Ireland missed the last industrial revolution but has an incredible edge in building the next one in the form of the industrial internet of things. And the country’s regions are best placed to reap the rewards, writes John Kennedy
As a nation of grumblers and occasional gamblers, we tend not to see the obvious in ourselves. One of our own unrecognised virtues is transition. We handle transition very well, even if we can’t see it through the storm clouds of the time. Those blessings in disguise aren’t obvious while trauma is being meted out.
Due to both our long-past and recent history, Ireland is one of the most globalised nations on earth, with the highest proportion of people living overseas and yet, ironically, with the concentration of the highest proportion of tech and life sciences industries outside of the US. It is ironic that while so many young Irish people live overseas because of the recession, Dublin and Cork are emerging as magnets for young people from all over Europe and Asia who want to live and work in STEM industries in vibrant cities.
But, ultimately, for a country that missed the industrial revolutions of the 19th century and the post-war boom of the 20th century, Ireland quickly caught up because of brave education policies. It was quick to catch the mobile investment trends that saw companies like Apple sweep into the country in the early 1980s and the same with Intel in the 1990s. Now, Apple is creating 1,000 new jobs in Cork, and Intel has selected Ireland for the latest $5bn investment in manufacturing technologies to produce its next generation of chips.
An example of the transition capabilities that result in fairly plump pigeons coming home to roost can be seen in software. In the 1980s, Oracle and Microsoft both established manufacturing facilities in Dublin where (soon-to-be millionaires) busied themselves packing cardboard boxes with instruction manuals and software discs. Jump forward more than three decades and Ireland deftly moved with the changes to now being the home of the cloud when you consider the multi-billion data centres and tech campuses that Microsoft is building in Dublin and the 450 recent jobs announced in the city by Oracle.
Ireland is also proving it has the DNA to transition in the world of pharmaceuticals. During the 1980s and 1990s, many of the big pharma giants established plants that were centred on process and production. In 2016, a large number of these plants have transitioned from factories with smoke stacks to sophisticated next-generation biotech campuses and Ireland is now the 7th largest exporter of medicine and pharmaceutical products in the world, with the amount of products exported annually reaching €39bn.
But that is the multinational picture and the IDA is now reaching record levels in terms of job creation figures. While the numbers are good, it is hard not to keep an eye on the prevailing international picture. Stock markets are being hammered by the faltering Chinese markets and all eyes are on the European Commission’s negotiations with Apple over tax arrangements and what that could mean for inward investment into the future.
The next industrial revolution will have to be homegrown
You can’t ignore the international headwinds but now, more-than-ever, Irish people’s skills at handling transition will need to come to the fore. When it comes to one of the biggest tech trends to hit the world – the internet of things – Ireland has been laying the blueprint for this particular opportunity for decades, it just didn’t know it.
A consequence of the IT manufacturing boom in Ireland in the 1990s was the local electronics industry that grew up to supply manufacturers like Dell, Apple, Intel, HP and many others with everything from printed circuit boards (PCBs) to integrated circuits sourced from Taiwan and the glue and materials needed to solder wires and chips onto PCBs.
I know all this because I was there, writing about the local electronics industry and visiting those early plants in Cork and Limerick. On one occasion I took a train to Galway and a taxi to a rurally-based company called Connaught Electronics, which was making electronic assemblies for the multi-billion automotive industry at the time.
On another occasion, in the 1990s, I travelled down to Kinsale where executives from EMC’s nearby plant in Ovens impressed on me that there was a tsunami of data and movies coming because of the internet, at that time a 56k modem phenomenon among a few people who owned PCs.
I had forgotten about Connaught Electronics until last week when talking to Dermot O’Shea, co-founder of a Wexford company called Taoglas, reminded me that one of his partners, a subsidiary of Connaught called Celtrak, which made internet of things devices for the auto sector, was recently bought by truck refrigeration giant ThermoKing.
