Business Irish

Wednesday 17 September 2014

Dublin isn't the centre of the world for everybody

There's a growing trend towards rural locations for clusters of firms

Emily Maree

Published 15/06/2014 | 02:30

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Town or country. Forget the old caricatures, like Pat Shortt's Willie Power in Killinaskully (pictured). The real question is how long will it be before Dublin becomes an industrial ghost town?

IT has been long believed that to succeed anywhere in business, you must move to the big city. From media to medical devices, domestic to international; people have always flocked to the capital city of their respective nation to make it big in the world of business. Multinational companies such as Facebook, Google and Twitter stepped off the plane at Dublin and pitched their proverbial tents less than 20 minutes away from the airport.

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But a pattern is beginning to emerge and, for once, Dublin hasn't been invited to the party. Clusters of industry have started to crop up in the most unlikely of places, providing jobs and opportunities in more rural areas.

It has become very evident in the last 10 years or so that groups of similar companies have been setting up little communes around the country. If you're looking for video game companies, look no further than Galway, hosting gaming giants EA Games and ZeniMax.

For medical devices, both Galway and Mayo should be your first ports of call with no fewer than three major companies set up in Mayo including Baxter, Allergan and Hollister. Limerick and Donegal are now seen as financial sectors, whereas Dundalk hosts payment services such as eBay and PayPal.

But why are clusters like this forming outside Dublin?

Bodies such as the IDA and Enterprise Ireland have watched these trends for years and are all too aware of these growing hubs of industry. Enterprise Ireland, a government organisation which helps Irish businesses start up and grow towards global markets, has some theories about why both Irish-owned and international companies are steering towards certain locations. From its observations of indigenous industry and Irish-owned companies, it believes it is often about the homestead of the founder.

"Irish-owned companies [like] Creganna-Tactx, Fexco, Glanbia etc... they are created and developed very often from where the founder is from and the evidence is that you can do this from a rural location in Ireland," says Eileen Banks of Enterprise Ireland.

Some foreign-owned companies also use this reasoning as their senior executives may come from Ireland and are comfortable setting up in familiar surroundings. Eileen says certain companies "are influenced to locate outside of main cities by senior executives who are based in corporate HQ but originally from the local area in Ireland ... examples include Pramerica in Letterkenny and MBNA in Carrick-on-Shannon."

However, Enterprise Ireland notes that there are often more practical reasons for foreign-owned companies to set up in rural Ireland. The skillset of the workforce, location and other factors can contribute to the setting up of a company. A spokesperson says these multinational companies are "very often set up outside a city because key investment criteria are met such as availability of skills, suitable premises, responsive local organisations, etc. I understand this was the case with Allergan locating in Westport. A skilled workforce led by dynamic management and responsive set of local organisations has led to a significant set of expansions."

The organisation has found evidence of two strong but contrasting hubs of industry: Galway and Cork. According to its research, Cork is a newly emerging hub focusing on energy, IT, pharmaceuticals and environmental sciences. Energy Cork, an initiative begun by Cork Chamber and a host of Cork-based companies, has a goal to secure more competition in the energy sector, to build upon existing business and to promote Cork as a thriving energy hub.

A significant cluster of resources, organisations and opportunities means that the Cork region is already established as an energy sector hub and companies such as Bord Gais, ESB, Phillips 66, Kinsale Energy, along with other organisations and expert consultants operating in Ireland and overseas provide a wealth of employment and revenue to the region.

Research groups and institutions such as the International Energy Research Centre based in the Tyndall National Institute, the NIMBUS Centre in CIT, the Irish Maritime and Energy Resource Cluster and Beaufort Research at UCC have also put Cork ahead of the game in terms of energy, environmental studies and, importantly, a source of employment. Boards and organisations such as Energy Cork, the European Technology Cluster and the Maritime and Energy Research Campus and Commercial Cluster (IMERC) mean that this newly-established hub can continue to grow and draw new business.

Galway, another cluster, is not so new and has been at the forefront of the medical device sector for over 20 years. It is now seen as one of the world's top clusters and has a strong mix of both indigenous and foreign-owned companies operating in the cluster with multinational companies such as Creganna-Tactx, Aerogen, Boston Scientific and Medtronic among others.

Barry O'Leary, head of the IDA, sees Galway as one of the strongest hubs in the country. "The Irish cluster that is growing the most is the medical device cluster in Galway. This started strong and has kept going. As a general rule, if you're looking to set up a medical device company in Ireland, you'll look at Galway first. Companies will generally stick to where their competitors are."

It seems that one of the reasons Galway has such a strong hub is due to investment and support. These companies are supported by a range of organisations including Enterprise Ireland, IDA Ireland, Udaras na Gaeltachta, Local Enterprise Office Galway, GMIT and NUI Galway. They provide key components for success including business development support, finance and access to finance for growth, access to markets and new customers, leadership development and access to a rich supply of talent, knowledge and research facilities.

IDA Ireland is responsible for creating industrial development in Ireland by scouting, attracting and developing foreign investment here. While Enterprise Ireland nurtures Irish industry, the IDA works towards bringing overseas talent to Ireland.

Emmet Oliver, the director of corporate communications, sees a wide range of reasons why these groups of companies are moving to certain areas. "In some cases, IDA can grant aid to the companies in the locations. Other times it is because costs are lower outside Dublin and that may be relevant for some firms. Other times it is because they will be near an airport or a university, or sometimes it is because a suitable property is available in the area they end up going to."

Barry O'Leary, CEO of IDA Ireland, also spoke about the link between these hubs and universities, crediting an educated and willing workforce for the clusters forming around university towns and cities.

"A big factor in setting these companies up is universities and institutes of technology. Donegal has a growing insurance sector near Letterkenny Institute of Technology. Clusters in Limerick have also grown a lot in the last few years ago, with huge investment in science and financial services. Northern Trust was only beginning four years ago and now there are many financial companies there. Also there are a number of global supply companies – like Johnson & Johnson and Vistakon – setting up near University of Limerick."

Industry is yet to abandon Dublin completely, but more and more companies are moving to rural settings whether it's for a more diligent workforce or because it is cheaper to set up. Technological multinationals such as Facebook and Google seem happy to stay in the capital for now, but sectors from medical to financial are craning their necks to find locations more suitable for their needs.

This poses one important question – how long will it be before Dublin becomes an industrial ghost town?

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