Chairman & Chief Executive Overview
"The primary task of the IDA is to create jobs"
The IDA Regional Industrial Plans 1973-77
"The new industries and expansions - large and small -
approved by IDA are the source of tomorrow's jobs"
IDA Annual Report 1974
"As the wealth produced by industry grows, so the number
of jobs supported by industry outside the manufacturing sector also increases"
IDA Annual Report 1984
"We are fortunate to have in Ireland so many world-class
companies many of them with the potential for significant expansion beyond
their original investments"
IDA Annual Report 1994
"The new strategy proposed is predicated on Ireland
becoming the foremost knowledge-based society in Europe, at the leading edge of
research and innovation, with world-class infrastructure"
IDA Annual Report 2000
Sean Dorgan,Chief Executive
John Dunne, Chairman
From Jobs to Knowledge
Over the past 35 years, IDA Ireland has played a central role in the development of the Irish economy. For most of that time our primary mission was to create jobs to address the substantial employment needs arising from our population growth. This mission has been largely fulfilled. The workforce continues to increase - to close to 2 million people now - but unemployment has stabilised below 5% and the economy has continued to grow substantially above the European average. Now our mission is to win the best in innovation and investment.
In 2000, IDA Ireland recognised that the dynamics of Ireland as a location for foreign direct investment were destined to change substantially. Two factors were critical in this regard:
- Continued liberalisation of the world economy and globalisation of business were changing the nature of competition and choice of locations for FDI.
- Ireland's own success would lead to further changes in business conditions, which would require step changes in our attractiveness for more advanced developments.
As a result, the types of investment for which Ireland could compete would substantially change and many earlier investments, which came to Ireland in different times, would be subject to considerable threat.
In this context, IDA Ireland set a new course aimed at contributing to the continued transformation of Ireland to a world-leading, knowledge-based economy at the forefront of technology and business innovation. We formulated a strategy comprising three key elements:
- A focus on winning new investments where the activities were at the quality end of the business value chain.
- The growth and development of our existing clients through the addition of new functions and activities in Ireland, which raised the value-add of the Irish operation and increased its strategic relevance to the parent.
- Actively working to develop the business environment and infrastructure, both educational and physical, throughout Ireland needed to support knowledge intensive businesses. Regional development is a special priority in this regard.
This strategy has borne substantial fruit, despite new competition from many countries and economic turbulence over the period. Ireland is now recognised as one of the best locations in the world for foreign investment. Following the 2001 slump, this has resulted in the numbers and value of investment projects into Ireland increasing in each of recent years to a total of seventy new investment projects in 2004 alone, involving investment in excess of €5bn.
Ireland's Value Proposition
The change in the nature and quality of investments choosing Ireland in this period has been of greater significance than their quantity or job creation alone. Large numbers of projects with leading-edge business functions, which are technologically advanced, and increasingly reliant on an educated and professional skilled workforce, have located throughout Ireland. These investments are inherently dynamic, market and innovation-driven and cross all areas of the business value chain.
As a result, Ireland as a location for foreign direct investment has transformed itself away from the low cost, low value and basic assembly and service operations, which had been the hallmark of strategy when investments were sought from the 1960s, onwards. The business value proposition Ireland offers today to the increasingly mobile multinational customer is best described under the following three headings:
World Class Innovation and Development
Aided by considerable government investment and a business orientated environment, Ireland is a location determined on establishing a unique capability in research, innovation and its commercialisation. Multinational companies in Ireland are already at the forefront of this development. Substantive in-house research, product and process development operations are generating new products and services, which are being commercialised into markets throughout the world. Companies are partnering with the fast growing, world-class, Irish academic community who are stimulating scientific discovery and generating new knowledge, leading-edge technologies and competitive enterprises.
Superior Performance and Efficiency
Manufacturing remains the backbone of the Irish economy and continues to account for over half of our foreign direct investment. Manufacturing operations in the Pharmaceutical, Medical Technologies, Engineering and the ICT sectors operate very competitively from Ireland, generating substantial profits for their stakeholders. These operations are characterised by being advanced technology manufacturing, operating to the highest standards of performance and efficiency. This standard of excellence and its consequential competitiveness has derived primarily from the capability of the internationally renowned, high skilled, flexible Irish workforce led by top class management and engineers.
