Pro­fes­sor Mark Durkin

Our top firms are grow­ing prof­its and many tra­di­tional in­dus­tries con­tinue to thrive and ex­pand

Belfast Telegraph - Top 100 Northern Ireland Companies - - CONTENTS -

It’s been a good year for North­ern Ire­land’s top 100 most prof­itable com­pa­nies with earn­ings up by 25% from the pre­vi­ous 12 months. This re­flects pat­terns we see in cor­po­rate re­port­ing more broadly as large firms con­tinue to in­crease prof­its de­spite chal­leng­ing global eco­nomic con­di­tions. The strong fi­nan­cial per­for­mance of the Top 100 is also a very use­ful barom­e­ter for the health of the econ­omy more gen­er­ally and par­tic­u­larly in terms of job cre­ation and ca­pac­ity build­ing.

Our top 100 com­pa­nies employ more than 80,000 peo­ple, that is over 13% of to­tal pri­vate sec­tor em­ploy­ment in North­ern Ire­land. Since the fall-out from the fi­nan­cial cri­sis, job cre­ation has been al­most en­tirely re­liant on the pri­vate sec­tor and de­spite there be­ing no growth in pub­lic sec­tor em­ploy­ment over the last decade, there have never been more peo­ple in work in North­ern Ire­land than there are to­day.

That is a real tes­ta­ment to the strength of our lo­cal com­pa­nies and their abil­ity to in­no­vate and cre­ate jobs.

The im­por­tance of a rel­a­tively small num­ber of large firms to an econ­omy can­not be over­stated. Not­with­stand­ing the fact that SMES con­sti­tute the vast ma­jor­ity of NI busi­nesses re­search shows that large com­pa­nies con­trib­ute dis­pro­por­tion­ately more to a coun­try’s eco­nomic per­for­mance than these smaller ones. Larger com­pa­nies have greater ca­pac­ity to in­no­vate, are more pro­duc­tive, more ex­port focused and they pay higher wages.

The Top 100 com­pa­nies had a wage bill in ex­cess of £2.6bn last year, that is an av­er­age salary of over £32,000 (com­pared to the NI av­er­age of just over £27,000).

Aris­ing from this jux­ta­po­si­tion of large and small there are some im­por­tant is­sues emerg­ing. One is the ar­gu­ment that much can be learned about growth and scal­ing from these larger com­pa­nies to the ben­e­fit of the SME com­mu­nity.

The sec­ond is the fact that most larger com­pa­nies have sup­ply chains in­volv­ing many SMES. This is a fact well un­der­stood in the lo­cal aerospace in­dus­try fol­low­ing the Bom­bardier an­nounce­ment to sell its North­ern Ire­land op­er­a­tions.

The Fed­er­a­tion of Small Busi­nesses (FSB) in­di­cates that Bom­bardier has over 200 NI SMES in its sup­ply chain. So, the po­ten­tial loss of a large com­pany in a lo­cal area has a much greater im­pact than just those work­ing for that large firm.

That said, a strong lo­cal sup­ply chain

in­creases the at­trac­tive­ness of any large com­pany to in­ter­na­tional in­vestors and one can be hope­ful and con­fi­dent that a suc­cess­ful out­come is achieved in that in­stance.

Large firms can do this be­cause they have ad­van­tages over small firms. Their economies of scale re­sult in re­duced pro­duc­tion costs, they have greater bar­gain­ing power with sup­pli­ers and may be perceived to be of lower risk and there­fore have eas­ier and lower cost ac­cess to fi­nance.

This al­lows for higher po­ten­tial prof­itabil­ity which in turn fa­cil­i­tates much greater lev­els of in­vest­ment in cap­i­tal and R&D and in­creases in­no­va­tion.

