Businesses face uncertain future after NZ quake

At least a third of the buildings in the centre of Christchurch must be rebuilt. About 6 000 downtown businesses are shut. Big employers are laying off workers. Residents are leaving in droves and tourists are not likely to come back to this once-picturesque city anytime soon.

Last week’s 6,3-magnitude earthquake, which killed at least 148 people and caused an estimated $15-billion in damage to Christchurch, has become New Zealand’s most expensive natural disaster, which economists fear could cause a shallow recession.

“There’s no reason to believe the place is going to become a permanent ghost town,” Bank of New Zealand head researcher Stephen Toplis said. “But it’s going to be a very, very long adjustment process, and that adjustment can’t begin until the place stops shaking.”

He said Christchurch’s small- and medium-sized businesses are the lifeblood of its economy and especially vulnerable as the city begins what will be a years-long rebuilding effort.

In Christchurch’s downtown alone, 6 000 businesses have been destroyed or remain isolated by a police cordon surrounding the search and rescue operation.

They include the city’s best hotels, such as the 26-story Hotel Grand Chancellor, now tilting on its foundations and slated for demolition. Their loss is a blow to New Zealand’s second-biggest industry, tourism, and to Christchurch’s reputation as the gateway for visitors to the country’s majestic South Island.

Hoping people will want to get back to normal
The scale of the destruction, estimated at $15-billion, has forced the government to consider building a temporary central business district elsewhere in this city of about 350 000. Some even suggest the city’s commercial centre be relocated permanently.

With the central business district closed, “all of the services that are offered in the CBD will need to relocate elsewhere”, Earthquake Recovery Minister Gerry Brownlee said.

Engineers and planners said the city’s decimated centre may be unusable for months and that at least a third of the buildings must be razed and rebuilt.

The massive reconstruction price tag comes as New Zealand’s economy has struggled to grow in recent quarters despite rebounding from the worst of a recession in 2008 following the global economic downturn.

Andy Vanlier, co-owner of the Beach Cafe in the coastal Christchurch suburb of Waimairi Beach, estimates he has already lost NZ$25 000 (New Zealand dollars) worth of stock and business since the quake forced him to close. He was planning to reopen after cleaning the place up, but worries about the long-term effects of the quake.

“A lot of people have left Christchurch,” he said. “We’re hoping people will want to get back to normal, have coffee and talk about their experiences.”

Part of normality
In the same suburb, Les Overend said he was nervous about taking his “Mr Whippy” ice cream truck back on the road too soon but found residents have appreciated any reminder of life before the disaster.

“People were very glad to see us,” he said of the truck, which blares chirpy tunes to attract customers. “They look at us as part of normality.”

Prime Minister John Key on Monday announced the first financial measures to get Christchurch back on its feet — subsidies for employers worth NZ$120-million to help pay salaries for some 50 000 people unable to go to work because of damage.

Despite the intervention, one of New Zealand’s largest supermarket chains, Foodstuffs, announced it was laying off 236 workers at two destroyed Christchurch supermarkets.

Other business owners are mulling how long they can afford to keep staff while not bringing in much money, and they might face higher costs moving into new buildings where rents could be higher.

Finance Minister Bill English said the government would take on more debt in the short-term to pay for rebuilding infrastructure in Christchurch and the surrounding Canterbury region, which accounts for 15% of the national economy.

Some analysts predict the central bank will cut interest rates next month to help the fragile economy.

“Fortuitously, we’re in the midst of a commodity boom, and I think that will rescue us,” Toplis, the Bank of New Zealand economist, said.

‘Long memories’
Agriculture is New Zealand’s biggest industry, and dairy products such as cheese and milk powder are its biggest export. The farm sector has not been severely damaged, although exports have been disrupted by extensive damage at Lyttelton, the South Island’s largest port, which was at the epicentre of the quake.

But tourism, which provides 18% of New Zealand’s foreign exchange, could unnecessarily suffer if tourists failed to realize that the damage was restricted to Canterbury, New Zealand Tourism Industry Association chief executive Tim Cossar said.

“There’s going to be an impact on Christchurch,” Cossar said. “You can’t lose that much accommodation and have that much of the city closed down and not have a profound effect in the short term and possibly the long term as well.”

Business advocate Paul Lonsdale, manager of the Christchurch Central City Business Association, said restoring tourism, which brings NZ$2,4-billion into Canterbury a year, was critical for the city.

Unless the crisis facing Christchurch was handled well, “we could face financial collapse”, Lonsdale said.

Some people are doing booming business, though, because of the quake.

Steve Crosby, the 57-year-old owner of Generator Place, is selling portable generators from a van parked on roadside rubble. He said his sales have doubled this month because the quake left thousands of residents sheltering in the ruins of power-bereft homes and in tents.

He said has not taken advantage of the disaster by jacking up prices because he is looking ahead.

“People have got long memories,” he said. “If I started ripping them off, they’ll remember the next time.” — Sapa-AP

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