Get off the Grass by Shaun Hendy & Paul Callaghan

Author:Shaun Hendy & Paul Callaghan [Hendy, Shaun]
Language: eng
Format: azw3
Tags: Economics, Business, Science
Publisher: Auckland University Press
Published: 2013-10-31T16:00:00+00:00

SELLING OUT?

As well as starting new firms, we should also look at what we can do to make our companies more likely to succeed as they grow. There are many reasons why otherwise successful New Zealand firms may not make it to the big time. For instance, firms can be acquired by their overseas competitors and either shut down or moved offshore. Chinese whiteware manufacturer Haier may have this fate in mind for Fisher & Paykel Appliances now that it has taken over this firm.

Perhaps the most high-profile example of this is Peter Maire’s company Navman, which made GPS navigation units. When Navman was acquired by a US firm, many media commentators expressed their disappointment. Is there any point in starting high-tech businesses, many asked, if they are simply going to be snapped up and relocated offshore by foreign owners?

Peter Maire established Talon Technology in his front room in 1986, a company which was later rebranded as Navman in 2001. Navman sold stand-alone GPS units, original equipment manufacturer (OEM) GPS modules for use in other products, automotive navigation systems and navigation systems for use at sea. By 2004, Navman had revenue in excess of $100 million and was worth around $400 million. That year, however, Brunswick, a US manufacturer of marine and recreation equipment, bought a 70 per cent stake in Navman, taking up the remaining 30 per cent in 2005. From there parts of the business have been sold and shifted offshore, although some software development is still carried out in Auckland. Peter Maire went on to establish an investment company in 2006, taking a shareholding in Rakon and investing in several other high-tech companies, including a successful start-up company called Orion Health.

Richard Fabling, a Wellington economist at the independent economic research institute Motu, and Lynda Sanderson from Treasury have looked at what makes New Zealand firms more likely to get snapped up by foreign owners and what happens to them afterwards.4 They found that overseas buyers do target high-performing New Zealand companies, but that these companies generally survive the experience and often end up better for it. And while we did lose Navman, a sizable proportion of the financial reward that Peter Maire received for his entrepreneurship has been reinvested in the New Zealand innovation ecosystem.

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