The smart money is always on Seán

Founded four decades ago, its annual turnover is now €2bn.

It employs 10,000 people worldwide, 470 of whom work in the Republic of Ireland. Best known for leading consumer appliance brands such as Morphy Richards and Dimplex heaters, this private company has become an increasingly important player in the energy sector. In December, it launched a new, smart electric heating system known as Quantum which promises major cost savings to consumers. It plans a couple more major product launches later this year, including a new ventilation heating system for buildings.

A century ago, Charles Duell, head of the US patent office, confidently predicted that “everything that can be invented has been invented.” This famous fallacy is contained in Glen Dimplex’s corporate DVD and serves as a constant reminder of how easy it is to get things badly wrong when it comes to foreseeing the future.

Glen Dimplex CEO, Seán O’Driscoll, is a strong believer in innovation. “We have 500 development engineers around the world, including 100 in different locations in Ireland. Everything we do is about innovation.”

This approach extends to product positioning and branding. “Five to seven years ago, our brands such as Morphy Richards, Belling, and Roberts Radio, were positioned in the middle of the market. We concluded that the market would polarise into the top and bottom ends. We have moved all the brands into the top end through R&D, branding, design, the introduction of new features, packaging.”

This has paved the way for higher profit margins on the brands in question. The company has also made some major strategic decisions. Around 2007, it foresaw trouble in the global economy having detected “squalls out in the Atlantic.” The company began retrenching ahead of the pack — indeed cutbacks took place in Ireland some years earlier. As a result of eroded cost competitiveness, employment at the group’s plant in Dunleer, Louth was cut from 1,200 to under 400. The group’s other two Irish plants are north of the border.

Recently, as competitiveness returned to Ireland, around 100 jobs have been restored at Dunleer, where two new R&D centres have recently opened, along with a showroom for international customers. One R&D centre is for heat pumps, the other for smart electric heating systems.

The energy sector is now a major focus of attention for O’Driscoll and his small top management team. The company has invested up to €40m in the past couple of years in new technology and R&D facilities, including €10m in the Quantum project.

The group CEO is a supporter of renewable energy. His focus is on ensuring that the maximum use is extracted from wind turbines through the introduction of new technologies aimed at boosting smart forms of energy consumption. Denmark is viewed by him as a forerunner in this regard.

“I am an advocate of wind power, but one can travel around the country and see turbines that are not spinning. The electricity grid is not capable of taking more than 50% of its capacity from wind. We were invited to work to increase the wind absorption capacity of the grid from 50% to 75%.”

O’Driscoll believes the additional revenues generated by such ground-breaking work could be used to subside activities such as business start-ups, or insulation in local host communities, thereby reducing local opposition to such projects.

The initiative is industry led and includes major players such as Intel and Eirgrid. Glen Dimplex is developing flexible heat storage systems, including Quantum, which would allow for a much more efficient and inexpensive energy use. In Germany and Denmark consumers are actually paid to consume energy at certain times of the day, enabling the turbines to be kept going — contrast this position with Scotland where on Apr 29, the turbines had to be turned off and operators compensated to the tune of £1.7m.

In Sean’s view, the electricity industry is set to change as dramatically in the next couple of decades as the telecommunications industry has changed in the past 25 years. Increasingly, sources of energy are unpredictable, based around wind, and solar sources. Ireland, he believes, will have to reduce its reliance on imported fossil fuels. Fracking may fill some of the gap, but such activity is highly controversial. Then there is the potential for offshore oil and gas exploration.

O’Driscoll believes that renewable energy has the potential to slash our crippling energy import bill. He suggests that we should not rush into exporting such energy sources before carefully examining the potential for import substitution. In particular, he believes there is great potential for spin-off in the form of new data centres which can boost the country’s business tax base.

He is less optimistic about the prospect for wind industry manufacturing spin-offs. “I believe the turbine industry opportunity has flown at this stage.”

Glen Dimplex is leader in a number of key technology areas including heat recovery and ventilation. It provides temperature control systems for laser machines involved in steel cutting and is a world leader in the provision of medical technology chiller systems.

In all, there are 26 companies operating under the global group umbrella. In the early Noughties, the founder, Martin Naughton was enthusiastic about China which had emerged as a major centre for manufacturing. O’Driscoll prefers to talk about its “whole of Asia strategy.”

“We are the largest Irish company operating in Japan. We have two very successful businesses in Australia and New Zealand, a new subsidiary has opened in Malaysia.”

The group is active in the US, UK and Europe yet overall control is in the hands of just 14 people operating out of a head office in north Dublin and Dunleer.

“We run the group as a series of small to medium sized businesses. Each local team is empowered, but there is very tight financial accountability. Because the structure is so lean, information is not filtered. Decision making is instant. There is no bureaucracy, or politics in the organisation.”

Looking to consumer markets, the CEO is upbeat about the US and Japan, but clearly worried about the eurozone where he warns that the recession is spreading to ‘core’ countries such as France, Austria, Holland and Denmark. He believes the heavy focus on austerity by Europe’s policymakers has been a mistake. What is needed is a 10-year vision.

“Without this, Europe is going nowhere.”

He is more upbeat about Ireland’s prospects. We have, he says, restored 80% of the competitiveness lost since the 1990s through so-called ‘internal devaluation’. The final 20% gap can be bridged within 18 months to two years.

Somewhat controversially, he suggests that the drop in bank lending across much of Europe is more about a lack of demand from SMEs than about supply. Only when confidence and consumer demand returns will SMEs, those key job creators, re-enter the market.

He praises the new generation of civil servants running government departments who, he says, are determined not to repeat the mistakes of recent years.

Glen Dimplex is currently involved in a retrofit initiative designed to promote sustainable insulation systems in public buildings, 35 of which will be retrofitted under the project. O’Driscoll is part of a six-person team advising the Government on energy policy.

O’Driscoll is getting ready to address a conference on innovation, ‘Open innovation 2.0’ hosted, next Monday and Tuesday by Dublin City Council in association with Intel Labs and Trinity College at the Mansion House.

A self-described ‘happy family man’, he emphasises his desire for personal privacy — not that he has much time for a private life given the intensive globe trotting he engages in.