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4. Development of the electronics industry
Sections 1-3 of this report have emphasized the importance that was attached to promoting the electronics industry in Ireland through the 1970s as a target sector for economic and employment growth. In 1982, a National Economic and Social Council (NESC) report, produced by the Telesis Consultancy Group, identified Irish electrical engineering industries as being a most significant growth area in the late 1970s. Those industries include:
electrical equipment and components,
discrete and integrated electronic components,
computers and computer peripherals,
consumer products such as televisions and calculators,
testing and control instruments.
Emergence of the Electronics Industry
According to the IDA's listing of overseas-sponsored companies, there were over 20 foreign-owned electronic manufacturing companies in Ireland in 1974 (table 1.2). Nine of these companies had located in Ireland prior to 1970, while the remaining 13 had set up in the years 1970-1974. This represents a considerable achievement in terms of attracting such firms to locate plants in Ireland. Apart from the small number of European companies, about 14 of the Irish plants had associated companies in the United States.22 The importance attached to attracting multinational investment in electronics, particularly in the 1970s, cannot be underestimated. It was part of a global pattern of industrial location and was regarded by the IDA as the only means of building up an electronics industry in Ireland.
Commenting on the emergence of an electronics industry, Ballance and Sinclair have stated that there are several reasons why many governments (including the Irish government) regard advanced electronics as a high priority:
(a) industrial applications of advanced electronics can improve the reliability and quality of products;
(b) costs of the manufactured product are lower than for human-assembled goods;
(c) there are productivity gains at a time of decline in productivity in many manufacturing fields;
(d) there are close links between advanced electronics and a country's defence and military interests.23
In Ireland, the government did not actively intervene to promote the electronics sector, since the IDA was all too well aware that Ireland could not match the levels of investment in countries such as India and Brazil. Rather, as an industrial development agency, the IDA actively promoted Ireland as the European location for mobile electronics companies, through grants/tax concessions.
Table 1.2. Overseas-sponsored companies in the electronics sector, 1974
Irish company name
Nationality of parent company
|Gross Cash Registers||1973||United Kingdom||Electronic calculators|
|Beckman Instruments||1972||United States||Electro medical instruments|
|Digital Equipment||1971||United States||Mini computers and peripherals|
|Ecco Ltd||1966||United States||Electronic components|
|E.I. Company||1963||United States||Electronic components and equipment|
|IBM||1960||United States||Business machine cards|
|Infotronics||1967||United States||Digital electronics systems|
|Molex||1972||United States||Electronic terminals|
|Neodata Services(5 plants)||1969||United States||Data-processing services|
|Pulse Engineering||1974||United States||Electronic components|
|Reliability||1974||United States||Electronic components|
|Square D||1972||United States||Electrical and control equipment|
|University Computing Co.||1964||United States||Data-processing services|
|Welch Allyn||1974||United States||Diagnostic instruments|
|Kraus & Naimer||1973||United States||Switchgear equipment|
|Northern Electric||1973||Canada||PAXB and telephone sets|
|Electronic Components||1967||French||Electronic components|
|Electronic Components and Equipment||1974||Swiss||Transistorised parts for electronics industry|
|Oelikon Electrodes||1966||Swiss||Welding electrodes|
|Irish Metals & Chemicals||1967||Swiss||Welding electrodes|
Source: Ref. 22.
According to the IDA, there are almost 500 electronics-related manufacturing companies in Ireland (table 1.3). Of the total, approximately 70 per cent are Irish companies, foreign-based companies accounting for only 30 per cent. However, this pattern is reversed if the larger companies are examined (those employing more than 200 people). Almost three-quarters of the 34 larger companies are foreign owned. These would include companies making computers and peripherals, like Digital Equipment Corporation (USA), telecommunications companies like L. M. Ericsson (Sweden) and AT & T (USA), and electronic component manufacturers like NEC (Japan). Amongst medium-sized firms, foreign-owned companies account
Table 1.3. Electronics-based manufacturing companies
|Irish owned||Foreign owned||Total|
|Large (>199 employees)||9||26.5||25||73.5||34|
|Medium (50-199 employees)||16||34.8||30||65.2||46|
|Small (<50 employees)||322||76.9||97||23.1||419|
Source: Unpublished IDA data, July 1988.
for slightly less than two-thirds of the total (65 per cent). Irish companies predominate among the firms employing fewer than 50 (77 per cent).
