Achieving Progress

There are many elements to the work of IDA Ireland and in the following pages we highlight a number of areas of activity and illustrate some of the success stories for 2002.

Delivering to The Regions

We also need to redress regional imbalances and IDA has prioritised this in our strategy and structure.

The announcement by MBNA in July 2002 of the expansion of its Carrick-on-Shannon operations centre is a prime example of the type of investment which will help to deliver significant development and growth throughout the North-West region.

The company originally established its operations in Carrick-on-Shannon in 2001 and decided to expand there because of their success in recruiting a quality and educated workforce in the North-West region and also because of the positive feedback and co-operation which the local community gave to the company - "people who like people" as MBNA would say.

MBNA commenced operations at their high profile, purpose built 65,000 sq ft facility by mid-2001 and by year end had 330 employees, including 70 staff re-locating from their Dublin office. The company filled their vacancies through unsolicited applications and a local advertising campaign. In July 2002 MBNA announced the creation of an additional 500 jobs over five years in a further m32 million investment in extended buildings, telecommunications and information technology infrastructure.

At this point in time MBNA's expansion is progressing rapidly, with over 750 people employed in Carrick-on-Shannon, mainly servicing the UK market but also with some support for the US and Ireland customers. Activities include inbound and outbound telemarketing, marketing, customer service, credit decisioning and administration. While over 70% of the workforce is from Leitrim and Roscommon, the company has workers travelling from within a forty mile radius each day.

MBNA adds a significant flagship service enterprise to the regional economy, which has traditionally relied on manufacturing enterprises, thereby providing a better mix of employment opportunities. This reverses the traditional balance of migration by providing quality career opportunities for the region's young people. This expansion also cements the company's commitment and roots in the region, which is a priority Objective One area. There are many elements to the work of IDA Ireland and in the following pages we highlight a number of areas of activity and illustrate some of the success stories for 2002.

Quality and Skills the Priority

The prime requirement is for high value added investments based on high skills levels, and the new Genzyme Corporation facility in Waterford, which opened in 2002, is one example of such investment in the biopharmaceuticals sector.

Since the Genzyme Corporation investment was announced in May 2001 not a moment was lost in moving the project forward and the company opened its facility in 2002 on schedule. Genzyme chose to locate the project in the former Luxottica (Rayban) sunglasses factory in Waterford. The existing building gave the opportunity of an early start up in production and the adjoining IDA land allowed room for future expansion.

Today the existing building is fully fitted out as a solid dosage tabletting facility. An Irish Medicines Board manufacturing license has been obtained and production commenced. The plant is manufacturing Renagel, a new and very successful product used as a phosphate binder with dialysis patients to improve their quality of life. Unlike other dialysis treatments Renagel achieves the phosphate binding effect without increasing the level of calcium in the blood stream. The plant is now going for FDA approval in order to supply Renagel to the US market.

A 3,000 sq. ft. development facility has also been built and this will undertake new product development work on later generation Renagel products and other gel based pharmaceutical products. Genzyme has a number of biopharmaceutical products for the treatment of rare genetic diseases including Gaucher, Pompe and Fabry. A further product in development, codenamed CAT-192, is in Phase II clinical trial. This is a monoclonal antibody product for the treatment of Schleroderma, a life threatening auto-immune disorder that affects hundreds of thousands of individuals and for which there is currently no effective treatment.

As the start-up was progressing planning permission was also obtained for a biopharmaceutical sterile fill/finish facility to be located on the adjoining site, which had been bought from IDA. Construction of this facility is now well advanced and will be completed in December 2003. Due to the complex nature of these biological products a lot of work has to be done before production can commence. Validation of the facility will take a year and regulatory approval will take a further six months with final production planned to start in the third quarter of 2005.

The start up of the tabletting facility and construction of the fill/finish facility is progressing on target. Senior management were in place by the end of 2001 and active recruitment at all grades is currently underway. Employment in Genzyme Ireland is now 100 and this is projected to grow to 250 by the end of 2004.

Genzyme as a leading biopharmaceuticals company presents new and challenging career opportunities for life science graduates in Waterford. The company has experienced a positive response to its recruitment drives to date. Genzyme Ireland has integrated very well into the community in Waterford. Many services are sourced locally. Its new graduate employees are coming from the local Waterford Institute of Technology (WIT) as well as Universities and Institutes of Technology throughout the country. Discussions have commenced with WIT in terms of tailoring courses to suit the needs of Genzyme Ireland.

Due to Genzyme's arrival in the city Waterford Regional Hospital is the first hospital in Ireland where 100% of dialysis patients are on Renagel treatment.

Genzyme Corporation of Cambridge Massachusetts is the fourth largest independent pharmaceutical biotechnology company in the world. Founded in 1981 by Dr. Henry Termeer, Genzyme employs 5,500 people in 60 manufacturing and trading operations throughout the world. Genzyme Corporation has three divisions, each of which has its own common stock quoted on the Nasdaq stock exchange. These divisions are Genzyme Biosurgery, Genzyme Molecular Oncology and Genzyme General. Genzyme Ireland is a subsidiary of Genzyme General the largest and more commercial division with sales in 2002 of $1,080 million and profits of $178.5 million.

