The Fitz has been closed for almost a decade and Palmy is no longer defined by student culture and sheep. Now it’s home to a new crop of innovators and startups who are thriving in the slower, more stable Manawatū business environment. Keri Welham talks to some of the key players shaping this North Island province.
Two years ago, Wade Cashmore was posted to Manawatū with the New Zealand Defence Force.
In Auckland, he and his partner Alesha McQuinn had often talked about owning a café. But the financial risk involved, primarily because of the economics of securing a stable lease, put them off. When they hit Palmerston North, they realised their cafe dream could come true without the Auckland-scale financial undertaking.
They set up Halcyon and paid the lease for the Cuba St premises out of disposable income. They’re funding the fit-out and doing all the renovations themselves, and customers seem happy to support their work-in-progress. There’s less competition than in Auckland, and McQuinn, 25, is able to run the small operation on her own while Cashmore, 28, concentrates on his day job.
“No matter how badly we mess this up,” Cashmore says, “we won’t be homeless.”
And they’re actually doing really well. After two years, they’re now, gently, making moves towards operating as a bar.
Cashmore says he’s conscious of “change resistance” in Palmerston North, so he’s determined to move at the community’s pace. He’s learnt a lot from the example of The Looking Glass Lounge which closed after just nine months, in 2017. The owners had decades of experience in owning and running bars in New Zealand and overseas when they landed in town from Christchurch with plans for a “speakeasy-style” low-lit cocktail bar in the Grand Hotel Building. Locals who spoke to The Spinoff for this article described the now-defunct bar as expensive, “just weird”, “a very Wellington thing”, and “too ahead of the curve”. Cashmore is determined Halcyon won’t outrun its clientele.
James Gardiner, Massey University’s corporate communications director, says young people like Wade and Alesha are increasingly seeking “an entrepreneurial life”. They don’t dream of working for a corporate; they want to row their own waka. Massey has responded by reworking its courses to bolster content which breeds innovation.
And the local business community insists that Manawatū isn’t just a good place to learn about business – it can also be an easier place to start one.
Tech entrepreneur Joe Harper, 36, develops Instagram assistance tools. He and his young family moved from Auckland to Palmerston North to be closer to their wider whānau. He discovered an immediate benefit in terms of sourcing developer talent. In Auckland, huge players such as Microsoft sucked up all the talent. But in Palmerston North, he found a clutch of very talented developers who had moved to regional New Zealand to access affordability and lifestyle and were looking for interesting opportunities.
Harper says he’s quickly built deeper connections across the business community here than he did in Auckland.
In a small place like Palmerston North, it feels like the city has your back, he says. People are cheering you on, willing you to succeed, and taking pride in your wins. The community is forgiving of speed wobbles; they’ll give you another go if they can see you’re trying hard. In this sense, he says Palmy is the perfect “test setting”.
Manawatū is New Zealand’s largest sheep farming region and home to a Massey University campus, Linton Military Camp and Ohakea Air Force Base. The region has a population of 117,000 – 87,000 of those in Palmerston North – and is home to 2.5% of New Zealand’s population.
Linda Stewart is CEO of the Central Economic Development Agency. She says Manawatū’s diverse economy spans everything from food research to logistics and defence, and includes 35 call centres, 22 software development companies, and 80 information technology and tech companies.
In February 2017, the region was home to 11,694 businesses, which is 51 more than a year earlier (by way of comparison, figures from 2016 show Hamilton – which enjoys enviable proximity to New Zealand’s largest city and has double Palmerston North’s population – had 14,424 businesses).
According to Statistics NZ, regional building consents grew 62% to $366 million in the year to June 2018.
Massey University is a massive presence in Manawatū, with roughly 5000 students and 3000 staff based in Palmerston North. Infamous student pub The Fitz closed in 2009 after 43 years amid extensive eulogising about its place in Palmy culture. James Gardiner says these days students seem to mostly head into town after midnight, Thursday to Saturday, following an evening of pre-loading. Among the working population, a new bar called Brew Union is enjoying mammoth success with a menu of craft beer and cheap eats.
Brew Union is located on Broadway, the shopping district that slumped when Farmers decamped to The Plaza in 2010. But Broadway is back: the avenue has risen again as a food and entertainment destination, led by a range of ethnic eateries offering lightning-fast service and low-cost meals. Longtime member of the local business community, Craig Nash, says it’s taken a decade, but Palmy has finally transitioned from its nightlife being defined by The Fitz to embracing craft beer and great food.
“In sophistication, we tend to lag five years,” he says.
Nash helps overseas companies relocate to central New Zealand. He says the Manawatū economy is “solid”.
“It’s an economy that doesn’t boom, but it doesn’t crash either. If you’re going to start up a business, that’s a very good point. It’s dependable.”
Nash contends the region was largely insulated throughout the GFC because a high percentage of locals worked for the government and had greater job certainty than those in the private sector. Around 26% of the region’s workforce (14,627 jobs) work for government employers such as the Defence Force, MidCentral District Health Board and the IRD call centre. He says attrition is low because people choose to stay in the region long-term.
He says new businesses also benefit from a “culture of support” in the region.
“The people [of] Manawatū are very loyal to Manawatū,” he says. “We’re big enough to matter but small enough to have a great sense of community.”
Nash says one of the downsides of Manawatū’s location is its distance to Auckland, which is where most New Zealand companies are headquartered. Manawatū business people are constantly jumping on a plane to get access to important people in organisations that matter to their business.
He also says a business trading locally won’t have as many potential customers as it would in a larger city and, with relatively high unemployment and low wages, customers’ disposable incomes aren’t as large.
