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The energy of innovation

NEIL NAUGHTON

For almost half a century, the Naughton family have helped drive growth, progress and sustainability via their business.

It was the couple’s first glimpse of the White Continent. But as their ship drew closer to the Antarctic shoreline, Martin and Carmel Naughton’s wonderment became mixed with sadness. The telltale signs of melting coastal glaciers were plain to see. And the graphic scene they were witnessing was no mere seasonal effect. The ship’s captain brought out a map to show them just how far the ice sheet had retreated in the previous decade alone.

I think that experience had a profound effect on my parents, says Neil Naughton.

I recall that when they returned from that trip, my father sat us down at work and told us the frightening developments that he’d seen first-hand. He said that things were changing much faster than most people understood, and that our company had a responsibility to do whatever we could.

Efficiency by design

As it happened, sustainability was second nature to the company that Martin had founded some decades earlier. 

 
 
From its earliest days, Glen Dimplex had focused upon helping heat British and Irish homes more efficiently. 
 

Not only did its electric heaters help consumers save money by storing heat during the night – when the electricity tariff was lower – its innovative designs sought to use less energy than rivals’ devices.

Admittedly, the driving force was economic rather than environmental. In the early 1970s, the risk of global warming was little discussed. Indeed, some scientists were warning that the gentle decline in global temperatures over the prior three decades might foretell a new miniature ice age.

But as US oil production peaked and Middle Eastern strife deepened, soaring fuel costs forced consumers everywhere to find ways of using energy more sparingly.

Sustainable innovation

Almost half a century later, Glen Dimplex is the world leader in electric heating. The original workforce of just seven has grown to over 7,000. And having begun life with a single factory in Northern Ireland, the company now has facilities across the world. What remains unchanged, however, is the organization’s focus upon energy efficiency and convenience by way of innovation. Our latest generation of storage heaters are smart devices, explains Neil. They’re part of the internet of things, talking constantly with the electricity grid. They communicate how much power they could take and store at a particular moment and when they will next be needed to generate heat. Nowadays, an increasing amount of the energy produced is from renewable sources. Windy days combined with low demand can create a glut of supply and lower daily prices. In Germany, for example, the price of electricity sometimes even goes negative. Our smart heaters can take advantage of this.

While Glen Dimplex is best known for electric heating, it has a significant presence in other areas. Its Morphy Richards-branded domestic appliances – which include bread makers, kettles and hair dryers – are a staple of households in countries spanning four continents. Among its other businesses are manufacturing high-tech cooling and ventilation solutions, which help to keep the likes of MRI scanners and industrial laser systems running at the right temperature. As diverse as Glen Dimplex’s businesses are, innovation is the common thread. Innovate or evaporate,’ as my father always loves to say, says Neil. That phrase has become a mantra for us. As a company, we keep a close eye on innovation. Among the metrics I look at regularly is what percentage of our sales come from products that we introduced in the last one, three and five years.

Given the risk to humanity from climate change, “innovate or evaporate” has a significance much greater than the success of any company.

Decarbonization across the board is absolutely essential, says Neil.

But within this process, buildings so far haven’t got the attention they deserve, given that they account for about 30% of all carbon emissions. So we’re working away on more efficient heating and cooling solutions for residential and office buildings. The drive for efficiency at Glen Dimplex goes right down to the smallest details. We’re always looking at our domestic appliances and how they function, says Neil.

Traditionally, there’s been a lot of wastage with kettles, with water boiling continuing for, say, an extra twenty seconds. That’s a completely unnecessary use of electricity. Instead, we seek to bring the kettle to boiling point and have it cut off immediately.

The greater outdoors

Besides developing its own sustainable solutions, the company has frequently augmented its innovation by making acquisitions - see Martin Naughton: Global citizen. Recently, it bought a stake in an Australian company that specializes in outdoor radiant heating and infrared barbeques. The concept of the outdoor room – where people treat their gardens as an extension of their internal space – has become increasingly popular over recent years, and not only in Australia. The outdoor room is clearly most developed ‘down under' observes Neil.

Their outdoor kitchens and living rooms are really quite elaborate now. We see this trend spreading to North America and beginning to catch on in Europe. Since the pandemic struck, people have really embraced being outdoors at home, and are investing in outdoor comfort. Eating outdoors has never been so popular and people are now happy to be outside all year round, even in cooler climates. We believe there’s going to be much more demand for things like outdoor heaters and fireplaces. The pandemic has definitely accelerated this trend.

Although the trend toward outdoor living could hardly be more wholesome, Glen Dimplex wants to ensure that it is also sustainable. Gas heaters have proliferated outside homes and on restaurant terraces in recent years but have a substantially higher carbon footprint than their electric counterparts. Our electric heaters are energy efficient and may cost less to run says Neil.

So we’re not just helping people to enjoy being outdoors but we’re also supporting their transition to a more sustainable world.

The family approach

While of existential importance, environmental impact is only one dimension of sustainability.

 

The way that a company is run and its relationships with employees and the community also matter greatly.

 
 

We’ve made many acquisitions over the years, but we have strict criteria, explains Neil. We consider only how we can add value to a business over a long-term horizon, rather than how much we might be able to squeeze out in the foreseeable future. We don’t flip the businesses we buy, we retain them and build them up further. In light of its distinctive approach, Glen Dimplex often finds that other family businesses make the best fit. The families we deal with are like us: they built everything from the ground up, says Neil. So when they come to sell up, they are really concerned about what becomes of their life’s work. They want to know that their workforce, factories and brand have a responsible new parent, who will keep investing in what they started. As part of a North American acquisition we did, we even committed to keep supporting the local baseball team, something that was very dear to the 86-year-old company founder’s heart. The pandemic has been an intensely difficult time for everyone, says Neil. However, there have been some positive aspects. I think that the focus on global sustainability has become much sharper. We realize much more that our responsibility to others extends far beyond our own borders. And everyone has a part to play, however big or small.

