Fighting for every firm’s survival

Heading up Enterprise Ireland in the midst of an economic crisis is no easy task but there has been some good news for Frank Ryan lately, with multinationals hiring again and the export sector packing a powerful punch, says Kyran Fitzgerald

FRANK RYAN has been steering the ship, Enterprise Ireland, through choppy waters in recent years. Through this difficult period, he has sought to project a sense of determined optimism but, at times, the struggle must surely have been an uphill one.

In recent weeks, amid the gloom, there have been some glimmers of hope: Important investment announcements from major multinationals such as Intel, Danone, Google, and just this week, Dell — promising 150 jobs in cloud computing. On the home front, SouthWestern plans to create 150 jobs in Clonakilty.

This represents a rebound of sorts. given it was Dell which delivered arguably the sharpest blow of all in 2009 when it announced the closure of its manufacturing facility in Limerick with the loss of almost 2,000 direct jobs, and many more in supply firms.

The presence of multinationals has ensured exports have remained a bright spot in the battered economy and, in recent times, the export growth story has become more broadly based, much of it taking place in companies supported by Enterprise Ireland, the state agency set up to support indigenous firms.

EI provides around €300 million a year to Irish companies. However, these firms have not escaped the impact of the downturn.

In 2010, numbers working in EI-backed companies dropped by 3,726 to 156, 577, a net decrease of 2.3%, while numbers employed on a full-time basis fell by 5,355 to 137,240.

This decline is disappointing, continuing as it does a pattern evident since 2007 and reflecting the loss of competitiveness during the boom. However, there are signs this pattern could soon be reversed.

New export orders among EI-backed firms grew every month in 2010 and the trend has continued this year.

The EI strategy is to try and reduce the dependence of Irish firms on the established markets in Europe and the US, where growth has slowed.

Exports to the so-called BRIC nations, Brazil, China, India and Russia, grew by around a quarter last year, but there is much ground to be made up. Germany has prospered on the back of a boom in the export of goods to China. In the case of Ireland, breaking into the huge markets in Asia will take time as EI’s director of global strategy, Julie Sinnamon, readily admits.

In 2009, Asia-Pacific absorbed €783m worth of goods and services from Irish firms. This compares with total exports of €12.3 billion achieved by EI-backed firms that year. Growth prospects are huge, particularly in food, IT and language teaching.

EI has opened four offices in China, along with Brazil, Russia and India. Ms Sinnamon acknowledges “we are growing exports in these markets from a low base”, adding it could take years for some companies to make the breakthrough.

The potential for food exports, however, could be enormous, given growing global food shortages, the emergence of a large new middle class and the lifting of EU restrictions on production.

“One in seven babies worldwide consume infant formula produced in Ireland. This will rise to one in five, once Danone’s investment in Macroom [with funding from EI] is completed,” says Ms Sinnamon.

Construction, engineering services and environmental services have also emerged as important growth centres. The London Olympics provided an important boost to firms desperate to compensate for business lost as a result of the slump in construction activity here. For the first time, Irish engineering firms are now selling more abroad than at home.

EI has helped companies cope with their loss of competitiveness through the implementation of its ‘lean’ programme involving the introduction of new methods across the organisation, from procurement through production to marketing.

Firms are being advised by EI to break into new markets overseas, yet many are being denied the necessary finance.

Ms Sinnamon acknowledges this is a real issue. She believes that loan capital needs to be made more freely available. “Every country needs a good functioning banking system.”

Her hope is that within two years, the banks will be making credit available.

“There is a high level of engagement. We are working closely with AIB, Bank of Ireland & Ulster Bank. Areas such as export credit are difficult... There is so much uncertainty.”

The last government worked with EI to build links with Silicon Valley and funds have been established. The National Treasury Management Agency may be providing further support in the venture funding area.

Over the years, Frank Ryan has pushed hard the mantra of innovation. This remains a key goal, but the focus has, not surprisingly, shifted to job creation. With almost 450,000 on the Live Register, it is a case of Back to Basics.

Back in 2007, a new seed and venture capital initiative was launched with the aim of boosting firms spending at least €100,000 a year on R&D to around €600,000.

But fast forward to 2009, and as firms’ balance sheets came under pressure, the emphasis shifted more towards survival with the launch of a €100m Enterprise Stabilisation Fund. At the time, Mr Ryan painted a picture of almost Darwinian struggle, with the weak going to the wall.

“If you have good prospects you will get funding. Weak projects will struggle. It depends on the quality of the technology and the management team.”

And he acknowledged “we are probably in the worst economic conditions since the 30s”. Despite this, exports held up and lately EI appears to have recovered much of its mojo. An exhausted administration has been replaced and EI executives like Ms Sinnamon can detect a new energy in Government. Whether this will be dissipated in due course, under the pressure of events, remains to be seen.

The number of so-called high potential start-ups has also held steady. Last year, 80 were supported, 10 of which came from the third-level sector, helping to justify some of the huge investment by the taxpayer in high-end research activities.

A good example is Solvotrin, a TCD spin-off producing bio-activated aspirin released directly into the bloodstream.

Ms Sinnamon: “We are putting in place a technology transfer office in each institution to support spin-off into new companies, or into existing ones.”

EI has also launched a business partner programme where 40 “business partners” are working with entrepreneurs providing them with commercial expertise and access to finance, including introductions to venture capital firms and investment capital.

Last year, the agency also supported two projects controlled by overseas entrepreneurs who have decided to use Ireland as their base.

So far, this year, five such projects have relocated here, including 2Paperdolls, a mobile gaming company started by Frenchman Louis Ravenet and his wife, Andrea.

EI expects to support at least 80 high potential start-ups again this year. “In a downturn, the number of start-ups we back does not decline. People previously in secure jobs have capital available following their redundancy.”

There are signs of a rethink on Ireland, with growing interest among investors, particularly in the US. But the bond market remains to be convinced and some business partners remain nervous.

EI and the IDA can only keep beating the drum.

Ms Sinnamon points to growing strengths in areas such as agribusiness, especially in so-called “functional foods” that Irish-based multinationals are increasingly active in. A network of friendly foreigners, former students, is being put together to assist in promoting sales into China. In recent weeks, two overseas language colleges have taken leases in Dublin.

The agency is also running competitions aimed at boosting home-grown entrepreneurship in an effort to replicate the Dragons’ Den TV series.

Looking ahead, Ms Sinnamon is counting on an easing in volatility in the eurozone, allowing firms to be better able to plan ahead.

She remains determinedly upbeat. “We are picking up an appetite from companies keen to bring activities back into Ireland. In some traditional sectors, lost competitiveness has been regained.

“Hopefully, in two years, we will see a recovery in job creation, with greater access to cash from a recovered banking system.”

Getting to know: Frank Ryan

- Born: 1953. Co Louth.

- Education: CBC, Dundalk. MSc, Business Strategy, Trinity College Dublin.Wharton School of Business, Pennsylvania, Advanced Management Programme.

- Career: Air traffic controller, Dublin, Cork. Qeleq — computer company. 978- 2003: Executive, IDA Ireland — became executive director, IT. 2003 to date: CEO, Enterprise Ireland.

- Married: Rose. Two adult children, grandchildren.

- Leisure: Horse riding.

Picture: Frank Ryan: The Enterprise Ireland chief has always striven to promote a sense of determined optimism, which cannot have been easy in recent years, when he has been forced to switch from encouraging firms to innovate and expand to just helping them survive. Picture: Gary O’Neill

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