Location of Electronics-Related Companies
In line with regional development priorities, there has been some success in spreading the locational impact of electronics-related manufacturing companies. Less than half of the companies are located in the East Region (44 per cent). However, there has been a tendency for companies to be attracted to other larger centres of population, namely Limerick/Shannon in the Mid-West Region (which attracted 17 per cent of companies), Cork in the South West (with 15 per cent of companies), and to a lesser extent Galway in the West Region (which accounted for 7 per cent of companies). The remaining five regions - Donegal, Midlands, North East, North West, and South East - accounted for a total of only 16 per cent of all electronics-related companies (table 1.4).
Taking each size category independently, among large companies (employing at least 200 people) the Mid-West and South West regions were almost equally as successful as the East region in attracting electronics-related companies. These three regions also accounted for 87 per cent of all the medium-sized companies and all of the Irish companies in that size category. This pattern of concentration in the three regions is also evident, although less pronounced, among the smaller companies, three-quarters of which are located in the East, Mid-West, and South West regions.
This clustering of electronics companies is a reflection of:
(a) an attempt to disperse industrial investment (to promote a trickle-down effect) to the less advantaged or more peripheral regions;
(b) the need for a physical infrastructural support (e.g. adequate access to ports/airports, telecommunications, site and services) and an adequate supply of managerial, technical, skilled, and other potential employees.
All of the regions that are well represented as electronics industry locations have reasonable proximity to universities and tertiary-level institutions and Regional Technical Colleges. In contrast, regions such as the Midlands, North West, and South East would have only a Regional Technical College
Table 1.4. Regional location of electronics-related manufacturing companies, according to size
|Region||Size of company|
|Large (>200)||Medium (50-199)||Small (<50)||Total|
|Foreign No.||Irish No.||%of large companies||Foreign No.||Irish No.||%of medium companies||Foreign No.||Irish No.||%of small companies||No.||%|
|East (inc. Dublin)||6||3||26.5||9||9||39.1||32||159||45.6||218||43 7|
|Mid-West (inc. Shannon & Limerick)||7||3||29.4||9||4||28.3||20||44||15.3||87||17.4|
|South West (inc. Cork)||5||3||23.5||6||3||19.6||23||36||14.1||76||15.2|
|West (inc. Galway)||2||-||5.9||3||-||6.5||10||22||7.6||37||7.4|
Source: Unpublished IDA data, July 1988. and a smaller population base. This suggests that companies may have considered that a certain threshold (in terms of population, service provision, skilled manpower) was necessary to locate successfully in Ireland.
Overseas investment in the Irish Electronics Industry
According to the Telesis report, by 1982 Ireland had not attracted the largest electronics companies in the world, but rather it had received investment from smaller, fast-growing companies, e.g. Mostek and Fujitsu. Digital Equipment Corporation was cited as the only larger company. The report went on to comment that small fast-growing electronics companies were attracted to Ireland and Puerto Rico as tax havens. Few of the 60 companies that it surveyed had truly stand-alone operations in Ireland. With the exception of three companies, all others were "currently manufacturing satellites, performing partial steps in the manufacturing process.... Very few of the electronics companies in Ireland do significant marketing, research and development, or integrated manufacturing."24 The Telesis view confirmed the emphasis of the IDA in attracting overseas electronics companies to Ireland primarily for tax concessions and other subsidies, and to enter the EC market.
Profile of Some Current Electronics Manufacturing Companies
Table 1.5 presents a summary of the major IT companies (worldwide) that have a manufacturing presence in Ireland. The remainder of the section profiles some of these companies.
