Port Taranaki Economic Impact November 2012
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4.5 Major industries From the volumes, values and types of goods going through the Port, we can see that there are some significant industries that utilise the services provided by the Port for the export and import of their goods and raw materials. The main industry catered for, as we have alluded to throughout this report, is the oil and gas industry. Other major export industries are in food processing, mainly dairy and meat; and increasingly forestry. On the import side, significant industries are the fertiliser and chemicals, and engineering industries. The industries that utilise the Port are the producers of the main commodities in the Taranaki Region. While the Port does not directly increase activity in the industries, the Port has an impact in terms of costs and/or production mix. There is a possibility that businesses operating at the margins may shift out, go out of business, or may not consider Taranaki as a place to locate a business, if the Port services were not available.
9 Ministry for Primary Industries (2012). Indicative New Zealand Radiata Pine Log Prices. Accessed: http://www.mpi.govt.nz/news-resources/statistics-forecasting/forestry/indicative-new-zealand-radiata-pine-log-prices.aspx.
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Port Taranaki Economic Impact November 2012
The Port is a significant business in the Taranaki Region in its own right. In 2011, the Port employed 121 people, spent over $35.4 million and paid a dividend to the Regional Council in the order of close to $1.9 million. Table 5.1 summarises Port Taranaki’s expenditure for 2012 .
In 2011/12, Port Taranaki had total expenditure of $34.8 million. This was made up of around $29.2 million in operational expenditure, $3.8 million in capital expenditure and dividends of $1.9 million. From this expenditure, the total impact on output, GDP and employment was determined using multiplier analysis. The economic impact generated from Port operations is shown in Table 5.2.
Based on total expenditure in 2010/11 of $34.8 million, Port Taranaki generated GDP of $16.8 million and employed 141 FTEs in the Taranaki region. Adding the indirect and induced effects, GDP increased to $25.5 million and employment increased to 349 FTEs. Further information on Port activity and trends is presented in the Appendix. 5.2 Port-related business activity Port related business activity refers to economic activity where the Port is a key enabler of that activity. Without the Port, it is unlikely that the activity would occur.
Payments to Suppliers and Employees $29,193,399 Capital Expenditure $3,780,000 Dividends to Council $1,850,000
Output
$34,823,399 $52,479,631 Value Added (GDP) $16,826,200 $25,522,625 Employment (FTEs) 141 319
Source: BERL Final Report 20
Port Taranaki Economic Impact November 2012 Port-related activity can be broken down into four subgroups – Port services and agents, transport and storage, fishing industry and boatbuilding and repair industry. Detail on each of these subgroups is included in the Appendix. The economic impact generated by Port-related activity is presented in Table 5.3. Table 5.3. Port-dependent activity
We estimate that Port-related activity generated output of $644 million, contributing around $312 million to GDP and employing 646 FTEs. Adding indirect and induced benefits increased output to $951 million, GDP to $465 million and employment to 1,272 FTEs.
Port services and agents provide shipping related services through the Port. They include shipping agents, stevedoring, chandlers, custom brokers and port servicing companies. Many of these companies provide offshore services to vessels and rigs in the oil and gas industry as well as general shipping clients. Table 5.4 shows the economic impact of the Port on shipping agents and businesses that provide port services.
The impact on port services is significant, with the majority of business directly attributable to the Port. Agents, on the other hand, generate activity through other avenues as well as the Port. Port services derive $527 million in activity via the Port. This activity generates $264 million in regional GDP, directly employing 391 FTEs. Adding indirect and induced effects increases contribution to GDP to $390 million and employment to 911. The Port’s impact on agents in the Region is $1.1 million, which generates $556 million in regional GDP and employs six FTEs. Adding indirect and induced effects increases contribution to regional GDP to $1.7 million and employment to eight FTEs.
Output
$644,303,931 $951,398,525 Value Added (GDP) $312,337,855 $464,827,878 Employment (FTEs) 646 1,272
Source: BERL Port Services Direct Total Output
$527,329,867 $780,448,203 Value Added (GDP) $263,664,934 $390,224,102 Employment (FTEs) 391 911
Agents Direct Total Output
$1,112,236 $1,679,477 Value Added (GDP) $556,118
$856,422 Employment (FTEs) 6 8
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Port Taranaki Economic Impact November 2012
The transport and storage industry has close relations to the Port, particularly in moving goods in and out of the Port. The Port therefore has a major impact on activity across a number of businesses in the transport and storage industry. Activity generated through the Port ranges from 100 percent (for some storage industries) down to less than five percent for some transport businesses. Table 5.5 shows the economic impact of the Port on the transport and storage industry. Table 5.5. Impact on the transport and storage industry
The Port is directly responsible for $24.1 million output in the transport industry. This activity generates $9.6 million in regional GDP, directly employing 64 FTEs. Adding indirect and induced effects increases contribution to GDP to $16.8 million and employment to 95. The Port is also directly responsible for $6.1 million output in the storage industry. This activity generates $2.4 million in regional GDP, directly employing 9 FTEs. Adding indirect and induced effects increases contribution to GDP to $3.6 million and employment to 13.
