Gold Coast economy: Winners and losers during COVID-19
ABS statistics have revealed the true impact of the COVID-19 downturn on the Gold Coast economy, with thousands of jobs lost. But some sectors are still bucking the trend. SEE FULL DETAILS OF WINNERS AND LOSERS
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THERE’s no question that COVID-19 has had a massive impact on the Gold Coast economy.
Construction between February and August has shed 5500 jobs, manufacturing 4100 and retail 1400 according to data from the Australian Bureau of Statistics.
A report released earlier this month found the city’s GDP of $37.24 billion in FY19 is expected to have declined by 16.9 per cent for the fourth quarter of the past financial year.
But the effect on the different industry sectors not been uniform. For example employment in the IT sector has stayed stable at 5000.
Some niche manufacturers (OzKleen as one example) have performed exceptionally well, some simply because they have the right product for the times.
KPMG partner Jeff Frazer said e-commerce companies that have well-developed platforms with a competitive advantage have seen success.
He said some manufacturers have also benefited from people turning towards Australia-made products.
However, a lot of companies have not been so fortunate.
The accommodation and hospitality and tourism sectors have been decimated.
Restrictions on international travel has left the RTO sector devastated with JobKeeper and government subsidies the only thing keeping them alive.
In this report below we signal out some of the bright spots in the economy as well as the companies on life support.
MANUFACTURING/FOOD PRODUCTION:
Jobs: August: 19,900 (down 17% since February)
Selected key players: Digga, Buyrite Steel Supplies, Patriot Campers, Riviera, Maritimo, OzKleen, Morlife, Frosty Boy, Dairy Free Down Under
OzKleen
Base: Ormeau
Staff: 26
Business: Cleaning products producer
Sales at the manufacturer of Shower Power soared by 50 per cent in March as consumers and businesses stocked up on surface cleaners during coronavirus. They have since come down overall but are still up 20 per cent compared to last year. The business is looking at developing more products and is collaborating with Beaudesert-based gelatine maker GELITA to fund research at the University of Queensland by Dr Heather Shewan to develop a new type of antiviral surface cleaner.
Morlife
Base: Arundel
Staff: 60
Business: Organic supplements and health foods
Functional food producer Morlife has struck trade deals, launched three new products and seen sales surge 31 per cent since March. It has been a beneficiary of a renewed focus on foods that provide an immune boost such as its Berry Active Immune powders, which contains including selenium, zinc and vitamins A, B6, B12, C & D. The company was doing 2000 packets a day of its powders in March and that has increased to 3000. The company, headed up by father-daughter team Warren and Cheryl Stewart, has invested $200,000 in new machinery to keep up with demand.
Frosty Boy
Base: Yatala
Staff: 60
Business: Dessert and beverage producer
Frosty Boy is best known for its soft serve but in recent years it has moved to diversify its product range. In December it announced it was rolling out a range of savoury products, including cheese sauce, and in August launched a range of powder-based drink formulas with vitamins and minerals to support muscle, bone, gut and immune health. Managing director Dirk Pretorius said exports, which make up 75 per cent of revenue, have taken a hit but the company’s efforts to diversify its income streams will see it come out the other side in a stronger position. The company exports to 65 countries.
Riviera
Base: Coomera
Staff: 600
Business: Luxury boat builder
The Rodney Longhurst-headed company has benefited from a mini-boom in the leisure market that has seen not only boat manufacturers but campervan builders see a surge in trade.
Riviera is expanding its Coomera production facility to increase production by 20 per cent and recently marked two milestones with the launch of its 100th 6000 Platinum Edition Sport Yacht and the 100th 5400 Platinum Edition Sport Yacht.
HEALTH CARE:
Jobs: 48,400 (down 0.6% since February)
Selected key players (private only): Gold Coast Private Hospital, Pindara Private Hospital, John Flynn Private Hospital, Amtan Medical Centres, Haan Health Medical Centres, Smiles Inclusive, Gold Coast Plastic Surgery, The Layt Clinic
Amtan Medical Centres
Base: Oxenford
Staff: 100
Business: Network of eight general practice clinics
Amtan Medical Centres has emerged as a leading health provider during COVID-19. Run by Dr Tanya Unni and husband Ameer Hamza, the network has eight clinics on the Gold Coast mostly in the northern corridor. The doctors saw huge demand for their drive-through covid testing clinics and recently launched the first of what they hope will be a number of women’s health clinics.
