In-car map system helped by $930,000

By CHRIS BARTON

Talon Technology has just scored $930,000 - the biggest research and development grant provided by Technology New Zealand - to help develop the company's Navman in-car navigation system.

Founder and managing director Peter Maire has had two smaller grants. He says he waited until he had the "ultimate project" to apply again.

He says that by the time the Navman unit goes into production next year the company will have invested $2.5 million in a product he believes will give it an edge in the burgeoning car navigation market.

An August Dataquest report estimates the worldwide market for car-navigation chips will soar, from $US246 million ($560 million) last year to as high as $US1.7 billion for 2001.

Expectations for the on-board-you-are-here gadgets are also bullish.

Japan leads the market - sales are expected to reach $US318 million this year. Europe follows with projected sales of $US41 million; the US is a distant third with $US4 million.

Talon is already in the market with its global positioning system (GPS) attachments for Palm and Compaq handheld computers which can be mounted in cars. It is also testing its Fleet Commander automatic vehicle location and in-vehicle messaging system using GPS and cellular modems.

The new Navman in-car system is built using Intel's latest Xscale chip and consists of an active matrix colour display with GPS, MP3 audio and compact flash and secure digital memory cards for the map software.

The result is a compact unit that can not only show where you are on an onscreen map, but plot routes and talk you through directions with street names and turns as you drive.

More importantly, because it is designed from scratch with its own operating system, its installed price will break the $US1000 barrier. Talon is talking to international manufacturers about including the unit in car audio systems.

But while Mr Maire is pleased to have the grant to help diversify the Northcote-based manufacturer's mainly marine GPS product range, he remains pessimistic about the Government's providing the right environment to support a high-tech manufacturing business here.

Although the company has grown to $25 million in export sales, from $20 million a year ago, it is facing serious obstacles to reaching the size it needs to be to compete globally.

Its main competitor is US company Garmin, whose R&D budget was $US21 million on sales of $US345 million in 2000.

The company does its R&D in the US, is domiciled in the Cayman Islands' tax haven and manufactures in Taiwan, where it has a five-year tax holiday.

In contrast, Talon manufacturing in New Zealand gets no export incentives, has to capitalise its R&D spending, has a tax rate that is at least double its competitors and faces a serious shortage of engineers and other skilled staff.

Mr Maire says he would like priority given to New Zealand citizens rather than residents in bachelor of engineering (electrical) degrees.

Last year only 12 out of 90 mainly Asian university graduates in the Auckland degree remained in New Zealand.

"We're spending a lot of money as taxpayers to the benefit of the Asian electronics industry."

Mr Maire would like to see the flow going the other way. The bulk of his 150 strong staff are of Asian background - because of their experience in electronics manufacturing - but finding enough skilled workers is a constant problem.

He says incentives are needed to attract international manufacturers to set up in New Zealand, which would in turn create a skilled workforce base to draw on.

So, while he is determined to remain in New Zealand, and hopes to list on the Stock Exchange within two years, he sees it as inevitable that future manufacturing expansion will happen overseas.

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