Covid-related losses are mounting in the business world: lost contracts, profits, staff and expertise, lack of growth, a cancelled rocket launch. Business owners tell Jane Phare about the multibillion-dollar effect of the restrictions and grappling with the "no way back" MIQ system.
Taking form like a soaring Gaudi masterpiece is a Kiwi-designed building in Shenzhen, so spectacular that the Chinese Government has declared it a building of national importance.
It's a project that South Island father-and-son architects Fred and Damien Van Brandenburg have worked on for the past 14 years, ever since billionaire fashion tycoon Zhu Chongyun walked into their Queenstown branch office with a plan to build the most spectacular headquarters in the world for her fashion house Marisfrolg.
At the end of a world tour, searching for the right architect, Chongyun had holidayed in New Zealand, staying at Huka Lodge in Taupō, Wharekauhau Lodge in the Wairarapa and Millbrook in Queenstown. All three were designed by Fred Van Brandenburg, which led to her to the Queenstown office. The commission came with no design restrictions, and an open chequebook.
This year, with the building nearing completion, Architecture Van Brandenburg was approached by another Chinese entity, impressed with the Shenzhen building and wanting to build an eco-research centre in a forest of 1000-year-old trees. The Kiwis were shortlisted down to two companies for a project worth hundreds of millions of dollars.
The catch was that the proposal had to be presented in person. A video conference was out of the question. Damien Van Brandenburg withdrew, unable to guarantee when he would be able to get back into New Zealand but also, he says, because he couldn't take an MIQ space from another Kiwi desperate to get home for compassionate reasons.
Soon afterwards, he heard that the project had gone to a company from Canada - part of a world that is now able to travel.
Before Covid-19, Van Brandenburg travelled from his Dunedin base to Shenzhen on a three-week turnaround. Last year's lockdowns meant it was the first time in 14 years that he had seen all four seasons in New Zealand consecutively. With offshore contracts on the back burner, it was time to "pivot". The company launched the Object Van Brandenburg product range, designing interior objects including lighting, ceramics and furniture overseen by his wife, product designer Ashleigh Van Brandenburg.
Lack of MIQ spaces stifling growth
When the Herald began looking for examples of people and businesses that had been affected by border closures and impossibly long queues for MIQ spaces, there was no shortage: it was just a matter of which ones to pick.
They included aerospace companies that could not bring key specialists in or out of the country; businesses increasingly taking research and development offshore; a company executive considering moving his family of five to Europe because of the difficulty of running a global business from locked-down New Zealand; a Kiwi North Sea oil rig diver, based in Blenheim, who could not work because he couldn't get an MIQ space; and a tech executive who even wondered whether to just sell the business to a multinational.
Off the record, several spoke to the Herald about considering moving their whole operation offshore, but were reluctant to go public for fear of alarming staff and investors before plans were in place. All wanted to know about the Government's plan for New Zealand, and how they were supposed to do business in a global economy that is now open again.
Navman founder and entrepreneur Sir Peter Maire is a majority shareholder in Invenco Technology, a major player in providing and developing pay-at-the-pump machines. He's frustrated at the lack of a "clear steer" from the Government - not only for his own business, but for smaller Kiwi start-ups that cannot grow without key staff being able to travel.
In the past year Invenco has won three major deals with "blue chip" multinational oil companies involving tens of thousands of fuel sites, pushing the company to a $100 million turnover and more than 300 staff. The company now has 70,000 terminals in the US, 100,000 worldwide and the business is growing by 30 per cent each year.
But his chief executive John Scott can't travel, and nor can key staff because they could be trapped overseas for months. One Kiwi staff member has been in the US all this year, with his family back in New Zealand. The solution has been to scale up overseas - an option that an increasing number of New Zealand-based global businesses are taking. Maire says the company now has 70 staff in the US and is adding four or five every week.
"We'll carry on that way because we can't scale here in New Zealand. There is only so much you can do from a logistics point of view."
Take Invenco's largest retail customer in the US, the convenience store and gas station chain Speedway, which has 3000 retail sites with 45,000 terminals. Customers use a colour screen to order everything from petrol to a hamburger and Coke, and see advertisements at the same time.
"So we don't just sell a box, we sell a very complicated end-to-end system that provides advertising, food and beverage ordering all at the pump," Maire says.
That requires multiple field engineers to meet with the teams in different locations. Currently, engineers are working from home on glide time, working through the night to deal with customers in different time zones.
"We're trying to provide all that by remote control. But it's just getting to a ridiculous point of trying to manage this kind of growth. The only option is to grow offshore but it's quite difficult when you're trying to hire people and you're relying on Zoom interviews. How do you really make them feel part of this Kiwi company? It's a hugely frustrating situation for shareholders and management."
The aerospace industry, too, is desperate for an MIQ system that will allow it to operate and grow. It argues that just 16 spaces are needed to keep the $2 billion industry going in New Zealand, including those needed by Rocket Lab.
Anna Kominik, Asia Pacific region director for Wisk New Zealand, which has developed a pilotless air taxi, says the industry can't grow without ongoing research and development. And that can't happen if aerospace companies cannot bring the necessary expertise into the country.
"The industry is growing really fast. It's likely to be about $10 billion by 2030. But at the moment that growth is being stifled by the fact that we can't get our subject-matter expertise in," she says.
