Taranaki industry projections

Business and Economic 

Research Limited

 

 

 

Report to: 

Venture Taranaki 

 

TARANAKI INDUSTRY PROJECTIONS 

2006 – 2026 

 

 

 

Final Report 

 

 

Prepared by 

Jason Leung-Wai 

Dr Ganesh Nana 

David Norman 

 

 

 

November 2007 

BERL ref #4597 

Copyright© BERL 

Level 5, 108 The Terrace, PO Box 10-277, Wellington 6143, New Zealand 

Telephone: [phone], Fax No: 04-931 9202, e-mail: [e-mail] 

Web-site: www.berl.co.nz  

 

1 Executive 

Summary 

This report was commissioned by Venture Taranaki Trust to provide an overview of the 

Taranaki region economy.  It looks at the historical growth of industries in the region to 2006, 

with a more in-depth analysis of key industry sectors.  It then provides employment and GDP 

projections by industry to 2026. 

There are 104,000 people who live in the Taranaki region.  From this, 45,200 Full Time 

Equivalents (FTEs) were employed in 12,800 businesses in 2006 producing $4.38 billion in 

GDP.  Taranaki makes up 2.5 percent of national employment and contributes 2.8 percent of 

national GDP. 

The key industries that drive the Taranaki economy are the oil and gas, and agriculture 

sectors, and their associated secondary industries such as food processing and engineering.  

As such, the region employs a far larger proportion of workers in these industries than New 

Zealand. 

Taranaki has achieved steady rises in employment and GDP in the region over the last five 

years despite flat population growth.  On a GDP per capita basis, Taranaki is well ahead of 

the national average, although regional employment and GDP growth (where population is 

not taken into account) has not been as rapid as national growth.  Based on the region’s 

industry structure, we project the Taranaki economy to grow at a faster rate than nationally 

over the next 20 years. 

The Taranaki region is benefiting from a fundamental shift in the global economy.  The 

effects of globalisation and the addition of an extra two billion people into the global 

workforce via India and China has driven down manufacturing prices.  Increased activity, 

along with a growing middle class has seen the demand for energy and commodities 

increase significantly over the last five years.  BERL does not see this demand changing in 

the future.  We actually see a fundamental shift, where rote manufacturing becomes the new 

commodity as Asia drives production costs down.  Meanwhile, the growing middle class sees 

the demand for western commodity goods, particularly dairy and meat, continue to increase.  

The Taranaki region, with its agriculture, food processing (meat and dairy) and energy focus, 

is well placed to take advantage of this fundamental shift. 

This positive shift cannot rely solely in increases in participation or productivity and will 

require an increase in employment, which should encourage population growth in the region.  

Increased population will flow through to the population-based industries (education, health, 

cultural and personal services).  There are glimpses of this in the latest census numbers 

 

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Taranaki Industry Projections 2006-2026 

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where the population arrested a decline from the previous five-years and actually increased 

by 2,000 people. 

Employment 

Agriculture, including dairy cattle farming, is the biggest employer in the region, accounting 

for 16 percent of FTEs in 2006.  The three manufacturing industries – food processing, 

engineering and other manufacturing – together accounted for a further 18 percent of 

Taranaki employment. 

Despite slower than national population growth, employment growth in Taranaki averaged a 

solid 2.4 percent per annum over the last five years.  This compares to growth of 3.4 percent 

per annum in New Zealand.  This indicates higher labour force participation is occurring in 

the region in order to meet the demand for labour.  

Employment over the last five years has grown rapidly across a range of industries including 

traditional strengths such as oil and gas (8 percent per annum) and engineering (4.1 percent 

per annum), but also in services such as business, finance and property services (6.8 

percent per annum) and hospitality (5.2 percent per annum). 

GDP 

Static population growth and an industry mix with a high proportion of lower GDP industries 

distorts GDP growth in the region compared to nationally.  Taking into account the region’s 

slow population growth and relative proportion of low GDP per FTE industries, it has done 

very well in terms of its GDP performance.  Further, looking at a similar measure, GDP per 

capita, Taranaki is significantly better off than nationally ($42,000 vs. $38,700). 

Taranaki GDP growth over the last five years was 1.7 percent per annum, which was less 

than national GDP growth of 3.7 percent per annum.  The lower GDP growth rate in Taranaki 

is strongly linked to lower employment growth and industry composition.  Activity has been 

strong and the individual industries have recorded strong growth.  Rising house prices and 

economic activity has seen strong GDP growth in construction (10.5 percent per annum), 

communications services (9.5 percent per annum) and a number of other industries from 

transport and storage to hospitality, business, finance and property services. 

The importance of primary and processing industries in Taranaki is once again clear from the 

far higher proportions of GDP that they contribute to the region compared to what is seen 

nationally.  Although it employs just two percent of FTEs, mining (oil and gas) produces 17 

 

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percent of the region’s GDP.  Agriculture production produces 9.5 percent of the region’s 

GDP, while food processing (mostly dairy and meat) contributes a further 9.9 percent. 

