March 5, 2008
Newry is not the sort of town that you’d automatically expect a dynamic, home-grown multinational to spring from. Yet, in a converted old corn warehouse at number 3 Canal Quay in Newry, a company called First Derivatives is doing just that. This is one of only three listed companies in the North and its business extends out from the centre of Newry to Tokyo, Singapore, New York and across Europe.
Just across the road, Daniel Lebeskind, the world-famous architect who designed the stunning Holocaust Museum in Berlin, has pitched to design a landmark building overlooking the Quays. If anything underscores the ambition of this town, it is a monument like this.
But ambition and trading are not new for Newry. Over 200 years ago — before Belfast took off as the dominant city of the North — Newry was a crucial exporting town. The canal and the quays were all constructed to facilitate trade. If you take a stroll around the town, you can see the architecture of trade everywhere, complete with fine Georgian buildings, a Cathedral and numerous echoes of its mercantile past. There is a rich commercial pedigree in this part of the country and now it is beginning to re-emerge after the Troubles.
The renaissance of towns like Newry — which last year had the fastest rising house prices in the UK — is what the peace process is all about.
It is also what globalisation is all about.
And, if the example set by First Derivatives can be followed, there is no reason for any provincial town in Ireland to feel anything but confident about the future.
First Derivatives provides technical software to the world’s biggest banks. It has been growing exponentially since it was founded in the 1990s. Like hundreds of thousands of young Irish people, the founders are returned emigrants. They are the professional echo of our economic and political failures in the 1970s and 1980s.
They left and many resigned themselves to the idea that “home” was a place to go back to at Christmas, for weddings and, ultimately, funerals. But that has changed. The economic migrants of the late 1980s and 1990s have come home and they are possibly the best asset the country has.
They are cosmopolitan and globalised, yet understand the value of the local. They have made invaluable connections with foreign peers. Many have learnt the most advanced ways of doing things and have brought home a work ethic and know-how that those who stayed put might not necessarily have. All around the country they are making their mark. This is a brain-gain, which has reversed the previous brain-drain.
Equally, globalisation — far from condemning provincial towns — provides a platform for companies that want to fuse the best the local economy has to offer with the opportunities that the global market affords. In the years ahead, all our industrial efforts should facilitate local companies that want to compete on international markets.
This should be a priority over and above the present policy of trying to get multinationals to set up here to provide jobs. Jobs alone are not enough.
In the years ahead, Ireland has to own what is termed the “intellectual property”. This means that Ireland needs to become the natural home of entrepreneurs wanting to set up businesses, deploying their inspiration as well as their perspiration.
This is what the founders of companies like First Derivatives have done. Using contacts and know-how learned abroad, they have come home and set up locally.
When you look a little closer, the question becomes not why they’d pick Newry, but why wouldn’t they chose Newry? This is a region where over 33pc of the population are under 15 and 1,900 students leave school in the area each year. But you might ask, aren’t they a bit far away from the buzz of London, the IFSC or indeed Wall Street, where many of the company’s clients are based?
But this is the change, globalisation and the roll-out of telecoms infrastructure has led to, a process that can be best described as “the death of distance”.
It doesn’t matter where you are located as long as you can be plugged into the global world.
South Down is as close to the southern tip of Manhattan as you need to be. Distances are only inside the head of workers.
Newry has one advantage over many other similar towns — infrastructure. The finest, but least busy motorway in Ireland, connects Dublin to Belfast and Newry is arguably the main beneficiary. It is now only an hour from Dublin and less than an hour from Belfast.
In the year ahead, if the transport infrastructure is complete, there will be a significant rebalancing of economic growth as provincial towns and cities can compete with Dublin. It is sometimes not appreciated just how small our country is and just how the geography of the country could change if we were to get our transport infrastructure right. Newry is the leading indicator.
The main change is a mindset change. Irish entrepreneurs are crucial to our success and facilitating this process must be the most important goal of the State.
If we create wealth, sustainable wealth, not the sort of stuff built on selling over-valued property to each other paid for by other people’s money, there will be the cash around to solve many social ills.Sustainable wealth is made with brain power and, to move into this area, Ireland must see the world differently.
The old idea that we can attract foreign investment with a combination of tax breaks and cheap labour is over. China and India will win this game. Equally, the era of easy money from property is over.
The property market is only going to weaken further from here. Now Ireland has to create value by owning the intellectual capital.
In the past, Irish start-up companies were often happy to sell out to bigger, usually foreign buyers before their companies had grown to a world-beating size. In the future it will be essential that we protect these new companies as they try to grow, by providing capital and, more importantly, management techniques.
We have a long way to go because our misplaced infatuation with property has led to huge amounts of Irish money invested in an asset that is now falling in value worldwide.
Check out this figure — last year we invested â‚¬159m in high tech start-ups but â‚¬8bn in overseas property!
If Ireland wants to profit from globalisation and ensure that the success of towns like Newry is repeated all over the country, we have to invest in brain-power.