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Will local businesses profit from cyclone rebuild?

The region’s rebuild of bridges and roads is set to cost more than $1 Billion and a provide a pipeline of civil infrastructure work that could stretch out for the next decade. But what businesses will benefit?

Large national and multi-national businesses have already formed alliances with Waka Kotahi while a local-centric procurement pledge (progressive procurement) by local council’s has locally owned and operated businesses hoping that they will receive their fair share. Since the cyclone and up to the end of June $61.3m has been invested in Response road repairs and reinstatement.

Hastings District Council transportation manager Jag Pannu says if capital works continue at this rate, the council’s recovery programme could potentially be delivered over the next seven years with a total investment of over $700m. The first two projects are the Puketapu and Matapiro bridges, which are expected to be completed within 18 months. Jag says although council tries to ensure local firms get project work, there’s a broad range of considerations as part of their tender and procurement processes and policies.

“The works are and will be procured in accordance with Council and Waka Kotahi’s approved procurement strategies. While Council supports local businesses, there are so many other lenses we have to look through, such as value for money, skills and experience, capacity, the Fair Trading Act, and government procurement rules. Jag adds that national and international firms do employ locals as well as subcontract work to local suppliers, where possible.

“Both local and national firms employ local people. In both cases, the council will be supporting and encouraging local employment. With the largest scale of projects in the history of the region Jag says the programme streams and local businesses that could benefit offering services in community engagement, project management and co-ordination, consultancy support in engineering design and construction of road and bridges.


The Profit spoke to several local business owners that have a role to play in the many projects which they say have significant benefits in employment opportunities and increased local investment back into the community.

Two newly established regional agencies, the Regional Economic Development Agency (REDA) – funded by all councils and the Hawke’s Bay Recovery Unit – funded by the government are also on the progressive procurement bandwagon.

Cam Wylie, chief executive and owner of RDCL says the cyclone rebuild offers a generational opportunity for local firms of types, shapes and sizes, particularly engineering and construction related, to develop and grow meaningful capability.

He says the local benefit should be significant but local engineering and contractor businesses in Christchurch and Kaikoura saw little benefit from the earthquake recovery investment. “SCIRT (Christchurch) and NCTIR (Kaikoura) are often touted as good examples of local benefit.  They are not.  “Many local (engineers, contractors) saw no benefit at all.

If you were ‘in’ the select few, basically large, multi-nationals you reaped serious coin.  That is a massive imbalance of tax-payers distribution of wealth and must not be repeated.” Cam says one of the most significant benefits is wholesale upskilling of the local population.

“There is an opportunity to lift skill levels across the business community to leave real resilience and inject money into sectors to strengthen and leave a legacy of significant capability so that we can manage similar events as they come in the future.

“It is a moment to get a ‘ticket’ (qualification) for almost anyone who wants it.  He adds that local businesses like RDCL have a deeper understanding of the environment and localised natural landscapes and features than national or international companies.

“The initial response at least must be able to come from locally competent Sixteen bridges were destroyed by Cyclone Gabrielle players to put assets such as roads and bridges back together, understanding future vulnerabilities and building in resilience that locals know about through living here.

“The unique culture of the East Coast must also be recognised. It is not for everyone to come here and operate. There is a way to be successful here through engagement. It’s not for
‘out-of-towners’ to fly in and operate. We know that will go down like a bag of cement!

He adds that local capability is essential for future recovery as national assets cannot be mobilised into areas cut off by landslides, rivers and bridges.

Strata Group director Russell Nettlingham says local businesses have a greater commitment to the region, and therefore are more loyal.

“Locally owned and operated businesses will remain in the region long after the rebuild is complete and large multi-nationals have a much higher staff turnover and don’t have the same commitment to the region.  In his view multi-nationals are more profit driven businesses, with profits not Rail connection between Napier and Hastings invested into the local economy, instead going back to offshore shareholders.

