News and events

Second pulse check survey finds Callaghan Innovation customers optimistic

This article was published on 17 June 2020

PDF icon Callaghan Innovation COVID-19 Customer Impact Survey Insights

A boost in optimism among Callaghan Innovation customers was a key finding from a second ‘pulse check’ survey of them as they moved into COVID-19 Alert Level 2 in mid-May.

98% of those surveyed indicated they expected to continue spending on R&D in the next year, while 40% indicated they were ready to contribute to the COVID-19 response, up from 30% in the first survey. 

We believe optimism has been slightly buoyed by customers having access to government support. For example, 73% of customers surveyed have accessed the Government wage subsidy, assisting with immediate cash flow worries.  In early April, 39% of our customers were concerned about their cash flow position, but by the May survey this had dropped to 33%.

Callaghan Innovation customers were first surveyed in early April while the country was in Alert Level 4 lockdown. The follow-up survey was completed over 13-18 May when the country was just moving into Alert Level 2. 474 customers responded to the second survey. The aim of the surveys for Callaghan Innovation has been to check customers' confidence in their cash flow, their appetite for R&D and their uptake of support services amid the COVID-19 crisis.

As cash flow is a key ingredient in most companies’ ability to spend on R&D, however, there is a strong sense that both cash flow confidence and the level of spend on R&D may remain volatile for some time as relief measures are phased out in Alert Level 1 and beyond. At this stage 22% of respondents believe their R&D spend will decrease (down from 27% in April), 26% expect their spend to remain the same (up from 20%), while 50% expect their R&D spend to increase  (down from 52% in April). 

The challenge will be ensuring customers are sufficiently supported to maintain a commitment to R&D while managing effective operations - and ensuring they are aware of all the support options they may be eligible for.

Without that, the current levels of optimism and that momentum towards R&D investment could well be lost.

With the data from these surveys, Callaghan Innovation can continue to play a key role in determining the value of current support initiatives, identifying gaps in support and connecting customers with services to meet their needs.

Rosalie Nelson, Callaghan Innovation’s General Manager, Strategy, Impact and Insights, says survey findings will be invaluable in determining ongoing support for businesses as part of the economic response to COVID-19. “Our customers know what they need. Our job is to listen and respond - working with our partner agencies and the Government on targeted initiatives that meet those needs.”

Key initiatives announced since completion of the second survey include the R&D Loan scheme, the Wage Subsidy Extension (with access to the Wage Subsidy and the Extension opened to pre-revenue businesses) and a financial boost for Callaghan Innovation’s in-house R&D services for NZ businesses. 

New RDTI refundability rules and the Innovation Accelerator Fund were also announced just prior to the second survey. The Innovation Accelerator Fund has seen $25m distributed to businesses for the fast development of new products and services that could help to detect, diagnose, treat or prevent COVID-19. In addition, Callaghan Innovation’s Scale Up NZ platform now identifies almost 200 New Zealand businesses as having capability relevant to the COVID-19 response.

Customer need states

COVID-19: Opportunity identification and cashflow position

Customer need states COVID-19

Other key findings

  • COVID-19 came as a shock to businesses, but they have now had time to adjust to the implications (new operating regulations, market and supply chain impacts) and the realisation that this was not just a short-lived change.

  • The five biggest impacts on Callaghan Innovation customers from COVID-19 have been:

    • Delays in the ability to launch products and services (50%)

    • Closure of markets (49%) - both national (28%) and/or international (30%)

    • Closure of supply chains (33%) - both national (24%) and/or international (12%)

    • Having to let staff go/reduce their pay (20%)

    • Investor funding affected (19%)

  • The most vulnerable groups are small to medium-size businesses and specifically pre-revenue/low revenue (under $200K pa). Their cash flow concerns increased between the two surveys: 55% April vs 61% May, as they were less likely to have had early benefit of key interventions.

  • The sector most unsettled by COVID-19 has been transport and logistics. 22% of respondents in that sector found the crisis unsettling, compared to 13% on average for all respondents. A third (34%) of those in the transport and logistics sector say they need cash flow support.

  • 82% of customers feel satisfied with the support the government provides to keep the business operations running, but fewer (67%) are satisfied with R&D support. 

  • When it comes to R&D support services available through COVID, negative sentiment is more likely to be felt among small and medium businesses, with pre-revenue the most concerned (45% satisfaction). This highlights potential significant demand (approx 50% of customers) for new pipeline services such as the R&D loan.

  • Other areas customers want to see more or ongoing government support in include:

    • Funding for business (49%) - such as wage subsidy extension and digital enablement

    • Actively promoting NZ business (48%) - such as ‘buy local’ campaigns, government procurement using local businesses, promotion of NZ’s COVID-free status

    • Regulation support (41%) - such as relaxed tax schemes, improved border management, tenancy laws

    • Funding for R&D (30%)

    • Upskilling/coaching (27%)

    • Connecting (26%)

Callaghan Innovation COVID-19 customer pulse insights webinar

On Monday 29 June 2020, Callaghan Innovation held a webinar to present in-depth findings of its two COVID-19 customer impact surveys.