Manukau has fallen on tough times. Christopher Adams looks at what is happening to help.
Manukau could be described as New Zealand's industrial engine room - home to some of our most famous manufacturers including Fisher & Paykel Appliances, its Healthcare cousin and the new Lion Nathan brewery.
Its industries had "China-like" output during the boom years of the early-to-mid 2000s when, according to the city's mayor, gross regional product (GRP) growth rates of between 3 and 8 per cent were the norm.
In 2008 Manukau's manufacturing industry contributed more than $2 billion to New Zealand's economy.
But GRP growth in Manukau decreased by 2 per cent over the year to March, compared with a 0.5 per cent reduction across Auckland as a whole. Local social service providers say the region has fallen on tough times.
Manufacturing workers have been hit by redundancies, reduced working hours and factory relocations to lower-cost countries such as China.
In 2008 - as the recession began to bite - the sector was by far Manukau's biggest employer, providing jobs for almost 19 per cent of the working population. By comparison, just 9.5 per cent of Auckland City's workforce was employed in manufacturing the same year.
The unemployment rate for those aged between 15 and 24 has now risen to 25 per cent, and 7.5 per cent across the wider population, which is the fastest growing in New Zealand, with 42 per cent of those living in the region aged under 25. That means a lot of new industry is required to provide jobs.
Manukau City Council chief executive Leigh Auton, however, says the uptake of industrial land for development has slowed rapidly as a result of the global downturn. From 2000 to 2008, he says, industrial land uptake was around 60ha annually. "Last year it was four hectares - so that's a 93 per cent drop," Auton says.
He says as soon as the economy improves, the uptake of land will quickly return to pre-recession levels, which may be cold comfort for those in the dole queue.
"Things are getting tougher by the day," says Mangere Budgeting Services chief executive Darryl Evans.
He says the impact of the global downturn has been felt most by the city's Maori and Pacific communities who make up a large part of Manukau's factory floor workforce.
"The tunnel seems to be getting longer ... realistically we're still a long way off getting over the recession, in my opinion," says Evans.
He says his organisation has seen a 65 per cent increase in both employed and unemployed people requiring food parcels over the past 12 months.
Peter Sykes, chief executive of the Mangere Family Centre, says the recession has led to a "Third World impact" - men with no jobs and lots of time on their hands, and the social consequences that come with idleness.
"People with low literacy and low language skills - they're the ones who are most vulnerable because their types of work are not transferable to an office," he says. And it's the office staff that tend to keep their jobs in New Zealand when factories close and production lines are relocated offshore.
One example is Mangere's Kumfs shoe factory, which finally closed last November following three years of redundancies, during which almost 100 workers lost their jobs. Their shoe manufacturing was shifted to China, while administration staff were retained in Auckland.
Kumfs managing director Andrew Robertson says the decision to close the factory was made only after the firm had exhausted all other options.
Fisher & Paykel Appliances has made similar moves in recent years, shedding 446 jobs at its East Tamaki plant. The electronics and laundry manufacturing operations were relocated to Rayong, Thailand.
And the future of F&P Appliances' remaining manufacturing operation in Auckland appears uncertain, with the firm indicating in its latest annual report that "the location of all manufacturing sites remains under review".
F&P Appliances chairman Ralph Waters says the advice he'd given to management was that no "major new projects" should be undertaken until the company's performance improves.
The firm suffered ballooning debt levels recently - a direct result of the recession hitting earnings at the same time as capital was poured into new plants in Thailand and Mexico.
"If and when our fortunes are better and we're paying a dividend - if somebody wants to look at the economic case for shifting Auckland [manufacturing] it can be looked at," said Waters. "But it's not on anybody's agenda right now."
But while some industry has left Manukau, new operations are being set up in the area, as well as capacity being increased at existing plants.
In March packaging manufacturer Amcor announced it would spend $40 million on a new production line at its Wiri can-making plant, doubling its capacity from 150 to 300 million aluminium cans a year. Amcor Australasia managing director Nigel Garrard said the new line would see staff numbers significantly increased from the 77 already employed at the plant.
Earlier in the year, Lion Nathan shifted its brewery operations to East Tamaki after 150 years in Newmarket.
About 190 staff are employed at the new site.
"The development in East Tamaki allows us to better integrate our production," says Lion Nathan communications manager Judy Walter.
Lion Nathan has warehouses scattered across Auckland, she says, as well as the Contact Bottling Company in East Tamaki.
"The new site allows us to bring all of that together, which naturally produces some efficiencies. There's not as much trucking between our sites."
Walter says the 16.8ha Manukau site, in Ormiston Rd, was also chosen for the room it provided for expansion and its proximity to vital roading links.
Just up the road, Fisher & Paykel Healthcare is also investing in Manukau. Although the high-tech medical product manufacturer opened its first offshore plant in Mexico recently, it also invested $27 million into its Auckland facilities during the last financial year.
Part of that money was spent on increasing manufacturing capacity as well as initial site works for a new 31,000sq m building at the East Tamaki site. F&P Healthcare chief executive Michael Daniell says around 40 per cent of the new building will be used for manufacturing.
"Our current plans have us growing our manufacturing capacity in New Zealand by around 5 per cent per year," he says.
The new building will also house F&P Healthcare's expanding R&D team, which is projected to double in size by 2015, from the 300 currently employed. At the company's annual shareholders meeting last month Daniell announced F&P Healthcare would invest a further $50 million in its New Zealand facilities during the current financial year.
Budget adviser Evans says the Government should be giving companies more encouragement to set up manufacturing facilities in Manukau. That, in turn, would help secure employment for the region's growing population.
Charging lower taxes to companies wanting to establish facilities in Manukau could be an option, he says.
"We need to make sure money is invested in these types of industries," he says.
But Bruce Goldsworthy, of the Employers and Manufacturers Association, says the Government is already doing as much as it can to encourage manufacturing, especially through lowering the company tax rate this year. "The Government can only create the best environment for businesses to be successful and grow," he says. "The real player is demand."
Auton says investment in early childhood education, primary schools and tertiary institutions is just as important for Manukau's future as new industry.
"That investment in social infrastructure is really critical to economic outcomes long term," he says.
Sykes, of Mangere Family Services, says he is not sure if more industry is the answer to Manukau's problems.
"There's a lot of things that are needed in the community and manufacturing is one of them, but I'd like to see more support for the trades. Apprenticeships need to be re-looked at so that people with literacy and other issues can be engaged."
Sykes says he would like to see apprenticeships available for people aged 14 and over. "It means changing attitudes and structures, but we need to do that."
* From the New Zealand Herald feature, 'Project Auckland - our city'
