`When we are selling Ireland overseas the two biggest advantages that we promote are the education and skills of our workforce and our low 10 per cent tax rate. In relation to both of these there have been some issues and some uncertainties recently," says Kieran McGowan, chief executive of IDA Ireland.
He continues: "On the workforce side, precisely because of our success in recent years, there are some tightnesses in the availability of people with the appropriate skills. A number of Government actions have been taken about this - in particular, the £250 million Education in Technology Fund, which is extremely helpful to us because of the commitment it shows by putting big money into creating extra places and upgrading facilities in the colleges. We are confident now that, over time, the supply will come into better balance with the projected demand.
"On the tax side there have been uncertainties because of reports that Brussels was concerned about Ireland extending our 10 per cent tax rate beyond the years 2005 and 2010. That now looks like being clarified, which is extremely important. We can confirm to companies here that they can be certain that the maximum rate of tax to them will be 12.5 per cent up to the year 2025. "In 1997, we did better than for many years in the number of companies we encouraged to go outside of Dublin. Very importantly we got a replacement for Tambrands in Tipperary town - Pall Corporation with 250 jobs - and more recently Oxford Health Plans is a major insurance company and quite a coup for Mullingar.
"We were under some pressure in relation to Ballina after the Asahi closure but succeeded in bringing in Lionbridge to set up a software testing centre and we were very pleased with that. There have been other significant enterprises announced for places like Carrick on Shannon, Ennis and Kilkenny. The key point is that, compared to many other years, we achieved a better spread, and a mix of different types of industry.
Mr McGowan also felt that the mix of industry and job types is also changing. "For the second year in a row," he says, "over half of the new companies that came to Ireland were in services. There is also a good mix within the services sector - customer services, software development, reservations centres and so on."
Another important aspect of the investment mix, according to Mr McGowan, is the range of countries of origin. "In that respect," he says, "we can take a great deal of satisfaction at a very good performance from Europe. We have a concern in the IDA that, in the last few years, our business has been very heavily dependent on America. Fortunately, the US economy has been buoyant for the last six or seven years in a row. Nevertheless, you feel safer with a better spread and we did better out of Europe in 1997 than for more than five years with companies like SAP, Bertelsmann, Telenor, Lufthansa, and DER."
And what about the IFSC?
"Yes," Mr McGowan exclaims, "we had another good year, signing up about 40 new companies. But, in fact, every year now the companies already in the IFSC add on another 500 or so jobs. The total down there is already over 4,000. We are attempting all the time to get IFSC companies to do other things here, like back-office administration or software development. A great example is the Bankers Trust 150-job project that arose when the company set up an operation at the IFSC and got to know it and Ireland and the quality of our people.
"In fact, the `second phase play' activity arising from the primary elements at the IFSC is very exciting. Some of it is physically in the centre, like the Citibank project, while others, such as AIG, are elsewhere in the city. Here, again, the biggest single factor is definitely the pool of talent that companies find here when they set up their first operation."
There is definitely room for more companies in this whole financial services sector, according to Mr McGowan. "After 2005," he says, "the importance of the location will not matter because there will be a single low tax rate for the whole country. The availability of good quality buildings and other support infrastructures could attract IFSC-type investment anywhere - anywhere the right calibre of people are or will come. Tomorrow's communications mean that we could have, as it were, a national `virtual' IFSC."
Where does the IDA get its signposts for the future?
"Principally," says Mr McGowan, "by recognising that identifying future trends and up and coming industries is an essential part of our business. So we give the process specific and dedicated resources, here and in the marketplace. We have two of our best people whose only job it is to look to the future. One of them is based in the US, in the field, because by and large that's where you find out the businesses of tomorrow. Examples right now would include Internet-related and multimedia services of various kinds.
"Probably the core of the IDA marketing style is to develop a little niche, get somebody of top stature to come into that area, then go out to others who would be impressed by that industry leader's investment here. For instance, now we have the IBM technology campus in Mulhuddart, so we are talking to some other major companies about the thought process behind that. We will see if we can encourage them to think of a campus centre in the same way.
"When we have a new area we try to build on it. We're also trying to open up new segments to products we already have. For instance, for the first time in the IDA we are now talking to the petroleum companies about the possibility of operations in Ireland to do centralised back office, call centre, software development."
Industrial development, according to Mr McGowan, is a constantly evolving area and the kinds of things you did five years ago are now radically different. "The IDA," he says, "was not in services at all until the mid1980s yet now the services sector accounts for nearly half our business.
"There are some main segments to our marketing. One is certainly to target the new, relatively small, fast-growing, technology-led company which is looking for its first step overseas. We have a very good share of that market from the US. In fact, to be honest, we don't like to lose any of those - certainly not without a chance to make our pitch.
"There are two other somewhat more complex areas. One is relatively new to our thinking process, and that is the mature, bigger company that's been in Europe possibly for decades but has not been in Ireland - like Hewlett Packard or IBM, say. Three years ago we put resources into Europe for the first time, marketing solely to American and Japanese companies through their European operations. This was also in recognition of the fact that increasingly power is being devolved by these multinationals to the European level.
"The other main marketing approach is getting different divisions of companies that are already here to look at Ireland - not just straightforward expansion, but like Johnson & Johnson or American Home Products where we have multiple divisions with operations here."
Companies that were already in Europe, according to Mr McGowan, might have seemed unapproachable a few years ago, but now these multinationals are re-appraising their operations, in Europe and worldwide, seeing how they can become more efficient.
"So," he says, "we are actively seeking an in all the time, and it has worked. But this constant re-evaluation can also work the other way - most dramatically with Seagate and others like Semperit and Packard Electric. These are examples of companies - and even whole industries - in a process of re-evaluation where Ireland lost out. It's unfortunate, but inevitable from time to time. That process of re-evaluation is now constant. It is quite simply the way businesses are managed, time cycles are shorter and we have to adapt and compete in today's realities."
The IDA's priorities for itself?
"A great part of the challenge for us," says Mr McGowan, "is trying to ensure that the quality of the package we have to offer remains competitive. So I'm spending a lot more of my time on issues like tax, the EU threats over our state aids regime, the availability of people and so on. More of the IDA's role will consist in the future, I think, of putting resources towards the development of our products. Our clients need to see the IDA active in looking after their interests in all sorts of areas, making things happen within the government system on their behalf. "It is important because we use our existing clients so hugely for reference and for planning. For example, we are averaging over 400 site visits a year, about eight every week. These are small groups of senior executives coming to look the place over, and every group visits at least one of our client companies in a similar business. So our existing client base is vital, both in its own right and in attracting other companies to come here. It's my own biggest single emphasis - all our clients are reference sites and we have an absolute priority in minding them. When we do the return is a hundredfold but we would neglect them at our peril."
One of the things that is commented on quite a lot by the companies already here, according to Mr McGowan, is that we are quite `nimble'. "We all know how small the country is," he says, "the lines of communications are quite short, everybody knows everybody. You can get from, let's say, your man in the IDA or project executive to the Taoiseach's office with no problem at all. In fact, our political system works very well in this whole context of inward investment. There's a very real sense of the whole team pulling together to win, and it really does impress the people we are trying to do business with.
"Just a couple of weeks ago senior managers of IBM said publicly that, in the history of IBM, there had never been such a fast start-up - 90 days from green field to operation - as the new European marketing call centre. Now that's a big tribute from such a company, and a big tribute also to Fingal County Council and the construction industry."
