Sean Dorgan, Chief Executive of IDA Ireland

“Foreign direct investment (FDI) continues to contribute strongly to the Irish economy and to growth, but in a broader way than before,” said John Dunne, Chairman of IDA Ireland today at the launch of IDA Ireland’s 2006 Annual Report.

“The measures of progress in a globalised, high value and knowledge-intensive economy, as we have in Ireland, are different to those that we used in the past. The number of jobs created was the key criterion of success in the 1990’s; now, it is the quality and value of the activities undertaken here that matters – in more skill-intensive manufacturing and services, in financial services and headquarters functions for European and wider markets, and in research and innovation. It is our success in winning these types of investments which will determine our future well-being”  Dunne said.

The Annual Report 2006 outlines the contributions of multinational companies: in 135,500 jobs (up almost 3% on 2005), in new capital investments of €2.6 billion, in 54 new research, development and innovation (RD&I) projects costing €470 million, in annual expenditure of about €15 billion on Irish payroll, material and services, and in corporation tax payments estimated at €2.8 billion.

In addition to these direct benefits, IDA Ireland says FDI has multiplier effects throughout the economy, creates demand for high skills, advanced management and business processes, and guides beneficial national developments in education, science, telecommunications and other infrastructure. “The leading global companies who operate in Ireland have set standards of performance which require us to be competitive in every aspect of our economy; this is a continuing challenge which we must repeatedly address. For this reason, IDA strongly supports the proposed investments in infrastructure, skills and research proposed in the National Development Plan 2007-2013,” John Dunne said.

“The progress that has been made in recent years in transforming the activities of overseas companies in Ireland, and in winning new investments in areas that barely existed ten years ago – such as in biopharmaceuticals and digital media – is striking. These latter developments were greatly assisted by novel investments by IDA in special utility-intensive sites and in international telecommunications connectivity (such as Global Crossing). These steps, and the Government’s investment in building national research capabilities, will be the basis for further success in coming years.”

The annual report showcases a number of companies that are household names in Ireland and that have greatly expanded their original corporate mandate here. Many of these companies may have originally started with a manufacturing or basic services remit but have since taken on strategically critical activities such as next generation shared services, R&D, value chain and supply chain optimisation and EMEA headquarters.

Sean Dorgan, CEO of IDA Ireland who plans to leave his position at the end of this year, referred to the addition of these high level activities within the Irish based multinational companies as “crucial progression".  He said “These high level activities play a strategically critical role within the parent corporation and strengthen the Irish based facility. Many compete with subsidiaries of their parent company located throughout the world for these cutting-edge investments. We are aggressively promoting Ireland as a location for these types of activities as we believe this is where a high proportion of our future investment will come from.”

John Dunne referred to coverage earlier this year of the contraction, or in a few cases the closure, of a number of multinational operations in Ireland. “In our view, there is no exceptional trend occurring here; we have seen such changes happening over many years. These changes may reflect marketplace problems which individual companies face, changes in Irish conditions and costs, or the operation of global economic forces that have worked to our benefit over the past two decades. We cannot afford to be complacent, and costs movements have to be moderated in every possible respect. The loss of a job is worrying for any individual, but experience tells us that employment prospects are good for those people affected.

We need not be unnerved nationally by what is a familiar experience for the Irish economy. The rate of job attrition in overseas companies in Ireland has fallen each year for the past five years, from a peak of 12.8% in 2001 to 5.9% in 2006. So long as we continue to win higher value investments, train our people for these new opportunities, and invest quickly in the needed infrastructure, we have nothing to fear from this transformation in activity.”

“Recent reports to the effect that we may be no longer competitive for manufacturing investments are misplaced” according to Sean Dorgan. “In fact, manufacturing output continues to grow and generate valuable new jobs here, and almost one third of all site visits by potential investors to Ireland to date this year are in respect of manufacturing projects. Many of these prospects are in the life sciences – pharmaceuticals and medical technology – where the depth of skill and expertise and regulatory excellence are key competitive advantages. We are confident that a number of these visits will lead to new investments over coming months.”

