Yes. I am sure they had these in Wales. It would refer to the horse that pulled the fire engine.
But it is worth pointing out what it does not mean. It does not mean anything to do with the Chinese Zodiac, or a horse that breathes fire or anything else to do with producing fire. The Gaelic for 'fire' is teine. So a neach teine would (presumably) be the word for the person who keeps the fire going on a steam train (usually fireman in UK English, due to sexism). But a neach smàlaidh is just the opposite. It is a person who is trying to put out the fire (literally an 'extinguishing person'. Several languages have words for this that do not contain a word for fire, such as French pompier 'pumper'. So the each smàlaidh is clearly the horse helping the fire brigade, not the one bringing coal for the fire, or associated with the element fire in the Chines Zodiac.