Thought Leadership shaping the future of our region
An occasional platform for a piece written by members for members on key topics to challenge and inform robust debate about the Waikato.
Preparing the Waikato for a changing world
Written by Chris Joblin
“Clowns to the left of me, jokers to the right …” – you won’t hear me quote Bob Dylan often, but the words seem just right to describe some of the acting out we’re seeing on the global stage. This is the third of my articles for Waikato Chamber on the economic potential of the Waikato region and we need to talk about the r-word – global risk.
The Rising Global Risk Landscape
Traditionally we have relied on distance as a form of economic moat for New Zealand, my message is that Waikato businesses need to position themselves to prepare for disruption and even more ideally – to be the disruptors.
Recent events have markedly increased geopolitical risk both globally and locally. With gobsmacking speed we’ve seen the US moving away from the western alliance and tearing down mutual trust as defence partners. Mystery ships, one of them with Tongan badging, have been circling the globe attacking undersea communications cables and there has been targeted cyber disruption to infrastructure. Don’t forget the Chinese naval exercises in the Tasman sea, an eruption of trade wars and the Cook Islands giving the diplomatic equivalent of the middle finger to New Zealand as it followed Solomon and Kiribati into deals with China.
In just the past few weeks more than two trillion dollars of new defence spending has been announced across Europe and the Asia pacific region. Even New Zealand is talking about increasing defence spending to 2% of GDP. It feels like 1938 all over again as nations scrabble to get their hands on natural resources e.g. oil & gas, rare earths. So, what does this mean for NZ strategically?
I don’t want to be too bleak. Global uncertainty presents risk and opportunity for our country and the region and business needs to take the time to adjust its strategies to react to this new paradigm.
New Zealand’s Strategic Preparedness
Firstly, in my view we need to increase our self-reliance both for our economy and also for defence with investments into both defence and infrastructure, and greater onshoring of strategic materials.
As the recent naval exercises in the Tasman have shown, our sea and air connections to the rest of the world, which we rely on so much, are vulnerable to being contested and potentially disrupted.
Our defence capability will need to be scaled to be able to protect these critical assets and communication lines.
New Zealand has abundant natural resources including water, renewable energy, oil & gas, precious metals, and rare earth minerals. We compare ourselves a lot to the Scandinavian countries but seldom mention their economies have been underpinned by unlocking their natural endowments particularly in oil and gas.
Strategically unlocking some of our natural endowments, while mitigating impacts on the environment, is a way we can fund some of the critical investments we now require to increase our national resilience and our standard of living.
We need new hydro power generation to support wind and solar. Electricity generation is inadequate to power our existing economy let alone new power requirements driven by AI and data centres.
For strategic resilience we should be onshoring more production and refining of oil and gas, and we should back up the bus on Marsden Point to reduce reliance on petroleum shipments from Singapore. We should also unlock more of our mineral deposits including precious metals and rare earth minerals which could underpin new high-tech manufacturing.
So where are the opportunities for New Zealand and the Waikato?
Demand for our food and fibre products is going to continue to grow. The emergence of potential trade wars between the US, China and Europe is going to see these economies seek imports from new sources, potentially creating new markets for New Zealand’s exporters.
We have many NZ companies working in defence and security related industries. Some of these are Waikato-based. The global demand for defence related innovation and capability is growing exponentially and will drive investment into AI. Robotics, autonomous vehicles and cyber to name a few.
Waikato’s Economic Opportunities
The Waikato is very well placed to take advantage of this through our existing technology sector and through the University of Waikato whose robotics and AI are world renowned.
The NZ military will need to make significant investments in surveillance, robootic technology (drones), AI and missile technology. Our region can expand on our existing industry to meet some of these requirements. Again, there are Waikato-based firms, as well as our University who are global leaders in some of these fields. We have many more Rocket Labs yet to emerge if we focus and collaborate on the opportunity.
Global companies are reassessing where to produce sensitive technology currently produced in Southeast Asia. Microchip, aeronautical, and pharmaceutical industries all have the potential to relocate. Why not here?
We have the critical components to attract these industries to the Waikato with our young and educated population, access to clean energy, raw materials, and relative security of our location compared to some of the world’s political and military fault lines.
So, what should Waikato business be thinking about?
We have had the recent experience of Covid which gives a good starting point for business to think about and plan for potential disruption.
Preparing Waikato Businesses for Disruption
We also need to think about the balance between onshoring and ‘just in time’ models for our supply chain and supply chain security. We need to have diversity of suppliers including domestically. Where needed, you may need to invest in advance to grow your supplier base.
