IDA Ireland End of Year Statement 2008

06/01/2009
IDA
‘2008 saw a Strong Performance in Winning Foreign Direct Investment for Ireland - Continuing Opportunities in FDI despite Turbulent Times.’

Investment Highlights 2008

• A total of 130 Foreign Direct Investment Projects won
• New Investments Secured up 14% on 2007
• Number of new companies investing in Ireland for the first time up 16% on 2007
• Over 8,800 new jobs created
• A 22% increase in Research, Development and Innovation Projects
• Circa €2 billion in investments secured

Speaking at the launch of IDA’s End of Year Statement for 2008, IDA CEO Barry O’Leary said, ‘Ireland continued to attract significant high end Foreign Direct Investment (FDI) over the last twelve months despite the global economic crisis. 2008 saw a 14% increase in the number of investments from IDA supported FDI companies on the previous year. Despite the economic uncertainty which will have a negative impact on the Irish and global economies IDA remains guardedly optimistic of Ireland’s ability to continue attracting high level FDI in 2009 and beyond. ’

‘It is particularly encouraging to see that many of the world’s leading companies continue to invest in Ireland in areas such as High End Manufacturing, Global Services and Research, Development and Innovation (RD&I). Leading companies locating in Ireland for the first time include GOA (France Telecom) and Facebook in Dublin, Zimmer in Shannon, PPD in Athlone and Lancaster Laboratories in Dungarvan.’

‘Existing IDA clients undertaking significant expansions in their manufacturing operations included Cook Medical in Limerick, Coca Cola in Wexford, Genzyme and TEVA in Waterford, Cameron in Longford and Microsemi in Ennis. A strong growth in RD&I investments included ICT companies such as IBM, EMC, ON Semiconductor and Business Objects/SAP, Life Sciences companies Boston Scientific and DePuy (J&J), cosmetics company Oriflame and Financial Services companies Citi and AON.’

He continued by saying, ‘The global economic turmoil makes it difficult to predict the outcome for FDI in 2009. Global FDI will decline and almost all economic commentators are predicting an extremely difficult year in 2009. It is important to recognise that even in turbulent economic times there is still FDI to be won and our competitors will not be slow in targeting opportunities. A firm focus and a positive attitude in our ability to win FDI, by all stakeholders in Team Ireland, are key ingredients to a successful outcome’

Referring to the need for a transformation agenda in existing client companies he said, ‘For the continued success of existing operations in Ireland it is extremely important that companies have or put in place a transformation agenda to constantly move to higher value activities and increase their strategic importance within their parent company. The impact on employment as a result of a successful transformation ranges from positive to negative.’

He concluded, ‘Building on the successes achieved in 2008 IDA continues to see good opportunities for FDI over the next three to four months and a number of key project announcements will be made in this timeframe. We all recognise the difficult economic environment and the need to face local and global challenges. The ability to think beyond the present and reposition Ireland’s competitiveness including energy will ensure that Ireland will continue to win significant FDI from a large number of the world’s leading companies.’

IDA Focus

IDA’s main focus is on securing investment from new and existing clients in the areas of High End Manufacturing, Global Services (including Financial Services) and Research, Development and Innovation. Within these areas the key sectors IDA focuses on are Life Sciences (Pharmaceutical, Biopharmaceutical and Medical Technologies), Information Communications Technology (ICT), Engineering, Professional Services, Digital Media, Consumer Brands and International Services. New opportunities are emerging in areas such as Clean Technology, Convergence and Services Innovation.

2008 Performance

• High End Manufacturing

IDA continued to attract significant investment in High End Manufacturing in 2008. Coca Cola, the world’s largest beverage company announced plans to build a new €200 million facility on a 41 acre site in Co. Wexford with the creation of 100 new jobs. The construction phase of the Coca Cola project will also result in the creation of 500 jobs.

