Saturday 18 November 2017

Like Mary Portas' knickers, Irish industrialists are thinking global

Manufacturers are clawing back the ground lost to Asia as the West rediscovers it appetite for making things, writes Mark Keenan

Could Mary Portas' knickers be revealing something about the future of manufacturing in Ireland? Earlier this year, Portas, who made her name by rejuvenating jaded shops on prime time telly, decided she'd do the same for British manufacturing.

The resulting programme -- "Mary's Bottom Line" was Jamie's School Dinners and Gok Wan's "Look Good Naked" but for British manufacturing... and knickers.

Portas took on a few juvenile apprentices, dug out some retired rag trade veterans to teach the pale youths the necessary skills and then put them to work.

The surprising end result is a vibrant clothing factory located a half hour from Manchester which is selling smalls faster than workers can get them off to the shops -- at a tenner a packet. Now they have shelf space at Liberty, Selfridges, John Lewis, Asos, Boots, House of Fraser and Marks & Spencer.

This tv project has pinged some strong elastic with the British buying public who have clamoured for the factory's "Kinky Knickers" at the shops to the degree that retailers are continuously awaiting new stock.

Portas proved that manufacturing could succeed in Britain for a product as cheap as knickers and the reaction to the series also proved that the average British society still hankers after the big hole left in it by the recent departure of so much manufacturing.

To the working class viewer whose mum worked a sewing machine for a living, Mary's knickers factory is Mike Baldwin's addled and Weatherfield lingerie workshop made real and making real money.

The choice of ladies' smalls was a pertinent one for the British project because no better object conveys why most of us in the West believe we can't make stuff any more. Bought in packets of three for a tenner -- we are now conditioned to expect that they come from some Asian sweatshop where indentured workers earn a fiver a week while sleeping nights under their machine benches.

In recent years that expectation has racheted up the product value line. Just as Dell computer manufacturing was leaving Ireland for Poland, Apple iPods were being turned out by Chinese dormitory based workers doing 15 hour days for €30 per month.

Twenty five years ago Ireland also made knickers and shirts, and shoes -- there were more than 500 rag trade manufacturers based here, now there are almost none. So what future for manufacturing in any western country let alone Ireland?

Portas argument is simple -- that anything, no matter how big or small can be manufactured locally and at a profit if the product is well branded, marketed, is made with quality, sold at a premium (but not exorbitant price) and plays on its local credentials in an employment conscious local market.

Portas says we can't make all the knickers, but we can make enough of them to make a difference to our economies. People buy her knickers she says, for the same reason they pay more for an organic chicken -- the principle (keeping jobs at home and closing battery condition sweatshops) and for the quality of the product.

But perhaps its not so odd to believe that we in Ireland can also make the "smalls" again alongside our tablets and medical devices.

While the Chinese have been busy making the plastic leprechauns for Irish tourist shops, here a swathe of bust-born cottage manufacturing outfits have been kicking off on a small scale, not only in the food sector, but also in areas you'd expect the Chinese to be busiest in -- like household cleaning products (the Cork based Lilli's Eco range) or Smallwares (a maker of plastic coat hangers) in Louth.

So why not knickers, or doilies, or socks? Once the value is added, Mary Portas shows it can work. And it's not just telly's pop trade crusade queen who asserts that manufacturing is heading for a revival.

A bevy of politicians and economic pointy heads from many countries are starting to argue that circumstances are changing enough globally to allow the West to wrestle back enough manufacturing from Asia to make a difference.

Not least the British, who not long ago sniffed at the German backwardness of continuing to make things while they busily divested themselves of their own factories for financial services.

Skills

Now (think George Osborne's "march of the makers" call) they want their factories back. So too do France and the USA, where reindustrialising has been near the top of the agenda in every last election campaign. Their role model is, of course, Germany which is also a successful manufacturer of paper tissues and bricks as well as BMW's and high tech drill bits for mining.

In May the Financial Times' manufacturing editor Peter Marsh caused a stir with the launch of his book "The New Industrial Revolution" which argues that there's a new golden era of manufacturing on the way which western countries like Ireland can grab a slice of -- if we're ready.

His battle cry for new factories (albeit higher-tech ones than knickers) reads: "In recent years it has become fashionable to think that the period of economic and productive ascendancy of the rich countries -- chiefly consisting of western Europe, north America and Japan -- is finished as more of the world's manufacturing momentum switches to China and other fast growing nations. This view is nonsense.

"In the era opening up, there will be a chance for many countries and individuals to excel, so long as they understand fully the nature of the changes, have the correct degree of skills and motivation and act with the necessary imagination and creativity.

"The world contains huge numbers of people with this mix of attributes. These individuals will be the 'shock troops' of the New Industrial Revolution. They will deal an upward push to the world economy unparalleled since the first Industrial Revolution almost a quarter of a millennium in the past."