Obviously, with threats of tariffs bouncing around – we need to think about diversifying our global customer base for both our key commodities and our niche value-added products.
Maintaining a strong balance sheet can help absorb short term disruption to global supply chains.
Attracting High-Tech Industries
An area that needs a lot more focus is cyber security. Businesses need to invest in protecting their core systems and environments and understand the security positions of their core suppliers and partners. The threat of cyber disruption will continue to grow in is sophistication and occurrence. From key global players in the IT sector, I have heard that New Zealand is around a decade behind Australia in being attuned to understanding the strategic risks in this area.
Everyone hopes that international actors will ‘calm the farm’ and realise that if conflict comes, everybody loses. Let’s hope and support work for the best outcome, while preparing for the worst. Either way, as Mr Dylan said way back in the 1960’s – the times are definitely a-changing.
What are we waiting for: The future is ours to make
By Chris Joblin
It was no fluke. In February this year, media reported that Hamilton overtook Tauranga as New Zealand’s fastest growing city for the first time. And now the latest figures reported this month say we’ve done it again. 3.1% more people are living in the Tron than the same time last year. According to Statistics NZ and the University of Waikato we’re on track to overhaul Wellington as New Zealand’s second largest city somewhere between 2048 and 2058. But personally, I think we’ll get there a lot quicker - we are the only ones who can stop it from happening – if we choke.
So, in this article I want to outline the things we can do to secure our position. Auckland and Tauranga are hemmed in on an isthmus – their constraints are our opportunities.
Productive infrastructure
As a city and region, we focus a lot on social infrastructure such as Claudelands and the new theatre in Victoria Street. But, as a community, we rarely focus on the productive infrastructure we need for economic growth first so we can afford the social facilities. Just like they say on the airline health and safety videos – put on your own oxygen mask before you help others – productivity needs to come before pleasure if we really want to be able to afford to pay for it.
One example of productive infrastructure would be that we need to move heaven and earth to get a major data centre into Hamilton. This is a burgeoning sector of infrastructure where we need to wet our beaks. We have the room to grow, relative seismic stability and the major transmission lines that transect the edge of our city. These high-spec facilities could keep our construction sector engaged for years and facilitate new high value industries and employment. Upgrading the network to allow more of the electricity generated here to be supplied to our region is a major priority.
Regional connections
Secondly, we need to build out our road and rail connections to the Upper North Island. Based on current progress, repairs on the Hamilton-Taupiri section of the Waikato Expressway may actually never finish. So, we need to get better at building roads of national significance, and hopefully, the extension of the dual laning won’t stop at Piarere and will eventually carry on to Tauranga. These roads are literal economic arteries in our rapidly growing golden triangle.
We should also be looking at examples around the world of the role of fast, reliable passenger rail and its role in regional development as well as the economic models supporting investment. I am not dreaming about 320km per hour Shinkansen-style trains of Japan, just the well-run trains you see servicing the outer Melbourne commuter belt.
The brave growth decisions our region needs are unlikely to gain traction unless there is further amalgamation of local authorities. We really need some boundary realignment for Hamilton City to enable orderly development for the future city of half a million people and to move our thinking beyond the current developer belt. If local government can’t sort it out, then Central government need to be the ones to do it. Multiple planning frameworks equals slower and more expensive growth – it’s driving up the cost of the housing and we can’t afford the turf wars.
Visitor magnet
Our region enjoys some of New Zealand’s coolest visitor attractions in Hobbiton, Hamilton Gardens, the Waitomo Caves and Raglan – but we’re short a major draw card attraction in our city.
World class gardens – and we do have them – are table stakes. Where’s our Te Papa North, our Peter Jackson movie experience, or cultural tourism experience to draw in an extra three hundred thousand visitor nights per year to supercharge the accommodation and hospitality sector?
Opportunities regularly arise, but to date we have lacked the imagination and focus to make it stick.
Global opportunities
In wrapping up these thoughts I’d like to touch on global geo-political dividend that’s coming our way. There has been a lot of focus on the economic risks to New Zealand from an unstable world, but what about the opportunities? Many security sensitive businesses such as microchip manufacturers, will be looking to move sensitive facilities further away from obvious fracture zones in the region where world powers grind together like tectonic plates.
