Retail NZ is calling for the Prime Minister to be kind, after reports that she is ‘angry’ that the Warehouse Group is undertaking a change process that could result in a substantial number of job losses.
“Retail NZ has been advising Government for months that larger retail chains are not immune from the impacts of the COVID-19 and we have been forecasting substantial numbers of job losses across the sector, and the Prime Minister should not be angry that businesses are acting to reduce costs and create sustainable futures,” Greg Harford, Retail NZ Chief Executive, said today.
“Retailers greatly appreciate the support that the Government has provided to the retail sector in recent months – but the margins in retail are wafer-thin. New Zealand businesses, both large and small are doing their best to manage the consequences of the lockdowns, and they are needing to make very tough decisions. Recently, a number of small and high-profile retailers have found themselves in a position where they need to close stores and reduce headcount in order to remain viable into the future. Retail NZ research suggests that more change and more job losses are expected in the coming period, across both small and large businesses.
“There is a misconception that larger businesses are able to incur big losses – but the fundamentals of operating a business are the same whether your business is large or small. Nobody in retail wants to make people redundant or close stores, but no matter the size of a business, it needs to make operational decisions to drive efficiency and productivity in order to survive. Failing to do so will ultimately lead to the demise of those businesses, and much greater numbers of job losses. . .
There is rarely a single factor behind business difficulty.
Those shedding staff, closing branches and folding altogether may well have been facing problems before the Covid-19 lockdown.
But not being able to operate for weeks while still incurring fixed costs, even with the wage subsidy, pushed them over and it didn’t have to be that tough for most of them.
When the lockdown was first announced, the Warehouse declared it was an essential business and would be operating at alert level 4. Ardern declared it wasn’t and wouldn’t be.
I had joined the chorus of people saying that the Warehouse wasn’t an essential business and agreed its stores shouldn’t be open at level 4. But why couldn’t it and any other retailer that could have done mail order not been able to do so?
Had the government allowed what was safe rather than dictating what was essential, the Warehouse and many other retailers would not have faced the total loss of business for all those weeks at level 4.
If it was safe to order Easter eggs online from a confectionary factory and a children’s or text book from a book shop, it would have been safe for the Warehouse to offer an online mail order service.
Perhaps the Prime Minister has forgotten her part in the forced closures, and has she also forgotten all the Warehouse founder did to help?
Warehouse founder Sir Stephen Tindall, Trade Me creator Sam Morgan and former Air New Zealand chief executive Rob Fyfe joined forces to help ready the country to fight Covid-19.
Together they ordered 50 intensive care ventilators, seven planeloads of PPE protective clothing and equipment, and met with the Prime Minister Jacinda Ardern the Sunday before lockdown was announced to urge the Government not to delay shutting the country down to try to limit deaths and eradicate Covid-19. . .
“Some of us, Sam Morgan and I in particular, realised there was a lot of stuff not getting done. We basically took the bull by the horns along with the guys from Zuru, and used our own money and ordered up a whole heap of PPE gear. There’s actually seven planeloads coming. Two have arrived already.”
They also worried New Zealand didn’t have enough ventilators, and moved to source some to give as many severely ill people the chance of beating infection.
“Of course every ventilator manufacturer in the world was chocka,” he said.
A little Kiwi ingenuity followed, and the group has backed niche New Zealand manufacturers around the country to begin manufacture once key parts can be sourced, though efforts to buy ventilators from overseas continued.
Tindall underwrote the purchase of 50 New Zealand-made ventilators at $60,000 each.
“I said to the agent, place the order, and you have got my word I will pay for them, if the Government doesn’t,” Tindall said. . .
Tindall and Morgan became convinced lockdown was inevitable about two weeks before the meeting with the politicians. . .
The government keeps telling us they went early and hard, but these business people saw the danger earlier and didn’t just talk, they acted.
The government didn’t go early enough, didn’t go hard enough at the border soon enough, then went too hard at level 4 and now Ardern has the audacity to vent her anger at the business founded by one of the men who saw the danger and acted earlier to help.
Heather du Plessis-Allan says the anger attack is a bad call politically:
Yes, this might play favourably with voters at the moment because of the rally-around-the-flag sentimentalism and because plenty of voters don’t understand business and seem to think the wage subsidy was intended for The Warehouse itself rather than the workers
But the PM should know better than that.
What she’s done here is betray her own fundamental let’s-all-work-four-days-a-week lack of understanding of what drives business. She’s complained that The Warehouse should prioritise staff higher and focus less on the shareholder.
Well that’s not how business works. Businesses are not charities.
The business sense behind that is deeply flawed. Sometimes it’s better to cut 100 jobs and save 900 for example, than to keep all 1000 on, risk the business itself – and then lose them all eventually anyway.
Through this public rebuke Ardern’s also essentially warned other big businesses to be careful about redundancies lest they also earn one too.
I tell you what, what I’m hearing from those involved in big business in this country is a deep frustration with this Government, their lack of understanding and their tin ear to pleas.
And what just happened will not make that better.
We’re going into an economic downturn and we are going to look to and lean on big business to help us out of this.
It’d be in the Government’s interests to keep them as friends, not make enemies out of them. . .
Paul Goldsmith said the PM has the wrong focus:
National’s finance spokesman Paul Goldsmith says Prime Minister should “stick to her knitting” after expressing her fury at The Warehouse Group’s mass job cuts.
“I don’t think it’s helpful for the Prime Minister to be criticising struggling businesses, she should stick to her knitting,” Goldsmith said.
Rather than getting angry, Ardern should be “better focused” on the Government’s plan to grow the economy, he said. . .
Meanwhile, Independent economist Cameron Bagrie said Ardern “overstepped the mark” when she said she was angry with the Warehouse over the job losses.
“Businesses are dealing with tough economic times,” he said.
“If that means they [businesses] need to cut costs to recalibrate for a different economic environment then so be it.”
He said there is a big structural shift going on in the economy at the moment – “I don’t think consumers are going to be out there spending like they were pre-Covid-19”. . .
No employers make these decisions lightly but sometimes cutting parts is necessary to save the whole.
A politician who preaches kindness shouldn’t be criticising those who are forced to act to ensure their business, and the remaining jobs, are sustainable.