Marsh cites the new enablers as recent improvements in technology which tilt the balance between labour and know-how back in our favour to make manufacturing more efficient again in costlier countries.

He cites the emergence of networked manufacturing which permits companies to base themselves in many different countries simultaneously, reducing the "all in one" approach which requires that everything from bedknobs to broomsticks be made in the same place.

In contrast he also cites the powers of high tech and R&D based "clustering" -- the trend by which many different firms move similar functions to one "cluster" area in order to benefit from economic and intellectual synergy.

Given Ireland's dramatic cost cutting of wages and rents in recent years, he thinks we're also in with a chance to get in on an industrial revolution for the first time round. "Of course you could argue that most of the points contained in my book also apply to Ireland," says Marsh.

But back to the Germans -- everyone's new favourite role model and the people from which people like Marsh say we should learn some lessons.

Other pointy heads are saying that manufacturing linked to stock markets is flawed as demonstrated by the rude survival of German companies who are mostly privately or family owned companies in the "Mittelstand" genre.

They don't have to worry about the impatient expectations of shareholders and their modus operandi is to survive to pay the workers and the owners a salary. The continued security of wages and the economy they bring is the whole point to the Germans.

Investment in R&D, apprenticeships and good kit is substantial and seen as a necessity to secure the future rather than a luxury.

German workers are treated well and expect a job for life in good times and in bad. They work extra hours for free in the booms so they can earn the same money for less hours in the downturns.

There are no automatic annual cutbacks to please bean counters and which cripple the ability of the operation to perform in bad times when it most needs to. The Germans don't do laissez faire. But can we compete with them in Ireland?

Working class Finglas in west Dublin is a long way from the Ruhr but not unlike unemployment-hit Manchester where Portas has hung her knickers operation.

Here Sigma Wireless, an Irish based and owned company has just started manufacturing a new life-saving, satellite-based emergency communications device which it designed and developed itself.

Sigma beat the Germans at their own game when their device was competitively tested against its nearest competitor, a German product, and emerged victorious to scoop a British contract worth €20m.

The ComAlerter which was researched, will be used by police, fire, defence, ambulance and prison services all over the UK. Interest has also come from Norway, Holland, Australia, Spain, Belgium and Saudi Arabia.

Sigma is not a new born Irish tech whiz outfit. The company has had its ups and downs over the years and was formed after a management buyout of Ireland's Motorola base years ago. It used to make radio antennae but demand fell and production was sold to another company which promptly shipped it abroad.

But Sigma, which has survived these last few years largely on maintenance contracts, didn't give up on manufacturing. Instead it used their market research to come up with a new and unique product and last year was devoted to R&D and testing. Today most of the 54-strong workforce are back manufacturing and the company plans to staff up this year.

"What we have proved here in Finglas is that there's a strong future for Irish manufacturing provided you link what you're doing to research and the end result is a high value added product that relies on strong expertise," says CEO Tony Boyle.

Boyle says his company might well have been able to launch their product in the boom but says the higher costs would have made it considerably more difficult to get it off the ground.

Speaking to the Irish Independent after receiving the Irish Exporters Gold Medal for achievement recently, Dr Martin Naughton -- whose Glen Dimplex company makes electrical goods in Ireland and sells them to the Chinese -- argued that Ireland can manufacture and export with the best -- in part because our management systems are so good.

The IDA, which is now predicting the first "green shoots" year for Irish manufacturing since 2008 agrees with him. It also agrees with Marsh's theory of a rejuvenated European sector and Boyle's theory that we Irish can get a piece of the action.

"Ireland is known for a high quality of managers and also, it might surprise you, for engineers who can think creatively and solve problems. Also a highly productive workforce who are not afraid to ask questions," says IDA's head of engineering and diversified industries Tommy Fanning.

Fanning says that while the control of boom-era wages and some other costs are of great significance in reattracting manufacturing FDI's to Ireland, the main reason they have been mostly staying clear these last four years is the continued uncertainty at EU level.

"What's more important than anything else for the future of Irish manufacturing is that Ireland continues to give out the correct signals in regard to our continued membership of the EU and in regard to our special relationship with the USA," he says.

Not surprisingly, Fanning sees the future for Irish manufacturing in high-end and high-value added goods, rather than in smalls.

"We should see some expansion with existing organisations and perhaps some new operations coming in the next 12 months and certainly a big lift in the next three years," he adds. Fanning also believes we can beat the Germans at their own game.

"One of our German-based client companies couldn't solve a particular design problem regarding a pipe device. However the Irish engineers based here worked out a solution with the result that the devices are now made in Ireland and not at the parent company in Germany."

Meantime just this week NCB confirmed that Ireland's manufacturing sector has grown for the past four months with the company's Purchasing Managers' Index (PMI, see table inset) registering the sharpest increase since 1999 when the register began. "These are a healthy set of numbers," said the company's chief economist Brian Devine.

So it looks like we won't have to stitch knickers just yet.

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