Shortage of engineers causes growing pains

By Yoke Har Lee

Entrepreneur Peter Maire's latest problem is how to find engineers for Talon Technology, a company he co-founded. He doesn't mean the fresh-out-of-university types, but the kind that can immediately be put on projects to develop products for mass markets.

Talon employs eight engineers, but needs something like 50 to get onto the projects Mr Maire and his shareholders have in mind. He has advertised without success to find multi-disciplined engineers to help Talon take on new product development.

Such is Talon Technology's dilemma as a company handling a rapid growth phase. Talon started life as a marine electronics company, supplying the Navman range of navigation equipment, but its fortunes took a sharp upturn when it spent time building its own GPS (satellite-based telecommunications) receivers.

In the last year or so, it has clinched two major multi-million dollar US deals. The first was with Leica, a $US2.5 billion company known for its advance marine chart-plotting system used in high-end leisure and commercial vessels. Just a few weeks ago, Talon sealed another multi-million dollar project with Rand McNally, a US geographical information services company to make GPS chips which will be integrated with Rand's software for use in car navigation.

Venturing beyond its traditional boundaries, Talon moved to court Rockwell, the US semiconductor manufacturer which was then just developing its own GPS-receiver modules. Based on this relationship with Rockwell, Talon was later able to build its own GPS receiver based on Rockwell's chipset.

At the heart of a GPS system is its antenna and receiver, both of which Talon can do. This technology has enabled Talon to integrate it into products for other GPS-based communications products.

From the 40 people it employed several years ago, Talon now has over 100 people working at peak periods. A company undergoing such a rapid phase of growth has to do two things correctly. The first is to hang onto the growth momentum, which means having to develop products faster; the second is to manage the growth well.

Mr Maire, who describes himself as a compulsive product developer, has so many ideas he gets impatient because he can't find or hire the right people to work with.

According to Mr Maire, fresh engineering graduates are fine for software development.

"But they only become truly useful after three years. It takes about 10 years before an engineer becomes really valuable - that's why people who talk about Motorola setting up their research centre here have no idea what it takes to be able to supply Motorola with the people."

He said new engineering graduates out of the South Island are snapped up by Tait Electronics or Trimble Navigation, a US company producing GPS-based technology for a wide ranged of applications.

Talon needs engineers with an understanding of the interplay between software and hardware.

"These would be people experienced in developing products for mass production, low volume production or just pure production. So they need to apply all the disciplines required to bring a product to the market, they need to understand things like the plastic box, the LCD (liquid crystal display), key panels right through to the design of circuit boards."

Here's his observation: the manufacturing environment that used to contribute to the breeding of engineers isn't here anymore because New Zealand's manufacturing has been in decline since the 1980s.

And we can't get people with world class manufacturing experience unless more multinationals operate out of New Zealand, Mr Maire observed.

"For a start, we need to have a pool of people working as assembly staff, then people working as trainee technicians and engineers for these companies. These people will be the fuel for future manufacturing companies - which is why Christchurch has been successful in manufacturing."

Talon's solution to meet its need for developing products quickly is to outsource its research and development and also to encourage other innovative research companies to share project risks with him.

Talon's first development relationship was with TMD Consultants, made up of Dr Phil Wakeman and Marcus Tetro - two consultants experienced in microwave engineering.

"We have contracted product development to them very successfully and are also looking at encouraging them to develop products on the basis that they carry some of the risks and share in the gains."

Mr Maire said: "These small R&D companies are where the awesome engineers are. We can offer them a much better long-term solution - encouraging them to go from being a three-to-five-men set-up to the 10-men company where the peak efficiency will be there."

Talon's offer to these R&D companies is its access to marketplace, its idea of what products are in vogue.

"We haven't got the capacity ourselves to develop the product but we can demonstrate to them we understand the market and encourage them, at their cost or on a cost-share basis, to develop the product. Later, we will license the technology back from them."

The first development work TDM has done was in differential GPS which works on removing errors introduced deliberately by the US military. Another relationship which Talon has built is with M2, a Northcote-based R&D company with about six people.

"Their expertise is hardware and software. We are currently doing two of the new projects that we have received from Leica with M2."

A third R&D source for Talon is from a Christchurch-based company called South Pacific Design Associates, made up of several ex-Tait Electronics engineers with expertise in communications product. The company is helping Talon with the Leica project.

Mr Maire admits that without this outsourcing, for instance, it would have taken a lot longer for it to develop the project with Leica.

A first piece of "pure" research work Talon is doing is done through Technology New Zealand's GRIF (graduates in industry fellowship) programme, where the company is working on how to produce an auto pilot that integrates several areas of technology.

A company can only grow as fast as it can hire the people to get on with project development.

"We sat down and calculated recently that we can grow our business so much more if we have more engineering capacity - we have no market barrier. It is down to how fast we can grow new products and that goes down to how fast you can develop these products," he said.