October 31, 2007

Beacon sheds light on our economy's future

Posted in Celtic Tiger · 8 comments ·
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Walking around the back of the Hook lighthouse, the oldest in the country, where the Atlantic waves crash against the dark grey, muddy limestone, it’s not hard to see why this has been a crucial landmark for mariners. The tower at Hook was first constructed in 1247 and has guided ships into the harbour at Waterford for centuries.

The area around the lighthouse offers a fascinating glimpse of the ebb and flow of Irish history. There is so much economic history in so small an area that a few days spent here gives you a feel for how industries and sub-culture spring up and thrive in certain regions and not in others.

For example, a mile or two from the tower at Hook Head lie scattered medieval ruins, evidence of large moats and fortification, cathedrals, late medieval castles and abbeys. It is apparent that this part of the country was a hive of creativity in the medieval ages. Why here?

The Cistercian monks from the local monasteries built the first Hook lighthouse in the 13th century and suffered greatly from the Black Death a few decades later but remained here as a cultural presence until well into the Tudor period.

The monks also linked the region to the Continent and, while much of Ireland was cut off from continental influences, this connection thrived until quite recently. These monasteries were part of a European-wide network of settlements of French Cistercian monks who eschewed worldly pleasures and the commercial distractions of the medieval world.

They arrived in Wexford in 1140. Their austere approach to life was reflected in the simple architecture of the great Cistercian abbeys of south Wexford — Dunbrody and Tintern. The monks’ presence and security was bolstered by the arrival of the Normans in 1170.

It is often forgotten that the middle ages were years of great discovery and the castles and abbeys of Wexford had direct links with the Crusaders in Jerusalem.

They were part of the great historical narrative which divided West from East, Roman Catholicism from Byzantine Orthodoxy and Muslim from Christian. For example, the Knights Templar had a base in Templetown, near Hook Head.

The overlapping of religious, military and Norman settlement patterns linked the south- west of Ireland to an economic system which stretched from Ireland to Wales, the southern towns of England and most importantly, the fortified Norman strongholds of Normandy and Brittany stretching further south to Bordeaux in an early example of European economic integration.

So why did so much activity seem to cluster around this part of the country? The answer is in the trading patterns of the day, the topology of the region and the access, via inland rivers, to the agricultural hinterland of south Leinster and east Munster.

The three great rivers of the south-west were its economic lifeline. On the river Suir, market towns like Cahir, Clonmel and Carrick on Suir flourished as trading outposts, bringing produce and people into Waterford city. To the north, the river Nore linked Kilkenny, Thomastown and Inistioge with New Ross and Waterford. The Barrow allowed trade with Monesterevin, Kildare, down through Carlow and Graignemanagh.

All this commerce centred on Waterford harbour and this part of Ireland rapidly became the most cosmopolitan and outward-looking region in the country.

Waterford was one of the key areas of economic growth and innovation in Ireland for a few hundred years and its economic importance implied a strategic significance also. To protect the harbour, Duncannon Fort was constructed in response to the threat of the Spanish Armada. Here is where King James II fled after his defeat at the Boyne and later again, it became the one of the last anti-Cromwellian strongholds in Ireland.

As a result of geography and international trade flows, Waterford and south Wexford had their commercial years in the sun. After the 1798 Rebellion the place went into decline.

However, when things were looking up, the age-old patterns of economic “clustering” repeated itself here. People tend to cluster around other like-minded individuals and positive economic development reinforces itself with trade begetting innovation, begetting more trade, more exchange of ideas, more development and a rising population. We see these clustering patterns in almost every industry. In Silicone Valley we see technology entrepreneurs, high-tech research and financial venture capitalists all keen to drive the area forward.

We see the same in the City of London, which has emerged pre-eminent in the financial world. The greater the cluster, the more insulated the industry and the better the chance for the region to prosper.

Ireland has got to create such a cluster around its high-tech industry which we know has been losing export market share for the past few years. When we see a company like Seagate Technologies closing down in Limavady, it is hard to reconcile this with a company whose share price has risen close to 30pc since May of this year. This is not a company in trouble, at least from the investor perspective. It is just that Seagate Ireland is a part of a supply chain which makes us vulnerable.

Trying to built a cluster of industry, technology, financial and marketing competence won’t protect us if we become uncompetitive, but it will mean Ireland as a location should be more attractive and resilient. More significantly, the commercial infrastructure servicing the large multinationals would be built up, adding an extra competitive edge.

In the past, these economic clusters were driven by geography, geology, irrigation patterns, rivers and agricultural yields. Things moved slowly and settlements were gradual.

Now things move quickly. Innovative clusters can be created and protected and geography matters less. In the years ahead, Irish economic policy should be focused on clusters so that unlike the Hook peninsula, we have more to sell than our heritage industry.


  1. vince

    Much as your economic debate can hold sweetly struck truth, the historic is best left well alone. Here is an instance, why did the cistercians arrive in the first place, given our natural ability to grow priests at the drip of a hat. Not exactly a market demand or was there. The Irish seen as having a taint of the Orthodoxy, were shifted from one of the most trusted to being less than slaves. The cistercians et al, took over Irish monastic houses and vast lands, because the writ from Rome said that they were allowed, ditto, with the takeover in the English island by William of Normandy.
    Agus, on the lands the imposed priests produced, grains, wool, cider and beef, for export. But needing little or no population. This system continued with the Normans. Ethnic cleaning, early style.
    You will note that there is very little of this information handed to ones little ones in the primary school.

  2. JimBo

    “To protect the harbour, Duncannon Fort was constructed in response to the threat of the Spanish Armada.”

    The Spanish Armada was no threat to the Irish.

