The regional landscape

(Data source: Infometrics Regional Database).

Northland had the most diverse economy among New Zealand’s sixteen regions, and in terms of GDP per capita, Northlands’ growth generally matches that of the national economy.

However, because Northland’s GDP per capita is off a much smaller base than at the national level, the gap between Northland’s per capita GDP and national per capita GDP has widened over the last ten years.

Northland’s economy can also be described as volatile; the region’s economy expands and contracts more, is quicker to head into recession, slower to emerge, and thus has more extreme peaks and troughs than New Zealand as a whole.

Manufacturing and processing

The Northland Dashboard

(Data source: Infometrics Regional Database)

Northland is not widely perceived as a region with a strong base in manufacturing, but in fact the sector is surprisingly large, contributing the most of any sector to Northland’s overall economic position and employing almost 10% of its workforce.

This is due to a number of reasons, the most significant of which is the location of New Zealand’s only petrol refinery at Marsden Point.  While the refinery accounts for only 5% of direct employment in manufacturing, it produces almost a third of the sector’s value to the region, and has encouraged the growth of the local engineering industry in and around Whangarei to service the plant’s day-to-day operational needs as well as its staged development. The refinery currently accounts for 40% of New Zealand’s total energy needs - notably producing 55% of New Zealand’s petrol demand, almost all its jet fuel, 80% of its diesel requirements, and 75-85% of the country’s bitumen for building roads.

The cement industry is another feature of the region, with the larger of the country’s now only two cement works operating near Whangarei and accounting for ~63% of the country’s production. The cement is distributed nationally by rail, road and coastal shipping and some quite large volumes are also exported.

The manufacturing sector also plays an important role in relation to the region’s primary industries turning product from the agriculture and forestry sectors into manufactured goods, producing farm inputs such as agricultural fertiliser and water tanks and servicing the engineering requirements of primary industry firms (farm and forestry machinery). Small, long established locally owned family firms, employing 10-20 employees is a feature of the manufacturing sector in the region, particularly in the engineering-, wood processing- and agriculture- related industries.  These three industries provide almost 75% of the jobs in the sector locally. Economic activity - and job growth - in all industries across the sector has slowed considerably over the last five years.

A particular feature of the sector in Northland is marine engineering.  This has expanded from a historical strength in boat-building into the building, repair and re-fitting of pleasure craft and super yachts, naval vessels and workboats such as fishing fleet vessels and barges. The associated industries  are clustered mostly around the Whangarei and Opua Harbours being often the first entry points, and what have become highly respected layover and provisioning spots, for ‘yachties’ sailing to New Zealand and the greater South Pacific.

GDP growth of the sector in the region bears little resemblance to the picture for manufacturing in the rest of the country.  If anything, it demonstrates that the sector is affected earlier and more significantly by the peaks and troughs that have impacted on manufacturing nationally.

Land based industries

The Northland Dashboard

(Data source: Infometrics Regional Database)

The land based sector of the economy involves changing natural resources into primary products and its contribution is measured at the farm-gate level, i.e. it does not include the output and employment of processing industries such as dairy factories, meat processing plants, timber mills, cement manufacturing facilities, etc (these being included in the ‘Manufacturing & processing’). Most products from this sector are considered raw materials for other industries.

In the last five years, the land based sector has contributed a healthy 15% to the Northland economy, and employs almost 12% of its workforce. 

The sector has not grown as fast in Northland as it has nationally, increasing by just 3% during the ten year period 2002-2011.  Annual growth rates have fluctuated between -11% and 4%. 

Dairying and forestry contribute 9% of the region’s GDP as a whole, and are the only two sectors whose economic activity has grown over the five year period 2007-11. They are the biggest industries in terms of value within Northland’s land based industries sector, accounting for 60% of the sector’s GDP.

In contrast, sheep/beef and other livestock farming has shown a marked economic decline over the past ten years.

About ~489,840 hectares of land are in pasture and Northland’s subtropical climate provides a competitive advantage not readily enjoyed by other regions – the ability to grow stock on during the warmer winter and spring months.

Northland has a well-established forestry sector, with predominantly Radiata pine plantation forests spread throughout the region; the regions log supply enviably respected for its superior strength and stiffness characteristics. 

Dairying and sheep/beef farming provide the most jobs, with horticulture also making a significant contribution to employment. 

Despite this, ~2,200 fewer people work in the land based sector in 2011 than in 2001, a drop of 24%.  In dairy farming for example, job numbers have decreased as farms have amalgamated and adopted sophisticated computer-based technology.  However, while the number of jobs has fallen, the value of the jobs has lifted due to a rise in the skill levels required.  It is now not uncommon for a Northland dairy herd manager to earn a package equivalent to $80,000 per annum, while a forestry worker is more likely to be earning the minimum wage.

GDP growth of the sector in Northland mirrors the country as a whole; differences relate to climatic variations in the region, for example flooding in 2007 and drought in 2012. 

Infrastructure and Construction

The Northland Dashboard

(Data source: Infometrics Regional Database)

This sector covers the range, from residential building through to major roading projects and associated service areas.  

As with manufacturing, one industry (electricity and gas supply) accounts for over a third of the sector’s GDP contribution to the region, though only 6% of the jobs – indicating the high productivity value of that particular industry. In contrast, building construction and related services soak up almost 75% of the jobs in the sector, but generate about 40% of the sector’s GDP. 

Building construction has been particularly hard hit by the recession, with an over 20% net loss in economic activity.  The sector has shed 700 jobs in Northland in the last five years. This is a comparable number to the manufacturing sector; both sectors demonstrate similar slippage in GDP at a regional level compared to the national situation.  

Tourism and hospitality

The Northland Dashboard

(Data source: Infometrics Regional Database)

The visitor industry market has been important to the Northland economy for many years. The FTE (full time employment) ps for the sector disguise the fact that many thousands of local people source their employment from tourism, through part time, casual and weekend jobs, or running small, owner-operated businesses such as B&B’s.

As is the case with all industry sectors in the region, tourism has also been affected by the recession of the last five years; with both slowed economic activity and a decrease in the number of people employed.

The region dropped from GDP growth that was higher than the national average, to a low in 2009. Interestingly, ps from the last two years show that industry growth in Northland is matching precisely the national rate of growth in the sector.

Fishing and Aquaculture

The Northland Dashboard

(Data source: Infometrics Regional Database)

This sector, although still small compared to other industry sectors in Northland, is already punching well above its weight at the national level.  While its contribution to the regional GDP is still small, it provides over 10% of the national value of the fishing and aquaculture sector.

Northland is notably home to NIWA’s world-leading fisheries and aquaculture research centre. Its base at Bream Bay supports a growing aquaculture industry throughout the region including oyster, and abalone farming, and the development of the world’s first on-land kingfish farm.

As with other industry sectors, fishing and aquaculture has been adversely affected by the economic downturn, though less dramatically than some other larger sectors. 

The sector’s GDP growth over the last ten years in Northland compares positively to that of the sector nationally, and at times is tracking ahead of national growth.