The Process of Renewal

Another requirement in IDA's work is for investments that meet replacement needs, as existing operations reach the end of their life cycle.

In the area of foreign direct investment there is a constant flow of job losses and job renewals. This happens irrespective of global growth or recession. For example, in the late nineties when the economy was growing at an astonishing rate there was a constant stream of job losses, averaging around 6% per annum. In slower periods that percentage can be greater. This process is a natural part of the business lifecycle and also reflects the changing nature of the Irish and the world economy. In Ireland's case, where there is a low unemployment rate, it is also a necessary part of the development process as the older businesses or redundant products need to make room for the newer enterprises. The workforce continuously needs greater challenge and reward to sustain a higher living standard through higher value-added activity.

This cyclical pattern is occurring throughout the country and Galway is one example where there is a constant challenge to replace lost jobs with newer and usually more advanced employment. In 2001 and 2002 in Galway there were approximately 2,000 jobs lost out of a total of 17,000 employed in IDA assisted companies. Companies such as Crown Equipment, who manufacture machinery for mining, quarrying and construction, shed a number of jobs because firstly their products were reaching the end of their life cycle and secondly the labour intensive environment around which the business was structured was not sustainable in the long term. Nortel is another example of a company that experienced job losses in recent times. The Galway plant produces telecommunications equipment but as part of securing a more sustainable future the company is in the process of switching focus from manufacturing to development. This is bringing the company up through the value chain and making the Galway operations more sustainable.

But Galway remains a very attractive location for foreign investors and is winning some high quality investments to replace the jobs being lost. In 2002, for example:

• Churchill Insurance, established a customer interaction centre creating 600 jobs
• MICROS systems established a shared services centre creating 180 jobs
• NetIQ set up an operations centre creating 180 jobs
• Abbott Vascular Devices began operations to produce medical devices that will create over 600 jobs
• American Power Conversion Corporation also established their European R&D Centre in Ireland at its European headquarters in Galway, moving their focus through the value chain.

Medtronic is another example of a company bringing substantial new employment to Galway during 2002. Medtronic is in the process of establishing a new stand-alone R&D and manufacturing centre-of-excellence for its Cardiac Rhythm Management Division. The plant will take projects from initial concept to production. The investment is expected to create 400 new jobs over the next five years and is one of the most important medical devices investments in Ireland, increasing the Galway plant's value and role in the company's global business. The jobs require a mix of skills across a range of technology and science areas. Over recent years, Medtronic has utilised the excellent third level infrastructure in Galway and has developed close working relationships with universities and technical institutes in the areas of education and technical support.

There are many reasons for Galway's attractiveness to potential investors. Firstly there is an established critical mass of high quality investments. The presence of such companies generates what can be termed the "flagship" effect and raises the profile and the credibility of the location. This has led to a wide-ranging community of investors locating in Galway particularly spurred by the excellent third level infrastructure; including the National University of Ireland Galway and the Galway Mayo Institute of Technology.

Growing Clusters in Ireland

Developing clusters of excellence where companies, business service providers and those in education and research, network together to create a climate of innovation and entrepreneurship is a key area of IDA activity. One sector where significant progress was made on this clustering concept in 2002 is the healthcare sector.

The healthcare sector continues to develop and expand, and most importantly is deepening its roots in the economy, adding significant front-end activity including important R&D functions in Ireland. One prime example of such growth in 2002 was the decision by Abbott, one of the leading companies in the world in this sector, to establish a major new centre for the development and manufacture of a range of vascular medical devices, in Galway, employing 600 people.

A strong and sophisticated sub-supply and sub-contract manufacturing capability has emerged to support the sector's development. Overseas healthcare companies are attracted into Ireland assured by the presence of key suppliers who are capable of meeting their exacting requirements. Industry-specific services and capabilities across the value chain such as design, research and development, proof of concept, manufacturing excellence, packaging, printing, logistics, and sterilisation can all be sourced in Ireland on a one stop shop basis. An example of such a sub-supply company is Fort Wayne Metals, a leader in medical wire technology which, during 2002, established a greenfield manufacturing and research & development operation at Castlebar employing 80 people, adding to the range of such companies in Ireland. Also critical to the ongoing development of the sector and to the emergence of Ireland as a premier, world-class location for healthcare has been the responsiveness of Ireland's third level education and training institutions. The convergence of the academic capabilities of these colleges with the needs of Ireland's healthcare companies has helped to ensure the success of these companies in Ireland.

Educational institutions have forged the necessary links with the industry to design the courses relevant to the sector and also to provide the essential research support, particularly vital at the proof of concept stage. The National Centre for Biomedical Engineering Science, at the National University of Ireland, Galway, along with a number of other specialist centres - such as the National Polymer Centre in Athlone, the Toolmaking Centre in Sligo, and the National Microelectronics Research Centre in University College Cork - are helping to create the right regional support infrastructures required so that companies can initiate in Ireland the important research and development activity needed to sustain and grow their businesses.

