NZ sales salvage a bad year

By PETER GRIFFIN IT editor

Export receipts from the New Zealand technology sector fell 30 per cent last year but strong domestic demand capped its overall shrinkage at just 1 per cent.

Total IT sales last year were $7 billion, according to Statistics New Zealand, with sales of "communication hardware and cables" down $250 million or 22 per cent, largely contributing to the general dip in IT sales.

While IT exports approached $1 billion for 2002, last year they dropped to $677 million.

The stronger New Zealand dollar will no doubt explain some of the decrease in value for exporters.

Fonterra farmers have been similarly hit as a result of a weak US dollar and stronger exchange rate for the NZ dollar, despite a worldwide boom in commodity prices.

The value of the New Zealand dollar rose about 20 per cent last year.

With prices for electronic components generally falling, the local IT industry does not have the safety net of a booming market to lessen the currency impact. But IT companies approached by the Herald claim to be exporting the same or greater value of goods and services than they did in 2002.

David Irving, president of the IT Association and chief executive of software developer and exporter Synergy, said major IT multinationals such as IBM, EDS and Unisys increasingly had the power to shift development of exportable products to cheaper locations, though he doubted the trend away from New Zealand last year had been great.

"We're still significantly cheaper than the US or the United Kingdom," he said.

New Zealand Software Association president, Rollo Gillespie, said lower US dollar sales were "affecting a lower return" but he put much of the dip down to global IT trends.

"We're still getting over the backlash from over-promising the benefits of IT solutions," he said.

"IT is a capital investment based on business confidence which is starting to come back."

Software exports dropped just 6 per cent but the real drops came in hardware sales and IT services sales overseas.

Domestic IT sales grew 2 per cent last year to $4.4 billion.