Angela Hunter: Mid-market beating slump fears

Mid-market fishing companies were big contributors to growth in their industry. Photo / Brett Phibbs

Companies find key to success outside housing and rebuilding

Accolades continue for New Zealand's economy and its recovery following the global financial crisis. Last month the World Bank labelled New Zealand one of the best places in the world to do business, second behind Singapore.

Yet despite this, there are concerns that we will experience an economic downturn once the Canterbury rebuild is complete.

However, the good news is that the mid-market - which between 2010 and 2012 contributed 27.8 per cent of New Zealand's total sales growth - is strong in industries not necessarily reliant on the Canterbury rebuild or the Auckland housing market.

Rather, mid-market businesses - defined as companies which have an annual turnover of between $2 million and $50 million - are dominant in wholesaling, retailing, manufacturing and professional, scientific and technical services.

Combined, these four sectors had more than 60 per cent of the mid-market's turnover in 2012 and on their own their results are just as significant.

Within wholesaling, the mid-market lifted sales by $5 billion between 2010 and 2012. The trend continues in the professional, scientific and technical services industry where mid-market companies delivered 36 per cent of that industry's growth in 2012.

High-performing mid-market companies can also be found within manufacturing sub-sectors, where 98 per cent of the growth of agriculture, forestry and fishing turnover between 2010 and 2012 was driven by mid-market activity.

This was in part due to mid-market firms' ability to act quickly after the global financial crisis and take advantage of opportunities.

For others within these sectors, adding value to raw goods not only increased revenue but gave these firms a unique selling point.

Take bio-recycling operator Noke, which is highly focused on adding value by turning organic waste into high-quality soil conditioners through its four worm farms.

Noke is not remotely connected to the Christchurch rebuild or the ongoing housing boom in Auckland, yet strong growth over the past five years has reached the point where the company is planning expansion to Australia.

Noke founder Michael Quintern says the company is forecasting and planning for rapid growth. The mid-market firm turns 150,000 tonnes of organic waste into high quality Wormicast, and wants to increase this to a quarter of a million tonnes by 2016. The company is in a good position to grow, says Quintern, and is recruiting to achieve its targets.

While this is just one example, GE Capital works with a number of mid-market firms who are targeting - and achieving - growth.

• Angela Hunter is managing director at GE Capital New Zealand.