Key sectors 

The report considers eight key sectors in greater depth.  The oil and gas sector in Taranaki 

is significant from a regional and national perspective.  It accounts for 90 percent of all oil 

and gas employment and GDP in New Zealand.  It has the highest employment multiplier 

among the seven key sectors; for every FTE created in the sector, a further 2.66 FTEs are 

created in the Taranaki economy.  Further, the oil and gas industry exports 85 percent of its 

output. 

The dairy sector produced 17 percent of Taranaki GDP in 2006.  Although Taranaki 

contributes just three percent of New Zealand’s GDP, the region produced 14 percent of 

national dairy GDP and employment.  A wide range of industries rely on the dairy sector to 

consume their outputs.  More than 60 percent of dairy output is exported from the region. 

The meat processing, engineering and other manufacturing sectors (ie all manufacturing 

except dairy) in Taranaki employed 6,900 FTEs between them in 2006, 15 percent of all 

Taranaki employment.  More than two-thirds of output from these three sectors was 

exported, equivalent to 21 percent of all Taranaki exports. 

Education in Taranaki employed 2,520 FTEs in 2006, or one in 18 FTEs.  As this sector is 

built around teaching and support staff, 67 percent of inputs are in the form of wages and 

other household income.  The Taranaki public sector (excluding education) employed around 

4,900 FTEs in 2006, or 11 percent of Taranaki FTEs. 

Tourism has grown faster than the regional average over the last five years achieving 2.8 

percent per annum employment growth, 2.7 percent per annum GDP growth and 2.8 percent 

per annum business growth.  While tourism growth has been impressive within the region, it 

has not matched the national figures of 3.5 percent per annum, 3.8 percent per annum, and 

4.2 percent per annum respectively.  However, this may be more a case of an under-

developed tourism industry as opposed to the growth in actual tourist numbers.  This 

suggests significant growth potential for the tourism industry. 

 

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Projections 

Taranaki’s economy is expected to grow faster than the national economy over the next 20 

years.  The projections indicate the growing importance (and potential) of the oil and gas 

sector.  The share of employment and GDP accounted for by oil and gas could well double 

over the next 20 years. 

Associated industries such as engineering, as well as the other manufacturing, hospitality, 

and transport and storage industries are also likely to see rapid expansion.  Along with 

business, finance and property services growth, these industries are expected to add around 

16,500 FTEs, or 77 percent, of the region’s employment growth by 2026. 

Particularly strong gains in GDP are expected in oil and gas; business, finance and property 

services; engineering; other manufacturing; and wholesale and retail trade.  These five 

industries will contribute 83 percent of the increase in GDP in the region over the next 20 

years. 

Employment is expected to grow by 2.0 percent per annum to 2026, while labour productivity 

gains could see GDP grow by 4.7 percent per annum. 

 

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Taranaki Industry Projections 2006 – 2026 

1

 

Executive Summary .......................................................................... 1

 

2

 

Introduction ....................................................................................... 8

 

3

 

Taranaki Industry Structure and Performance ............................... 9

 

3.1

 

Taranaki population .................................................................................9

 

3.2

 

Taranaki employment ..............................................................................9

 

3.3

 

Taranaki GDP........................................................................................15

 

3.4

 

Summary of Taranaki Industry structure and performance...................20

 

4

 

Taranaki’s Key Sectors................................................................... 22

 

4.1

 

Approach ...............................................................................................22

 

4.2

 

Oil and gas sector..................................................................................24

 

4.3

 

Dairy sector ...........................................................................................27

 

4.4

 

Meat processing sector .........................................................................31

 

4.5

 

Engineering sector.................................................................................34

 

4.6

 

Other manufacturing sector ...................................................................37

 

4.7

 

Education sector....................................................................................40

 

4.8

 

Public sector ..........................................................................................43

 

4.9

 

Tourism..................................................................................................46

 

5

 

Industry Projections ....................................................................... 49

 

5.1

 

Employment projections ........................................................................49

 

5.2

 

GDP projections ....................................................................................51

 

5.3

 

Summary of projections.........................................................................53

 

6

 

Appendices ...................................................................................... 54

 

6.1

 

Multiplier analysis method .....................................................................54

 

6.2

 

BERL projections method......................................................................56

 

6.3

 

Taranaki business units.........................................................................59

 

 

 

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List of Tables 

Table 3.1  Population trend, 1996 – 2006 ............................................................................................... 9

 

Table 3.2  Taranaki FTEs, 2001 – 2006................................................................................................ 12

 

Table 3.3  Taranaki GDP, 2001 – 2006 ................................................................................................ 17

 

Table 4.1  Taranaki oil and gas sector .................................................................................................. 24

 

Table 4.2  Taranaki oil and gas sector total inputs and outputs ............................................................ 25

 

Table 4.3  Taranaki oil and gas major input industries.......................................................................... 25

 

Table 4.4  Taranaki industries reliant on oil and gas............................................................................. 26

 

Table 4.5  Taranaki dairy sector ........................................................................................................... 27

 

