‘Best is yet to come’ for Irish enterprise
THE job of Frank Ryan, CEO of Enterprise Ireland since 2003, is to sound bullish.
An old IDA hand, he has brought with him the messianic zeal one associates with that organisation to his current posting.
Mr Ryan’s favourite saying is that “the best is yet to come”. This week, as a challenging year for the agency draws to a close, he had good reason to smile.
The double job announcements from Kerry Group and Paddy Power are a major morale booster for Mr Ryan and Taoiseach Enda Kenny as they reach the US where they will be out beating the drums looking for investment.
Enterprise Ireland is a big spender of taxpayers’ money. It received €304m in 2011 and €422m in 2010. More than 300,000 people are employed, directly or indirectly, by the indigenous Irish firms in manufacturing and internationally traded services that fall under the agency’s wing.
The agency focuses in particular on providing backing for so-called high-potential start ups. The benefits of this approach can be seen in the resilience of the agency’s companies in spite of the near-meltdown in the country’s banking sector.
Last year, the total exports from this client base rose by 11% to €15.2bn, this performance beingunderpinned by a strong showing by Irish food and drink companies. This year, Irish exporters are facing into the wind due to the prolonged slowdown in our key US and European markets, although a falling euro will provide a short-term boost in the UK.
Julie Sinnamon, the agency’s head of global business development, believes Irish firms will once again record growth in sales overseas, but at a slower rate than in 2011.
Lower food prices, particularly in dairy, and a poor harvest look set to hold back the performance of the food sector.
Ms Sinnamon believes this week’s announcement from Kerry Group is “the most significant... in the history of indigenous industry”, not just because of the scale of the investment — 900 permanent direct jobs, more than 1,000 permanent spin-off jobs, and 400 temporary jobs in construction — but on account of the signals it sends to other overseas investors.
This is not the case of an iconic Irish company seeking to wear the green jersey. Kerry Group is a global company, with a market cap of €7bn and sales of €5bn, and with a shareholder base that is global. Sentiment cannot inform such a decision on the location of what will be the group’s largest research and innovation campus.
Kerry has already two such campuses in place, in Wisconsin and in Mexico. The facility at Beloit in Wisconsin is credited with boosting Kerry Group sales in north America. The Beloit campus is just an hour’s drive from O’Hare Airport in Chicago, a global aviation hub. The new Naas campus is less than an hour, outside peak times, from Dublin Airport.
Access is critical. This allows customers to fly in and out — with minimal expenditure of time — to the research and innovation campus in order to discuss joint product development.
Kerry believes that its development of such campuses puts it ahead of the competition. Such a network of campuses would not have been possible 25 years ago, and is down to the group’s global scale.
In Ms Sinnamon’s view, Naas won a very tight race. The campus could become a magnet for future investment, she believes. As yet, the agency does not have a project of a similar scale to this in the pipeline, but the agency will be emboldened in its efforts to persuade major players such as Danone to boost their Irish research arms.
Elsewhere, there are positive developments. Exports from Irish engineering firms have grown by 30% and, for the first time, more of their output is sold overseas than at home.
In the latest three-year plan up to the end of 2013, there is a much greater focus than previously on job creation.
In 2011, net job creation in client firms was just six people. At this rate, it would take 70,000 years to end the dole queues.
But, joking apart, this still compares favourably to the heavy losses incurred in the preceding two years. “We are trying to prioritise areas of strong jobs impact, with a big focus on start ups.”
For every 10 direct jobs in Irish firms, 12 spin-off jobs are provided. This compares with just seven spin-offs for every 10 in multinationals operating here.
But how do you create such jobs in indigenous industry when your country’s banking system is bust?
In Ms Sinnamon’s view, there will be net growth in numbers employed in client firms. As to how much, it is too early to say. Looking forward, she believes that it will be necessary to broaden the funding base beyond the banking system.
She regrets the delay in the launch of the loan guarantee scheme — a similar scheme is performing well in Britain.
Such a scheme will provide “significant help” to firms.
THE agency has established a new “potential export” division to help firms in the transition from total reliance on the domestic market.
“Angel” and venture capital funding has been lined up for technology start-ups. So far, 155 firms have benefited under this initiative. While a number of transitional programmes are in place, Ms Sinnamon warns that there is no “quick fix”.
However, the property collapse has at least meant that the business community is now looking much more closely at the enterprise sector, helped by Business Expansion Scheme style incentives.
The agency is also working on a fund to provide development capital to established firms in transition. Another area receiving greater attention is female entrepreneurship — or rather the lack of it.
“Out of 95 Enterprise Ireland start-ups, only seven had females anywhere in their promotional team. We have started running a feasibility finance fund for females. We have had 125 applications and have supported 20 of these.”
Clearly, carving market share in the high growth of Brazil, Russia, India, and China remains a priority. The latter is receiving priority, particularly in food. Educational providers have made a breakthrough there. India is being targeted, particularly in education, and Africa is increasingly on the radar. A mission is in Brazil and another is due in India shortly. However, patience will be required.
“It will take a long time. Companies need to be committed — they can’t just dip in and dip out.”
And whatever you might say about Enterprise Ireland, you can hardly charge Mr Ryan and his team with lack of determination and focus.
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