Without a detailed survey of the companies listed in table 1.5 it is impossible to substantiate, or otherwise, the claim in the Telesis report that these companies support only a limited range of functions that tend to exclude important phases (such as marketing, design, and development). All of the listed companies were contacted for information on product, manufacturing process, size of company, etc. to help provide some insight into electronic manufacturing activities. The following represents the information received from some of those companies.
IBM is not directly involved in hardware manufacture in Ireland. It claims that, in 1987, IBM manufacturing plants in Europe and the United States purchased some IR£50 million worth of components from Irish manufacturers, thus supporting an estimated 620 jobs in Irish industry. IBM's activities in software development and systems design will be covered in section 5.
Digital Equipment Corporation (DEC)
Table 1.5. Major electronics companies located in Ireland
|International IT ranking||Company name||Nationality||Total global revenue (US$m.)|
Source: Adapted from Datamation 100, 15 June 1977.
a. No manufacturing plant in Ireland.
DEC is the largest employer in the IT sector in Ireland. It has two major manufacturing plants in Galway (West Region) and Clonmel (South East Region). Total employment reached 1,887 in 1987 from 1,325 in 1981. Of these, 1,110 were employed in Ballybrit, 270 in Clonmel, 225 in the European Software Distribution Centre (Galway), and a further 282 in the Dublin and Belfast sales and service offices. Total operating revenues for Ireland increased by 7.5 per cent to IR£35.7 million in 1987.
The major DEC products have been the VAX machines, now developed as a VAX 8000 range, which makes them contenders for the traditional mainframe computer market, along with that for minicomputers. They offer a single networking environment - DECnet. The company also emphasizes its marketing and research and development activities in Ireland; the latter to concentrate on product design and value engineering. The European Software Distribution Centre, which opened in 1976, manufactures a wide range of software products to run on VAX and PDP-11 computers.
Wang employs more than 1,100 people in Ireland. The bulk of these are employed in its automatic production plant in Limerick. The remainder are in nonmanufacturing sales and customer support centres and the European Leasing Centre and distribution offices. It claims to spend more than IR£50 million annually in Ireland. The Wang factory in Limerick produces all the Wang workstations, many major assemblies for the entire US range, and essential equipment for office systems. It also operates an automated warehouse.
The manufacturing plant has a major sourcing centre, providing a centralized European purchasing facility to buy, test, and monitor components and materials. Wang operates an international leasing facility, from which equipment refurbishing is supported in Shannon.
The US company AT & T bought out Electron Ltd in 1982 and currently operates from four locations in Ireland: Bray (manufacturing and design) and Santry (manufacturing and distribution), both of which are close to Dublin, Bunbeg in Donegal, and the Aran Islands (West Region). It currently employs about 400 people in transmission systems manufacturing and production of electronic equipment, including products relating to telecommunications equipment, such as rack, shelving, and office products. Most of the output (over 95 per cent) is exported worldwide, to markets that include African countries.
Since locating in Ireland, the trend in AT & T has been towards more development of software and products, higher tech, and more quality value added. Estimated turnover is US$38 billion.
The Irish plants operate their own market activities and also have product development and systems engineering functions.
Fujitsu first located in Ireland in 1980. It manufactures integrated circuits, all of which are exported to a sister sales company in West Germany that distributes the Irish products to European customers. It currently employs about 250 people in Tallaght, Dublin.
Apple Computer Ltd.
Apple has its manufacturing plant in Hollyhill, Cork (South West Region). Since it located in Ireland in 1980, the workforce has increased to about 400 people, 15 of whom are employed in the Dublin sales/marketing/finance/ service office.
The Cork plant produces the full range of Macintosh products. It is responsible for the assembly of hard disk drive units and laser writers and the manufacture of printed circuit boards for computer assembly. Apple's European Service Centre is also located in Cork, to provide repair back-up to six European countries. A New Products Group exists to focus on the introduction of Apple's new products to the international market.
These profiles illustrate the extent to which some electronics-related companies operate in Ireland. The greatest emphasis is generally on product assembly for the European market, with some evidence of extension into product and process research and development functions in Ireland.
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