Reflections on Irish Industrial Strategy
Dr John Bradley
Presented at Irish Government Economic and Evaluation Service
Conference on Medium-Term Economic Strategy
Tuesday 3rd September 2013
George’s Hall, Dublin Castle
[1] Introductory remarks
By any standards, Irish industrial/enterprise strategy has produced great successes over a period of
five decades since the previous import substitution strategy was replaced by an aggressive exportled alternative. The peak of its success was the decade of the 1990s, the “real” Celtic Tiger period,
when burgeoning growth in the foreign manufacturing sector spilled over into the rest of the
economy and produced broad-based, sustainable full employment by the start of the disastrous
decade that culminated in the property bust and banking crisis.
However, it is something of a paradox that the very success of Irish enterprise strategy makes it
difficult to examine it in a spirit of constructive criticism. The two main enterprise agencies, IDA
Ireland and Enterprise Ireland, responsible for implementing the strategy as well as for some
elements of its design, do not engage in much public self-examination or introspection.
In the case of IDA Ireland, its core mission is one of marketing Ireland as the premier destination for
certain types of inward investment in high technology manufacturing and services in the context of
supportive public sector investment in key attractors of such investment: physical infrastructure,
human resources and innovation activities. The focus on marketing is well illustrated in the recent
IDA one-minute video, ”Ireland’s unique selling points: warm people and wet weather”.1 In the
descriptions of that video on the IDA web site it is asserted that:
“There are two ways to persuade people to come over to your point of view: marshal the facts
and engage in an intellectual argument, or write compelling stories based on relevant ideas and
engage people’s emotions”
The video certainly carries one along on a wave of admiration, good feeling and enthusiasm. But the
ethos of self-praise may not be entirely healthy and the underlying anti-intellectual tone may not be
entirely wise.
In the case of Enterprise Ireland, the approach is rather different. A strong marketing theme is also
present, of course. But the audience is ourselves, not foreigners, and we Irish are a sceptical bunch!
So the focus is on detail. There are lots of supportive enterprise programmes, being rolled out in
diverse sectors and local businesses, and many success stories. The Action Plan for Jobs 2013, with
its myriad reforms and sectoral policies, fits well into this domestic context. There is a strategy,
indeed, many strategies, implicit in Enterprise Ireland and APJ activities, but they tend to get lost in
the detail.
1
http://www.youtube.com/watch?v=83M-zYzZWEU&feature=c4-overview-vl&list=PLB8F1908620D0565A
1
As one tries to stand back and examine critically the likely future directions of Irish enterprise
strategy and its implementation by these mainly very successful agencies, I am reminded of what
Frank O’Connor once wrote about taking up a dangerous trade like literature in a censorious Ireland:
you need to develop the hide of a rhinoceros and rent a house in a strategic spot with direct access
to the sea.2 But industrial strategy success stories should not blind us to challenges and dangers that
lie ahead. The recent global financial crisis, global recession, and the rise of Asian economies have
made over the previous comfortable world of US industrial hegemony and EU consolidation, within
which Ireland prospered. Knowledge of these changes and clear thinking about their implications
are essential elements of strategy reformulation.
[2] The Irish industrial strategy divide
The dominance of FDI in Irish manufacturing and in some sub-sectors of market services has created
an industrial strategy “divide” that is not often found to the same extent in other small, developed
economies. Although it would be possible to discuss Irish industrial strategy in a unified way, in view
of the polarised nature of the economy it is more useful to recognise the need for two separate, but
interconnected, strategies: one for attracting the mainly foreign, high technology sectors and
another for growing the more heterogeneous indigenous sectors. Indeed, the agency split
institutionalises this divide.
I do not propose to say much about the FDI strand of Irish industrial strategy. The great success of
this is obvious and it was the presence of the mainly foreign owned modern manufacturing and
market service base that has carried the economy through the years of fiscal austerity. The absence
of such a base made this task very difficult for Portugal and almost impossible for Greece.
