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Lack of skills sees high-tech company Talon look offshore

By Aimee McClinchy

Friday 7th July 2000

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FRUSTRATED: Peter Maire's firm is shipping $1 million of exports a week but lack of skills in New Zealand may mean a partial company move across the Tasman
Marine and global positioning-systems company Talon Technology is just the sort of new economy company the government would like to encourage - but its spectacular success selling to giant US corporates is likely to lead to it being forced to move offshore.

The 10-year-old company is shipping more than $1 million in exports a week with most of its products going to mapping giant Rand McNally and popular hand-held computer company Palm.

Year on year it has been doubling revenue and expects to top $40 million in revenues this year.

Talon has 145 staff and is investing massively in research and development. It expects to hit $100 million revenue and list on the Nasdaq in about three years.

But chief executive Peter Maire said he was thinking of moving some R&D or manufacturing to Australia due to the country's lack of skilled staff or government incentives.

"We are gearing up big time: we are hiring engineers and have an ambitious product-development strategy that will see 10 times as much work on Palm next year.

"But we are frustrated. We find ourselves severely penalised. We are paying a pile of tax and don't get any help," Mr Maire said.

He bemoaned the lack of experienced and skilled engineers here.

"We don't want to move. We are patriotic. But our customers demand we grow with them," he said.

Talon would keep its headquarters here, Mr Maire said.

Talon began in exporting marine electronics, chips and navigation software but it now also focuses on satellite-based global positioning systems (GPS) and software.

Both industries are multimillion-dollar markets: the US marine industry is a $1 billion market just in the category Talon works in, and one GPS market, that for navigating and autopiloting vehicles, is estimated at $20 million a year.

Much of the company's success is attributed to finding a cornerstone investor, Nasdaq-listed UltraData, in 1998, and not trying to go public too soon.

The investment resulted in major R&D and last year Talon won an initial $5 million deal with Rand McNally for its "mouse" GPS receiver which sits on the dashboard of cars and plugs into McNally's software on a PC.

Over 60,000 units were shipped and now a contract has been won for a receiver that clips on to personal digital assistant (PDA) Palm Pilot.

More work with Palm and several other models in production means next year Talon expects to do more than $10 million in handhelds alone.

Speaking to a BIIA Raising Private Capital conference last week, Mr Maire stressed the importance of joining with high-profile brand companies.

"This is often overlooked as a strategy by local companies and it has worked for us," he said.

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