Few people are aware that Sony actually had experience managing foreign plants prior to the San Diego experience. Sony had been forced to close its first two factories just a few years after they opened, but learned many lessons in the process.
Sony's efforts to manufacture products close to markets dates back to the 1950s. Just 15 years after the end of World War II, Japanese firms were still subject to strict foreign exchange laws and other restrictions, including volume limitations on industrial goods exported from Japan. It was not easy for Japanese companies to expand abroad.
In 1959, Sony built a transistor radio assembly plant in Hong Kong through a local legal entity. This was Sony's first overseas production facility, but the Hong Kong firm provided all capital. Production was on a contract basis only and even the management of the plant was left to the local firm. The plant was called the "Champagne Plant," and to be truthful, it was not really a plant at all, but an apartment with two production lines manned by sixty women. With the women assembling transistor radio kits brought in from Japan, it was more like a home business than a factory. The plant assembled the TR-510 and the TR-623, which were then sent to Europe, Australia, Canada, and other Commonwealth countries. The Champagne Plant was only in operation for two years before it was closed down in 1961 due to a disagreement between the local management and Sony.
Although production in Hong Kong was halted, Sony still needed a source of supply for Europe. Once again, Sony resumed the search for a new production site and came across the city of Shannon. Located in the southwest of Ireland, Shannon was surrounded by a natural green landscape and heath. It was an area totally unknown to Sony and most of the Japanese population. The Sony Shannon factory was a wholly owned subsidiary of Sony. At that time, the only other Japanese firm in the region was Brother Industries, Ltd., which operated a typewriter factory in the capital city of Dublin.
Why did Sony choose Ireland and Shannon? First of all, Ireland was a member of the British Commonwealth, so anything manufactured in Ireland could easily be shipped to the United Kingdom and other Commonwealth countries, such as Australia and Canada. Also, the United Kingdom and Ireland were scheduled to join the European Community (EC), so Sony was hopeful that the greater European market would eventually become more accessible through its Irish operations. Furthermore, Shannon was designated as a free port and functioned as a major transit point for air travel in the Western Hemisphere. Transistor radios could be quickly transported by air from Shannon to England, Canada, and countries in Europe, Africa, South America and other regions. Finally, the Irish government was enthusiastically promoting industrialization and frequently solicited Japanese firms, in particular Sony, to establish operations there. In May 1959, Morita, who was then Senior Managing Director, first visited Shannon. Tozawa, who was then General Manager of the Semiconductor Department, followed. Then after a visit by Ohga, who was then General Manager of the Tape Recorder Division, plans to construct a plant in Shannon began to materialize.
Preparations began right away. In October 1959, Sony submitted an application to establish an overseas affiliated firm in Ireland to the Japanese Ministry of Finance and the Bank of Japan. In the process they asked for permission to send money and apply for foreign exchange bonds. Within ten days of the filing, Sony received permission to apply for foreign exchange bonds worth 50,000 pounds as capital for establishing an affiliate company in Ireland. The money was sent at the end of November. At the time, 1 pound was worth approximately 1,000 yen so this amounted to a huge investment of roughly 50 million yen.
Manpo Komatsu, who was stationed at the Sony representative office in Zurich, and other Sony staff arrived in Shannon and began to vigorously prepare for the new company's establishment by investigating the availability of necessary materials.
On December 23, 1959, Sony Ltd. was established in Shannon, and in February of the following year an office was opened. The first items Sony Ltd. bought were two desks, two chairs, a few garbage bins and a typewriter. The opening ceremony for the office was conducted in June, and Akira Suzuki was appointed the first plant manager.
Production of transistor radios began in May. Both Japanese and local staff aspired to eventually make radios entirely from parts sourced in Ireland, but in the beginning, some of the parts had to be brought in from England and the transistors had to be imported from Japan. The plant's main operation was assembly. At its peak, the Shannon plant had close to 100 employees, and an output of approximately 3,000 TR- transistor radio units, such as the 6120/L, per month.