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Global Position

By Deborah Hill Cone

Friday 20th June 2003

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It's a problem most firms would kill to have: growing so fast you can't get enough skilled staff. But it's a serious frustration for award-winning GPS technology firm Navman, one of New Zealand's fastest growing companies.

Navman's sales have grown from $25 million to $150 million in three years but it can't fulfill demand for its GPS products in markets in Europe and the US.

Navman is selling 4000 pieces of its GPS product a month in Europe and estimates it will sell about 50,000 pieces this year ­ $US40 million worth.

"This is really what is driving the growth of the company today ­ it really is directly a result of our investment," Navman president Peter Maire said.

Surely that's all good? Well, yes and no.

The company could grow faster but "we can never get enough engineers," Mr Maire complained.

Navman can seldom hire more than three engineers a month.

"We could hire a dozen if we could find them. It's very frustrating."

Mr Maire, who has most of a Bachelor of Engineering degree in electronics, said the company had to turn down business because the lack of staff limited its ability to develop new products.

And it isn't just graduates ­ even if Navman could hire as many engineers fresh out of varsity as it needed, it would also need intermediate and senior engineers to supervise them.

Navman is using contract manufacturers to help fulfil the orders but it is the development of new products that is most important.

The company's most recent coup has been to sell its GPS personal in-car navigation system to US-based Delphi Delco Electronic Systems, the world's largest auto electronics firm, which was spun out of Ford.

Navman has just signed a contract to supply Delphi with the units, which will then be sold under the Delco brand, with the first product launching in the US in September.

Mr Maire said Delphi had contacted Navman because it was so impressed with its technology platform.

What makes the technology special is that the software is designed and written to run directly off a microprocessor without an operating system, which means there is no Windows licence fee to pay or "bloatware" to slow it down.

Mr Maire said Navman had brought a different point of view because for 10 years it made only hardware, which had given it the luxury of working with all the software companies and seeing what they did.

"We started with a clean sheet of paper and built something stunning."

No wonder Delco was impressed ­ it would be paying three to four times the price for other comparable products that have "bulky, ineffective, slow operating systems," Mr Maire said.

Delphi would have liked to have bought four new variants of products, rather than one, but Navman wasn't able to supply more because of staff limitations. "We're choking for the lack of engineers."

Mr Maire said the University of Auckland had had a few bad years when it came to Bachelor of Engineering (Electrical) degrees, with fewer than a dozen graduates of 120 who did the course remaining in New Zealand.

Mr Maire said he hoped the numbers of BE (Elec) graduates had grown a bit since then and Navman was doing its bit to mentor engineers by supporting student researchers.

Navman has received $280,000 in government funding for the programme, a pilot for the Foundation of Research, Science and Technology's scheme.

"It means we become a halfway house between industry and academia. The benefit is two-way, with students gaining industry experience and career development within our industry while we are able to look at projects that are related to our current business but are more strategic in nature," Mr Maire said.

The scheme allows masters and PhD students to work alongside Navman's engineers and do postgraduate blue-sky research "that is a real stretch," he said.

Navman this month will celebrate its 16th anniversary

Mr Maire said there were lots of great companies in New Zealand but some of them were missing the knowledge of how to get their product to market.

He recommended entrepreneurs look at being involved in the distribution and retail stages of getting their product into consumers' hands, because then they could command the highest price.

Navman had gone from strength to strength after it started its own distribution system in Australia five years ago ­ which helped it understand its customers' customers ­ the people who actually use the product.

Two years ago Navman launched its marketing operations in the US and Europe, which had helped it control its brand.

"I'm lucky because I'm half engineer and half salesman," Mr Maire said.

At Navman the close connection between the engineers and the marketing department had brought a lot more success. "When you control the product, that's when you really make the major breakthroughs."

Navman recently announced its OEM division was part of a consortium to build a sophisticated road toll system in Germany, with Navman's part of the contract worth $US40 million.

Trucks in Germany will be fitted with playing-card-sized GPS receivers, which will be linked to a billing system that will charge them for use of the roads.

The GPS units will be made in Christchurch, about 35,000 per month, with the contract bringing in about $40 million over two years

Mr Maire said Navman had another big announcement to make next week but he could not reveal details.

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