Smiles Inclusive
Base: Burleigh Heads
Business: Dental practice network operator with clinics around Australia
Smiles was struggling long before the COVID-19 pandemic forced states to shut down entire industries. The company revealed a $31 million loss in FY19 but it has failed to report its half-year results for this financial year. That is the reason its shares have not been traded on the ASX since March. The coronavirus crisis has not helped with the company reporting revenue fell to just $2.1 million in August impacted by the State of Disaster in Victoria.
EDUCATION:
Jobs: 27,000 (up 6.7% since February)
Selected key players (private only): Imagine Education, Browns English Language School, Bond University, G8 Education
G8 Education
Base: Varsity Lakes
Staff: 150 (head office)
Business: Early childhood education and care provider
Australia’s largest listed child care and education provider took a significant hit from COVID-19 with a $239 million first-half loss but strong funding from the Federal Government and a capital raising ensured it has plenty of liquidity to make it through the crisis. G8, which has about 475 centres throughout Australia, is selling off its Singapore centres to focus on the Australian market.
Imagine Education
Base: Southport
Staff: 140
Business: Education provider offering hospitality, automotive, children’s and community services, business, english and finance courses
Owner Bill Adler says the company hit an iceberg but is still surviving. English enrolments, a key source of revenue, have fallen to zero while overall applications are 50 per cent of what they would normally receive. Mr Adler said Australia needs to take a similar approach to countries such as Canada in providing pathways for international students to return.
Browns English Language School
Base: Southport
Staff: 100
Business: English and vocational course provider
Managing director Richard Brown says coronavirus has “decimated” the sector with many RTOs at risk of not surviving the next few months. Pre-covid it had 1000 students, most studying English. That has been whittled down to “just a few hundred”. Mr Brown said it was just JobKeeper and other stimulus enabling businesses to survive. Revenue at Browns was down 80 per cent He said the sector desperately needs international students to return from countries with low rates of transmission.
TECHNOLOGY:
Jobs: 5000 (no change since February)
Selected key players: Opmantek, Mercury IT, Carton Cloud, Pivotel, onPlatinum, OntheNet
Carton Cloud
Base: Burleigh Heads
Staff: 30
Business: Transport and warehouse management cloud software
Founder and CEO Vincent Fletcher says it saw a sharp drop in activity when states went into lockdown but had recovered over six weeks to be on a growth trajectory again.
Mr Fletcher said since March it has grown its headcount from 23 to 30 and clients from 200 to 250. He said they are seeing new inquiries every day.
Mercury IT
Base: Arundel
Staff: 60
Business: IT and cybersecurity services provider
The coronavirus pandemic forced thousands of people to work from home and placed immense pressure on ICT infrastructure, exposing companies to cyber security threats. Mercury, headed up by AJ Williams, has been at the forefront of providing services to create ‘robust’ infrastructure that enables companies to do things “faster and better”. AJ says the company has used the coronavirus period to become more data driven by using BI (business intelligence applications) and investing in new software to support growth.
RETAIL:
Jobs: 33,600 (down 4% since February)
Selected key players: HiSmile, SurfStitch, Retail Food Group
HiSmile
Base: Burleigh Heads (from November)
Staff: 65
Business: Teeth whitening kit e-tailer
Founders Nik Mirkovic and Alex Tomic have used social media to turn their e-commerce business into one of the leading e-tailers in the country. Coronavirus has failed to dent their model and they have their sights set firmly on global domination. The pair move to their new HQ in November with plenty of room for expansion.
Peppy Co
Base: Southport
Staff: Six
Business: Hi tech beauty products e-tailer
So much of business is being in the right place at the right time. Peppy Co, founded by Ermin and Mia Plakalo, was one of the first companies in Australia to sell LED light therapy masks widely used at salons. When covid hit and salons shut the masks suddenly came into hot demand and they sold what they normally would in one month in two weeks.
Retail Food Group
Base: Robina
Business: Franchise system owner with brands including Donut King, Pizza Capers and more
Franchisor RFG saw varied effects from COVID-19 with its outlets at shopping centres seeing a sharp dive in trade but drive-through coffee outlets reporting strong business. A number of stores were closed temporarily with the vast majority reopening as restrictions were eased. Executive chairman Peter George has navigated the company, which has been the subject of numerous allegations of mistreatment of franchisees, through choppy waters cutting a $142.5 million loss in FY19 to $4 million in the past financial year largely through a successful capital raising and restructure.
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