OPINION: All zero employee business owners I spoke to reported being extremely busy. But then “EQC came and took over” and insisted that all work had to “go through them.”
There can be no doubt that the Christchurch earthquakes caused interference and disorder to the normal running of businesses within the city and that the quakes had a direct influence on their ability to continue operating.
Zero employee businesses were no exception. The total losses experienced by zero-employee business owners in Christchurch following the seismic events of 2010–2011 varied widely. Some businesses survived unharmed whilst their fellow citizens suffered extensive loss; both financially, personally, and psychologically.
I have recently conducted research into the effect of the Christchurch earthquakes on small business, more particularly, those defined as zero-employee businesses.
Interestingly, the zero-employee business owners I spoke to did not immediately make reference to economic issues but rather the importance of “getting out there to help.”
They went on to say that “it wasn’t about the money”; it was about their desire to provide continuous, high-quality services in spite of the sometimes overwhelming obstacles.
This has significant fiscal implications. Certainly the redevelopment of the city has brought with it increased economic activity leading to more wealth for many businesses in the greater Christchurch area. Deloitte (commissioned by Vero Insurance) in 2015, pointed to a “new wave of economic growth and employment activity.”
This growth was not only in the construction sector but also in aligned occupations such as legal firms and financial institutions.
Vero points to the construction industry being of utmost importance in driving economic growth in the short and medium-term (Deloitte, 2015).
But what of other industries and what does the longer-term bigger picture look like?
Fortunately, there are exemplars from other cities that have experienced similar recovery surges. For instance, studies carried out after the Nisqually earthquake in Puget Sound near Seattle in 2001 concluded that the unseen monetary cost of disasters, especially business losses, can be as great if not greater than recognised costs.
This would seem to indicate the financial loss is actually much greater than is openly acknowledged, especially within the local community. The unseen and, in many cases, unmitigated losses suffered by zero employee businesses in Christchurch is far greater than has been publicly acknowledged by economists and politicians commenting on data generalised from taking a macro view.
Small business owners understand the lifetime value of a customer.
They go to great lengths to ensure they provide a consistently high level of service, including immediate response times, to their regular customers. But, in the aftermath of the Christchurch earthquakes, the business environment changed dramatically.
All zero-employee business owners spoken to reported being extremely busy. But then “EQC came and took over” and insisted that all work had to “go through them.”
No longer could a customer call their regular plumber or electrician for repair work. EQC directed that all emergency repairs were to be carried out through Fletcher EQR, and warned that if a person engaged their own contractor, they might not be reimbursed for costs. Sadly, Fletcher EQR was not equipped for this task due to lack of manpower and, in many instances, emergency repairs did not take place.
Zero employee business owners reported that they were advised to go through the Fletcher EQR accreditation process and this would enable them to service their existing customers and be paid by EQC for work completed.
The process was lengthy and time-consuming, with no reimbursement offered for attending the compulsory induction sessions but they saw it as the means to an end; an avenue to ensure the survival of their businesses in the post-quake environment.
One business owner reported sitting through the accreditation process, then walking away because he “did not want to be part of a patch and hide operation” or what he deemed to be shoddy work. His business suffered greatly as a result of his decision but his personal and business integrity remained intact.
Therefore, in the process of funnelling repairs through a single provider (Fletcher EQR) who would then endorse contractors, EQC unwittingly opened the door to substandard work being carried out by a fully stretched construction sector. A further blow was delivered when those who completed the accreditation process realised that EQC and Fletcher EQR would not allow them to do earthquake repair work for clients unless they worked under the auspices of the Canterbury Home Repair Programme (CHRP).
This is an example of policy development that attended to bureaucratic processes but directly contradicted the newly emerging norms. The customer wanted their trusted contractor and the contractor wanted to provide a service to their customer but the bureaucratic process stymied already established provider-customer relationships by Fletcher EQR insisting that the customer use only Fletcher’s providers and not allowing the customer to engage their long-standing, trusted contractor. As time went by and work became scarce, one business owner visited the local Fletcher hub to enquire as to why he was being overlooked. The response was that Fletcher EQR “only wanted to deal with the bigger firms.”
This led to huge frustration and anxiety for the business owner who continued to do work for people in desperate situations, not knowing if he would ever be paid. As at the time of writing, there is still a large sum outstanding by EQC to this tradesman. Fortunately, their financial position before the quakes was strong and stable, which gave them the ability to ride out the events of the Canterbury earthquake sequences – but not all were so lucky and there were many casualties due to the failure of the bureaucracy to manage the disaster effectively.
Debra Harding runs a consultancy providing liaison between her clients, the Earthquake Commission (EQC), Fletcher Earthquake Repairs (EQR) and private insurers. She also provides a project management service involving the repair of earthquake-damaged residential properties.
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