ACCOUNTANCY BEYOND THE NUMBERS with Hayes Knight
Doing business with the super city…
Well folks, the super city is here, and whether you like it or not, it’s here to stay. Never before has Auckland seen such a major and also controversial shift in local government, nor one that has generated such debate and concern over its impact on the local community. Going into this transition it’s fair to say that there was an air of uncertainty as to how both residents and local businesses will be affected, and although the long term implications remain to be seen there are trends emerging which will likely give us some clues as to what we can expect over the coming six to 12 months. Recognising these trends and understanding the drivers impacting change will allow local businesses to best position themselves to take advantages of opportunities presented and protect themselves from any negative impacts.
A key objective of consolidating to one super city council was to realise operational efficiencies. We believe that this will be done primarily through supplier relations, economies of scale and reduction of duplication. Smaller organisations that previously supplied any of the councils are likely to face the most challenges as they may no longer have the resources to meet the needs of the much larger super city council. We can expect to see bigger and be more complex jobs go to larger businesses as engaging a number of smaller businesses simply isn’t efficient and won’t result in the productivity improvements they are looking for.
Businesses who have previously supplied goods or services to the individual councils will also need to address changes in the way the new super city operates, and ensure they are well positioned to continue to secure work. For some, doing business may become easier as standardised rules and regulations will be set across the region, including new streamlined procurement processes and standard procedures for tendering and entering contracts. Our clients are noticing a shift in the tendering process for work whereby the super city is becoming more selective in who they engage, with fewer companies selected to participate in a tender by invite only. Price competitiveness is at an all-time high but reputation is already emerging as a vital competitive advantage. Many businesses will have invested a lot of time and effort into establishing relationships with the regional councils and positioning themselves as a preferred supplier. Rebuilding these relationships with the new super city council will prove to be a valuable investment and pivotal to continuing to secure work.
In the short term we’ve noticed that a number of projects have been suspended or slowed down as a result of the transition resulting in an unexpected dip in turnover for some businesses. This may give businesses an opportunity to consider other routes to market or ways of expanding their product or service offerings. Over the long term we may see consolidation within industry sectors, so now is a good time for businesses to consider revising their strategic plan and thinking about possible alliances which can be built.
As well as the immediate efficiency gains, the adoption of the super city structure also serves an added long term objective – to drive economic development and expansion. Real benefits will come as Auckland city becomes recognised on the global stage and gains attention from investors, tourists, shoppers and as a destination for international events. One of the key tasks identified for the new council is to prepare a “spatial plan”. With Auckland expecting substantial population growth over the next 20 years planning will be vital to managing transport, housing and infrastructure investments and resources. These developments are widely recognised as being favourable to economic development and can be expected to drive local industry.
But, one message is loud and clear, and one that I consistently reiterate to business owners as the key to success. The ability to remain agile and seize opportunities will set a business apart from its competitors. This may come in the form of product or service differentiation, the ability to secure relationships with customers or building strong alliances. Capitalizing on these strengths through times of change can only build a stronger and more successful business. At the end of the day, the only thing for certain as that things will be different to the they were before, and that the difference is a permanent as opposed to a temporary change. You can’t control the outcome, but you can control your response. Review your plans, re-build your relationships, look for opportunities and consider investment in plant and equipment to ensure you are best place to win those elusive contracts.
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