Ireland is now a global competitor for R&D investments from multinational companies and this investment has grown to record levels. This has been achieved in an environment of intense globalisation and increased competition.  Mr Dunne said “Ireland is reaping the results of a concerted effort in Government policy to build a substantial foundation of world class science and technology in our academic institutions and with a strong emphasis on business and academic collaborations.”  

Highlights of Annual Report 

In Biopharmaceuticals, Ireland has emerged as a leading location in the world. In 2006, industry leaders like Amgen and Eli Lilly joined Schering Plough, Wyeth, Genzyme and Centocor in making Ireland a prime location for the development and manufacture of the newest drugs.

Digital Media companies have placed Ireland firmly on the map in this burgeoning industry sector with Amazon in Cork and Dublin, and Google in Dublin, along with other leaders such as eBay / Paypal and Yahoo – all of whom grew in 2006.

Ireland holds a sturdy position with Information and Communications Technologies companies, which was strongly reinforced in 2006 by new investments from Cisco, IBM, Netgear, Sandisk and Trend Micro, amongst others. Today there are 210 foreign owned companies in the ICT sector in Ireland.

One of the strongest sectors for new business is Financial Services.  In twenty years, the international financial services sector in Ireland has attracted 250 companies and now employs 24,000 people. The sector continues to thrive and last year saw new investments from Citco (Cork), Northern Trust (Limerick) and Vesta (Dundalk), as well as the continuing growth of Dublin-based businesses.

Ireland is a leading destination for Medical Technology investment. Continued growth in 2006 was evident by announcements from Cordis (Cashel), USCI (Ballinasloe) and Vistakon (Limerick) among others.

Every developed economy must posses a strong core competency in Engineering & Manufacturing and Ireland continues to foster and develop these key attributes which apply across sectors and business segments.

Dorgan summarised IDA’s activities during 2006: 

• 71 new business projects were negotiated with new and existing clients, which involve a total investment of €2.6bn over the coming years.

• Investment in research and development continues to increase. 54 R&D investment projects were supported in 2006 involving a total investment of almost €470m. The corresponding values were €140m in 2004 and €260m in 2005.

• Reflecting IDA’s strategy of balanced regional development, 89 new investment projects (including 46 R&D investments) occurred outside of Dublin.

• IDA supported companies spent almost €15bn in the Irish economy in 2006 from their annual sales of €77bn and paid over €2.8bn in corporation tax.

• Over 50% of jobs in new IDA supported projects in 2006 have wage and salary levels in excess of €40,000 per annum.

• Employment in IDA supported companies increasing by 3,795 in 2006, bringing total employment to 135,487.

• IDA reiterated its commitment to achieving the best possible regional balance in investments with almost 60% of new Greenfield projects, and 6 out of every 7 R&D investments (or 85%), occurring outside of Dublin.

The Future

Looking to the future, the Annual Report puts the progress of recent years in context and points out that Ireland has reinvented its attractions for inward investment over the past seven years, since the peak of the ‘Celtic Tiger’ years in 2000. That has been done by continually recognising changes in global conditions and in our own circumstances. "We have moved with agility to enhance our national capabilities, innovation, creativity and connected national ecosystem. This we must continue to do," the report says.

IDA Ireland says that a number of aspects are particularly critical for success in FDI:

•  investment in transport infrastructure, such as roads, airports and public transport,

• providing competitive and robust energy supplies,

• encouraging our students to study science, engineering and business,

• enabling a fully connected and innovative research environment.

Dorgan said that, based on these factors and the strong position from which we are currently operating, IDA is confident in our ability to win important new investments this year and beyond.

He concluded: “Back in 1996, IDA highlighted the importance of an educational and training system: in particular, industry-related disciplines for students making third level education choices. We encouraged local organisations and especially the local authorities to ensure their areas were attractive to investors. 

We stressed the necessity for new infrastructure that would bring us to international standards in the 21^st Century.  And we also made the stability and longevity of the corporate tax regime a critical element of our offering to companies. While Ireland has had a remarkable make-over and has achieved extraordinary economic success in the past 10 years, our objectives for future success remain unchanged.”