participation of older people from 16 per cent in 2010 to over 26 per cent by 2030 could offset a projected shortfall in funding New Zealand Superannuation over that period.

“Not all baby boomers may want to remain in paid work,” the report reads, “but flexibility and changing attitudes will be key to harnessing the potential of those who do.”

For baby boomer business owners who are ready to retire and need to successfully exit their businesses to do so, the current economic slump is not good news.

“The recession’s almost put up a dam to stop these people retiring,” Auckland business broker David Newport says. Business advisers are telling clients they’ll get better prices if they wait and “sell on the other side”, despite the availability of willing buyers. But, he asks, once that dam is removed, “what happens if everyone tries to hit the market at the same time”? Prices will drop and would-be retirees may find themselves worse off.

There’s another potential problem on the buyers’ side of the equation. “A lot of Generation X and obviously Generation Y generally live up to their means,” Newport says, which means they might not be able to raise enough funds to buy the baby boomers’ businesses.

For now, this isn’t an issue. Older boomers can sell to their slightly younger peers (those in their late 40s or early 50s) or to peers who’ve found retirement too boring for their liking.

Eventually, though, the boomers might need to find alternative exit strategies. “I don’t think people are going to be able to sell 100 per cent of their businesses,” Newport says. “People are going to have to leave money in. They’re going to have to have vendor loans. They’re going to have to have different ways of exiting.”

On the plus side, if the boomers leave money in their businesses, they’re more likely to stay involved and pass their experience and contacts on to the next generation.

There are other upsides to New Zealand’s ageing population. There’ll be a growing “silver market” of consumers, which will fuel growth in certain sectors. Retired baby boomers could prove an invaluable addition to the volunteer sector, including as business mentors.

What’s certain is that the ageing of the boomers won’t be business as usual. Expect to hear a lot more about it in another three years.

–

Originally published in IN-Business March/April 2012

Story by Ellie van Baaren
Photograph supplied 

It’s not usually a subject you bring up in polite company; you need to tread very car fully if you want to introduce it to the dinner table conversation. But emerging technology is showing that by letting our waste (the bodily kind) languish in sewage treatment plants we are overlooking a valuable resource.

Yes you heard me right. The search for alternative, environmentally friendly energy sources has led us to our own toilet bowls.

Processing our waste in the right way can produce biogas, which can then be used to for heating, cooking and electricity. It’s already being used in far-flung countries around the world, including Rwanda, India, Canada and the United Kingdom.

We’re not the first to come up with this. Not by a long shot. Experts believe the Assyrians were using biogas to heat bath water as far back as the 10th century BC, as were the Persians in the 16th century. In the 13th century AD Marco Polo noted the Chinese were using covered sewage tanks to generate power, and the 17th century author Daniel Defoe referred to biogas technology. In 1859 an anaerobic digestion plant was built to process sewage at a Bombay leper colony and in Victorian Britain human waste was used to power gas street lamps.

In the modern world, biogas is commonly produced by anaerobic digestion as part of the treatment process in municipal wastewater and sewage treatment plants. Technology can take that a step further so that biogas can be used on-site for electricity or exported to other areas.

Biogas from anaerobic digestion can be used to produce heat for the digestion process itself, or for heat and electricity in other parts of the plant. It can be upgraded to “natural gas” quality and fed into a local utility network. It can also be used directly as a fuel in a number of different types of plants.

Biogas is typically composed of 60 per cent methane and 40 per cent CO2, similar to natural gas, which is composed of 99 per cent methane. While methane is a greenhouse gas, combustion turns it into CO2, reducing its environmental impact by more than 20 times. It’s considered carbon neutral because carbon emitted by its combustion comes from carbon that is then fixed by plants, ie it’s part of the natural carbon cycle.

For countries such as India, the process can also provide an answer to two issues – the lack of sewage infrastructure in many villages and lowering their contribution to climate change. Private digesters, which the government there has recently agreed to subsidise, effectively provide the residents with a hygienic sewerage system while also using that waste to supply electricity and gas. All of which creates energy-neutral communities.

On a larger scale, most of the biogas currently produced powers small communities or specific institutions which, collectively, helps ease electricity demand on the national grid and lowers green- house emissions. For instance half the prisons in Rwanda operate biogas facilities that use the electricity produced to cook the prisoners’ meals and light the buildings. In the UK the Didcot sewage works in Oxfordshire went online in October 2010 supplying up to 200 homes with biogas made from human waste.

In New Zealand, several councils generate biogas through sewage and wastewater treatment plants, as well as landfill. There is potential for its use in transport, and the country’s first biogas-powered rubbish truck hit the road in November 2010 (although at this stage the biogas comes from Redvale Energy Park landfill site, rather than directly from sewage).

Biogas from human waste is by no means the silver bullet when it comes to finding a replacement for fossil fuels. We humans naturally produce a finite amount of waste – although that does increase as the population rises – and our stomachs are so efficient that human waste doesn’t produce as much biogas per cubic tonne as animal waste does. However, the more communities and high-energy users that can become self-sustaining, the less demand there is on the national grid.

AROUND THE WORLD

CANADA – Saanich Peninsula Thermal Energy Recovery Plant

Commissioned in early 2001, this plant was built by Opus DaytonKnight Consultants Ltd, the Canadian arm of New Zealand success story Opus International Consultants. Its thermal energy recovery system extracts energy from the effluent of a wastewater treatment plant and, in its first phase, uses it to heat a leisure centre swimming pool.

