Northern Ireland’s economy is a mix of the old and the new

The latest Belfast Telegraph Top 100 most profitable Northern Ireland companies report provides a snapshot of what is happening within our economy. It illustrates both how far our economy has changed, but also the ways in which it has not. In some sectors, such as energy, it is in with the new, but not yet out with the old.

The two most profitable companies are both in the pharmaceutical sector, revealing phenomenal turnover, as well as strong profits. These companies did well from the Covid pandemic, but continue to do well. Randox – with £190m in pre-tax profits, on turnover of £626m – is a performance star, as is Almac – with £97m in pre-tax profits, on turnover of £840m.

These are modern economy businesses, built on research, development and technical skills. Their success is a testament to the best outcomes of our two universities, replicating what is being achieved in the South, where the pharmaceutical industry is part of the infrastructure of its economy. Northern Ireland needs to further build both on the research emerging from higher education, and also on the talents of the graduates.

Another illustration of this connection between the new economy and our university sector is that two of the top 100 companies are spin-out businesses that emerged from Queen’s University. There can be no clearer illustration of the importance of higher education to the modern economy. Andor is one of these companies, though no longer locally owned as it was acquired by a University of Oxford spin-out, Oxford Instruments. It is now rebranded as Oxford Instruments Andor.

Kainos is better known as one of Northern Ireland’s most successful home grown businesses. It is a much older Queen’s University spin-out – dating from the 1980s. And Kainos is a plc, in contrast to many of the largest Northern Ireland companies that are subsidiaries of global corporations. In many instances, it is far from obvious from the branding of those local operations that they are, in reality, owned by multinationals. It is only when companies’ annual reports, filed with Companies House, are examined that the ultimate ownership structure becomes clear.

For many, the single route for a Northern Ireland SME to grow is by attracting capital investment from outside. This may be through acquisition by a large corporate, or it can be – as is the case with some of the Top 100 – through a partnership with external private equity, that provides growth expertise and strengthened corporate governance, alongside a capital injection. These supports help to address one of Northern Ireland’s strategic weaknesses – the difficulties small and medium sized firms have in becoming genuinely large.

Despite this, Northern Ireland has a vibrant high tech sector. EOS remains locally owned, while TextHelp is locally initiated and led, but now private equity supported. A number of other large high tech businesses here are parts of major global corporations – Seagate, Tungsten Automation, GE Grid Solutions, Crossbows Optical and Creation Consumer Finance. Together these provide important revenues for employees and Northern Ireland as a whole. Many of our other largest businesses are bringing high tech processes into traditional industries, such as mineral extraction and waste recycling.

One of the most significant reeals peeking out from the Top 100 is the number of wind farm companies that are now appearing – reporting multi-million pound profits, with almost no employees. Some of these are subsidiaries of major energy companies seeking to decarbonise their energy sources: others involve investment vehicles focused on generating high returns. These companies are reaping mega-profits following the onset of the Ukraine war.

These are undoubtedly positive stories for our economy, reducing our carbon emissions, potentially attracting new investment from companies that are energy intensive users. Yet some of the more traditional energy companies – such as LCC, Maxol, Calor and Nicholl’s – remain large and profitable.

Increasingly, the energy sector is a mix of the old and the new. That is true, more broadly, of our economy. Agriculture and construction remain at its heart. Two farmer owned co-operatives – Dale Farm and Fane Valley – are among the biggest. Moy Park is, by turnover, the largest Northern Ireland business, but not by profit, nor is it locally owned as it is part of the global food giant Pilgrim. Its role in our economy has become increasingly controversial, especially after a recent BBC Spotlight documentary. The locally owned Ballygarvey Eggs business is a genuine Northern Ireland success story, while Foyle Food is a massive processor of beef.

The construction sector continues to be important for our economy, not least as it generates external revenues, with contracts delivered to Great Britain, the Republic and internationally. This sector contains several household names – McCann’s, Graham’s, McAleer & Rushe, Heron Bros, Lagan Homes.

If there are lessons to be drawn from the Top 100 it is surely to recognise the role of university research and skills in building our economy, not just through the emerging high technology businesses, but also in re-shaping some of our traditional industrial base through the use of the latest technologies and research.

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