 
 
In life, I believe it’s essential that we expand our horizons. And we can only do that by experiencing other cultures at first hand.
 

Neil Naughton: My Life

I was born and raised in Ireland. As a small child, I recall my father designing his earliest products at our kitchen table. The whole process fascinated me, like a real-life version of the construction sets that I played with. I also have fond memories of going to the factory in Newry, across the border in Northern Ireland. As a bonus, the plant was close to one of the only public swimming pools in the region, so it was an excuse for the family to go for a dip!

During my high school holidays, I worked in various related industries to get some experience. When I was 16, for example, I spent the summer working for a maker of corrugated boxes. Our family company was one of the biggest customers of the corrugated box industry in Ireland, so it was important that I understood the ins and outs of this business. The following year, I worked as an apprentice toolmaker, which introduced me to precision engineering.

Although I’m technically minded, I didn’t study engineering at college, probably to my dad’s disappointment. Instead, I did my undergraduate degree in pure economics at University College Dublin. After that, I went to Columbia Business School in New York to do an MBA. I thoroughly enjoyed living in New York, but I reckon if I’d lived there another fortnight I’d have been burnt out! I love that city to this day; it’s a home from home to me.

When it came to joining the family business, my dad was very strict. He said he had two golden rules: we had to want to join the business and demonstrate the necessary ability. After finishing my MBA, I spent three years running our business in Belgium, the Netherlands and Luxembourg. I probably came out of business school a bit arrogant, thinking I knew everything. If I could do enough analysis, I believed I would get to the right answer. I quickly learned that the real world of business is about multiple shades of gray, rather than black-and-white answers. But it forced me to learn how to make decisions.

Upon returning to Ireland, I took over responsibility for Glen Dimplex’s international sales. I held that role for about five years and then joined the board. I’ve served as deputy chairman, chairman and now president. Until recently, my brother Fergal was our chief executive officer. Working with him is absolutely fantastic. We both have the exact same long-term goals for the business. We are demanding of each other, but I couldn’t ask for better.

While my home is Ireland, I have lived and enjoyed living in many other countries, and I’ve also traveled extensively. In life, I believe it’s essential that we expand our horizons. And we can only do that by experiencing other cultures at first hand. Over the years, I’ve helped to bring American football college games to Ireland. For me and the other organizers, it’s about enabling many thousands of young Americans to come to Ireland, broaden their horizons by seeing another culture, and make new friends.

The next generation of our family is starting to come through and they’re showing a lot of promise. One of my sister’s sons has started his own business, while another has been doing some work experience with us already. Some of our other kids are still quite young, so we’ve a few years to go before they make any decisions. If any of them want to join Glen Dimplex, we’ll be applying my father’s golden rule of desire plus ability.

Martin Naughton: My Life

The early 1970s were some of the darkest of times for Northern Ireland. The sectarian conflict that would become known as the Troubles was escalating rapidly. Serious disorder and violence against people and property were a daily occurrence. The situation was aggravated by the global oil price shock, which marked the beginning of a seemingly relentless rise in Northern Irish unemployment. Manufacturing was hit hardest, as many businesses either retreated from the stricken province or simply folded.

However unfertile this landscape may have seemed, it wasn’t enough to deter Martin Naughton. The young engineer from the Irish Republic had always dreamt of running his own business. So, while he and his wife had only recently become parents, he decided to leave the secure world of paid employment. In 1973, Glen Electric began operations in the Northern Irish town of Newry, making oil-filled radiators. But despite his tiny workforce, Martin’s ambition was huge. He wanted his start-up to become the world leader in its field.

Having risked everything that he had to start Glen Electric, Martin gave his all to make it work. The factory kept running seven days a week; vacations were little more than a theory. His childhood memories helped spur him on. His father had erected their family home all by himself, juggling the enormous task with his duties as a policeman and father of seven.

Martin’s tireless efforts paid off. Within eighteen months, Glen Electric’s business had grown so much that he’d had to take on almost a hundred employees. Not long afterwards, an enormous opportunity arose. Dimplex – the market leader in electric heating – had gone into receivership. The subsequent deal took almost everyone by surprise. For an Irish company to buy a British rival several times its size was simply unheard of. Glen Dimplex – as the combined organization was called – would make a habit of rescuing distressed British household-name brands. In the decades that followed, it purchased Morphy Richards, a producer of domestic appliances, Roberts Radio, a maker of iconic radio sets, and Belling, a manufacturer of kitchen appliances.

Such was the success of Glen Dimplex that it too attracted the interest of potential buyers. At a trade show in the early 1990s, a representative of Siemens took Martin aside. He informed him that the German industrial giant had a plan to become the market leader in the category and wanted to know what price Martin would accept for the business. Once it became clear that the Irish company wasn’t for sale, Siemens suggested selling its own electric heating operations to Glen Dimplex. Here was an offer that Martin could definitely accept.

Over the years, the continued success of Glen Dimplex has helped to generate jobs and growth in a region where both were sorely needed. In 2015, Martin received an honorary knighthood from the British state in recognition of his services to the Northern Irish economy, as well as to art and philanthropy. Three years later, he was named one of the winners of the Oslo Business for Peace Award. The award committee cited his exceptional contributions to peacebuilding through business, including creating opportunities on both sides of the Irish border.

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