Table 4.6  Taranaki dairy sector total inputs and outputs...................................................................... 28

 

Table 4.7  Taranaki dairy major input industries ................................................................................... 29

 

Table 4.8  Taranaki industries reliant on dairy ...................................................................................... 29

 

Table 4.9  Taranaki meat processing sector ......................................................................................... 31

 

Table 4.10  Taranaki meat processing sector total inputs and outputs ................................................. 32

 

Table 4.11  Taranaki meat processing major input industries............................................................... 32

 

Table 4.12  Taranaki industries reliant on meat processing.................................................................. 33

 

Table 4.13  Taranaki engineering sector............................................................................................... 34

 

Table 4.14  Taranaki engineering sector total inputs and outputs......................................................... 35

 

Table 4.15  Taranaki engineering major input industries ...................................................................... 35

 

Table 4.16  Taranaki industries reliant on engineering ......................................................................... 36

 

Table 4.17  Taranaki other manufacturing sector ................................................................................. 37

 

Table 4.18  Taranaki other manufacturing sector total inputs and outputs............................................ 38

 

Table 4.19  Taranaki other manufacturing major input industries ......................................................... 38

 

Table 4.20  Taranaki industries reliant on other manufacturing ............................................................ 39

 

Table 4.21  Taranaki education sector.................................................................................................. 40

 

Table 4.22  Taranaki education sector total inputs and outputs ............................................................ 41

 

Table 4.23  Taranaki education major input industries.......................................................................... 41

 

Table 4.24  Taranaki industries reliant on education............................................................................. 42

 

Table 4.25  Taranaki public sector ........................................................................................................ 43

 

Table 4.26  Taranaki public sector total inputs and outputs .................................................................. 44

 

Table 4.27  Taranaki public sector major input industries ..................................................................... 44

 

Table 4.28  Taranaki industries reliant on public sector ........................................................................ 45

 

Table 4.29 Tourism summary indicators, 2006 ..................................................................................... 46

 

Table 4.30 Recent performance of tourism sector, 2001 – 2006 .......................................................... 47

 

Table 5.1  Forecast employment growth in Taranaki ............................................................................ 49

 

Table 5.2  Forecast GDP growth in Taranaki........................................................................................ 51

 

Table 6.1  National employment and GDP projections ......................................................................... 56

 

Table 6.2  Taranaki business units, 2001 – 2006 ................................................................................. 61

 

 

 

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List of Figures 

Figure 3.1  Taranaki FTEs, 2006 .......................................................................................................... 10

 

Figure 3.2  Comparison of employment by industry, 2006.................................................................... 11

 

Figure 3.3  Employment trend, 2001 – 2006......................................................................................... 13

 

Figure 3.4  Comparison of employment growth by industry, 2001 – 2006 ............................................ 14

 

Figure 3.5  Taranaki GDP, 2006 ........................................................................................................... 15

 

Figure 3.6  Comparison of GDP by industry, 2006................................................................................ 16

 

Figure 3.7  GDP trend, 2001 – 2006 ..................................................................................................... 18

 

Figure 3.8  GDP per capita trend, 2001 – 2006 .................................................................................... 19

 

Figure 3.9  Comparison of GDP growth by industry, 2001 – 2006........................................................ 20

 

Figure 4.1  Contributions to employment, GDP and business units ...................................................... 47

 

Figure 6.1  Taranaki business units, 2006 ............................................................................................ 59

 

Figure 6.2  Comparison of business units by industry, 2006................................................................. 60

 

Figure 6.3  Business units trend, 2001 – 2006...................................................................................... 62

 

Figure 6.4  Comparison of business units growth by industry, 2001 – 2006 ......................................... 63

 

 

 

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2 Introduction 

This report looks at the Taranaki economy through three different aspects.  First, it 

summarises the recent economic performance in Taranaki.  Second, it takes an in-depth 

look at seven key sectors in the region.  Third, it forecasts how the regional economy could 

look in 2011, 2016 and 2026. 

Chapter 3 provides a summary of current economic activity in Taranaki, looking specifically 

at employment and GDP growth across 19 industries. 

Eight key sectors within the Taranaki economy are analysed in chapter 4.  Some of these 

sectors are identical to the 19 industries discussed in chapter 3, while others are made up of 

more or less industries.  A wide range of indicators are looked at for each sector, including 

where each sector sources its inputs, and where each sector’s outputs go.  The eight sectors 

analysed are: 

• 

oil and gas 

• 

dairy 

• 

meat processing 

• 

engineering 

• 

other manufacturing 

• 

education 

• 

public sector 

• 

tourism. 

Projections of the Taranaki economy are provided in chapter 5.  These projections present a 

picture of what employment and GDP in each of the 19 industries could be in 2011, 2016 

and 2026.  The analysis is based largely on the assumption that future growth trends will 

mirror the region’s recent

1

 performance relative to national growth. 

The Appendices explain employment multiplier analysis as well as the assumptions used in 

the national and regional growth projections.  They also include a 19 industry analysis of 

business units in Taranaki. 

                                                      

1

 The last five years 

 

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