As to the future, the dangers of relying excessively on the attraction of a low rate of corporation tax
are fairly obvious to everyone. Although the low rate is defended vigorously in public rhetoric, it
would be reasonable to assume that behind closed doors at least some thought is being given to the
consequences for Irish strategy in a reformed euro zone, where the evolving fiscal union will restrict
domestic tax-setting autonomy. This point is all the more relevant since the advent of increased FDI
in internationally traded market services during the last decade arrived just in time to take over from
a slackening in manufacturing activity. The tax shifting actions of multi-national firms engaged in
services has generated considerable anger in the larger EU economies, who resent the serious
erosion of their tax bases.
In any case, the kind of sustained public investment in physical infrastructure, human resources and
innovation, together with efficient institutions, that are needed to attract FDI are also needed to
build a stronger indigenous enterprise sector. However, there are additional elements required in
formulating and implementing strategies designed to enhance and strengthen indigenous
enterprise, a task that is more complex than the more transparent process of attracting inward
investment. For the remainder of my presentation I wish to focus on indigenous enterprise strategy.
2
Introduction by Frank O’Connor to The Tailor and Ansty by Eric Cross, Chapman & Hall, 1942.
2
[3] The components of indigenous enterprise strategy
It is important to unpack the essential elements involved in the design of strategy for indigenous
enterprises. The most important of these strands are the following:
a) An appropriate methodology for defining, measuring and monitoring competitiveness;
b) A full recognition of the inter-linkages between indigenous enterprise strategy and regional
development policy;
c) The desirable features of strategic policy interventions.
These three elements are to be found in present and past Irish indigenous strategy formulations, but
they are seldom made explicit, and the balance between them can be very skewed. We briefly
review each in turn.
[3.1] A better methodology to measure and monitor competitiveness
The annual reports of the National Competitiveness Council are useful here, but are not properly
focused on the internal logic of indigenous development. It is well known that national aggregate
measures of Irish competitiveness are heavily distorted by the dominance of the foreign, high
technology sector. In Figure 1 we suggest how a more appropriate conceptual framework for
indigenous competitiveness benchmarking might be structured. There would need to be three
dimensions in this framework: “activity”, “space” and “innovation”.
Figure 1: The dimensions of competitiveness
The activity dimension is designed to encourage competitiveness benchmarking at all levels of
production, from the most aggregated to the most disaggregated. It examines competitiveness from
the viewpoint of producers and aggregates of producers, i.e. it is an enterprise perspective. The
types of questions that are posed by benchmarking on the “activity” dimension include the
following. At what level of “activity” is this indicator appropriate? Is it the individual firm; groups or
clusters of firms; entire sectors; the whole of manufacturing; or the entire national economy? In the
case of Ireland, a small, open and regionally heterogeneous economy, the importance of individual
firms, or small groups or clusters of firms, producing a limited range of products and/or services, is
likely to be very significant.
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The spatial dimension recognizes that competitiveness is also a concept that applies to the
environment within which the enterprise sector operates. In other words, it is as much a
characterisation of a town, city, region or nation as it is of the particular enterprises located in that
space. The types of questions that are posed by benchmarking on the “spatial” dimension include
the following. At what level of “space” is this indicator appropriate? Is it a single city or city-region,
like Dublin; a group of regions centred on large cities (Dublin, Cork, Limerick, Galway); peripheral
regions not located near large city economies; or the entire country?
The innovation dimension stresses the fact that competitiveness is a dynamic concept and is closely
related to the activity and space dimensions. Its relationship to the “activity” dimension is usually
associated with the life-cycle of product birth, growth, maturity and decline, which imposes a
dynamic behaviour that originates from within firms themselves and drives the evolution of the
firms’ products.3 Its relationship to the “space” dimension becomes important in various different
circumstances. For example, it may be invoked to explain why some internal regions perform better
over time than others. The types of questions that are posed by benchmarking on the “innovation”
dimension include the following. What do we know about the factors that influence this indicator
over time? Is the indicator more appropriate to firms at one stage of the product life-cycle than a
different stage? How different is innovation across a range of sectors. Can we foresee policy
changes that may influence the rate of future innovation?
If the two-way approach (foreign and indigenous) to Irish enterprise strategy is accepted, then its
implications for a more appropriate approach to monitoring competitiveness also has to be accepted
as a direct consequence.
