You might be surprised by what keeps Sleepyhead Estate developer Craig Turner awake at night.
With inflation and a souring economy hogging the headlines, the responsibility for wrestling a grand plan for a $1.2 billion work/lifestyle community into reality would make anyone toss and turn.
At least because he’s a director and, with brother Graeme, co-owner of Australasia’s biggest bed and bedding maker The Comfort Group, you can be sure it’s not because his bed’s uncomfortable.
The dreary economic news isn’t much of a sleep-depriver either. The Sleepyhead business has seen off more than a few downturns since the brothers’ grandfather Sidney Turner bought it 77 years ago.
Sure, says Turner, some costs at the trailblazing development now rising at Ohinewai in north Waikato have blown out – like earthworks material, up by 20 per cent.
And yes, the economy “right now is really scary” and the company wonders whether the Reserve Bank’s interest rate hikes will “overshoot pretty heavily and deepen a recession”.
But innovation, finding new and better ways to achieve the same goal, is what gets Turner up in the morning and there are bigger things to worry about, he says.
Like New Zealand’s dismal productivity rate, the inflationary pace of minimum wage rises, employment preparation gaps in the education system, getting kids off the street and interested in job training, and creating prospects and a sense of hope for young Kiwis.
“We have a very long-term goal,” says Turner. “We believe in New Zealand, we believe in our business, and we believe in our people.
“I’m 70 this year, my brother’s 73. We have the next generation coming up. You can’t just stop.
“Right now we are really challenged because the market is terrible, but that’s not an excuse for anything – it’s a reason to get moving.
“We have to find other ways. We can’t afford to take the cost escalation on the chin.”
Stage one of the Sleepyhead Estate, a $55 million foam-making factory, is nearing completion beside SH1, north of Huntly.
Stage two of the 10-year, light industrial, housing and lifestyle development will be the 50,000 square metre main Sleepyhead factory – price-tag $100m. It’s likely to be finished in late 2026 or early 2027.
Stage three is the commercial precinct. An invitation will go out soon for expressions of interest for light industrial and manufacturing partners. There will be no heavy or “dirty” industry at the Sleepyhead Estate, says Turner. The brothers are keen for big box retail but don’t want big warehousing.
“We want to build a community, so they will be community-minded people that are corporately responsible,” says Turner.
“We want people who are going to embrace using grey water – recycled wastewater - in their toilets and washdowns. People who are going to embrace solar energy.
“We want to attract people who want to be part of a community and have the same philosophy around staff.
“That may take us longer to get away because it’s not everyone’s cup of tea. But we have a very long-term goal.”
Turner says what people have to understand about the Sleepyhead Estate is that it’s being developed by a bedding company.
“We’re a bedding company first … we’re not desperate to turn this land into an industrial estate and sell it off and have a happy day. That doesn’t achieve our community.”
Of course, it’ll take the final stage, housing, to seal the project’s claim to being a community.
On the drawing board are up to 1100 “affordable” new homes, many for Sleepyhead factory staff.
While the company, a major exporter, bought the 178ha rural Ohinewai site because it has outgrown its Auckland manufacturing locations, it also had another agenda.
Many of its staff cannot afford Auckland house prices. The Turners wanted to be able to help them into their own homes. The brothers were also keen to tap the Waikato’s younger generation for the company’s future workforce.
The icing on top is that the site is beside the Waikato Expressway and main rail line and within the so-called “golden” economic triangle of Waikato, Bay of Plenty and Auckland. The company’s import needs come in at Auckland’s port, and its exports go out through Port of Tauranga.
Up to 70ha of the total site will be dedicated to light industry and about 10ha to community . No supermarket is permitted as local regulators want residents to shop at neighbouring Huntly, in a bid to transform that town and its economy.
Much of the rest of the site will be devoted to housing, 50ha of wetland, running and walking tracks, playgrounds and a community centre.
It’s this idea of a tailored work/lifestyle masterplan that has captured the public’s imagination and made Craig Turner a sought-after speaker at events and meetings.
“There’s so much interest because it’s a good story and it’s positive. People are sick of the negative,” he says.
Inflation may not be keeping Turner awake at night but he’s not blasé about it.
“It isn’t a red light but it’s a pretty vicious slowdown to what we are trying to do. We have to find solutions because it goes to the heart of what we are doing.”
While the price for the foam factory, a complex, high-hazard specialist facility, was fixed before construction prices soared, it sounds as if providing “affordable” homes could prove challenging, given New Zealand Inc’s current idea of what constitutes ”affordable”.
“We’ve done pretty good analysis and our factory workers can afford $500,000, maybe $550,000. We pay well, and fairly, but today you’re looking at $900,000 to build an ‘affordable’ house,” says Turner.
“This is a community we’re building here, not an industrial development. It’s important people grasp that concept. We’re looking to create a lifestyle, we’re looking at creating good jobs for people.”
He says the hunt is on for solutions to that “affordable” housing challenge, including looking overseas for ideas.