New Zealand is a member of the Five Eyes intelligence family. It has to bring some benefits – and one of them can be as a trusted locality for sensitive technology production. We already have quality electronics manufacturers in Hamilton, and scope to see more. We have a strong and growing technology sector, and 75% of our population growth in the past year has been from international migration into Hamilton – so we know we can grow and import the work force. Our time zone works perfectly to provide out of office services to the United States and Europe.
Nvidia II in East Hamilton? You bet. We have the space, the juice, the university – and we also have the time zone to be America’s back office, not just Wellington’s.
The future is ours to make.
Five reasons why the Waikato is onto a winner
By Chris Joblin
Head down slogging through the spring – whether it’s on the farm, a construction site, or downtown in a corporate office in central Hamilton - it’s easy to lose the sight of all the great things we have going for us. As I get ready to wrap up my role as CEO of a significant value creator for our region, I’m letting loose with my five reasons why I think the Waikato is on to a winner, and our moment in the sun is fast dawning. Here we go:
1. We’re part of a love triangle.
Hold your tea. It’s another way of talking about the increasing interdependence of Auckland-Hamilton-Tauranga. Each area has the opportunity to concentrate on its strengths and not feel so much need to go head-to-head on everything. The Waikato is the really productive engine-room in this economic troika, sitting alongside New Zealand’s most multi-national city Auckland and the Bay of Plenty that does well in all the lifestyle beauty parades. Waikato’s strengths lie in our ability to unlock constraints of both Auckland and Tauranga, their weaknesses will be to Waikato’s benefit.
2. Geographically, we’ve got the right moves.
The Waikato Expressway really put us on the map. From here you can cruise to Auckland in 90 minutes, Tauranga in less and punch down to Taupo and Taranaki or beyond. Like the drafting gate in a sheep race, it makes us an attractive place for distribution and logistics – you can draft your cargoes every which way. That was the thinking behind the formation of the Ruakura Superhub. Not everyone got it at first but now those really large previously out-of-town businesses like Maersk, Kmart and Big Chill are there to prove the point. This month’s news of new direct flight connections with the Gold Coast and Sydney puts the Aussie versions of Vegas right on our doorstep too.
3. We’re seen as relatively stable.
I’m not talking about political stability here but rather the geotech kind. Earthquakes are an unforgiving reality in New Zealand. Scientists (and many others) live in fear of a major movement in the Alpine Fault, transecting the country from Milford Sound out through the top of the South Island and exiting the country like a bullet wound around Napier/Hastings and out to the Hikurangi Trench. It’s not a question of if but when – hopefully a long, long time. Tragic events such as the Christchurch and Kaikoura earthquakes provide a glimpse of the reality and in my various property development roles I’ve noticed a distinct trend for government agencies and internationals to cover their bases with new offices in what is perceived as a more benign seismic environment in the Waikato. One of the things I’ve learnt is never say never – but if we can be that resilient province, let’s do it.
4. Plenty of smart cookies.
Waikato has provided smart science to the country since, well, practically forever. In comparatively recent years, notably with the establishment of the Ruakura training and research centre in 1888, our region began to further expand its reputation for excellence in agricultural science. It’s a space we still excel at today with the likes of Dairy NZ, Livestock Improvement Corporation, Gallagher and others. I wanted to say Halter too – but that was one that got away. Its founder Craig Piggott grew up on a dairy farm in the Waikato and obviously nurtured the idea here. It just got away on us when he headed up the road to the University of Auckland and then Rocket Lab. Today we have new generations of smart cookies here such as the teams at Aware Group, Company-X, and Dynamo6 carrying the tech torch into the cloud-distributed, AI-enabled, digital-distance.
5. Stealth moves
As everyone knows – even The Chiefs – the world loves a stealth move and the Waikato has them in spades. Every time we show an out-of-town guest to the Ruakura Superhub it bowls them over. We deliver great infrastructure (and delivered it on an Australasian scale.) Entities like Rabobank NZ, Maersk and Kmart obviously cottoned on to the Tron, and others are on their way. Besides, don’t tell Tauranga, we are actually a secret slayer on the lifestyle front. From the world-class left hander breaking on the rocks at Manu Bay to the bush clad solitude of New Chums beach in the Coromandel. It’s all in our region and we should celebrate it. Credit where it's due: we also have an awesome hospitality scene led by some world-class eateries in Palate, Chim Choo Ree and Gothenburg.
Thanks for bearing with my reckons on this fantastic region where we live. My next column (second of three) will lean into three economic areas where the Waikato needs to wet its beak.
