The conditions for Irish manufacturing to succeed are in place both globally and locally, writes Emmet Cole

ECONOMIES OF scale dictate that Irish firms will never compete with the manufacturing capabilities of larger, industrialised nations. However, if they focus their efforts on the production of high-value, niche products, there is hope for the Irish manufacturing sector, according to Dr Masahiko Mori, president of Mori Seiki.

His firm is one of the world's largest players in machine tool design and manufacture, with a turnover in excess of $1.5 billion (€960 million) and a worldwide reputation for innovation through university incubation projects.

The company makes high-tech lathes, machining centres, multi-axis turning centres and grinders - in simple terms, machines used to make machines. Machine tools are used in almost every conceivable industry, from aerospace, defence, railways and construction equipment, through medical equipment and consumer electronic devices.

It's a huge industry. According to Gardner Publications, the worldwide production of machine tools in 2007 was valued at $70 billion, and Mori Seiki is a major global player, producing about 8,000 machines per year.

Mori, who was in Dublin to deliver a keynote speech to the third CIRP International Conference on High Performance Metal Cutting in UCD, believes that the structures and conditions needed for Irish manufacturing to succeed are in place - both globally and locally.

Rising global fuel prices will bring unexpected benefits to Irish and European manufacturing, as the ability to manufacture products locally becomes increasingly important, says Mori.

"You can't import everything from India and China. I estimate 70 per cent of EU machine production should remain in the EU," Mori claims. According to the European Commission's EnginEurope report on the state of mechanical engineering on the continent, published in 2007, a 66 per cent share of Europe's production output currently remains in the EU.

Driven by emerging economies and a rapidly growing world population, demand for manufactured goods will outweigh the negative impact of any global recession, says Mori.

For the major players, diversity is key, he adds. "If your company only focuses on the Japanese market or only the automotive sectors, you will suffer. But if you play globally and cover a variety of industries, then you can stabilise and succeed," says Mori.

Mori believes Irish firms need to take a different approach, however, placing their emphasis on innovative, niche markets. "Ireland can't compete against the US or other large countries, but this is not a war. It's a kind of game. Countries need to grow together. The idea is not to destroy others, but to exchange knowledge and expertise."

Education is key to unlocking Ireland's high-tech manufacturing potential, he continues. "You need organisation to make innovation happen. First, you have to gather people from schools and industry, which is why I am committed to working with good universities around the world, like UCD."

Next, "stop spending money on unnecessary things and concentrate on your core competence". Finally, companies should look at reinvesting about 50 per cent of their operating thresholds on R&D.

The Forfás High Level Group on Manufacturing, which included representatives from employers, unions, Government and development agencies, drew similar conclusions in a report published last March.

It encourages Irish manufacturing firms - who spent €25 billion in the Irish economy in 2006 - to quickly embrace new technologies to stay competitive in a flexible global market. It also recommended concerted action to improve the skills of Irish manufacturing workers.

"The Irish Government does a good job of supporting business. You have a very good educational system and the quality of life in Ireland is very good - much better than Japan's," says Mori, adding that the stable banking and business environments here help create an ideal climate for local manufacturing.

The long-term outlook may be positive, but the manufacturing sector worldwide needs a little rebranding, says Mori.

"People who don't understand the industry think that manufacturing is just old. This is not true. To run a machine shop successfully, you need knowledge of finance, mathematics, chemistry, and electronics. It's a kind of art," says Mori, who calls for "a new terminology to define the role and content of the manufacturing sector".

That's a view shared by Prof Gerry Byrne, head of the mechanical engineering department at UCD, who believes that the image of manufacturing in Ireland, which centres around "people working on lathes built in the 1950s", is not correct.

Byrne cites the Forfás report, which found that manufacturing accounts for 221,000 direct jobs in Ireland, and an additional 165,000 through secondary employment - with many of the jobs in high-tech sectors.

Nevertheless, Irish companies need to change more rapidly to encompass research and development for new products, says Byrne. He also wants to see "strong, concerted action on manufacturing" involving the IDA, Enterprise Ireland, Forfás and the third- and fourth-level education sectors.

In 2007, students from UCD's department of mechanical engineering, with the support of Enterprise Ireland, developed an integrated diode laser technology with a Mori Seiki machining centre. The project received a commercialisation award from Enterprise Ireland last December and gave students challenges and access to commercial equipment and facilities.

"It's critically important that the universities and institutes of technology link with companies in Ireland at all levels. Such linkages are at an early stage of development and much work needs to be done both within the universities and in industry," Byrne says.

Prof Fritz Klocke, president of the International Academy for Production Engineering (CIRP), agrees. "Engineering and manufacturing are global businesses, and should not be seen simply on a national basis. That said, if Ireland focuses on its existing experience in knowledge-driven, high-end projects, the future looks good," he says, citing Irish expertise in biotechnology and aerospace as examples of the kind of approach that will pay dividends.

Klocke also sees potential for Ireland in manufacturing innovative devices to support alternative energy: "You have wind. You have waves. And sometimes you have sun."

Sometimes we have sun. For it to stay shining on manufacturing, experts agree, however, that Irish firms really have to focus efforts on high-end, niche opportunities.