At the turn of the century, much of the PCB manufacturing and electronics industry had left these shores and migrated to lower cost centres in Asia, such as Malaysia and Taiwan. Although, obviously, some companies held on and transitioned.
It was as a consequence of this transition that many Irish executives who worked in the electronics industry in Ireland then found themselves in Asia. One night, while playing Gaelic football with other ex-pats, Dermot O’Shea from Enniscorthy stuck up a friendship with Dubliner Ronan Quinlan. O’Shea was there to spec out distribution opportunities and the pair went into business buying and selling electronics for other manufacturers before spotting a niche in terms of wireless antennae.
Geography is history
In 2004, they established a company in Enniscorthy called Taoglas to focus on a niche area known as telematics and its first client was a UK firm designing anti-theft and vehicle-tracking devices for Jaguar.
Zoom forward to 2016 and Taoglas is a game-changer in the area known as the industrial internet of things, making the wireless systems that enable machines to talk to each other. The global value of the IoT sector is predicted to exceed £25bn a year (€34.2bn) by 2020, with an expectation that 25bn devices will be connected by 2025.
Last week, Taoglas, which is now achieving turnover of €32m a year, announced it is investing €2m in a state-of-the-art internet of things design centre in San Diego, close to where giants like Qualcomm are located.
Few people in Enniscorthy or, indeed, across Ireland realised that in their midst is a young company that employs 137 people worldwide and is making IoT come to life for some of the world’s biggest tech brands.
The global supply chain transition in electronics from the 20th to 21st century was also the making of Corkman Liam Casey’s PCH, which he established in Cork in 1996 as an outsourcing operation matching Asian suppliers with Western manufacturers. Today, PCH is a $1bn a year global giant still headquartered in Cork but with operations in San Francisco and Shenzen, China.
PCH helps in the design, manufacture and delivery of some of the best-known consumer electronic products and much of this is because it transitioned from supplying into masterminding the global supply chain for these products.
Every time I have spoken with Casey he repeats the phrase “geography is history.”
Entrepreneurs are unique and rare, but Ireland has thousands of experienced executives, like O’Shea and Quinlan and Casey, who understand the global supply chains of not only the electronics but also the pharma-chem industry. Cork, for example, has an enviable cluster of wireless design expertise and talent thanks to companies like Motorola and now Qualcomm in the region. Other regional bases like Athlone have enviable cloud and wireless cloud expertise honed at Ericsson.
It is no accident that last summer EMC (which last year announced a merger with Dell) and Vodafone jointly committed €2m to invest in an industrial internet of things testbed in Cork and Limerick.
It is no accident that a team of experienced Intel engineers in Kildare led by Philip Moynagh have spearheaded some of Intel’s most compelling products aimed at IoT, ranging from Galileo Arduino boards to the new Curie chips that will lead Intel’s drive into the wearables space.
It is no accident that this morning a young company called VT Networks raised €1.2m to build Ireland’s first IoT network using Sigfox technology. The company is targeting 1m connected devices in Ireland by 2017.
The chips are down, let’s play
What is needed is a blueprint for the industrial IoT opportunity. How do we tie together all of these developments to foster an indigenous powerhouse so we can better navigate the changing headwinds?
How do we take advantage of the experience and insight that can be gleaned from entrepreneurs like O’Shea and Casey and accelerate and foster new businesses that could emerge from any number of seasoned executives who cut their teeth in multinationals but could now foster global growth companies from regional bases. These guys would agree with Casey, geography is history.
Last week, the Government announced a €3m plan that could be leveraged to €6m to invest in regionally based accelerators. Accelerators are ultimately about ramping up sales but with a bit of imagination plans could be designed to also jump start and incubate industrial IoT companies in regional towns led by seasoned local executives with international insight.
Ireland is good at transition. The politicians are in election mode so they don’t want to talk about the next set of economic challenges that will come from the collapsing stock markets.
But another wave of economic change is coming whether we like it or not. This time, let’s play our cards right.
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