BGF investor Joe Higgins discusses the continued growth and resilience of Ireland’s manufacturing industry, and the ambitious businesses he’s looking to back.
Manufacturing is at the heart of the Irish economy. The sector accounts for 35% of Ireland’s GDP (more than twice the EU average) and SMEs make up a significant proportion of businesses operating in this space, most of which are predominantly serving export markets. Despite macroeconomic headwinds, which continue to exacerbate labour shortages and input cost inflation across the country, the Irish manufacturing sector has remained resilient, with exports increasing 27% in 2022.
Efficiency is key to growth in the manufacturing sector, with good manufacturers continually innovating—whether that’s automating certain processes to become leaner or lowering their energy costs by installing solar panels. The businesses that come out on top will work hard to provide the highest quality offering, at the lowest production cost.
But labour and input costs will always be relatively high in Ireland, so finding your niche is also crucial. If you produce something that’s easy to make, a factory in Eastern Europe or Asia can probably produce it for less. So, successful manufacturers aren’t just efficient, they also differentiate themselves from the competition. For example, they may specialise in high-value items in the medical sector, where there’s no room for error. These kinds of items can command a premium.
We already have a really strong ecosystem of manufacturing businesses here in Ireland, in particular those servicing the healthcare and medical technology sectors, but also the agricultural, automotive and data centre industries, alongside many others. Some notable success stories in recent times include the likes of Pat Beirne’s Mergon, Garry Moore’s medical packaging firm SteriPack and Jimmy McGee’s Athlone Extrusions—all great role models for the next generation of manufacturing scaleups in Ireland. There are also some great support structures in place, such as Enterprise Ireland, the Irish Exporters Association and other government bodies.
I see lots of opportunities to support manufacturers in Ireland right now. Historically, there’s been pressure on SMEs to sell out relatively early in their journeys. But BGF is trying to change that. We provide minority investment to companies that are looking to expand, win contracts, and compete globally, allowing them to reach their potential while still maintaining majority control of the business.
Croom Precision is one that comes to mind. Based in County Limerick, the precision engineering business produces items for the medical sector, such as orthopaedic hips and knees. It’s a family-run business with an excellent track record of quality and delivery. Patrick Byrnes, Croom’s CEO and its founder’s son, has ambitious expansion plans for the business, which required them to invest in expensive kit. That’s where we came in, providing a multi-million euro investment back in 2020.
Another manufacturing business BGF has supported is Aubren, based in Portlaoise. Aubren both designs and produces systems to control, condition and monitor air. Its solutions are used in critical applications, such as air cooling systems for data centres. We led a €7 million investment round in December 2021 to help the business scale its operations and to develop a new product range—Akrivis—for the edge data centre and telecom sectors.
Other examples of BGF-backed businesses are Galway-based Revive Active, which produces a range of vitamins and supplements, and Dublin Meat Company’s ready meal brand FitFoods, plus numerous manufacturing companies in the UK. BGF is an advocate for the manufacturing sector on both sides of the Irish Sea, with more than €300m already invested across the UK and Ireland into industrial businesses alone, and plenty more in the pipeline.
We want to uncover more of what Ireland’s manufacturing sector has to offer, and we’re always keen to speak with high-potential businesses. Typically, what we look for is a management team with a good track record, experience and vision, who know why they’re seeking investment. They’ll have a clear direction for the business, can show us how they’ve dealt with challenges in the past, and will be open to working together to make the right decisions if there are difficult times.
It will come as no surprise that we’re also looking for an appetite for growth. We want to see that a team has planned ahead, for instance by acquiring land that could be used for new facilities and laying out adequate storage space to allow the business to build up inventories of stock. If this sounds like your business, and you’re currently seeking funding, then please do get in touch.