Monday 20 November 2017

What things does Ireland make?

Waterford Crystal is making glass again, but traditional manufacturing has fled Ireland to find cheaper costs elsewhere, writes Roisin Burke. Hi-tech drug and food production is where the money is

SO the furnaces have fired up in Waterford again and the famous stemware is being made there once more. It's a public image and tourism coup for the luxury brand -- but in the context of Ireland's €88bn export sales figure, it's a mere manufacturing minnow.

Crystal making in Waterford halted when Waterford Wedgwood went into receivership last year. But long before that the lion's share of its crystal making had been outsourced to factories in eastern and central Europe. It's just one example of the exodus of traditional manufacturing to places where costs are far lower than Ireland.

We don't make cars or clothes any more, nor computers. Penneys/Primark may be a major Irish success story, but its cheap fashion garments are made in Asia and elsewhere. Clothing and footwear was once our largest manufacturing activity, employing 40,000 people up to the late Sixties -- now it's all but gone.

Manufacturing here has shifted away from labour-intensive activity to what's termed "high value" -- the mostly multinationally driven drugs, medicinal device and electronics production. The food sector is the big indigenous player.

Manufacturing is finally on the rise again after more than two years of stagnation, the Irish manufacturing index shows. Before 2007, it had soared by 20 per cent since 2000.

"We have an enormous export sector, one of the most open economies in the world," says NCB chief economist Brian Devine.

But it's not the key source of employment it was. The services sector, with its 1.4 million workers in everything from hairdressing to catering and financial services, has far eclipsed manufacturing's 220,000 employment figure.

So what does Ireland make now, and who is making stuff here on a major scale?

Pharmaceuticals

Worth €45bn a year in export sales, pharmaceutical and healthcare is the bulwark of Irish manufacturing.

Pfizer's Irish plants make its blockbuster medicines such as impotence drug Viagra, cholesterol controller Lipitor and anti-depressant Effexor. Allergan makes the wrinkle freezer Botox and filler Juvederm here. Major employer Abbott makes drugs including HIV and diabetes treatments.

A cluster of medical device-makers are based here, including the world's biggest, Boston Scientific. Its main products are stents coated in drugs and polymers that stop arteries from getting blocked.

Though plant closures and job losses have been rife in the past two years, Brian Devine says the recession-cycle losses are coming to an end and "it's starting to grow again".

Homegrown medical device operation Creganna is expanding. The Galway-based outfit made a circa €16m acquisition in Silicon Valley this year, adding 50 per cent to its revenues by buying Tactx Medical. It bought to boost its product line in the US and is extending its operations in Asia too.

Hi-tech electronics

Thanks mainly to silicon-chip makers Intel and Hewlett Packard, Ireland is the second largest exporter of software to the tune of €18bn sales a year. Intel is the State's biggest private employer.

Dell's transfer of its manufacturing from Limerick to Poland last year ended our major computer manufacturing function.

"The sector got hit very badly as global investment in business declined in 2009, but we expect it to come back," says Mr Devine.

food

Cheese, diet drinks, crisps and jelly beans nourish the economy. Food and drink manufacturing is worth €8bn in exports, with €6bn of that being the food part. It's a major producer for the home market as well, unlike most of the multinational manufacturers here.

Glanbia and Kerry Group have been transformed from local creameries to worldwide food producers since the Eighties. Other major names are Bulmers-making drinks giant C&C, Guinness maker Diageo and Cadbury.

Diageo exports €1bn-a-year worth of booze made here -- 70 per cent of all the Guinness made here, 95 per cent of Baileys and 70 per cent of Bushmills.

Glanbia is seeking to shake off its traditional Irish dairy and agri-business, hoping for a €350m deal with its farmer providers that will allow it to focus more on its cheese and nutritionals business in the US and Asia markets.

'Manufacturing is finally on the rise again after more than two years of stagnation. Before 2007, it had soared'

The Largo Foods-owned Tayto brand has just launched its assault on the huge Chinese market. Taking advantage of the empty containers going back to China after goods have been delivered here, it's using that capacity to export its stock cheaply into Shanghai's market of 20 million people from its food plants in Ashbourne, Co Meath, and Gweedore in Co Donegal.

Mr Tayto grins out from the packaging, but cheese and onion flavour won't be on offer -- instead tastes like sweet chilli are tailored to the local palette.

The Australian maker of diet aid Celebrity Slim, Probiotec, is the newest arrival here in the sector. It has just set up its European production headquarters in Dundalk and expects to generate €30m worth of sales from its new base in the next three years.

Irish gourmet jelly bean maker Aran Candy has just made a major change to its sweets as part of its plan to make serious inroads in more eurozone countries.

In May, it converted over to 100 per cent natural flavours and colours -- no mean feat when you have hundreds of varieties of jelly bean. "It is one of the single biggest things we've ever done in terms of our product," says managing director Paul Cullen.

He hopes the move will steal a march on the company's competitors who are mainly US-based and which make heavy use of artificial colours and flavours.

"Our single major market would still be the UK, but we're developing more business in European markets," he added.

"The more we can sell in to the eurozone the better." It is also strengthening its North American business.

For commodity-dependent Irish manufacturers like Aran Candy, it's not just about making and selling goods, it's about getting your raw materials for a good price. It requires looking at currency hedging in a similar way to how airlines hedge on oil prices.

"We have a conscious programme of hedging our exposures on currency, looking at where it's likely to move," says Mr Cullen.

Building

About a dozen Irish manufacturers are getting a head start on economic recovery from the 2012 London Olympics, winning contracts worth over €110m to date, with more up for grabs in the coming year.

Dublin company Techcrete will provide pre-cast concrete structures for the Athlete's Village, and ABM Precast is making precast concrete shells for buildings and tunnels at Olympic sites.

Clearpower will provide six megawatts of woodchip heating equipment for the Olympic Park complex in Stratford, East London.

Aviva Stadium supplier Banagher Concrete is doing the terracing for the handball arena at the Olympic Park, while Leinster Reinforcements has the contract for the manufacture of reinforced steel cages for the construction of the Aquatic Centre and handball arena.

... AND THE REST

From soap to cardboard boxes to wind turbines and posh dog food, some traditional manufacturing is still here

Cardboard box and packaging maker Smurfit Kappa is the leading producer for Europe and Latin America.

Donegal soap and cottonwool maker Irish Breeze has been in operation for almost 20 years.

Machine and tool maker C&F Group is now going in a greentech direction.

It has started to design and manufacture wind turbines at its Galway base as part of a €20m expansion. It also designs and supplies machine and tool components to clients including IBM and Hitachi.

There are several other machinery makers here, including AG Machinery and building switchgear company E&I Engineering.

Kilkenny pet food company Connolly Redmills is an international manufacturer of posh human-grade dog food, mainly for the pet-loving Japanese market.

It also makes food for thoroughbred horses, including the feed for one of the greatest flat-racing winners of all time, Sea the Stars.

Sunday Independent

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