In the Life Sciences sector some very significant announcements were made. Cook Medical announced a €25 million expansion in their global manufacturing facility in Limerick resulting in 200 new jobs. Another key expansion was announced by Alcon with a €22 million manufacturing expansion at their Cork operation creating 186 employment opportunities while a €100 million manufacturing investment was announced for Vistakon, a member of the Johnson & Johnson Group, in Limerick. Zimmer announced a €50 million Greenfield manufacturing investment in Co. Clare with the creation of 250 high quality jobs.

Other exciting High End Manufacturing announcements in the Life Sciences Sector included the establishment of a Greenfield global manufacturing facility in Athlone with the creation of 250 jobs by ABIOMED, the €190 million Pfizer investment in a new biologics facility creating 100 jobs in Cork and GSK’s €30 million expansion of its pharmaceutical manufacturing facility in Dungarvan. Genzyme, one of the world’s foremost biotechnology companies announced a €130 million expansion at its Waterford facility creating 170 jobs and Teva plans to invest €65 million at its existing Waterford operation with the creation of 165 new jobs.

Major announcements in other sectors were made by existing IDA clients in 2008. Option Wireless announced the establishment of a manufacturing centre for Global Supply Chain and Fulfilment at its Cork facility with the creation of 145 jobs, Pauwells Trafo announced the creation of 70 new high quality jobs in a €12 million investment to expand its manufacturing facility in Cavan into higher value products and new markets and 315 new jobs were announced at Microsemi in Co. Clare in the areas of manufacturing, sales and technical support. Cameron, a leading provider of oil and gas pressure control equipment announced the expansion of its operation in Longford with the creation of 140 new highly skilled jobs and a €15 million investment.

• Global Services

2008 was also an excellent year for Global Services with IDA supported investment highlights including Facebook, the world’s leading online networking site which announced that Dublin has been chosen as the location for the company’s International Headquarters, CSN Stores, a global online retail company announced the establishment of its EMEA Headquarters in Galway with the creation of 200 new jobs and FreightQuote, a leading online freight services provider announced the establishment of its European Headquarters in Dublin with the establishment of 100 jobs. GOA, the online games division of France Telecom announced the establishment of a multilingual Customer and Operations Support Centre in Dublin with the creation of 400 jobs and Marriott opened its second international operation in Cork with plans to create 220 new jobs.

DTS, a global provider of high quality entertainment technology announced the establishment of its European Headquarters in Limerick with the creation of 50 new jobs while Netezza located its European Operations Centre in Dundalk creating 65 new jobs. SATIR, IDA’s first Chinese client company established its European Headquarters also in Dundalk.

Other significant investments included an expansion by Siemens at its Cork facility to create 60 new jobs and Solaris Mobile, a company providing satellite based services throughout Europe established its Corporate Headquarters in Dublin creating 50 new, highly skilled jobs.

PPD, one of the world’s leading pharmaceutical contract research organisations, announced 250 new jobs with the establishment of a contract research facility in Athlone and an investment of €14 million and Lancaster Laboratories expanded its Dungarvan pharmaceutical laboratory operation creating 100 new jobs.

In the Financial Services Sector, UNUM, the US insurance company announced the establishment of a Strategic Software Service Centre in Carlow which will result in the creation of 200 new highly skilled jobs while Aetna Inc. expanded its operation in Co. Kerry resulting in 70 new jobs.

• Research, Development & Innovation

The focus on RD&I investment continued to grow in 2008 with new investments planned reaching €420 million including a €50 million R&D investment at Boston Scientific in Galway. Oriflame Cosmetics announced a €2.4 million investment at its Co. Wicklow operation with the creation of 35 new jobs bringing total job numbers to 100 and DePuy part of the Johnson & Johnson family announced its decision to locate its new innovation centre in Cork with 20 new jobs.

Announcements in 2008 in ICT included a €29 million R&D investment in Dublin by Business Objects, a subsidiary of SAP and the largest business intelligence company in the world, with the creation of 100 jobs, an expansion by Synopsis, the world leader in providing software and intellectual property products, of its R&D operation in Dublin creating 50 new software and electrical engineering positions and global IT leader EMC announced a €20 million investment in R&D activities with the creation of 20 jobs.