“We haven’t dug terribly deeply yet because we’ve had to solve [other] infrastructure questions. A lot of our attention has gone into that, but in the not-too-distant future, housing for us will become the big thing.”
Turner says government rental housing agency Kāinga Ora can build a house much cheaper than $900,000, but the agency won’t be part of the Sleepyhead community.
He recognises that some people don’t aspire to own a home and are happy renting, but says the concept of building “affordable rentals” doesn’t meet the goals of the Sleepyhead community, which includes enabling people to own a home at the end of their working life.
He notes that the Waikato District Council, a “fantastic” supporter of the Sleepyhead Estate, is planning a lot of housing redevelopment in Huntly, which will help meet demand from people who want to move into the region but don’t want to buy, “or maybe don’t fit with our criteria”.
Those who Sleepyhead will consider helping to buy in the new estate “will have to demonstrate they are reliable, will turn up to work, and are people we see a future with”, he says.
The Comfort Group employs more than 1000 people on both sides of the Tasman, most of them in Auckland.
Turner says many have worked for the company for many years. “Some have their own homes, some don’t but they are great people who will make good members of this community, which is another requirement of the criteria for us helping them in.
“But we have to get the building price down.”
Progress on the housing side can’t be made until wastewater infrastructure is sorted.
“For industrial wastewater, we have a good solution but for the residential side, Waikato District Council is still working on that. So there’s a limit to what we can do on housing at this point.
“But it’s important to get the industrial side established. It’s not a case of build the houses and industry will come.”
Another cornerstone of the Sleepyhead Estate master plan is to provide a pathway for young people to job training and employment. The company is already working with local high schools, and for some time has offered job training and work to Huntly people, providing daily transport to its Auckland sites.
“We need to get young people off the streets and into work experience really early in their education. We need to try to change the way kids learn. We have to change – the community needs it and we argue New Zealand needs it. There’s a huge gap in our education system [in this respect].
“We have escalating [youth] crime. How do we get kids who are the future of New Zealand interested? Not by sticking them in jail.”
Economic reports in 2021 that supported consent applications for the Sleepyhead Estate suggested it would inject $8.5b into the Waikato economy over the next 10 years, create up to 2600 new jobs and provide the region with much-needed new housing.
If anything makes Turner restive at night, it’s New Zealand’s “ridiculously low” productivity levels and the Beehive’s attitude to that issue.
“We as a country can’t survive these levels, and we at Sleepyhead can’t. We had to find answers to lift productivity and the answer isn’t in old factories. We have to have solar, reuse water and have the lowest possible building costs.”
He’s troubled that the Government has fanned wage inflation with the pace of minimum wage rises.
“It’s one thing to put wages up but where’s the requirement for higher productivity? We are among the lowest in the OECD for productivity. Why isn’t this Government helping industry get more productive, why isn’t productivity a key focus?
“The thing I’m staggered about is this Labour Government created a fast-track programme for building projects. It’s a great concept. Why aren’t they doing more of that sort of thing?”
Turner saw red at the Government’s recent handling of an Inland Revenue tax audit, which showed wealthy people paid a tax rate of 8.9 per cent, half the rate of the rest of us.
“It was such a misguided deal because [the audit] was all property pre-loaded. A lot of people in property don’t pay tax but it insinuated that people in business like ours don’t pay tax. That’s just wrong.”
The resulting fuss raised the question of whether the Government was again considering a capital gains tax (CGT). Prime Minister Chris Hipkins responded that it wasn’t.
Turner says “on balance”, a CGT “probably has more merit than not”.
“I know a lot of people will disagree with me but in my mind, the big issue is not what people are taxed, it’s what the government does with that tax.
“Until that is addressed, I will never support a capital gains tax because it’s really just giving money to them that’s going to be wasted. I’d rather see people keep that money and spend it on developments.
“If government could turn the money to good use, and we saw that, I’m sure people would support it, but at the moment it’s a ludicrous suggestion.
“It’s just a straight-out money grab.”
In all the talk about a CGT, politicians haven’t told business leaders how they plan to use such a tax to get industry moving and productivity up, says Turner.
“They’re just saying we’re going to rip all the money out of your pockets and spend it. [I say] if you want to bring in this tax, give some commitment as to how you’re going to use it to grow the economy and the country.
“Don’t just say we’re going to take money off these so-called rich people. It’s ridiculous.”
Asked which party he’ll back in this year’s election, Turner says he’s “a big supporter” of Act.
“I see a leader who actually understands the issues. I worry about National’s inability to tell us as a business where they think they would take this country. I’m just not seeing it.”
New Zealand needs to “stand up and admit we have a lot of work to do”, says Turner.
“We have serious crime going on and for politicians to suggest jail or the army is the place for these young people is outrageous. Life has moved on. The army’s not going to solve all the problems.
“Get education sorted. Get stuff happening.”
Turner says he’s not afraid of speaking out because his business “doesn’t engage” with the Government.
“They won’t help us so we go down our own track and create this community.
“It will show that getting young people off the streets and into work actually will change things.
“But it will take a long time and you can’t start any later than now.”
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