“Giving them the lion’s share of the work is not building resilience in our community.” Often a concern on using local firms is capacity but Russell says that as well as a team of 35 professionals, existing partnerships with similar businesses provides scale to over 180 engineers and technicians. Russell Roads chief executive Gavin O’Connor says large scale projects enables investment to upgrade plant and machinery at the same time as investing in talent.

“We will be able to employ and train more people who will remain employed locally long beyond the rebuild works. “It goes without saying, money spent with local firms finds its way directly back in to the local economy bringing a double benefit of the spend.”

He says another benefit of a large work programme or ‘boom’ is it can be managed in a more sustainable way.

“For example, bringing in large numbers of contractors from outside the region can have some dire negative outcomes.  It creates false inflation of housing demand and costs and those issues will have impacts that long outlive the rebuild timeframe. Bringing in people locally who are already here and can build sustainably will better limit these impacts.”

Drainways managing director Mark Currie also raises a red flag that too many out of town contractors establishing a presence due to could oversaturate Temporary bridge at Waikare the local scene long after the rebuild is over.

“There’s always opportunities that come out of these disasters but if too much work is given to out of town contractors it will have a twofold effect. “Once it’s all completed, what will the contractors that have come into town do? I think they’ll try to stay on and it’ll end up another race to the bottom for most companies competing in a smaller market and with too many contractors.”

He adds that most locals were affected by the cyclone in some way and by giving locals work not only helps them financially get back on their feet but also helps their mental wellbeing.

“Seeing other contractors come into the area and get work that we know we could do and handle doesn’t give any encouragement, motivation or confidence that the councils are looking
a natural disaster out for the locals and trying to support them.”

“I fully agree that the work out there at the moment is way too much for us locals to complete and I’m all for getting this place back to as normal as possible as quickly as possible but I think there should be some way for the councils to liaise with the local companies to find out how they’re doing and also what else they need to succeed and survive in these current times.

Hastings-based land development consultants Development Nous is also waiting for a role to play.

Business Operations Manager Will Newall said the firm attended presentations early on around the alliances but then all went quiet.

“We attended presentations based around two separate alliances, which looked like it could deliver what is needed by our community. Subsequently, we were then told the model is a direct engagement, and not an alliance, but to be ready for when someone needs your services.”

Will also agrees with the other local businesses in that they are similar to first responders after an event and have just offered support without thinking of their bottom line. “As a business community, we have all rallied around the people who needed assistance, often without compensation. Moving forward, I believe it’s essential that the process draws as much on local knowledge, expertise and relationships already embedded in our community as it does on the resourcing ‘grunt’ that larger companies outside the region can potentially provide.

“One of the key reasons as to why we are in business and why I specifically work at DNL is our having a significant influence on the sustainable development and improvement of our communities that we all live in.

“Being involved in cyclone recovery work in our own communities as locals working for locals means we are truly invested in doing what’s right for our future as a region,” says Will.

At Russell Roads, Gavin says they’ve done pretty well so far across their civil infrastructure capability as well as quarry materials and having the only operational Asphalt plant locally and supply product to all of the large and small contractors.

The business has been directly involved in cyclone response works for Hastings DC, CHBDC and Waka Kotahi as well as sub-contractors to Fulton Hogan and Higgins across the Hastings and State Highway networks. Their Mohaka quarry serviced the Wairoa clean up and response works while their Hastings and CHB quarries have serviced some of the local demands.

Going forward Gavin says they have repair works in the Waimarama and Maraekakaho areas with Fultons and are working directly with Waka Kotahi with bridge repairs on SH2.

Tukituki MP Anna Lorck strongly supports local businesses getting their fair share of the investment.

With economic forecasts suggesting Cyclone Gabrielle might take a $1b bite out of the Hawke’s Bay horticultural industry, Anna says any loss in this sector could be offset by infrastructure work. The Government has committed just over $1B for state highway rebuilds in Tairāwhiti, Wairoa, Hawke’s Bay, Coromandel and Northland.