Cutting-Edge Business Integration and Support
Increasingly, Ireland is the corporate location of choice for strategic business integration and support activities. Headquarters, supply chain management, sales and marketing, logistical and technical support, finance management are some of the functions being carried out by companies in Ireland to support customers particularly in Europe, Middle East and Africa (EMEA). Common to all of these investments is the requirement for high-level skills and expertise, usually to third or fourth level qualification standard. This is combined with a professional, flexible operating and fiscal environment, international business management capability and a widely recognised high quality of life. This creates a location where innovative business models are developed and implemented by global business leaders.
A Watershed Year
2004 was a watershed year for the quality and nature of the investment decisions won. It saw the fruit of a strategic effort by IDA and many partners since 2001, which has transformed Ireland's value proposition as a competitive location for the future.
In 2004, there was a 10% increase in the number of investment decisions made. There has been buoyancy across all of our business sectors and a noticeable recovery in the ICT sector. Investment in research and development by overseas businesses continued to increase and Ireland was again chosen by many as a location from which to support business activities throughout Europe.
Highlights of the year included Intel's announcement of its new Fab 24-2 investment, Guidant's 1,000 person expansion in Clonmel, breakthrough R&D investments from Bell Labs, IBM and HP, biopharmaceutical investments from Centocor and Pfizer, major European business services centres from Merrill Lynch, Kelloggs, Business Objects and McAfee and upgrading and expansion in Dell's Irish services operations.
- 70 new business projects were negotiated with new and existing clients, which involve a total investment over the coming years of over €5 billion. Close to 9,000 new jobs will be created by these investments, but it is the quality rather than the number of these jobs that matters. Reflecting this, over 48% of the new jobs in IDA supported projects will pay salaries in excess of €37,000.
- Investment in research and development continued to increase and some 36 new R&D investment projects were supported by IDA, involving a total investment by business in excess of €140m.
- IDA supported companies now spend €15.5 billion in the Irish economy from their annual sales of €72 billion and exports of €68 billion and paid over €2.7 billion in corporation tax in 2004.
- Total employment in IDA supported companies has increased slightly overall to 128,946 reversing the trend of the past couple of years. The number of new jobs created during the year was 10,825; there were 10,628 job losses, which is 20% less than the previous year.
- The spread of investment geographically throughout Ireland was very noticeable in 2004. 35 investments located into regions throughout the country, outside of Dublin. Achieving a regional balance in investments remains a challenge but it is a core part of IDA's strategy and one that we are totally committed to meeting with our national and regional partners.
- The world-class Business and Technology Parks being developed in key towns throughout the country underpin IDA's regional strategy. In 2004, a further €50 million was spent on our property developments (almost all outside Dublin) to provide the basis for future growth in regions.
New Measures of Success
Reflecting the nature of this success, the changing needs of our economy and the transformation in our business, IDA Ireland is reporting a number of new performance indicators or measures of success this year, in addition to those reported in the past. These indicators, on page 7, are more qualitative than before, and less focused on the single dimension of job numbers. In our view, they are more attuned to the nature of an advanced economy, rather than a developing one, but one that is ambitious to advance further to meet national aspirations and needs.
New measures in this year's report which illustrate some of these contributions include:
- Capital investment in approved projects
- Average salary in new investments
- IDA supported or initiated Industry/Academic R&D collaborations
- IDA client companies with significant R&D or EMEA mandates
In addition, on a broader level, international indicators of Ireland's relative attractiveness for FDI are shown in our statistics section at page 14 of this report.
Looking to the future
To compete we must constantly innovate by adapting and changing the value proposition Ireland offers to international businesses. This means exploring new business areas and strategies, remaining dedicated to improving our physical and digital infrastructure, retaining our renowned speed, agility and flexibility, but most importantly investing in our people, through education and research. It is the quality of our people and their skills that will keep Ireland ahead of the curve.
Ireland now has to compete with the best, most advanced countries in the world for business. The investments of the future will be even more challenging and demanding than in the past. Maintaining a competitiveness based upon performance, efficiency, research, innovation and leading-edge business ideas is a great challenge but one that we take on with relish. We are confident that Ireland is meeting this challenge and providing the right competitive environment, but in an ever-changing world we need to continue to invest to remain ahead.
