For as long as most of us can remember, multinational companies, particularly those coming from the US, have been a very important part of the Irish economy.
If I had been asked how far back that went, after some thought, I would have suggested sometime in the mid- to late-70s after Michael Killeen took over as chief executive of the IDA.
There have been many announcements in the last few weeks involving pharmaceutical companies investing in new jobs here, including Merck’s MSD in Cork and Carlow.
I was pleasantly surprised the other day to discover that Abbott Laboratories has been in Ireland since 1946.
It now has six manufacturing sites in Ireland and four other offices located in various parts of Ireland.
It is one of the largest healthcare companies in the world. It has been a major success story.
So much for those folk who ridiculed Ireland’s efforts at attracting foreign direct investment by suggesting they came only for 10 years until as the critics would insist “they used up the grants and then vanished”.
Abbott is not the only company which has been in Ireland contributing to the economy for decades rather than just years.
Abbott was back in the news again the other day with the announcement that Abbott intends to invest around €10m in its Irish nutritional devices business in Sligo.
All of this is good news for the economy, for its employees and, of course, for those companies which supply goods and services to the company.
However, it’s not just the investment of cash that is important, although that always helps.
It’s another vote of confidence in an Ireland outside of Dublin.
As the IDA said: “Multinational companies contribute significantly to Ireland in terms of direct employment, capital spend, and developing Ireland’s skill base.”
Of course, they also pay taxes.
The strength of the contribution of these multinational companies was a key factor in our ability to withstand the worst effects of the recent recession when much of the Irish domestic economy was seriously hammered.
Indeed, we should not underestimate that contribution of the multinationals, even if at times little incidentals like Apple’s €13bn in back-taxes EU Competition Commissioner Margrethe Vestager has ruled it pay back to the Irish Government leads to serious debate.
Multinational companies accounted for about the vast bulk of all corporation taxes collected by the Government.
Economist John FitzGerald estimates the multinationals accounted for 16% of total employment over the years 2012 to 2015.
While the tax take from such companies, particularly coupled with the tax take from its employees, makes for a considerable part of the cash that we require to fund the day to day running of the economy, its importance to the economy has in fact lessened.
That is to be welcomed as ultimately we must be able to support ourselves.
Yet, foreign direct investment is still mobile investment. Its objective is to find a location where it can consistently make money.
It will not establish an operation in any country without considerable thought. Likewise, it will not leave a location on a whim, nor will it do it lightly. But it will pull out its investment if makes sense for it to do so.
Abbott has been in Ireland for over 70 years and has expanded its operations.
This proves that such companies can and will become part of the local economy and remain so for a very long time.
However, it makes it even more important we establish our own sustainable industrial base in what is an ever and rapidly changing global economy.
Ultimately, we should not be totally dependent on decision makers who have no vested interest in the sustainable success of the Irish economy.
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