The fishing and seafood processing industry in the Taranaki Region is relatively small. The fishing and seafood processing industry in the Taranaki Region is reliant on the Port for docking and offloading catch. While not a significant industry (as there is only one processor in the Taranaki), it still makes a contribution to the regional economy. Table 5.6 shows the economic impact of the Port on the fishing and seafood industry. Table 5.6. Impact on the fishing and seafood processing industry
The fishing and seafood processing industry has direct expenditure of $17.9 million. This contributes $5.5 million to regional GDP and employs 16 FTEs. Adding indirect and induced effects, the contribution to GDP increases to around $9.0 million and employs 27 FTEs. Road Transport Direct Total Output
$24,056,379 $39,452,461 Value Added (GDP) $9,622,551 $16,839,465 Employment (FTEs) 64 95
Direct Total Output
$6,105,574 $8,547,804 Value Added (GDP) $2,442,230 $3,663,344 Employment (FTEs) 9 13
Fishing and Seafood Processing Direct Total Output
$17,949,442 $25,742,469 Value Added (GDP) $5,564,327 $9,037,388 Employment (FTEs) 16 27
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Port Taranaki Economic Impact November 2012
Taranaki has a fledgling boatbuilding industry, based around Fitzroy Yachts, which operates on Port land and uses Port facilities to launch their boats. The BERL regional database shows that the boatbuilding industry employs 147 FTEs in three businesses in the Region. Because of the inter-relationship between the Port and Fitzroy Yachts, we suggest that the industry, Fitzroy Yachts in particular, is reliant on the Port for its continued existence in the Taranaki Region. There is a very strong chance, that if the Port services were not available to Fitzroy Yachts, that it would move its operations to an area that had the necessary infrastructure to support its activities. Table 5.7 shows the economic impact of the boatbuilding industry in the Taranaki Region.
In 2012, it was estimated that the boatbuilding and repair sector generated direct output of around $67.8 million. This resulted in a $30 million contribution to GDP and employment of 160 FTEs. Adding indirect and induced effects to the analysis generates around $44 million in GDP and 218 FTEs. 5.4 Summary The economic impact of the Port on the Taranaki Region is calculated by combining the Port and the Port related business activity. This is shown in Table 5.8 below.
Combining direct Port expenditure and the expenditure of industries dependent on the Port suggests gross output of $680 million. This results in direct GDP and employment of $329 million and 790 FTEs. Applying regional multipliers to identify indirect and induced impacts results in total regional GDP of $490 million and 1,600 FTEs employed.
Output
$67,750,433 $95,528,111 Value Added (GDP) $30,487,695 $44,207,158 Employment (FTEs) 160 218
Source: BERL Port Econom ic Im pact Direct Total Output
$679,127,330 $1,003,878,155 Value Added (GDP) $329,164,054 $490,350,504 Employment (FTEs) 787 1,592
Source: BERL Final Report 23
Port Taranaki Economic Impact November 2012
Since the last economic impact assessment in 2007, the composition of throughput has changed. The oil and gas sector continues to be a major client and accounts for a significant proportion of activity through the Port. Growth out of Methanex could see the chemicals industry become bigger users, and forestry (logs) is currently growing at a rapid rate. Conversely, container volumes have dropped dramatically with the consolidation of export activity by Fonterra out of Auckland and Tauranga. This has coincided with the loss of a key major shipping service, which has had a flow on effect to other exporters who have diversified risk by moving a portion of goods out of other ports in the North Island. However, the Port still remains a viable export option and continues to support and be supported by the major industries in the region. As long as container services are provided on a reliable basis, the port provides competition to rail and ensures that transport prices remain competitive. Transport, logistics and storage companies continue to benefit from Port activity, particularly related to the movement of oil and gas, fertilisers, logs and feed stock. The combined output, value added and employment for the oil and gas, primary, dairy, meat, fertiliser and chemical, and engineering industries in the Taranaki Region are shown in Table 6.1.