[3.2] Regional policy and indigenous enterprise strategy: a crucial link
Earlier Irish debates on regional policy often generated more heat than light. Policy makers are
reluctant to think aloud about the role of Irish regions in economic development. Our regional
institutions tend to be weak, as does inter-regional co-operation. As a nation, we are loath to accept
the truth of the characteristic features of regional growth:
a) Economic activity tends not to take place uniformly over space, or to affect all sectors of the
economy to the same extent. Rather it tends to cluster, both spatially and sectorally.
b) Clustering provides evidence of increasing returns processes, i.e. doubling inputs more than
doubles outputs. This justifies intervention by policy makers if these returns are to be
exploited.
c) Growth centres in cities or towns of above a certain size tend to interact with adjoining
population centres and eventually generate even higher returns.
The first element simply describes the physical realities of the cities, towns, villages and less
populated hinterlands to be found in any country or region. The second element provides an
economic explanation for why clustering occurs, and has been a very active area of research in
industrial economics over the past decade (i.e., the ‘new’ growth, trade and spatial economic
3
For an explanation of the product life cycle, see: Bradley, J. (2001) “The computer sector in Irish manufacturing: past
triumphs, present strains, future challenges”, Journal of the Statistical and Social Inquiry Society of Ireland, Vol. XXXI, pp.
25-70.
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theories).4 The third element is a logical consequence of the first two and describes the interaction
of two or more contiguous growth poles as their areas of influence begin to overlap.
A very early (pre-1960) approach to regional industrial strategy in Ireland was unsuccessful since the
normal processes of clustering and regional concentration were impeded both by the imposition of
high tariff barriers and by a public policy of forced geographical dispersal of locally owned, import
substituting firms. The promotion of regional dispersal in pursuit of spatial equity goals was almost
certainly at some expense to economic efficiency.
Post-1960 industrial strategy in Ireland took place in an era of free trade and was a process whereby
the state development agency (the IDA), using a wide range of incentives, bid for subcontracting
roles from global multinational firms and made efforts to influence the allocation of these activities
across the Irish regions. To the extent that there were spillover effects from the inflow of foreign
enterprises, these came mainly from the labour market and from some domestically produced
inputs, but not from the kind of dynamic clustering spillovers (Route 128, Silicon Valley, etc.) that are
characteristic of more advanced economies.
Unlike for the foreign sector, regions play a much bigger role in the indigenous sector. The Irish
regions retain very distinctive characteristics. As an illustration, take the case of the Irish border
counties, the subject of recent work by Mike Best and myself.5 Our analysis suggested that even an
area as small as the Irish border region is internally very heterogeneous and that there are at least
three broad sub-divisions of the “border” economy, with rather different production characteristics:6
North-East sub-region ( Louth)
Here one finds many examples of advanced manufacturing, foreign and indigenous, in specialities
such as engineering, pharmaceuticals, food processing, as well as evidence of specialised producer
services in finance, accounting and other areas. Our interpretation of these findings was that this
segment of the border economy benefited from spillovers from the Dublin and Belfast metropolitan
‘poles’ at either end of the so called east coast ‘corridor’. This issue had been explored during the
1990s, and what we see today is the realisation of the benefits of a massively improved transport
and communication infrastructure in a region of the island that contains about one third of the
whole population.7
Mid-border sub-region (Monaghan, Cavan, Leitrim)
This is a heterogeneous sub-region, containing many examples of more ‘traditional’ manufacturing
(food processing, furniture, etc.), but also retaining traces of pre-partition engineering specialities
from an era when the Belfast growth pole of the late 19th and early 20th centuries was the main
4
Fujitsa et al. (1999) is the standard technical work on the new spatial economic theories. Warsh (2006) is a readable
account of the role of human capital. Best (2001) provides an excellent introduction to modern economic approaches to
industrial strategy design.
5 Bradley, J. and M. Best (2012), Cross Border Economic Renewal: Rethinking Irish Regional Policy, Centre for Cross-Border
Studies, March, (http://www.crossborder.ie/pubs/2012-economic-report.pdf.)
6 The CCBS research report examined both the Northern and Southern border region.
But the quest for greater
opportunities for North-South enterprise strategy co-operation is for another day!
