Angela Hunter: Opportunities needs careful plan

One of the largest projects in the country is the Waterview Connection which will provide a direct link between the CBD and Auckland International Airport. Photo / Dean Purcell

Growth climate opens doors but strategy is vital.

As the economy keeps growing steadily, many mid-market companies find themselves with an abundance of growth opportunities within New Zealand.

What's more, the rapid emergence of large middle classes in Asia, South America and the Middle East has fuelled growing demand for New Zealand products, particularly food and agriculturally related items.

Further to this, there is a massive amount of work that has to be done to rebuild Christchurch. We're talking about construction, transport, civil and heavy engineering tasks. Many of these projects have already been approved.

The companies undertaking this work will need a lot of capital equipment - anything from trucks and steamrollers to cranes, cherrypickers, diggers, front loaders and forklifts. But as the rebuild momentum grows, these companies will have to make significant choices. They won't need all this equipment forever. So should they buy it or lease it? Either way, how will they finance it?

The question of how to manage growth opportunity is one faced by mid-market firms - those companies with an annual turnover of between $2 million and $50 million - throughout New Zealand.

As important as the Canterbury rebuild is, large projects are going ahead all around the country. Take, for example, the Waterview Connection in Auckland. This will complete a motorway ring around the city and provide a direct link between the central business district and Auckland International Airport.

Or take Flat Bush, also in Auckland. On 1700ha in Southeast Auckland, it will provide homes for at least 36,000 people by 2025. It's New Zealand's largest "new town" project and has set its sights high in terms of open space, high design standards and environmental sustainability.

Given New Zealand's well-known ability to grow grass, specialised dairy companies have many opportunities. But the industry as a whole knows that it will never be able to expand production enough to keep pace with growth in world demand.

Fonterra - although hardly a mid-market company - is building farms in China and Brazil to deliver a local supply into those economies.

The world's love affair with Marlborough sauvignon blanc gets ever hotter - but there's only so much land in Marlborough on which you can grow grapes.

The Manuka honey export industry has seen extraordinary growth but, again, sooner or later it is going to come up against what the economists call "capacity restraints". In other words, New Zealand just won't be able to make enough of the stuff to satisfy world demand growth.

With so many opportunities available, well-placed mid-market companies will need to employ highly disciplined processes to identify those most deserving of their limited resources. Stretching themselves too thinly will not only risk quality of product but can also be counter-productive to growth. Crucially, mid-market firms need to ask, "What does success mean to us?"

In the purely financial sense, your chief financial officer will be able to tell you at the end of each year whether you have been successful. But regardless of the actual financial outcome, a company's directors, managers and planners have to have the courage to ask: "Was that priority we set ourselves really the best one?"

Angela Hunter is managing director of GE Capital New Zealand.