The drive for an innovative value-add based export sector – we’ve got a long way to go
The things you write without thinking.
I’d tapped out something along the lines of there being a lot of examples of Kiwi companies who’d invested heavily in research and development and as a result were doing nicely in various international marketplaces.
Okay, it’s true because there are heaps of little businesses that fit the bill, but try to name more than a couple that are household names.
Hamilton Jet and Fisher & Paykel Appliances maybe. The Gallagher Group? F&P Healthcare?
The thing is, the largest of these innovation-led, exporting businesses is under the radar resin maker Nuplex which comes in as NZ’s 21st largest business (by revenue). Then comes F&P Appliances (24th ).
The rest are nowhere though F&P Healthcare is steaming up the rankings.
If you have a look at these Kiwi companies’ counterparts in other small countries we get:
o Israel – Teva Pharmaceuticals #1
o Finland – Nokia #1
o Denmark – (drug company) Lundbeck # 3
o Ireland – (technology focused food group) Kerry Group #6
Australia’s list is full of finance and mining companies, but you get the picture.
If Kerry is there as an innovation-led exporter, why not Fonterra for NZ?
Well here’s Kerry describes itself:
“…a leader in the global food industry. We develop, manufacture and deliver technology based ingredients flavours and solutions for the food and beverage industry worldwide.”
Technology is all over the Kerry’s market positioning.
And Fonterra:
“Dairy is our life’s work and our strategy is to lead in dairy. We’ve built strong partnerships with other leading global dairy companies and we are co-operatively owned by 11,000 New Zealand dairy farmers.”
Mmmm.
I’ve posted before on Fonterra’s lack of commitment to research and development.
This is not pushing the idea that we need a multi-billion dollar high-tech exporter to match the size of Fonterra – a big bunch of companies doing $100 – $200 million will do just as well, and this is more feasible.
But these comparisons show how far NZ has got to go for the economy to escape the clutches of a commodity-focused export sector.
Re Fonterra – it’s just a case of them not doing very much. 0.5% of revenue in 2008-09.
But it’d be interesting to see how their value-add business fares with the commodity side of Fonterra stripped out.
admin, July 8, 2010 at 9:39 pm
I haven’t checked but is Fonterra’s low profile in R&D due to them being quiet about what they are doing?, contracting it out?, or is it because they don’t do much?
What is the contribution of the CRI’s to our R&D? One that really annoys me is AgResearch spending money and brains on GE research such as the human gene in cows, when our markets have rejected such GE products. Not only that but they have cancelled or scaled back programmes looking at pest control, e.g. possums, rabbits, bee mite. I would suggest that sustainable and eco-friendly pest control would be a better and more popular use of the money and brains.
It is good to see the wool industry getting together under one umbrella. Maybe something good will come from that product-wise. You only need to look at Icehouse to see what R&D on a natural product can do. There is a successful exporter turning over millions, and generating improved returns for their farmer suppliers.
Keith Mockett, July 8, 2010 at 8:38 pm