7 For information on the Belfast-Dublin Corridor, see Bradley, 1994, ‘A Path to Prosperity? Reflections on the Belfast-Dublin
Economic Corridor’, paper presented to a conference of the Irish Association on Economic Prospects on the Island of
Ireland for the Next Five Years, Belfast, November 24, 1994
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(indeed, the only) industrial driving force on the island. The situation here is complex, and it is only
when we moved to a more detailed ‘insider’ perspective that we began to understand the history
and likely future potential of this region.
North-West sub-region (Donegal, Sligo)
Looking at earlier data from the 1950s to the 1990s, it was clear that Donegal manufacturing
specialities either reflected those of the adjoining Derry City region (e.g. clothing and textiles) or
were specific to resources available in the county itself (e.g. seafood processing). The decline of the
clothing and textiles sector in Derry since the 1960s probably dragged down these sectors in Donegal
as they became progressively uncompetitive. An added negative factor was that the city of Derry
has never played the role in its Donegal hinterland that it might have played in the absence of any
border. Take away Derry City and Donegal becomes an economic ‘island’ peripheral to any large or
even medium sized urban centre.
The work that we did on the border region provided insights that have wider application to the task
of getting indigenous enterprise strategy right. The weakness of regional development policy in
both Ireland and Northern Ireland has left the many of their internal regions, as well as the crossborder region, economically “detached” or “stranded”. These more peripheral regions do not have
the characteristics attractive to large-scale FDI (e.g., urban population centres, third-level education
establishments, high-grade transport and communication facilities). So their development is much
more dependent on indigenous enterprise growth. Major infrastructural improvements have eased
Dublin-Belfast, Dublin-Cork and Dublin-Galway communication, but these city-based growth centres
interact only weakly. Elsewhere in Ireland, the structural characteristics of less advanced counties
and regions derive mainly from their peripherality and low level of urbanisation
One of the by-products of the publication in 2002 of the recently abandoned National Spatial
Strategy was that individual counties were required to produce county development plans. These
are usually drawn up with the assistance of specialised firms of consultants rather than produced by
policy makers within the county itself. After reviewing many examples, some patterns become clear.
Although such plans contain SWOT analysis, the intention is often to portray the county as a highly
desirable location and an attractive base for inward investment. Understandably, county
development plans tend to be seen more as marketing opportunities than as vehicles for self-critical
analysis and realistic forward thinking.
Perhaps the most surprising aspect of county development plans is the brevity with which they
usually treat the study of the existing county production base. For example, the Monaghan County
Development Plan, published in 2002 and regularly reviewed and updated since then, has no
separate section covering the important county manufacturing base, or, indeed, of its base of
market service enterprises, but does have detailed treatment of the environment, social inclusion, a
healthy and safe community, arts and culture, and sports and leisure. Somehow, production gets
written out of the story!
Given the difficulty that researchers experience in obtaining, processing and understanding data on
the enterprise sector at a county level, this limitation of county-level planning is understandable.
Such plans are heavily influenced by local government and state development agencies, that are
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often tasked with implementing a plan which, however admirable, is complex and often lacks local
budgets or policy instruments to attain designated targets.
In the research that Mike Best and I carried out, we ranged from ‘top-down’ treatment of regions
using official data, to a ‘bottom-up’ view based on private data sources and extended interviews of
business people who are actually running successful businesses in the region. We placed a lot of
stress on the bottom-up view, not because we believed that it is the only valid approach. Rather, we
found that it was seldom used in previous research or motivated existing county development plans,
which at best tend to take for granted the role played by individual business enterprises or
geographical clusters of similar enterprises, and at worst simply do not understand their significance.
Institutional and broad policy aspects are also important, and ideally should work in harmony with
an enterprise-based approach. County-based organisations do not always have any overall, strategic
understanding of their own county enterprise base, and tend to neglect sources of data that would
have informed such an overview.
