Ireland’s inward investment agency IDA Ireland has increased the levels of foreign direct investment (FDI) by 14pc despite the recession, yielding 8,837 new jobs in 130 new investments worth €2bn by companies like Facebook , HP, Intel, Microsoft and IBM.
Exports from IDA client companies reached €92bn according to the agency’s annual results and the companies contributed €16bn in direct expenditure to the Irish economy.
The total payroll costs by IDA supported companies amounted to €6.7bn.
In 2008 35 investments came from new clients and 95 from existing client companies. Some 55 of the investments were R&D based, up 22pc on the previous year.
Speaking with siliconrepublic.com Barry O’Leary, chief executive of IDA Ireland, said that Ireland is holding its own in the global battle for investment and the fact that the world’s leading ICT companies are continuing to invest here shows the country has something worth fighting for.
“The important thing is the FDI is still taking place, it is there to fight for even if the fight has gotten harder. Four of the top ICT companies have invested in Ireland.”
O’Leary says that IDA Ireland’s clustering approach of trying to target the top three or four of any global industry whether its ICT or bio-pharma is a strategy that continues to deliver.
“If you look at ICT or financial services we have clusters of activities consisting peer companies that are active. This instils confidence to invest. For example, Facebook knew that Google, Amazon and Yahoo were here and thriving. The key is to focus on an area of growth, build a cluster around it and then you attract waves of investment.”
The digital space O’Leary argues is one where Ireland has a lot to contribute. “The companies are here, the ingredients are here, but there are infrastructural deficits that need to be address, in particular telecoms networks. We need to be in the top three of any space we target.”
State-of-the-art fibre networks that are lying unused around Ireland, such as that of CIE which could feasibly link up 90pc of urban centres in the country, need to be lit O’Leary argues.
“Every investor has different requirements, some need thousands of gallons of water, most need affordable energy, but all of them will need digitisation. There are always challenges and we have to keep moving.
O’Leary says that the recession has actually been useful in reorienting Ireland and making it a competitive location for investment. “Energy prices are moving in the right direction. Labour costs are coming down rapidly as are the costs of buildings and land.
“This will prepare us very well for the upturn – never waste a good recession, as they say.”
While the work of NAMA has yet to even begin in righting the damage caused by the construction boom, O’Leary says the nation has to work at ensuring it repurposes itself in terms of skills and education.
“The construction boom will never return, let’s be straight about that. We need construction levels to be at the same average as other countries in Europe. The lesson of the property bubble will be with us for some time. It will still take a good while to correct everything.”
While many of the investments that IDA Ireland is winning is in the knowledge industries of ICT, pharma and financial industries, O’Leary says it is important to remember that these will each result indirect spending in other ancillary areas like security, maintenance and catering.
“At the same time we need to develop the skillbase for these industries. Everybody in Ireland needs to take a long hard look at where they are going from a skills point of view. This work should go back to second level and the kind of careers that will be around in the years to come.
“In the last five years people just walked into jobs and there was a sense of entitlement. That no longer exists. Industries like life sciences, digital media, and financial services will be where the jobs will be.
“Convergence of these industries is another major team. For example you could have Google, Johnson & Johnson and an insurance giant collaborating on next generation research products.
“R&D in financial services is another area that people aren’t aware of. They think R&D is just people in white lab coats. It’s not. PayPal for example are investing €15m in a global innovation centre to develop all-round customer interaction technologies while insurance giant Aon has invested in an innovation centre to develop tomorrow’s products.
“These companies knew there was a change coming and that things will never be the same again. They have set up innovation centres in Ireland where they can develop and test the technologies and base themselves in Ireland from where they can roll them out globally.”
On the road ahead, O’Leary argues that patience, nerve, skill and hard work will be needed to ensure the country maintains its attractiveness as an investment loation.
“Last year was a challenging environment. This year is more challenging. It is a tougher environment, there is less FDI available and we have no shortage of competitors.
“But at the same time if we stay focused on continuing to target FDI and win a good number of investments, we will solidify our base and when the upturn comes we will have the calibre of companies here that will enable the country and its economy to grow,” O’Leary concluded.
By John Kennedy