“Hawke’s Bay and our impacted communities have been hit hard by the cyclone and need ongoing support to help rebuild their lives, and that means building back stronger and much more resilient infrastructure.

“A big part of that is ensuring a proactive approach that guarantees Hawke’s Bay gets as much opportunity as possible from the work ahead. And, as we do, this does create a once-in-a-generation opportunity to grow our capability and capacity and build the region’s workforce with transportable and new skills.

“This also has the significant benefit of the money earned going back into the region’s economy, further supporting local service
providers, hospitality and retailers – those businesses that are also so critical to our regional growth.”

Waka Kotahi Regional Manager of Maintenance and Operations Jaclyn Hankin says the procurement plan is in place to ensure locally-owned contractors and consultants benefit from the rebuild.

This will be via the Transport Rebuild East Coast (TREC) Alliance which is a collaboration between Waka Kotahi, KiwiRail, Fulton Hogan, and the existing maintenance contractors for the two regions; Downer and Higgins.

The alliance will lead the design and delivery of physical works on the state highway and rail networks over the coming years and Jaclyn says there’s plenty of project work for local firms and the alliance will complement – not replace – existing resource within the region. “Waka Kotahi is committed to a regionally led recovery and centrally supported approach to the future of the East Coast’s transport networks.

“Waka Kotahi and KiwiRail have developed a strategic procurement plan based on an ‘East Coast first’ philosophy, ensuring locally owned contractors, who know Hawke’s Bay, the Wairoa district and Tairāwhiti best – is critical to ensure we meet current and future needs.

“The East Coast has a strong pool of hard-working, skilled and experienced contractors, consultants and suppliers who understand both road building and the East Coast whenua.

She says a number of locally-owned organisations are already involved in the recovery work that has been ongoing over recent months and the alliance will continue to work closely with these organisations, and other locally-owned contractors and suppliers.

A professional services sub-alliance is also being established to ensure the design element of the process is well resourced. Like the construction element, this will include both large consultancies with national scale as well as smaller locally based consultancies that have significant experience within the East Coast.

REDA’s project manager Michael Bassett-Foss says to get local businesses ‘procurement ready’ they have hosted meetings with councils, government agencies and providers. He says participants provided input into a stocktake of developments in the progressive procurement space, identified key constraints and opportunities for progress but he says it will take time to develop the framework and systems to ensure its success. There is no monitoring or reporting of involvement by local businesses, but it should be the first step, he says.

“This is work in progress. It will take time for agencies, including councils, to develop systems to be able to capture and report on relevant metrics. Michael says REDA is keen to work
with the recovery agency to wrap the civil infrastructure alliance into the progressive procurement framework.

The Government already has a mandatory requirement to report on progressive procurement metrics and although all councils have signed up to a regional procurement policy, reporting isn’t required.

“Multiple central and local government agencies will be procuring and funding the alliance for the work they do, so efforts will need to be coordinated across these multiple parties. Michael sees the major benefits for local businesses as being more long term; an ability to creating a greater pool of capable and experienced local suppliers and staff, skills and capability development for locals and pathways through employment.

The short-term financial benefits through the regional economy are helpful, but after the bridge is built or the road repaired, progressive procurement will leave a more skilled and employable workforce that can continue to support Hawke’s Bay into the future. “This is where the value is. Employing local will also deliver more engaged communities with associated social and wellbeing outcomes.”

Ross McLeod is leading the region’s recovery agency (RRA). He says central and local government hold different procurement approaches based on progressive procurement and central government targets. He says a yet to be finalised progressive procurement framework will offer many benefits such as preferred use of local suppliers, increased use of Māori suppliers, increased local level employment and training and targeted outcomes to improve training specific outcomes for rangatahi Māori and Pasifika training and employment.

“As pipelines of work are developed, further work will take place to define how local businesses are involved in each area of procurement activity.”

Both the Regional Economic Development Agency, with RRA support, has suggested an auditor be installed to ensure Hawke’s Bay labour and expertise is definitely involved across the various rebuild projects.