Some of the people I talk to are already deciding whether to walk away because of their age, whether to reimage themselves, or whether to go to the bank and try to get some more funds. Most business owners are already pouring their own money into their industries to stay afloat, alongside borrowing significant amounts from the bank, Barrett said.
From a bank’s point of view, they don’t want to put any more investment into an industry that’s literally at the bottom. Barrett said he understands how people end up pushed to the brink, juggling debt while trying to retain staff and work through day-to-day issues.
Since Covid, Steel Worx has invested more than $30 million and has just built a $15 million factory. “As soon as it was done, we just watched the economy flatline. We went from 45 staff down to 28. Luckily, in the last few weeks, we’ve picked up a lot of work. I think I’ve hired eight or nine people in the last two weeks. We’ll get through — we’re lucky; a lot of people won’t,” Barrett said.
Barrett expressed frustration at the current Government sending the IRD after businesses owing money, especially after voting for change. Expectations were for a 0.4% decline in GDP, while Reserve Bank forecasts predicted a 0.3% drop. The result was double the Reserve Bank’s forecast.
“We’re like observers, watching the demise of the country, and it’s been a very hard thing to swallow,” Barrett said.
Recently, Griffin’s proposed closing its Proper Crisps Nelson factory, putting 82 jobs at risk. Earlier this month, another large Nelson employer, Eves Valley Sawmill, confirmed its closure would cost 142 jobs.
Finance Minister Nicola Willis acknowledged that businesses are struggling during a conversation with Ryan Bridge on Herald NOW. “It has been a really gruelling time for many businesses and many New Zealanders. This has been a very hard-fought economic recovery after a very difficult few years of sky-high inflation and soaring interest rates,” she said.
Willis said she understands where Barrett is coming from. Regarding the IRD, she noted that significant outstanding tax debt was built up during the Covid years, and it would be the wrong move for the Government to simply write all of that off.
New Zealand Council of Trade Unions economist Craig Renney said the latest GDP data show that tax cuts and public service cuts aren’t delivering economic relief.
GDP fell in 10 out of 16 industry sectors. Manufacturing fell 3.5% in just three months, and mining was down 4.1%. Retail trade, financial services, business services, healthcare, social assistance, agriculture, forestry, and fishing all saw declines.
Quarterly GDP per capita has fallen back into the red, now lower than it was in 2021 even after adjusting for inflation. Business investment also fell in plant, machinery, and transport equipment, while residential construction dropped 1.9% this quarter.
The indicators that might support growth in the future are falling, painting a challenging economic outlook ahead.
https://www.nzherald.co.nz/nz/gdp-shock-manufacturing-boss-warns-of-businesses-in-critical-freefall/KLZSS2T32BHCZEKQHYBJADZXXY/