[3.3] Desirable characteristics of strategic policy interventions
Faced with the need to create jobs in order to reduce unemployment, the temptation is to focus on
separate sectors and individual technologies. The Action Plan for Jobs 2013 is organised along these
lines, identifying eleven separate sectors. Of course, attention is paid to collaborative issues:
“Companies increasingly need to collaborate to compete, requiring engagement in networks,
clustering activities and in building strategic relationships with HEIs, research institutes, partners
and suppliers within and across sectors.” (AJP, 2013, page 111)
In the AJP, this appears as an exhortation. In reality, it is the crucial element in building a successful
indigenous enterprise strategy and needs to be brought centre stage. Knowing what enterprises are
present in any regional economy is the start. But the fact that clusters of similar manufacturing
activities exist in a region does not tell you if the constituent firms are focusing on core capabilities
and partnering for complementary capabilities in a way that creates an organic and highly
competitive entity referred to as an “entrepreneurial industrial district”.8
For example, Emilia-Romagna is a highly successful region of northern Italy consisting of many small,
indigenous firms producing traditional goods such as furniture, ceramics and clothing. This region
demonstrates that networked groups of firms, with the appropriate strategy, can prosper and be
competitive even in the global market place. In isolation from each other, such firms cannot survive
in modern, high wage economies, and tend to migrate to the low wage Asian countries. Of course
we do not yet find such advanced Emilia-Romagna-like behaviour amongst indigenous firms in the
Irish regions. But it is useful to have a best case example of regional clustering in order to calibrate
how far removed business activity in the Irish regions are from this standard.
The issues here may be illustrated by two examples: one of the failure of an old, well established
cluster and the other as the first stirrings of a potentially new cluster.
8
Best, Michael (1990), The New Competition, Harvard University Press and Polity Press
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Monaghan Furniture Cluster
Starting in the 1930s, a prosperous cabinet making furniture cluster formed in County Monaghan
and set the standard in investment, training, design, quality, product development and advanced
production capabilities for the island of Ireland. The Monaghan cabinet makers, unlike their UK
counterparts, survived the economic downturn of the industry of the early 1980s. In fact, they
benefited from the collapse of the once large North London cabinet making industry in this period
(Best, 1990). Thereafter, they rode the Irish construction boom and the high growth of the early
2000s.
With very little advance warning, in 2007 the market for furniture collapsed. Turnover declined
sharply and the leading firms folded. With hindsight, the boom years delayed the impact on the
Monaghan cluster of the powerful forces of globalization that were revolutionizing the once
internationally fragmented furniture industry. The arrival of IKEA in both Ireland and Northern
Ireland is a manifestation of the new forces.
The age of the container dramatically reduced transportation costs, an opportunity that was seized
first by Italian, German and Danish exporters. Over the period 1970 to 1992, Italy’s exports of
furniture increased by fifty times and Denmark’s by twenty eight times. In the period 1961 to 1990,
the average annual growth in international demand was nineteen per cent, only surpassed by
computers and peripherals (just over twenty four per cent). Furniture making, a traditional industry
which at the same time had taken on modern attributes that can drive regional growth, became
both a major employer and contributor to the EU trade balance.
Over the last two decades China exploded onto the world furniture industry scene. In 1990 it did not
feature in the top ten exporters; in 2000 was the world’s ninth largest exporter, and by 2006 the
largest. Between 2002 and 2006 Chinese furniture exports increased by thirty per cent annually to
reach over twenty per cent of global exports, double that of Italy, the second largest exporter.
Against these global forces, most of the Monaghan furniture companies diversified into trading by
outsourcing to Eastern Europe and China, and it has not always been successful. Raw material costs,
high in furniture, are the same as everywhere else. Labour only represents between ten and twenty
per cent of costs. The problem is that the bottom end of the furniture market is very crowded and
the top end is firmly in the control of long established furniture districts on the European continent.
Góla Furniture: Emyvale
Góla Furniture: Showroom
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Visiting the shop floors of the region’s furniture companies revealed a deeper cause of their loss of
competitiveness: none had made the transition to world class, one-piece flow production methods.
This is understandable, since achieving high rates of throughput (based on JIT production methods)
entails a focus and network business model. This transition cannot be done alone; it requires interfirm coordination in the form of network alliances. The Monaghan-based companies pursued instead
a go-it-alone business model: they sought to compete on the basis of designing new products within
an existing production system. The result was in all cases an increase in scheduling bottlenecks and
batch sizes, and a decrease in flow. While this ‘mass batch’ production system was competitive in
the past, the new ‘lean’ production system established an order of magnitude advance in
performance standards for cost, quality and time. State support, which emphasised joint marketing,
was completely misdirected.
