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What makes up businesses on the Coromandel?

18 November 2019

Thames-Coromandel people have always been entrepreneurial, but in recent years they’ve upped the ante, with new businesses playing a lead role in creating jobs across our district.

This is among findings of a new report Who creates the jobs in Thames-Coromandel District? New or existing businesses?released this week. 

Authored by economist Benje Patterson, and commissioned by our Council, the report reveals new businesses have made a higher contribution to jobs growth over the last 15 years. 

"New businesses being established on the Coromandel also makes our district vibrant and diverse," says Thames-Coromandel District Mayor Sandra Goudie.

"But we also can't forget the amount existing businesses contribute. That's why our Council has an economic development team to work with fledgling and mature busineses to make sure everyone, in whatever line they are working in, is doing the best they can for themselves and their employees and customers and in terms of contribution to our district as a whole," Mayor Sandra says.

Business numbers have recoveredThe total number of businesses across Thames-Coromandel District in 2019 was 4,350, representing a recovery from the 2013 trough of 4,080 and back at the levels of prior to the 2008 Global Financial Crisis.

Business numbers in our district experience bigger swings across the business cycle than the rest of New Zealand as our economy is less diversified and relies heavily on the cyclical construction and tourism sectors.  See this trend represented in the graph above.   

New businesses drive job creation


In 2019, the 4,350 businesses in Thames-Coromandel accounted for 10,700 jobs. 

Over the last 15 years, new businesses accounted for a 2.9 per cent annual contribution to total local jobs growth, while existing businesses have struggled to create jobs and, by shedding staff, detracted 2.1 per cent from that figure.

“New businesses’ higher contribution to jobs growth in Thames-Coromandel may stem from people moving to the area from other parts of New Zealand and choosing to start businesses to generate income, given that quality local job options are relatively thin on the ground,” Mr Patterson says.

Where are the new jobs?
The top five industries for job creation in Thames-Coromandel District in the five years to 2019 were:

1. Accommodation and food services
2. Construction
3. Health care and social assistance
4. Electricity, gas, water and waste services
5. Administrative and support services.

“Accommodation and food services is a particularly cut-throat industry. Job creation was concentrated in new businesses, with existing businesses shedding workers,” Mr Patterson says.

Our district’s stalwart industries such as health care, electricity, gas, water and waste services showed stronger performances compared to other existing businesses such as hospitality and tourism.

“That's not surprising given the larger barriers to entry into these sectors,” Mr Patterson says.

At the other end of the spectrum, the industry where business employment suffered the most was manufacturing. “These heavy job losses in the manufacturing sector were driven by existing businesses.  Encouragingly however, there were signs of job creation among start-up manufacturing businesses,” Mr Patterson says.  

The stats on our start-ups

The average Thames-Coromandel start-up business has 4.5 employees, close to the national average of 4.7 employees.

“It’s no surprise that start-up businesses have a relatively small number of employees, as entrepreneurs are unlikely to invest in staff initially as they build up their client base and bed in processes,” Mr Patterson says.

However, Thames-Coromandel businesses struggle to scale up thereafter, when compared to start-ups across the country generally.

“Reasons could include the fact it’s the nature of industries such as hospitality, or that they are mum-and-dad-type businesses,” Mr Patterson says.

Our Council’s Economic Development and Communications Group Manager Laurna White says the report emphasises the importance of striking a balance between attracting new business to our district and creating space for entrepreneurs to invest in or create start-ups, while at the same time bolstering the productivity and resilience of existing businesses.

“Both are important for job creation,” Mrs White says. “New businesses generate a steady stream of jobs, but these gains can be quickly eroded when  the existing businesses we have backpedal or strike tough times.

“While being entrepreneurial and creating jobs matters, we also focus on the wellbeing of our communities and the quality of the employment, as measured by how what is offered to employees in new jobs compares to existing jobs," Mrs White says.

“Pleasingly, the gap has been closing between what someone is paid in a new role compared to  a continuing job within the district."

Business attraction is a key focus of our Council’s Economic Development Strategy, centred on improving economic, environmental and social outcomes for our district. 

"Thames-Coromandel has significant opportunity. It is in close proximity to Auckland, Hamilton and Tauranga, has an enviable lifestyle due to the natural environment and climate, and is a popular tourist destination," Mrs White says.

"We have work underway, through our Productivity Plan, focused on high-value opportuniites with targeted workstreams in land use, land productivity, connected journeys, aquaculture and destination management and tourism," Mrs White says.

"This new report helps us understand trends for our district and the best focus for support to help both fledgling and mature businesses," she says.

"Our economic development team can help with contacts, networks, support and putting you in touch with potential investors," Mrs White says. 

Contact our Council's economic development team on 07 868 0200 or email laurna.white@tcdc.govt.nz

Find our more about our economic development strategy here. 

The demographics of Thames-Coromandel businesses - summary

• The total number of businesses across Thames-Coromandel District in 2019 was 4,350.
• From 2013 to 2019, new businesses added 10.4% to the District’s business stock each year, while business ‘deaths’ over the same period, remained steady at 9.4% of existing businesses failing each year.
• The average number of employees per business in Thames-Coromandel (counting businesses who employ staff only) is 7.7 employees, smaller than the national average of 12.1 employees.
• On average over the 15 years to 2019, new businesses accounted for a 2.9 per cent annual contribution to total jobs growth, while existing businesses detracted 2.1 per cent annually.
• New local businesses are more pivotal creators of jobs than in nearby areas.
• The average Thames-Coromandel start-up business has 4.5 employees, close to the national average of 4.7 employees.
• Local start-ups struggle to scale up, with existing businesses in Thames-Coromandel on average having just 3.2 additional employees than new entrants.
• Industries where employment was expanding offered average returns on equity of 21.6 per cent, while industries where job numbers were contracting offered average returns of 16.5 per cent.
• Over the five years to June 2018, new jobs’ pay increased by an average of 5.2 per cent annually,  while pay for continuing jobs with existing employers increased by an average of 2.4 per cent.

Read the full report on our website here.

Note: This report draws data from the Statistics New Zealand’s Business Register (between 2005-2019), which does not cover self-employment or people who derive income as a contractor or from informal enterprises.  The 2013 Census showed that 23 per cent of people in paid work in Thames-Coromandel were self-employed, compared to 12 per cent nationally.  Estimates from Infometrics showed that total employment in the district, including jobs in both businesses and the self-employed, was 12,726 jobs in 2018.