In the June 2018 quarter, the Manawatū-Whanganui region had the highest unemployment rate in the country at 6.6%, compared with the national rate of 4.5%. The average income in Palmerston North in 2016 was $48,430; the average house price in the city in June this year was $391,000.
According to Statistics NZ’s regional economies report, New Zealand GDP per capita averaged $57,002 in 2017. In Manawatū, it averaged $42,919.
Nash says business owners need to really understand the market to make sure they attract a meaningful portion of available business.
Palmerston North City Council’s 10-year-plan, adopted this year, claims the city is New Zealand’s most ethnically-diverse regional city. “Since 2004, Palmerston North has become home to small groups of former refugees from the Republic of Congo, Burma, Bhutan and Syria,” it says.
The fact there’s even a 10-year-plan “in this day and age” makes Reeanjou Ram’s blood boil. She went along to a business consultation for the plan and was disappointed to realise the technology sector was woefully under-represented in the document.
“I thought: ‘what on earth am I doing here?’”
Ram set up her Australian company’s New Zealand base in Palmerston North last year. She was enticed by claims that Manawatū was “a place where things will happen”.
Speaking from Melbourne, Ram says she’d intended to have 20 people working for her emerging tech company Blockbit Solutions in Manawatū by the end of this year. She was especially keen to snap up talented Massey graduates and keep them in the region. But almost a year after setting up the Manawatū branch in October last year, she’s kept her Palmerston North team to six because she says she couldn’t see evidence of the local tech opportunities she’d been sold. Ram says most of her New Zealand work is in Auckland and Wellington.
“I guess my experience has left a bit of a bad taste in my mouth. I’ve invested in the region but the region hasn’t invested in me.”
She’d hoped for more integration with the local community, and perhaps some visibility of what contracts were coming up with agencies, such as the City Council, so she could have time to attract specialist staff and then be in a good position to tender and offer a local solution.
Ram sounds a word of caution to anyone thinking Manawatū might be an easy nut to crack.
In tech at least, it’s hard to attract talent away from the main centres, and constantly flying to other cities to see clients will quickly erode the financial benefits of the region’s cheaper living, she says.
“Make sure you’ve done your homework. Is there a market for your product?”
Local tech mega-success Frogparking has no trouble attracting talent.
The Palmerston North company is the world leader in innovative parking management solutions. It uses cloud-based technology to help organisations such as NASA and Disney manage huge parking facilities.
Shareena Sandbrook started the company with her father Don in 2010. Frogparking’s reputation is such that the company has lured brilliant minds from countries such as Egypt, North Korea, Slovakia, and China to the relative serenity of Manawatū.
These tech talents are “young and at the top of their game”, Sandbrook says. Her international staff still work the long hours common in start-ups overseas, but it’s only 10 minutes’ drive home, their kids go to school just down the road, and the tight-knit team offer a readymade social life.
Sandbrook has also found Aucklanders willing to give Manawatū more than a casual glance. She says career-oriented people in their 40s are excited to realise they can move to Palmerston North, afford to buy a home, and still test and expand their skills on the international stage with a grunty, fast-growing start-up.
Sandbrook spends half her year overseas. Every time she comes home, she’s reminded of the immense value of the relative calm of regional New Zealand. “It’s an easier life.”
Manawatū’s slower-paced lifestyle, stripped of the noise of a large city, gives an innovator treasured time to think, reflect and focus on the next milestone, says Sandbrook. Her comments echo those of seasoned innovator Simon Barnett, who founded Palmerston North hockey equipment company OBO 24 years ago. He says innovation requires fresh thinking, and that requires time.
“Being based in the Manawatū means that you are not distracted by the busy and time-consuming rush of a big city… Time is now your friend.”
Partner all that precious time with the ability to have deep connections with Massey University and modern technology that connects you instantly to the world, and Simon says true innovation can flourish on the fertile Manawatū Plains.
Sarah Cowan, 37 – Managing Director, The Herb Farm
Sarah Cowan says Manawatū is a great place to take risks. The community is incredibly supportive of people giving it a go with a bold venture and a business can exist “under the radar” nationally for a long time; learning from mistakes, fine-tuning, without the glaring eyes of a big city watching.
“It’s a place where you’d be more inclined to take risks.”
The Herb Farm was started by Sarah’s mother Lynn Kirkland 25 years ago. Sarah was an international model, based in Milan, but decided to bring her business degree home and join forces with her Mum. The business is based on a tranquil property just above Ashhurst. Plants grown in The Herb Farm gardens are picked and manufactured on site in to a range of skincare products. Customers love the setting, the transparency of the manufacturing process, and the fact the ingredients grow in fresh air miles from even a small city.
Trudi Duncan, 28 – Managing Director, GYRO Plastics
Trudi moved GYRO Plastics from Lower Hutt to Manawatū two years ago. The 50-year-old rotational moulding business, which Trudi took over when her father Ross Biggar retired, needed new premises. Trudi had been living in Manawatū for three years and commuting to Wellington for work, so she naturally took a look at options closer to home and found a great facility in Feilding.
“We could get the facility we needed for a price that was accessible. The more I looked in to it, the more it made sense.”
Trudi says the Manawatū business community is characterised by a friendly, collegial attitude. People are easy to deal with and are taken at their word. If her staff are ever unable to help a customer, she encourages them to suggest other local businesses, even direct competitors.
“That’s just how it is up here, you help each other out.”
Trudi’s family business is a long-term, stable organisation. But when it comes to start-ups, she’s noticed the community will enthusiastically support people who are seen to be working hard and giving it a go with a new venture. She puts it down to “old-school, rural values”.
The Spinoff Weekly compiles the best stories of the week – an essential guide to modern life in New Zealand, emailed out on Monday evenings.