The Gourmet Greenway cluster in Mayo
If the Monaghan furniture cluster was a story of decline caused by a failure to seize opportunities,
the Mayo Gourmet Greenway is an example of success starting from very small beginnings and the
imaginative leveraging the limited opportunities offered in a country that has a relatively weak
industrial base and lacks the infrastructure to attract much by way of large-scale inward investment.
This grouping of 15 quality food producers and users is unified by identification with a very
successful tourist facility, the greenway cycle route linking the towns and villages that circle Clew
Bay. Individually the constituent enterprises range from small to tiny, but one – Kelly’s Butchers in
Newport – already employs about 50 people. The linkages here are not inter-firm related to
production, the failure of which doomed the Monaghan furniture cluster. Rather they relate to
engaging retail outlets, restaurants and hotels in the area to highlight their products in a region that
seeks to strengthen and deepen its high quality tourist base. The present modest public sector
support for the Gourmet Greenway is associated with tourism (Bórd Fáilte) and regional
development (Leader) rather than enterprise development (DETE). But it is an example of the kind
of cluster that could grow dramatically if nurtured in the right way.
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[4] Enterprise strategy: push or pull
Any outsider reading the extensive Irish enterprise strategy documentation would be left with the
strong impression that the state was all-knowing and regarded its main task as “pushing” advice out
to a fairly passive private sector. This view would be reinforced by the lack of any deep commitment
on the part of private sector organisations, such as IBEC and ICTU, to thinking out and promoting
much by way of independent work on enterprise strategy. Unlike in, say, Germany, employer’s
organisations and trades unions see their task mainly in terms of defending their members’narrow
interests.
One does not have to engage for long with business leaders in the Irish indigenous sector to realise
that this is a very partial and simplistic view. Viewed from inside actual businesses, the State’s
efforts at formulating strategic policy can sometimes appear to be shallow, biased towards the more
“fashionable” sectors and technologies, and misdirected. The kinds of inter-plant and productmarket linkages that come automatically as part of the deal with MNEs have to be painfully built
from scratch in the SME-dominated indigenous sector. Research demonstrates clearly that there are
strong links between entrepreneurial firms and the evolution of clusters. For example:
a) Firms do not compete alone in the global marketplace but as members of networked groups
of firms. For this reason, network alliances and other forms of inter-firm relationships are
crucial to survival and growth.
b) Firms compete in the global marketplace by leveraging the skills, capabilities and knowledge
bases of the regions in which they are embedded.
c) Innovative firms make more than products: they advance the skills, capabilities and
knowledge base of the region in which they conduct business. Moreover, the process by
which innovative firms develop specific capabilities in pursuit of new market opportunities
itself creates opportunities for other firms. In fact, even the failure to pursue emergent
market opportunities by one firm may give rise to the establishment of a new firm
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d) The inter-firm processes by which skills, capabilities and knowledge are deepened within a
region can trigger the emergence of new sub-sector growth opportunities. In this way, a
region’s production base can be enhanced by transition from declining to growing sectors.
In our recent cross-border research, Mike Best and I targeted indigenous firms rather than
multinational branch plants. We accepted that foreign branch plants play a vital role in directly
generating jobs and indirectly sustaining activity in the region. Indeed, for many small Irish towns
the multinational enterprise is the largest, or sometimes the only, significant manufacturing
employer. But such plants can resemble what Jane Jacobs referred to as ‘castles in the desert’,
having no organic links with other businesses other than through their direct and indirect spillover
impacts.9 However, when we visited locally owned firms it was usually very clear that success was
always traceable to gifted individuals who, against all odds, founded and developed dynamic
business ventures and leveraged local resources. In some cases the state development agencies
played a crucial supportive role. But in others the firms seemed to value their independence and did
not wish to bend their plans to the rigid, bureaucratic rules and regulations of the agencies. The
diversity of experience with the state agencies was surprising.
