TIN100: Tech exports overtaking dairy 'a certainty'

Growth in New Zealand’s robust technology export sector has broken through the $1 billion mark for the first time, underlining the sector’s rise as a key driver for the country’s economic growth.

New Zealand’s leading 200 tech “exporters” continue to grow strongly in size and diversity, increasing revenue by a record 12 per cent over the past year to reach combined revenues of $9.4 billion, according to the 2016 TIN100 Report.

This double digit growth was spread across geographies, market sectors and company sizes, with the growth also resulting in a record number of new tech sector jobs.

“It is not just a consistent rate of growth, it is an accelerating rate of growth," says TIN managing director Greg Shanahan.

“In no previous year since the launch of the TIN100 Report 12 years ago, has change been so dramatic or widespread,” he adds.

“This year’s data signals that an inflexion point has been passed as the industry hits critical momentum, reflecting longer term acceleration of technology growth and a significant closure of the export earnings gap between dairy and tech.”

Credit: TIN

“At this stage I would say technology overtaking dairy is a certainty,” says Shanahan.

“If you are an optimist you would probably say in three years, and if you are a little bit more conservative, it will be a bit longer than that, around five to six years,” says Shanahan.

He points out the 200 companies in the TIN (TIN200) report created nearly 3000 new jobs in the past year, up 7.9 per cent, to employ almost 40,000 people.

“The dairy sector domestically employs that number so in terms of social impact already, the technology sector is having a significant impact.”

The report likewise records a 16 per cent growth in R&D spend among the companies. It says R&D now accounts for nearly 9 per cent of total revenues of the TIN200 companies.

The report tracks the performance of New Zealand’s 200 (TIN100 and Next100) largest technology exporters in the areas of information and communication technology (ICT), high-tech manufacturing and biotechnology. It is produced by Technology Investment Network (TIN) and sponsored by NZTE, Callaghan Innovation, EY and AJ Park.

“We’re also seeing changing dynamics across the industry as more companies are expanding through acquisition than ever before, more investment is being made across the entire breadth of company life cycles and more high growth companies across a range of sectors are muscling out the single market powerhouses,” says Shanahan.

He says the financial services sector (31.2 per cent) and digital media (24.3 per cent) sectors recorded the highest percentage gains.

“The newest story this year is the sudden acceleration in digital media companies,” says Shanahan.

Weta Digital is well known from the production side but there is a whole range of companies in this sector, he states.

On the distribution side, Vista Entertainment Solutions is the number one provider for multicomplex cinemas and deals with the largest entertainment companies in the world. Parrot Analytics, one of the top 10 promising early stage companies, analyses global demand for entertainment media.

“The companies range from startups to scale up to mature companies,” he states. "There is new blood coming through on the strength of these trends.”

In addition to the TIN100 rankings which include the EY Ten Companies to Watch 2016 and Ten Hot Emerging Companies 2016, for the first time this year’s report also lists the 100 promising New Zealand Early Stage Companies.

Top performers

Auckland and Northland:

The Auckland region has continued its strong growth in 2016, with TIN200 companies generating over $5.4 billion revenue (12 per cent revenue growth); created 1,203 jobs (6 per cent job growth)

The top 5 Auckland companies (in revenue terms) were:

• Fisher & Paykel Appliances

• Fisher & Paykel Healthcare

• Orion Health

• Temperzone Group

• Douglas Pharmaceuticals

Wellington and Lower North Island

The Wellington region nearly doubled its revenue growth percentage in 2016, and again topped percentage growth this year.

TIN200 companies generated over $1.9 billion revenue (15 per cent revenue growth); created 1,516 jobs (18 per cent job growth)

The top 5 Wellington companies (in revenue terms) were:

• Datacom Group

• Xero

• Weta Digital

• Intergen

• Fronde Systems Group

Hamilton

Hamilton grew its revenue growth percentage in 2016 by 11 per cent. TIN200 companies generated nearly $566 million revenue; created 62 jobs (3 per cent job growth).

The top 5 Hamilton companies (in revenue terms) were:

• Gallagher Group

• NDA Group

• Waikato Milking Systems NZ

• Pacific Aerospace

• Simcro

Christchurch and South Island

The South Island region further increased its traction in 2016, with TIN200 companies generating nearly $1.3 billion revenue (9.2 per cent revenue growth), created 124 jobs (2.2 per cent job growth).

The top 5 South Island companies (in revenue terms) were:

• Tait Communications

• Diligent Corporation

• OMNI Orthopaedics

• Scott Technology

• CWF Hamilton (Source: TIN100)

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