TIN 100 : Technology Industry Report 07
Technology Top 100 Results Continue to Show Strength of New Zealand Enterprise.
The TIN 100 2007 Report is a benchmarking study of the country’s 100 largest (by revenue) technology companies in the areas of High Tech Manufacturing, ICT Software/Services and Biotechnology.
2007 Report available Click here to purchase NOW
The fortunes of New Zealand’s 100 largest technology businesses continue to rise according to the findings of Technology Investment Network’s third annual report(TIN 100)
This in-depth industry overview—conducted with the support of New Zealand Trade and Enterprise and professional services group Ernst & Young—revealed that New Zealand’s globally focused technology sector grew combined revenues by 8% over the past year to reach NZ$5.8 billion.
While not as dramatic an increase as in previous years, in the context of some major challenges TIN Managing Director Greg Shanahan believes the overall performance is still impressive.
“Annual growth slowed to 8% from 15% in the previous period, primarily due to the tough economic environment for technology exporters. While there were a variety of contributing factors to this decline, the overriding one was the sharp rise in the value of the New Zealand dollar against major trading partner’s currencies. This was particularly the case for High Tech Manufacturers who account for nearly three quarters of combine revenues results for the time period being measured.”
Further signs of strain in the technology sector were evident, says Greg Shanahan, in sliding margins, a high turnover in CEO’s, business sales to offshore interests and the relocation of manufacturing offshore.
“What is encouraging and worth noting, however, is that despite these somewhat negative trends many TIN 100 companies exhibited double digit growth. Public companies for example grew by 18%.
“In addition, since we started our work three years ago, the profile of companies in the report is changing in favor of larger companies. The biggest grouping showing an increase in numbers of companies is in the $20 million to $49 million category,” he said.
Not surprisingly, he says, Auckland companies account for over two thirds of combined revenue. This concentration is increasing, especially for New Zealand-owned businesses as a growing number of South Island businesses, in particular, have been, or are in the process of being, sold to foreign owners.
Greg Shanahan says the 2006 report showed the importance, and emphasis, on achieving critical mass for growth. .
“In the 2007 report it is clear that many of New Zealand’s leading companies were actively trying to accelerate the pace of their international growth, beyond organic sales increases. The types of measures they employed included:
• Increasing R&D investment
• Relocation of some manufacturing offshore
• Component sourcing offshore
• Acquisition of foreign manufacturing or distribution businesses
“It is also apparent that leading companies are working to scale up faster to become more internationally competitive and profitable in the marketplaces in which they are competing. In some cases this has meant the loss of New Zealand jobs, and the creation of a more demanding management environment, as operations become more internationally spread out.”
Fulfilling the Vision
In contrast, says Greg Shanahan, the demands and costs of managing an internationally- dispersed enterprise have, thanks to modern technology, been greatly reduced. The combined efforts and benefits of long-tenure, highly-experienced CEOs and management teams, fulfilling the visions of the more robust TIN 100 companies, are also part of the success story for the year past. .
“Overall, while the current environment was indeed challenging, the future looks promising. All the more so if TIN 100 companies can retain many of the unique cultural values that had made them successful in the first place, while also achieving the scale required to ‘footing it’ internationally.”
Ernst & Young Director Jon Hooper says the industry ‘barometric reading’, particularly as the time frame parallels part of Export Year 2007, is cause for applause.
“With only 157 companies responsible for 75 percent of our exports New Zealand is currently in a vulnerable position. Improved export receipts will strengthen the New Zealand economy and this in turn delivers value in terms of improved infrastructure and other benefits to local communities.
“Against this backdrop this year’s TIN 100 report highlights the strong contribution this sector is delivering to the long term goal. Given the fiscal results and employment opportunities being created through these new ventures, one could argue that this sector is leading the charge.
“Fundamentally, if we wish to build big New Zealand based companies, the best way to do this is to take heed of the lessons learned by New Zealand companies that are already successful.”
2007 Sponsors:
2007 NZ Herald Article >>Click here
2006 Media Releases:
TV interview of Greg Shanahan on TIN 100 Report 2006
click here for interview (available soon)
NBR Article June 2006 Page One Page Two
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