The major industries using the Port account for around $7.8 billion in output, generating $2.5 billion in GDP and employing 11,668 FTEs in the Taranaki Region. We can therefore infer that Port-associated industries account for 24.3 percent of th e Region’s employment and 41.4 percent of its GDP. Associated Industries Direct Output
$7,752,184,947 Value Added (GDP) $2,496,510,554 Employment (FTEs) 11,668
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Port Taranaki Economic Impact November 2012
Taranaki is the focus region for New Zealand’s oil and gas production. There are approximately 20 oil and gas fields in production in the Taranaki region, the key ones being Pohokura, Kupe, Maui, Maari, Turangi, Tui, Kowhai, Kapuni, and Mangahewa. 10
The oil and gas industry is the most significant industry in the Taranaki region. In 2012, the oil and gas industry contributed $1.4 billion to the Taranaki Region ’s GDP, which is close to 23 percent of total regional GDP. The oil and gas industry employed 1,043 FTEs in 107 businesses. Taranaki is also the focus province for oil and gas production in New Zealand. It has the advantage over other developing frontier oil and gas regions (such as Southland) of having established support services and good prospectivity available to developers. 11
resins, etc.) industries have been inextricably linked for a long time. The Alpha well, one of the first in the world and probably the first in the former British Empire, was drilled by hand at Moturoa, New Plymouth, in 1865. The first New Zealand oil refinery was built in New Plymouth in 1913.
10 Venture Taranaki (2010). The Wealth Beneath Our Feet. 11 Arete Consulting Ltd June 2006. Final Report 25
Port Taranaki Economic Impact November 2012
Since then, Port Taranaki has grown on the back of significant oil projects, Kapun i in the 60’s and Maui in the 70’s .
The Port’s Newton King Tanker Terminal was built specifically to service the oil and gas industry and also has storage facilities designed specifically for the oil and gas industry. Table 6.2. Summary of oil and gas industry, 2012
Of more interest is the intensity of the oil and gas industry in the Taranaki Region when compared to all of New Zealand. Looking at location quotients, the oil and gas exploration industry has employment in the Taranaki Region that is 31 times higher than the national average. 12 For services to mining, the location quotient for the Taranaki Region is almost 12 times higher. This suggests the importance of the oil and gas industry within the Taranaki Region, but also the importance of the Taranaki Region to the national oil and gas industry. Table 6.3 shows the economic impact of the oil and gas industry on the Taranaki Region’s economy.
Directly, the oil and gas industry generated $2.8 billion in output, adding around $1.4 b illion to the Taranaki Region’s GDP and employing 1,043 FTEs. Including indirect and induced impacts, the oil and gas industry contributed $2.0 billion to regional GDP and employed 9,112 FTEs. The Port plays a vital role in facilitating the operations of the oil and gas industries. It provides key infrastructure that enables the oil and gas industry to operate and has developed specialist services and infrastructure to meet their demands. This is reflected in Port throughput. In relation to the Port:
12 The location quotient is a ratio that helps analysts examine the relative concentration of industry employment in a particular area relative to another larger, or base, area. In this case, New Zealand is the base area. The measure provides a potentially valuable insight into a local labour market’s industry structure, relative to the larger base area.
When the ratio is larger than 1.0, the percentage of those employed in the industry locally is higher than the percentage of those employed in the larger area. Likewise, when the ratio is smaller than 1.0, the percentage of people employed in this industry locally is smaller than the larger area. Location Quotient Oil and Gas Oil and Gas Extraction 473 1,339
20 30.99
Exploration and Other Mining Support Services 569 42
11.84 Total Oil and Gas 1,043 1,381 107 % of region activity 2.2% 22.9% 0.7% Source: BERL regional database FTEs GDP ($m ) AUTs Oil and Gas Direct Total Output
$2,818,463,384 $4,171,325,808 Value Added (GDP) $1,381,047,058 $2,016,328,705 Employment (FTEs) 1,043 9,112
Source: BERL Final Report 26
Port Taranaki Economic Impact November 2012
73 percent of volume throughput is oil and gas related.
85 percent of exports by value are oil and gas.
Close to three percent of imports by value are oil and gas related.
The Port accounts for close to 87 percent of all oil and gas exports out of New Zealand. All onshore liquids go through Port Taranaki as does all Maui condensate. Most offshore oil is shipped to its destination directly from the platform through an FPSO (Floating Production Storage and Offloading vessel), while offshore gas is piped through to onshore production stations. However, all offshore platforms are serviced through Port Taranaki. We suggest that Port Taranaki and the oil and gas industry are inextricably linked. The oil and gas industry increases the viability of Port Taranaki and the Port ensures the viability of the oil and gas industry.
AWE
BP Oil (NZ) Ltd Chevron
Coastal Oil Logistics Greymouth Petroleum Ltd Liquigas Ltd Methanex New Zealand Ltd New Zealand Oil Services Ltd
OMV
Origin Energy Ltd Shell (Petroleum Mining) Company Ltd Shell Todd Oil Services TAG Oil Ltd Todd Energy Z Energy Ltd
The Taranaki Region has developed the infrastructure, industry and experience to support the oil and gas industry. Some of this infrastructure, such as the Maui Pipeline, cannot be replicated outside the Region without considerable effort and cost. |