Based in British Columbia, the Saanich Peninsula Thermal Energy Recovery Plant was a North American first and is a great example of the potential for facilities to benefit from a single closed energy system – feeding in surplus heat or drawing it out depending on requirements.

The closed loop system is efficient and doesn’t need additional energy to operate unlike in more open systems where pumps are required. It is also low-temperature so the piping doesn’t require insulation against energy loss.

Already, the Panorama Recreation Centre has reported cost savings of almost NZ$93,500 and an estimated reduction in greenhouse gas emissions of 560 tonnes.

The whole loop was designed with future expansion in mind. Phase two for the project will see the introduction of an ice rink, and future phases could provide for a local primary school, Centre for Plant Health, the treatment plant itself and nearby residents.

Panorama Recreation Commission’s vice-chair, Marilyn Loveless, is excited about the project’s wider objectives of advocating efficient energy use within communities.

“I believe the value of our facility, the pool in particular, is increased significantly by thermal energy recovery it receives from Saanich Peninsula Wastewater Treatment Plant. We work to make our society healthy, inclusive and sustainable and this project has done much to further these goals.”

UNITED KINGDOM
The Didcot sewage works in oxfordshire supplies up to 200 homes with biogas made from human waste as part of a pilot programme.

CHINA
More than 30 million households in china have biogas digesters, biogas accounts for about 1.2 per cent of china’s total energy use.

RWANDA
Half the country’s prisons power their cooking and lighting via biogas made from the prisoners’ waste.

INDIA
The government has agreed to subsidise private digesters, to get human waste off the streets and power local communities.

NEW ZEALAND
Several councils use wastewater and sewage treatment plants, or landfill to create biogas, plus the country’s first biogas-fuelled rubbish truck hit the road in 2010.

–

Originally published in IN-Business March/April 2012

As told to Greg Bruce
Photographs by Isaac de Reus 

On my first trip to China in 1986 we had a long three-day negotiation about the price of pulp. They very skilfully held off actually agreeing. They sort of agreed tentatively, subject to what the boss said. By that stage Madam Li, who was the boss, was not in the negotiating team. We had the final banquet before we left and the banquet took place – as it did every time I went there – in a restaurant called The Sick Duck. It was a Beijing duck restaurant next to the hospital.

If you speak to anybody about doing business in China, the common characteristic is that you have to be able to hold your liquor. You were tested on that. The toasts were in Maotai, the Chinese local spirit, a sort of rice wine, which was very strong and godawful. It tasted like bad medicine. We got to the point where we had a couple of toasts, then Madam Li, who was presiding, said to me: “If you can just drop another $5 off your price, we’ve got a deal.” By that stage, everyone was being friends. I subsequently found out they weren’t drinking the Maotai. They were actually drinking water, with a colour like schnapps. Fortunately, in those days I was younger and able to toast without too much bad effect. We were able to do a deal somewhere in between.

We got a lot of things wrong in the early days. One meeting in China still embarrasses me to this day. Unlike with the people I had been dealing with previously, which were a series of relationships building up, this was a cold call in effect.
He asked me: “What are you here for?”
“I want to sell you some linerboard.”
“But you used to sell us linerboard, then you pulled out of the market” which I remembered and knew, but I had to say: “Oh we’re serious this time.”

I wasn’t prepared for the meeting and he quite rightly really tore me to strips – in a polite way, because the Chinese are very polite. Face is an important thing. He basically said: “No, I’m not going to buy your linerboard because I don’t think you’re serious about it.”
He was quite right. And I couldn’t say with a straight face: “If we start a relationship with you to buy linerboard, we will stay in the market,” because I knew our company regarded it as a spot sale and that’s not how you deal with the Chinese.

Vic Percival was really the New Zealand pioneer in China trade. We were with him at the 100th Canton Fair in 2006 [one of the world’s biggest trade fairs] when he was honoured as one of the 30 surviving foreigners from the first Canton fair in 1957. The Chinese Premier, Wen Jiabao, was there and the governor of Guangzhou, and all these dignitaries were on the stage. And there’s Vic. He, as it turned out, was the only foreigner to speak, which was a huge honour. The guests who were being honoured were told not to make contact with the dignitaries. They would go and get their medals, shake hands and that would be it.

So Vic made his speech. Vic being Vic didn’t stick to the script, which rather upset the interpreters. At the time, Air New Zealand was launching its direct service into Shanghai, so he departed from the approved script to give a big plug to Air New Zealand. We were just gobsmacked. And not only were there 5000 there at the ceremony, with the Premier and everything, but it was beamed live all over China, so hundreds of millions of viewers were watching Vic make his speech. And although they had been told not to make contact, Premier Wen went up to Vic and just embraced him: “Vic, my old friend.”

If you have good trade you avoid wars. People talk to each other. It creates the forum where you’re communicating with other cultures, other people. As Vic Percival proved, you can go up to China, which was basically our enemy – the US was telling the New Zealand government “don’t go near the place” – but Vic went up there and created relationships, which have lasted to this day.

Some of the places I went, New Zealand wasn’t on the friendliest terms with, but you felt you could build up a relationship. It was a business relationship essentially, but it had personal elements to it that tran- scended trade.

–

Originally published in IN-Business March/April 2012