Many of the firms that we visited had a similar governance structure: privately held, family firms run
by entrepreneurially-minded, independently-inclined people. The companies did not use debt
finance but grew ‘organically’ via reinvested profits. They were entrepreneurial firms in that they
saw markets as subject to change to which the company must adapt, but that the adaptation must
be anchored in deepening the company’s distinctive capability. They are also organised as
entrepreneurial firms in the sense that the purpose of the company is not to generate profits for the
purpose of personal aggrandisement. Rather it is to grow and develop a successful business
organisation in which profits are the source of investment funds.
Further, and perhaps most importantly, the people who run these companies have a long time
horizon. Most have lived through hard times in the past and see growth as an opportunity to build
capabilities to enhance the company’s resilience in the future. While we were visiting these
companies more than two years after the onset of the current economic recession, none mentioned
the consequences for their companies. They were dealing with it!
For example, the insights arising from our discussions with Simon Hunter in Derry related mainly to
the question of how a firm in a very traditional manufacturing sector (clothing) can transform itself
and survive in a declining sector and a de-industrialising region. When we visited the Derry region
and spoke to people in local government and NGOs, there was a tendency to regard this sector as a
lost cause and to want to move on to high-tech sectors that appeared to offer more promise.
Hunter Apparel Solutions showed us how short-sighted and flawed this view was.
The insights arising from our discussions with Paul Shortt of Castlecool in Louth related to the
complex storage and supply logistic systems that are essential in supporting the growth of high
added value food manufacturing, much of which is located in the cross-border area. They also
9
Jane Jacobs’ seminal book Cities and the Wealth of Nations (Penguin, 1986), seldom read by economists, contains a
remarkable account of how prosperity in regions depend on prosperity of cities and towns. It should be required reading
for all spatial and economic planners.
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illustrated how firms that take the island market seriously see the cross-border region as an
important strategic location for supplying the large population centres, North and South.
Our discussions with Walter Watson in Down gave valuable insights into how a sophisticated,
modern firm engaged in the production of a range of complex metal products could evolve in a rural
area near the border and thrive in highly competitive domestic and export markets. It also
illustrated how a firm can start by manufacturing simple products destined for local markets, but can
eventually grow to become a large and sophisticated exporter.
Our discussions with Pat McAdam, Bose director in Carrickmacross, gave us an example of an
extraordinarily sophisticated, foreign-owned firm that located in the border region in 1978, originally
hoping to source some of its supply chain locally (i.e. production of wooden cabinets for the Bose
top-of-the-range audio equipment), failed to find suitable suppliers and then put in place its own
supply facility. It also illustrated how the valuable experience of a firm like Bose was largely ignored
by the existing furniture sector in the area, which has suffered a catastrophic decline in recent years.
National, top-down measures of competitiveness may be useful for international comparisons. But
it is not until one moves to the regional and local level of individual enterprises and people that you
begin to understand how small, innovative firms can start up, survive and thrive in regions; the
methods that these entrepreneurs use to grow their businesses; and how they often manage to turn
what initially look like locational disadvantages into gateways to opportunities.
Public rhetoric on Irish enterprise strategy has come to be dominated by the view that industrial and
wider business strategy is the responsibility of central government and state agencies. Somehow
the business sector in Ireland, and organisations like IBEC in particular, find it difficult to mobilise
themselves in the way of many successful European regions and this difficulty also dominates
thinking in Irish regions. This is very serious because it is what goes on inside firms that really
matters, in terms of new firm creation, survival, growth, diversification, partnering and
internationalisation. The main realisation that emerged gradually from work that Michael Best and I
carried out in the cross-border region was that we actually understand much less of these processes
of enterprise strategy and regional development in Ireland than we confidently believe.
-----------------------------Dr John Bradley,
Economic Modelling and Development Strategies (EMDS),
14 Bloomfield Avenue, Portobello,
Dublin 8, IRELAND.
tel: (++-353-1) 454 5138 mob: (++-353-86) 829 8799 fax: (++-353-1) 696 1007
e-mail: [email protected]
web: http://www.herminonline.net/
RePEc: http://ideas.repec.org/e/pbr138.html
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