Consequently, while continuing to focus on the core activity of winning new innovation and investment, IDA Ireland will be strongly supporting Ireland's development efforts in a number of key areas:
Delivering the skills and workforce of the future.
Ireland has one of the most responsive education systems in the world in meeting the needs of business. In this context, we welcome the recommendations of the OECD review of Higher Education in Ireland, which we believe has set out a clear vision for future development of education and research in our higher education institutions. IDA Ireland looks forward to continuing to work with all the stakeholders in Irish education and research to assist in implementing the recommendations of the OECD review.
The past five years has seen major initiatives, under the National Development Plan, to stimulate and enhance the research capability. These included the recent establishment of Science Foundation Ireland with whom IDA Ireland has collaborated closely to develop the connectedness between academic and industry research.
Last year Building Ireland's Knowledge Economy - The Irish Action Plan for Promoting Investment in R&D to 2010 was developed and published by the Department of Enterprise, Trade and Employment. This plan sets out very ambitious targets for the development of research capability into the future. Since then IDA Ireland, has been working closely with Forfás, the Chief Scientific Advisor, Science Foundation Ireland, Enterprise Ireland and the Department of Enterprise, Trade and Employment on the strategies for the implementation of this plan. Because of its critical strategic importance to the development of an innovation economy driven by knowledge, implementing this plan will be a major focus of IDA Ireland in the coming years.
Infrastructure
The development of Ireland's infrastructure continues to be critical to Ireland's ability to remain an internationally competitive location for business. Having world-class access, telecommunications, business services, water and waste management, property solutions and lifestyle amenities is a constant and fundamental need for any successful economy. Ireland's commitment to infrastructure development is evident to any business that experiences the connectedness and competitiveness of our global telecommunications and the continuing improvement in our transport infrastructure.
However as our economy and population continues to grow rapidly there is a need to plan our future infrastructure development. In doing this we need to consider issues such as:
- The nature of the living environment we wish to create
- Whether our plans are appropriate to meet the projected growth.
In this regard, it is IDA's view that the preparation of a new National Development Plan to cover the period 2007 to 2011 should commence immediately.
Regional Development
We face a considerable national challenge, as we advance, to maintain a good balance in the development of our regions. The National Spatial Strategy is fundamental to the creation of attractive centres in each region for the winning of inward investment. We will continue to work closely with national and regional authorities and interests to achieve good regional growth.
In order to make the next 30 years as productive as the last, we will need to keep focused on the newest and best businesses and technologies and committed to bringing them to Ireland. By reinforcing and reinvesting in our educational system and our infrastructure, and remaining the most flexible and business friendly economy, we are currently meeting this challenge. But we must remain constantly vigilant to change and we must be ever ready to hone our competitive edge to ensure that we are the best location in the world in attracting inward investment and developing the companies already based in Ireland.
The Board wishes to acknowledge every member of IDA Ireland's staff for embracing and achieving the strategic goals set for the organisation and for their hard work and dedication. The ability of staff to rise to every new challenge created by the ever-changing global competition for investment is remarkable. Everyone involved in IDA Ireland can be proud of what they contribute. Their work gives us great confidence for the future.
IDA Ireland Indicators
| Indicator | 2004 Value |
|---|---|
| No. of Greenfield Projects | 37 |
| No. of Expansion Projects | 33 |
| Capital Investment in Approved Projects | €5.0 billion |
| Average Salary in New Investments | €40, 000 |
| Annual Corporate Tax Payments of IDA Client Companies | €2.7 billion (est) |
| No. of Approved R&D Capability and Research, Technology Development and Innovation Projects by IDA Client Companies | 36 |
| Employment Creation (New Jobs) | 10,825 |
| IDA supported / initiated Industry - Academia R&D Collaborations | 7 |
| No. of IDA Client Companies investing more than !250,000 per annum on R&D | 238 |
| No. of IDA Client Companies with significant corporate R&D mandate | 139 |
| No. of IDA Client Companies with mandate to supply product and services to Europe, Middle East and Africa (EMEA) markets | 144 |