More than a Phelan

Big badge investments in Ireland remain strong, but Louise Phelan tells Niamh Mac Sweeney we can’t afford to stand still while global competitors continue to gain advantage.

There are over 700 US companies operating in Ireland that contribute an impressive $204bn in FDI and €100bn in exports for the country.

Moreover, the IDA’s figures for job growth in 2013 speak volumes. More that 13,000 new jobs were created by IDA client companies in the past 12 months. This net increase of employment is the highest level of job creation in over a decade and sets the inward investment promotion agency firmly on track to exceed its targets, as set out by the Horizon 2020 strategy.

Big badge companies such as Twitter, eBay, Salesforce, Vistakon, Facebook, Symantec and De Puy have all announced recent investments, while companies such as Google, Linkedin, Intel and PayPal continue to contribute significantly to the FDI landscape in Ireland.

Identifying and targeting specific growth sectors and business models, increased competitiveness and an improved international reputation as a leader in all sectors, with particular focus on digital, ICT, international financial services, life sciences and business services, are all factors responsible for securing strong results thus far. But how can Ireland ensure that investment, competitiveness and expertise continue to translate into economic gains for the country?

Core competencies

Newly appointed president of the American Chamber of Commerce, Louise Phelan believes its time to capitalise on the gains already made and to continue to vigorously secure investment.

“The golden pyramid of tax, talent and competitiveness is critical to the enduring interest of multinationals in Ireland,” she says. “These elements are at the core of our success in attracting FDI and it is essential that they are maintained.”

Key factor, including Ireland’s open and transparent corporate tax regime provides certainty to investors. The competitive headline rate of 12.5% is also of paramount importance.

In terms of talent, Ireland’s has a world-class workforce that ranks third in the world by the IMD for the availability of skilled labour. “We are recognised for our flexibility and adaptability and it is crucial we deliver the skills and competencies that industry demands,” Phelan says.

But according to the president of the American Chamber of Commerce, while Ireland has experienced improvements in cost competitiveness since 2008, it continues to be a relatively expensive place to do business and she says this can diminish our ability to secure new investments.

“We must not become complacent with the progress that has been made and more must be done to keep costs in check. In particular, we need to look at ways of curbing energy costs and rental prices. My goal as president is to advance the Chamber’s mission to make Ireland the global location of choice for US investment.”

Phelan is also vice president of Global Operations for PayPal, EMEA and the firm’s experience, success and reputation in Ireland is being used as a blueprint for other companies globally. “My position in PayPal gives me an insight into the experiences of multinationals in Ireland; the value we have to offer investors, as well as the areas that can be improved.”

Multinational investment

FDI in Ireland from US multinationals is still strong with 72% of investment and job announcements coming from US companies. This stream of investment into Ireland continues to  grow and latest figures show US FDI outflows to Ireland reached $15.8bn in the first half of 2013.

Collectively, US companies have $204bn in FDI in Ireland, which represents 9% of all US investment in the EU and 4.5% worldwide.

There are a number of reasons why US companies choose to invest in Ireland and while tax, talent and competitiveness are at the core of Ireland’s attractiveness as a location for investment, these are not the only factors pertaining to firms setting up operations here.

Forbes ranking of Ireland as the best country in the world to do business is a testament to our ability to deliver results.”

“The existing base of US companies here, also provides a strong platform from which to win new investment; 60% of new investment is from existing Irish-based companies,” Phelan says. “Ireland has a proven track-record in terms of delivering results to investors. Strong local management, a skilled and flexible labour force and pro-business environment all attribute to the strength of FDI. Forbes ranking of Ireland as the best country in the world to do business is a testament to our ability to deliver results and reflects the reasons why we continue to attract FDI.”

Buoyant sectors

The strength of FDI in Ireland in 2013 was evident across all sectors, but was particularly strong in digital, ICT, international services, life sciences and business services. Pharma and medtech industries had a successful year in terms of securing new projects.

For example, DePuy plans to invest over $36m in R&D here, while Vistakon Ireland is investing €100m in the expansion of its manufacturing operations and Regeneron, a biopharmaceutical company, announced the creation of 300 high-skilled jobs by 2016.

ICT remains one of Ireland’s most prosperous sectors. Facebook expanded its Irish operations by adding 100 positions, and Hubspot and Squarespace both established their European headquarters in Dublin. While Digital Realty, a data centre operator, began work on the first of its eight new data centres, the expansion is part of a €120m investment by the firm in its Irish operations.

According to Phelan, despite these significant endorsements of Ireland as a location for FDI, we cannot afford complacency in terms of retaining investment and the challenge now is in attracting new companies.

“There is huge global demand for foreign direct investment with countries around the world adopting policies that improve competitiveness and entice new investment,” Phelan says.

“Critical to attracting new investment is ensuring we have a strong ‘business case’ for investors. Our successful exit from the bailout is a fantastic achievement and over the past three years Ireland has rebuilt its competitive advantage. With employment growing, now is the time to capitalise on those gains.”

Attraction and retention

First-time investments in Ireland were up 18% in 2013 compared to the previous year, with particular success in attracting emerging fast-growth companies. But in order to build on this momentum and to continue to attract new investment into Ireland, a number of issues must be addressed according to Phelan.

“In the future, investment will be focused on countries deemed ‘innovation rich’. In order to be considered as such, we must advance policies which will deliver an innovation-led economy.”

Best in class

One of the Ireland’s great successes over the decades has been the ability to attract new and cutting edge industries, such as the first wave of computer companies in the 1970s, internationally traded services in the 1980s, and latterly in the last 10 years, the online sector.

Phelan argues that central to this development will be a transformative education system which supports innovative and entrepreneurial thinking among our young people.

“Investing in education and training must be a priority to ensure that we can offer a workforce with the skills required. Ireland needs to develop and retain home-grown talent and also attract talent from abroad to fill any skills-gaps.”

Multinationals spent €20.8bn in the Irish economy in 2013, contributed €2.8bn to the Irish exchequer, were responsible for €177bn worth of exports and also benefited indigenous firms through their demand for goods and services.

These global organisations also support tens-of-thousands of jobs in support services, from legal and banking to catering and security.“For every 10 jobs created in a multinational company, approximately seven jobs were created elsewhere in the economy,” Phelan points out.

Critical to attracting new investment is ensuring we have a strong ‘business case’ for investors.”

There is also evidence of collaboration between multinationals and indigenous firms across all industry sectors, to mutual benefit.

Ireland is considered ‘best in class’ when it comes to FDI and certainly our tax regime, talent and competitiveness are important factors in attracting and retaining firms.

Transparency

The business community in Ireland has been collectively insistent that our 12.5% corporate tax rate is maintained. While international taxation has become an issue of debate on the world stage, the Irish Government has reaffirmed its commitment to retaining the rate.

“Ireland’s tax system attracts investment not only for the rate it offers, but as a result of the certainty and transparency it provides to investors, Phelan points out.

“Ensuring Ireland can provide companies with a talented workforce is also crucial. Investing in training and education must be a priority in seeking to sustain FDI, ensuring that we can offer companies employees who have the right skills to meet industry needs,” she adds.

If Ireland is to build on the progress of the last few years, remaining vigilant against cost increases and inflation will be crucial. Sustaining the positive momentum of recent times and maintaining Ireland’s reputation as an attractive location for investment will benefit indigenous enterprises and the wider economy as a whole.