While much is made as to the opportunit­ies that re­side in new sec­tors like fin­tech, AI and robotics, re­view­ing this Belfast Tele­graph list shows the strength of busi­nesses from tra­di­tional in­dus­tries. The four big banks lo­cally are all in the top 10, again un­der­lin­ing the re­cent strength of the econ­omy and power/ util­ity com­pa­nies also fea­ture strongly at the top of the list. Look­ing fur­ther down the list, agri-food, con­struc­tion and en­gi­neer­ing busi­nesses are very well rep­re­sented. Although a diver­sity in sec­toral terms has its ad­van­tages, a small econ­omy can­not be world-class at ev­ery­thing and North­ern Ire­land has de­vel­oped a very strong in­ter­na­tional rep­u­ta­tion in these sec­tors.

Suc­cess­ful com­pa­nies also tend not to emerge in iso­la­tion. As this list shows, groups or clus­ters of com­pa­nies de­velop which can be suc­cess­ful both lo­cally as well as in­ter­na­tion­ally.

This raises an im­por­tant point for Govern­ment re­gard­ing the need to fo­cus lim­ited re­sources on sup­port­ing sec­tors and de­vel­op­ing clus­ters which are most likely to suc­ceed in the com­pet­i­tive global econ­omy of the 21st cen­tury.

In re­la­tion to com­pet­i­tive­ness within North­ern Ire­land, an in­creased and more tar­geted ap­proach to in­vest­ment within higher ed­u­ca­tion is crit­i­cal as we cur­rently re­main the only UK re­gion dis­in­vest­ing in higher ed­u­ca­tion. This would cre­ate a win-win sce­nario where larger com­pa­nies would ben­e­fit through ac­cess to fresh tal­ent that can make an im­me­di­ate im­pact and SMES would gain grad­u­ates who have the flex­i­bil­ity, agility and in­no­va­tion in­sight needed to en­able their com­pany to grow glob­ally.

Ul­ster Univer­sity Busi­ness School is cur­rently tak­ing a highly pro­gres­sive ap­proach, through a fo­cus on entreprene­urial ed­u­ca­tion, through well-es­tab­lished in­ter­na­tional and busi­ness part­ner­ships. We are pre­sent­ing an ed­u­ca­tion of­fer that has been co-cre­ated with premier part­ners in the US and China and a new sin­gle ‘front door’ through which all busi­nesses can come to draw value from that ed­u­ca­tion of­fer.

This global foot­print and lo­cal ac­cess to the value it presents is cre­ated through a part­ner­ship-driven and net­worked model with a fo­cus on co-cre­ation. It is all about in­clu­siv­ity and moder­nity, not ex­clu­siv­ity and tra­di­tion. This net­worked phi­los­o­phy of do­ing busi­ness is re­flected in many of the Top 100 com­pa­nies listed here – in­deed one would ex­pect that a re­gion­ally en­gaged busi­ness school op­er­at­ing across North­ern Ire­land would re­flect its mar­ket but we, as a univer­sity, must do more than mir­ror the mar­ket in which we op­er­ate – we must and do bring global per­spec­tives to bear and in­tro­duce ways of find­ing value for com­pa­nies through that global net­work. This helps en­sure a highly re­spon­sive and rel­e­vant strat­egy to NI com­pa­nies.

The re­cently launched MSC Strate­gic Growth pro­gramme, de­vel­oped in col­lab­o­ra­tion with Bab­son Col­lege, Bos­ton is one such ex­am­ple of how rel­e­vant busi­ness ed­u­ca­tion can work along­side busi­ness to en­sure op­ti­mum busi­ness growth and prof­itabil­ity. Such an ap­proach is crit­i­cal in my view for all com­pa­nies given the need to fu­ture-proof our busi­nesses in the face of un­prece­dented and tech­no­log­i­cally-en­abled change.

See page 6 for a round-up of the Belfast Tele­graph Busi­ness Awards in part­ner­ship with Ul­ster Bank

SUC­CESS­FUL FIRMS DON’T EMERGE IN ISO­LA­TION BUT CAN DE­VELOP IN CLUS­TERS THOUGH THAT FORM OF DE­VEL­OP­MENT RE­QUIRES SUP­PORT FROM GOVERN­MENT

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