    “….Tudor period”
    Do we have an Irish phrase for this time?

  3. Billy

    Waterford port is the most neglected in the country. We tried for FIVE years to get a business broadband enabled in a company in the port.

    The solution proposed by Eircom was to move the port. I kid you not. The best answer that Eircom could come up with was to physically alter the geography of the country. The Department of Communication could not care less and were insistent that the port was in Wexford. It is technically in South Kilkenny but instead of helping with the difficulties the Department argued about semantics.

    We tried to create jobs and stimulate more work in the port but the dead hand of the State prevents us. We had to beg for broadband. We want to bring more business to Waterford but the combination of incompetence and entrenched positions for God knows what reason has resulted in the company we operate remaining small and essentially cut off from the world of business.

    We tried explaining what infrastructure was to Department officials but this fell on deaf ears. I even attended a conference that the minister for Dial Up insisted on bullshitted about infrastructure and how important that it was connected together. Complete and unadulterated horseshit.

    Don’t even get me started on freight trains. One train journey would take up to 30 trucks off the road. Freight transportation by rail in Ireland is practically illegal. Think of that when you are stuck behind a load of them on the M50 inching along.

    If the port is where the heart of the economy is and it cannot stimulate jobs further up the food chain because of public sector incompetence then its dead.

  4. Wessel

    David,

    Good to see an attempt to seek angles to develop our competitiveness. Agree fully. Michael Porter’s latest research is on creative clusters. Good read. London is hosting a massive Creative Clusters Conference in two weeks time.

    If ever we have an angle, it is developing creative clusters. Now if you can imaginatively transport the medieval economy of Waterford and environs to a modern day analogy, time to explore our creative past and project a future.

  5. Paul Sweeney

    David – it’s Silicon (no “e” at the end) Valley… they make semiconductors there, not breast implants!

  6. David wrote:
    “become uncompetitive, but it will mean Ireland as a location should be more attractive and resilient. More significantly, the commercial infrastructure servicing the large multinationals would be built up, adding an extra competitive edge.”
    If a multi national can employ 5 university graduates in China or India,(ditto factory workers)for the price of one in Ireland, why would any new company relocate here-except maybe to avoid tariffs imposed by Fortress Europe.Even such tariffs will not force companies to remain here.I bought some items of high quality clothing recently in an irish store in Dublin.I was amazed that almost everything was made in China.(Not just electronic devices,cameras, etc), or Vietnam, or indonesia, etc
    When the high tech transfer is complete in 5 years time the only people employed in Ireland will be the ever protected farmers and of course the 400,000 odd civil servants, health system employees,and staff in the 400 odd government “Quangos” such as the grandiose titled, “Consumer Protection Agency” or the “Environmental Protection Agency” and so on! Who will pay the never ending agricultural subsidies, grants etc, and the Rolls Royce wages and pensions of state employees?
    Interesting times ahead. The low corporation tax rate bonus won´t make a difference forever.
    Now that little dilemma will tax the ingenuity of our “Accountant” Taoiseach, and Mr Cowan!

  7. Ed

    I would endorse David’s observations – the South East region has always looked to the wider world for trade. Perhaps it has something to do with the fact that Kilkenny was the administrative centre for the country at one point in history. We grew up with an attitude that the world is our oyster and have always look beyond Dublin for trade – examples from the past were always around and one in particular was brilliant by the standards of the time. A local individual spotted the Victorians fondness for starch and started producing it from potatoes after the famine. The business grew to such an extent that it became economical for him to import rice from Rangoon as a raw material in place of potatoes. Shipping through Waterford and onwards up the river Barrow by barge was an ambitious undertaking. Finished product was then shipped in the opposite direction to all corners of the British Empire. A positive knock-on effect to the local community was the provision of electric street lighting from the plant’s water driven generator which at that time was very advanced for Ireland. The legacy of this type of can do attitude is very much alive in the area – examples are three indigenous companies with a global reach and employing up to two thousand people between them – http://www.redmills.com/, http://www.keenansystem.com/keenan/master2.asp?queryName=home, http://www.burnside.ie/profile.html,
    If this attitude could be replicated throughout the country, we wouldn’t need multinationals.

  8. john

    “When the high tech transfer is complete in 5 years time the only people employed in Ireland will be the ever protected farmers and of course the 400,000 odd civil servants, health system employees,and staff in the 400 odd government “Quangos” such as the grandiose titled, “Consumer Protection Agency” or the “Environmental Protection Agency” and so on! Who will pay the never ending agricultural subsidies, grants etc, and the Rolls Royce wages and pensions of state employees?”

    Well farmers and public servants are in two completely different camps, the subsidies farmers get is from europe and is the same as the subsidies all european farmers receive, how it is implemented in each country is left to each government, a substantial part of what ireland receives is eaten up by mindless bureacracy in the department of agriculture, indeed even when the subsidies were decoupled from production in 2005 no public servant in the department of agriculture was layed off even though there is in effect no work for them to do, there was a plan to retrain them as driving testers, but i think this never got off the ground, so in the department of agriculture there is an obsolete layer of bureacracy, just like in health where a layer of bureacracy was left in place when the HSE was formed.
    The subsidies farmers receive do not come from irish taxpayers but from europe (as ireland is not a net contributor to the EU). In fact these subsidies are a net beneficiary to the irish economy. But overall subsidies have been bad for irish and european farmers because they caused food surpluses (up to 2005 when they were linked to production) and depressed the market price of agricultural commodities. In fact this is one of the reasons for the sharp increases in prices this year because subsidies are no longer linked to production . In 1995 similar circumstances arose with bad grain harvests in australia and the americas but prices then did not shoot up because the EU released huge quantities of grain from their intervention stocks.

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