IBM made three major announcements in 2008. The company is to establish an Exascale Stream Computing Research Collaboratory in Dublin creating 40 jobs, a new Green Data Centre and Global Supply Chain Hub includes an investment of €30 million and Europe’s first Cloud Computing Centre was established in Dublin creating 21 jobs. Meanwhile, ON Semiconductor established an R&D centre in Limerick creating 49 highly skilled positions.

In financial services RD&I is becoming a core activity in driving the strategic importance of the Irish operations within their corporations. An industry first occurred when AON, a provider of risk management services, insurance and reinsurance brokerage choose Dublin as its location for a Global Centre of Excellence with the creation of 100 jobs. Another highly significant RD&I announcement was by CITI, one of the largest financial services companies in the world who announced a €35 million investment in the setting up of its next generation ebanking platform in Dublin, creating 30 high calibre positions.

Almost one third of RD&I investments involved collaboration with Irish third level institutions and research institutes, many of which have been supported by Science Foundation Ireland. SFI support is building research capability and capacity and helps improve Ireland’s value proposition for attracting world leading research and development to Ireland.

Transformation Agenda and Impact on Employment

There is a constant need for FDI companies to transform their Irish operations into higher value activities and increase their strategic importance within their parent company. There are a large number of examples of companies that have successfully carried out major transformation of their Irish operations.

A recent NIB/IMI survey identified ‘the continued movement of multinational companies into higher value-added activities. In the last survey in 2005, only half of all companies rated their Irish operation as either strategically important or very important in terms of their global operation.’ The survey cited that this figure has now risen to ‘two out of every three companies.’

This constant feature of the IDA portfolio is why Ireland wins significant reinvestment from existing clients but the pace of this transformation needs to intensify.

The outcome of such transformations from an Irish perspective may impact on employment levels positively or negatively. IDA constantly works with local and corporate management in client companies to stimulate and facilitate the transformation agenda. It is vital that all of our base of FDI companies have in place such an agenda to ensure the continued economic benefits of FDI to the Irish economy are maintained even if such transformations at an individual company level involve some job losses.

Job losses may occur for a variety of reasons including business model changes, declining market share, rationalisation of global sites, lack of new products, consolidation due to excess capacity arising from mergers and acquisitions or cost pressures where Ireland/Europe may no longer be competitive for certain activities due to the increasing pace of globalisation and competition from low cost economies.

There are currently c.136,000 full-time employees in IDA supported companies. Job losses occur every year in every economy, even in strong economic times while new jobs are also created each year. In Ireland job losses in the IDA portfolio over the last ten years have ranged between 5.9% and 12.7% of the employee base. In 2008 there were 10,044 job losses accounting for 7.4% of the employee base. However, there were 8,837 new jobs created resulting in an overall decline of 1,207 jobs or 0.8% of the employee base.

IDA Initiatives to Drive Business Development

IDA continues to undertake a number of initiatives to grow the FDI presence in Ireland. These include:

• 10% shift in staff resources to Business Generation
• Expansion of resources in IDA’s main market; the US, including the opening of new offices in Irvine, Orange County, Boston and Atlanta
• Extra resources in London and Frankfurt
• Diversifying sources of FDI with new offices opened in Shanghai (2006) and Mumbai (2008) along with three further locations currently under consideration
• Focus on potential new areas for FDI including Clean Tech, Services Innovation and Convergence
• Enhanced partnerships with Industry Associations and Stakeholders and joint Global Marketing

Conclusion

2008 saw a strong FDI performance despite the stark deterioration in the global economic situation. Despite a gloomy outlook there are still FDI opportunities for Ireland. The current economic environment presents an opportunity to improve Ireland’s competitiveness including energy.

Recent Government initiatives in the Finance Bill to support Ireland’s attractiveness as a location for FDI are very welcome.

Ireland’s immediate FDI prospects are strong with visibility on a number of high value investments which can be won for Ireland in the coming months. The common goal of all stakeholders to overcome the challenges we will encounter, combined with ambition, a firm focus and a positive attitude in our ability to win FDI, will steer Ireland towards continued success in securing investments from many more companies at the forefront of global business.

Summary of IDA Activities 2008