Why Irish Stability Appeals to the World’s Corporations
An interview with the Head of Technology, Consumer and Business Services at IDA, Leo Clancy
IDA Ireland has been encouraging foreign direct investment into the country for more than 70 years. Leo Clancy oversees 40% of its investor portfolio, including the likes of Microsoft, Google, Facebook and Amazon. Prepaid card provider Soldo, discusses how IDA Ireland supports multinational investment throughout the country and the knock-on benefits for the local business ecosystem.
It’s been crowned the fastest-growing EU economy for five consecutive years, made Forbes Magazine’s list of the best countries for business, and was described by Apple CEO Tim Cook as the company’s “second home” – Ireland is clearly doing a lot right when it comes to attracting investment from the world’s largest and brightest multinational companies.
“Businesses benefit from access to European markets for revenue growth and a business friendly environment ,” Leo Clancy, Head of Technology, Consumer and Business Services at IDA Ireland says about the country’s appeal. “That includes the ability to trade and [access] to good talent as well.” Early investment by the likes of Google, which opened its office in Dublin in 2003 and now employs 8,000 people from 70 countries speaking 75 languages, has also had an impact. “I think there’s a great signaling effect when you have someone that large … it’s much easier for another company to come in and say ‘I know I can get engineers, I know I can get top grade inside sales people, or marketing people who understand the internet business’. It’s been a huge draw.”
From our point of view at IDA, staying close to clients is very important. We’re an organisation of more than 300 people in over 20 offices around the world. You need to be out there, you need to be close to your clients, and you need to be understanding of what their issues are.
IDA Ireland is a Government Agency that has worked to encourage foreign direct investment (FDI) into Ireland for the past 71 years. Through early interventions such as hosted site visits, tailored advice and networking sessions with key stakeholders, and access to government incentives such as R&D, employment, training and capital grants, the agency has partnered with more than 1,400 clients to help them establish and grow their operations in Ireland. IDA relationship managers are spread all over the world to identify and support new investor interest, with recent wins including South African animation studio Triggerfish opening its first international office in Galway; American healthcare provider UPMC establishing a technology operations centre in Kilkenny, bringing another 60 highly skilled jobs to the area; and news that doTerra, a leading provider in essential oils and wellness products, will build its first manufacturing facility outside the US in Cork City’s northern suburbs. “Triggerfish is [an example] where we’ve recently put a resource on the ground in South Africa to cover South Africa and Sub-Saharan Africa, to [build] that network out there. Those [relationship managers] are well connected,” Clancy says.
“From our point of view at IDA, staying close to clients is very important. We’re an organisation of more than 300 people in over 20 offices around the world. You need to be out there, you need to be close to your clients, and you need to be understanding of what their issues are.”
Dublin was reportedly the most popular for IDA sponsored visits by potential investors in 2019 (accounting for 41%), but there has been a significant push by IDA to encourage FDI in regional areas. Over 33,000 additional direct jobs on the ground were created by IDA-backed companies from 2015-2019, with regional investments increasing by 57%. It can be a challenge to encourage executives to look outside the capital city, Clancy admits. “They know Dublin and they’re pretty sure because of Google, Facebook and others [who have offices there] that Dublin can work for them … [we try] to help clients make the decision to choose the regional location as easy as possible.”
When the global economy takes a hit, we can take somewhat of a worse hit and when the global economy grows strongly, we bounce back faster than most places.
Those moves can bring a significant number of jobs and economic stimulus to an area – in 2017, for example, technology and business service company Pramerica opened a new facility in Letterkenny, County Donegal. The firm is now the largest employer in the northwest region, with more than 1,500 staff in a town of only 10,000 people. “These kinds of stories are brilliant and for the small communities they operate in, they are systemically important,” Clancy says. Similar investments in Cork in recent years have contributed to it being named one of the top small cities in Europe for economic potential by The Financial Times, ranking higher than Cambridge, Geneva and Basel in Switzerland.
In Galway, one of the early large FDI projects was from Digital Equipment Corporation (DEC) in the 1970s. That early vote of confidence went on to have a significant impact on the city’s future growth, thanks to the skills and future talent developed by the company. With one of the most educated workforces in the world (56% of Irish 25-34 year olds have higher or further education, compared to a 44% OECD average), Ireland is well placed to make the most of those opportunities. “The executives who were trained by DEC went on to found Irish companies that did very well or they went on to senior positions in multinational companies,” Clancy says. “So you get that long term spillover effect of those businesses … there is a multiplier in terms of how [FDI] pays it forward.”
The coronavirus pandemic has already had an impact on FDI activity in Ireland, but experts predict it won’t be as badly affected as the rest of Europe. Recent estimates from EY suggest 20% of planned Irish projects won’t happen this year, with the country realising 80% of expected foreign direct investment versus Europe’s 65%. “In broad terms, FDI flows have slowed down significantly due to COVID-19,” Clancy says of his current workload. “For new investments, we’re highly dependent on bringing people to Ireland, showing them the proposition they can invest in and helping them make a decision from there. [That’s] ceased, so final decisions on new business have slowed although we continue to conduct visits virtually.” IDA Ireland was also expecting to launch a new five-year plan this year, which is now being revised with the pandemic, and subsequent recovery, in mind.
Of course, Ireland has turned it around before. In September 2008, the country became the first in the eurozone to declare it was in a recession after the global economic crisis. In the ensuing years, unemployment would rise from 5% to 15%, property prices would fall 54%, and almost 47,000 companies would cease trading from 2008 to 2011. In 2010, the country’s government agreed a €64billion EU-International Monetary Fund (IMF) loan to support the Irish banking system, a sum it has recently sought to repay early. “We were a country that took an IMF loan and then beat all of the performance targets set by the EU and the IMF through a very fiscally responsible approach. That created a lot of confidence globally,” Clancy says. “When the global economy takes a hit, we can take somewhat of a worse hit and when the global economy grows strongly, we bounce back faster than most places.”
There has also been a commitment to stability from successive governments, which has proven attractive to foreign investors and helped ensure longevity for businesses. Almost two thirds (60%) of multinationals in Ireland have operated for at least 10 years, with a third reaching 20 or more years. “Ireland has been known for maintaining a stable environment for investors,” Clancy says, nodding to the 12.5% corporation tax rate (compared to the UK’s rate of 19%), which has been in place since 2003. More recently, that stability has been in stark contrast with the uncertainty seen in the UK since the EU Referendum result in 2016. A similar move in Ireland is unlikely – a poll in 2018 found 90% of Irish people want to stay in the EU – and there have been a number of companies moving or establishing European headquarters there since the vote. “So far we’ve won north of 90 discrete investments by new investors who have been adjusting for Brexit within their businesses by coming to Ireland,” Clancy says.
Despite the recent challenges, IDA’s pool of existing clients is broadly based and resilient, he adds, though some sectors have been more impacted than others. It’s a diversified group, made up of some of the world’s biggest tech and financial service firms, as well as key players from the pharma and medtech sectors. “I think a lot of the activity we have in Ireland is high value and is depended on by business. So I think we’re in reasonably good shape coming into this … Companies are still hiring in Ireland.”