"We also need to send our people out and get them back in for training purposes, so that's been a major constraint over the last 18 months. It's now got to the point where we are having to make some really hard decisions."
That will include moving more of the research and development offshore to allow easier access to technical experts. Already, research into airspace integration in South Canterbury, using autonomous aircraft, which was due to take place in the next few months has been moved to Queensland using a surrogate vehicle.
Kominik is another person who doesn't want to be competing for MIQ spaces with families trying to get their loved ones home.
"That's what is so gutting. You're sitting there at 22,000 [places] wishing, hoping that you will get in but you know somebody else is going to miss out. And that is just the most horrid feeling. So I think we can do better."
Rocket Lab's director of communications Morgan Bailey acknowledges the important role Covid-19 restrictions play in keeping communities safe, but says the international border restrictions have limited Rocket Lab's ability to get satellite integration experts into the country.
"Satellites are incredibly complex machines that require a lot of work in preparation for launching to space. These processes can only be carried out by technical experts who built the satellite and these people are most often based overseas."
As well, it's been difficult to recruit specialist talent overseas because people cannot move to New Zealand with border restrictions in place.
Grant Straker, CEO of Straker Translations, a technology platform that translates languages, has built the business to a $50m turnover with his wife Merryn, who is the company's chief operating officer. More than 10 years ago they decided to target the $US57b translation industry and now have 240 staff in New Zealand and in nine offices overseas.
But border closures and the lack of MIQ spaces meant that a few weeks ago the Strakers made plans to move their family of five overseas. Those plans are temporarily on hold while they wait to see if the Government will ease travel restrictions and allow the business community to run its own isolation programmes.
Last year Straker Translations became the global supplier for IBM, which went from having 20 translation suppliers to just one in New Zealand. With that deal Straker went from a $1m contract translating IBM's Spanish work to one providing 55 languages. A major part of the company's growth strategy is mergers and acquisitions, but being unable to travel can lead to risky decisions, Straker says.
"I would normally be at conferences, I would be meeting people who might want to sell their businesses that we have an interest in. I'd be able to get to know them, I'd be able to go to their offices and get a sense of the company and the people involved."
Earlier this year Straker bought a Utah company with 50 staff but hasn't been able to bring any of them to New Zealand to integrate with the team.
"Because of that geographical distance, you need to keep the culture of the team together. To do that, historically we have travelled, we've gone into markets, we've had team meetings and engaged with customers. You just can't replicate that on Zoom."
Being unable to travel or get staff in and out of New Zealand means his company, like others, will increasingly relocate resources to other parts of the world. The company has already filled a global training role overseas, rather than hiring a New Zealander.
"We're filling that in Europe now because that person's got to travel to train people and they can't from New Zealand. These high-value jobs are getting shipped offshore."
Straker says his company can probably get through another six months of not travelling, thanks to having established teams overseas. But other companies in a critical growth phase may not survive, he says.
Like competing in a boxing match with hands tied
"Other countries have started to open up and New Zealand entrepreneurs who cannot travel are in a boxing match with their hands tied behind their backs, while their competitors are in the ring throwing punches."
He knows of many key staff and business owners who have left the country with no way back because of the thousands of people ahead of them in the MIQ queue. "No way back" is a catchphrase tech entrepreneur Jenny Morel has been using on LinkedIn posts. Morel launched Morgo, which she describes as a high-energy retreat for tech companies "without the sauna and beanbags", 19 years ago. It was a chance for the tech industry to share stories, hold workshops, network and have time to think.
Morel moved the Morgo date from September to November as a result of lockdown but then started getting cancellations for the Queenstown conference. Participants told her they simply had to travel even if there was no way back. Since then, Morel has collected 43 "no way back" stories.
"People can't get MIQ but they're going anyway. Some are preparing to be away for up to six months."
Mark Robothom, CEO of Manta5 which makes hydrofoil bikes, sent four sales staff to Europe between June and August, knowing there were no guaranteed MIQ spots to get them back.
"We just couldn't hold back any longer. We're lucky, we've got some very dedicated staff who jumped on planes. It comes down to business survival. If you want your business to survive, you've got to get out there, particularly when you're starting out."
Two of his staff have made it home, the other two are still overseas. There's a cost to keeping them over there but that's balanced with the cost of doing nothing, Robotham says.
"The cost of doing nothing is too high. If we want to protect the 30-odd staff we've got, we've got to get some sales and some momentum going."
As a result of Covid-19 and the ensuing restrictions, Manta5 ran months late with its manufacturing, making it late to get product in for the European summer. That's forced the company to look to the future, one that will mean reducing the number of staff in New Zealand and establishing bases overseas.
"How do you secure investment when some investors want to come into the country to do due diligence and that's not going to be possible any more? And so we're just going to have to continually look at new ways of structuring our business."
Damien Van Brandenburg is also hamstrung by the inability to travel to Marisfrolg's six-hectare site in Shenzhen and get home to support his small team. The 120,000sq m Marisfrolg building - which includes a 50-room, five-star hotel and spa, retail stores for each of the brands, a 50m catwalk, space for startups, an art gallery and exhibition space - is still not finished.
Now he and his father Fred are having to oversee the finishing details by remote control.
"It is really challenging to deal with the cultural aspects over Zoom," Van Brandenburg says. "But I just can't in good conscience take up an MIQ space knowing that families haven't seen loved ones. I just feel like we couldn't do that to them. That's the priority for New Zealand."
