Not always in clusters

IRELAND’S Atlantic coast is sheep-rearing and pilgrim country. The drive to Tuam, a modest town of 9,550 residents, reveals mostly lush fields, low hills, stone walls and mist. Yet this unlikely spot has a hi-tech industrial side. Off Tuam’s main road a bunch of warehouses contains some 400 software engineers, researchers and artificial-intelligence experts, drawn from 35 countries. Next door is a manufacturing plant employing 650 people churning out circuit boards, cameras and sensors for driverless cars.

The set-up in Tuam is operated by Valeo, a French car-parts firm with a market value of €12 billion ($13.4 billion), which brought in €500m in sales last year from producing 100m such products globally. Tuam is “our biggest R&D centre for surround cameras, with huge production capacity”, says Jacques Aschenbroich, the firm’s CEO. Tuam has also become Valeo’s global mother plant, overseeing its sensor factories in Hungary, Mexico and China.

What possessed the French firm to keep such operations in a spot so far from customers such as BMW, Range Rover and Google, away from big pools of labour, and a lengthy drive from Dublin? History is one answer: in 2007 Valeo bought Connaught, a successful local firm making cameras for cars, and preferred to expand there rather than move. Fergus Moyles, who runs things in Tuam (and managed the old firm), says that attracting talent is not hard. Nearby Galway University offers useful ties. Property prices are low, which appeals to foreign engineers, for example from India, who intend to save while in Ireland. Land prices help when building new facilities.

Setting up shop in a remote location like Tuam runs counter to conventional thinking about the gains from industrial clusters. But Valeo is not the only firm to see benefits from sticking operations in remote spots. Turbomeca, the helicopter-engine unit of Safran, a big French defence firm, is based in the Pyrenees on the French-Spanish border. That location, Bordes, with just 2,700 residents, makes Tuam look like a metropolis. Again, history explains the initial choice of location: Turbomeca was founded pre-war, then moved to a remote spot to avoid invading Germans. Being in the boonies means sympathetic local officials and staff who are extremely loyal.

For high-end manufacturing firms that rely on highly skilled workers, a location with an appealing climate, good housing and other compelling virtues, like schools for young families, is a big draw. Another example is Medtech, a startup that makes surgical robots for spine and brain operations. Its “Rosa” products are widely used in American and European hospitals. The firm’s founder, Bertin Nahum, started and built the firm on the outskirts of Montpellier, a picturesque town on the Mediterranean coast.

Wouldn’t Mr Nahum really be better off joining a cluster of other medical technology companies, for example in Grenoble, or around Paris? “I would much rather be here,” he says, talking warmly of support from the local mayor and of how attracting talent is no trouble at all. His robots can be flown to hospitals easily from Marseille airport. For some, the periphery appeals more than the centre.


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