Ireland enjoys great investment in a year of huge global upheaval

The competition for foreign direct investment from other jurisdictions is higher than ever — yet Ireland continues to fare extremely well, with record job creation in the sector throughout 2016.
Ireland enjoys great investment in a year of huge global upheaval

“We created just under 19,000 jobs on the ground across Ireland and across a range of sectors. Every region saw net job gain,” says IDA executive director, Mary Buckley.

“There was unprecedented geo-political change over 2016, yet it was our best year for foreign direct investment in IDA-client companies. It was the best in the history of the IDA for FDI job creation,” she says, adding that employment in IDA client-companies is now at a record 200,000 jobs.

“It is the highest on record. It is a new level for us. We have never had that before,” she declares, adding however, that 2015 was a very good year also, so the excellent figures for the end of 2016 came on the foot of two years of extremely good growth.

FDI, of course, has always been and continues to be, extremely important to Ireland — and about 70% of the IDA’s client portfolio is from the United States, and increasingly, firms are locating outside the capital. In 2016, for example, 52% of all jobs (gross) created by IDA clients were based outside of Dublin.

Key developments include the announcement by Oracle in Dublin of 450 new hires and state-of-the-art offices in Dublin to help drive cloud momentum across EMEA; the decision by First Data in Tipperary that it is to establish a Research & Development Hub in Ireland housing up to 300 highly skilled people to centralise work on a number of the company’s leading technology platforms.

In Waterford, OPKO Healthcare plans to create 200 highly skilled jobs, while for Galway came the news of an expanded European Operation Centre creating 160 jobs in the region. In Cork, GE has announced plans to invest €150 million in biopharmaceutical manufacturing campus in Cork, and creating up to 500 jobs while Cylance , the artificial intelligence-based endpoint security software developer will offer 150 jobs over the next three years in Cork.

Crucially, IDA estimates that for every 10 jobs generated by Foreign Direct Investment (FDI) directly, another seven are generated in the wider economy.

This translates into 339,790 jobs that are supported by FDI at the end of 2016. Secondary economic benefits are significant — they impacts positively on the construction industry, the retail sector and the hospitality industry.

Overseas companies continue to be significant exporters from Ireland, with IDA clients exporting, based on preliminary estimates, approximately €149bn in 2015, almost 64% of all national exports.

In addition, IDA client companies spend €18.7bn in the Irish economy annual; €10bn on payroll and €8.7bn on Irish sourced materials and services.

IDA is working closely with its sister agency Enterprise Ireland on ensuring that links between overseas companies and indigenous firms are further enhanced, in order to deliver an overall macroeconomic benefit for Ireland.

In this context — and in the context of intensifying global competition for Foreign Director Investment, what is Ireland getting right?

Because we’re certainly doing some things right — this country according to the IDA, wins a much larger market share of European FDI than might be expected with 4.3% of all FDI projects coming into the EU in 2015. This is significant in light of the fact that Ireland constitutes just 1.7% of EU GDP i.e. Ireland is winning approximately 2.5 times the amount of investment that might be expected given its relative size.

“From our perspective, a number of things are driving this success,” Ms Buckley explains.

First is the availability of talent. This is crucial she says.

“We have people with the right skills in the right place.”

Secondly, Ireland has an excellent track record as a location for foreign direct investment with a large, existing base of such companies in Ireland.

“We have a great base of companies across all sectors from pharma to bio-tech to technology and energy companies,” she points out.

“Many of these companies have been in Ireland over many years.”

On top of that, she explains, although they may have come in to perform one particular activity, many have subsequently moved up the value chain to carry out other industrial activities in Ireland.

Many such companies have also re-invested in their operations in Ireland and, significantly, have added new activities to their existing portfolio of enterprises. Also — and very importantly, as a country Ireland boasts ‘very good’ pro-enterprise policies.

“Companies like stability and consistency in enterprise policies,” she explains, adding that Ireland’s approach to enterprise policy is a critical factor in attracting foreign direct investment here. And then, of course, geographically, we boast excellent proximity to EU markets; and of course, last but not least, we have an attractive tax regime.”

We’ve had a good two years, says Buckley, and, while the first quarter of 2017 is already looking positive, this is not a time for complacency.

“There will be a lot of change in the year ahead,” she observes. Competitiveness is key to Ireland’s continued success,” she warns.

“For businesses, competitiveness is key. We are competing with other countries to win investment and the competition is more intense and there is more of it.

“We must be competitive in all areas, but particularly around the issue of costs,” she emphasises.

As part of improving our overall competitiveness levels in the context of intensifying international competition, is the need to continue to ensure a relevant talent pool is available, in terms of education and skills policies, both now and into the future, to meet the needs of a rapidly changing business.

The need to continue to provide firms with the necessary infrastructure is critical, she adds.

“In this context we need to have a functioning sustainable residential and commercial properly market — it has to be there all the time and that is important from our perspective.”

Right across the economy, says Mary Buckley, Ireland must be consistently innovating to drive productivity.

“These are the things we need to be very concerned about in the future!”

“In 2016 we had our lowest job losses within IDA client companies since 1997,” says Ms Buckley who extends a cautious welcome to 2017, adding that despite the current global uncertainty, quarter one already promises a strong pipeline of investment.

With the impact of factors such as Brexit for example this trend may not continue so strongly from an IDA perspective.

So, although performance has been nothing short of “terrific” over the last two years, she warns, we cannot afford complacency.

Interview: Áilín Quinlan

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