We are confident that the sector continues to deepen its structure and depth in Ireland as is reflected by the growing levels of R&D activity in these companies. Over half of them now have some research or development activity. A notable example of this in 2002 was the establishment by Bausch and Lomb, in Waterford, of a development centre for its new implantable intravitreous drug delivery system, for the treatment of blinding back-of-the-eye diseases. This involves an investment of a further m6.3 million by the company and the creation of 30 new jobs for highly skilled people.

Healthcare companies in Ireland are also augmenting their manufacturing and R&D activities with centralised shared services, customer support and marketing activities. During 2002, for example, Advanced Medical Optics (AMO) established financial shared services centres in Westport and Dublin employing 60 people. GN Resound, a leader in digital hearing aid technology, added its global supply chain management group to its existing manufacturing facility in Cork, where it employs over 200 people.

Today up to 18,000 people are employed in the healthcare sector in Ireland, a growth of 10% in the past year and the sector compares favourably with the key medical device clusters worldwide such as in Minneapolis, California and Massachusetts. The sector is very diversified, with products ranging across large capital items such as laser, ventilator and diagnostic equipment through vascular, orthopaedic, ophthalmic, renal and diagnostic products, to electronic devices such as hearing aids.

R&D and Innovation Crucial to the Future

Creating new knowledge-based industries, especially promoting the R&D and innovation capacity in the economy, is a key element of IDA strategy.

The Dow Corning investment, announced in 2002 for Midleton in Cork, is an example of the high-value, research-led investment IDA seeks for the future. A research and development operation projected to employ 60 people, Dow Corning's focus is on using plasma technology to develop equipment and processes to apply coatings that modify surfaces.

Dow Corning is one of the world's leaders in conventional coating technology. In recent times, this technology has been evolving to encompass high tech surface depositions through chemical or physical vapour depositions (plasma). A feature of the technology is that the processes are undertaken in vacuum, or near vacuum conditions, and to date as such has been limited to batch processing. This is extremely costly and has not been applicable in a continuous process such as coating roll-to-roll materials like textiles, films, sheets, and fibres. The Irish project is aimed at developing continuous processes and equipment that will enable plasma-based coating of materials in a cost-effective manner.

The key technological challenge has been to combine the technologies of Atmospheric Pressure Glow Discharge Equipment (APGD) with Atmospheric Pressure Plasma Liquid Deposition (APPLD).

APGD had not been applied commercially, due to many engineering challenges that needed to be overcome to generate a homogeneous, large area glow discharge. An Irish start-up campus company, Plasma Ireland, developed patented prototype equipment capable of generating large area, cool, homogeneous atmospheric pressure glow discharge and demonstrated that plasma sources over two metres in width were achievable.

APPLD is a new and patented method of plasma coating owned by Dow Corning that was developed as part of a collaborative research project between Dow Corning and Prof. Jas Pal Badyal at the University of Durham, UK.

Dow Corning, as part of this project, acquired the proprietary engineering solution, which had been developed by Plasma Ireland and combined it with its own plasma coating technology. To date Dow Corning has spent almost m4 million on the Cork enterprise and the Irish based research team has successfully integrated the technologies and produced a working production scale prototype, which is currently being tested by a leading European company.

The successful development of this technology for a specific commercial application is a world first and opens up a range of other potential applications across many other sectors from electronics to textiles.

The quality of this project is evidenced not only by the technology challenges being addressed but also by the skills mix of the team involved. Over 90% of staff are third level graduates, 65% are technically qualified and almost 20% will be PhD's.

World Leading Activity

Identifying and building niches where Ireland can be a leader is an important element of IDA's strategy. The objective is to create a dynamic for innovation in niches that will, in time, make Ireland a world leading location.

IDEALLY, IRELAND SHOULD BE A KEY CENTRE IN THE CREATION OF NEW VALUE CHAINS.

One sector where Ireland has the potential to take a leading position is in specialised software used to bring together and manage telecommunications, internet and computer systems known as Communications Management Software (CMS). This software enables a wide range of products and services to be accessed on a variety of devices such as mobile phones, computers and personal digital assistants (PDA's). It also enables the technology, whether mobile or fixed, to track and provide the monitoring, billing, customer services and any other needs, irrespective of location. CMS will provide significant business opportunity into the future, as the sector is driven by service requirements and as technology in wireless, access devices, the Internet and IP services continue to develop.

There are 4,500 people engaged in developing CMS products in over 40 indigenous and overseas-owned companies in Ireland and in research in third level institutions working in areas including Operations Support Services, Business Support Services, Customer Relationship Management and Systems Integration. The cluster includes recognised global leaders such as Motorola, Nortel, Ericsson, Lucent, Vodafone, Sun, ADC Software and Irish companies such as Cape Technologies, Am Beo, Comnitel and Iona among others.

IDA is working in partnership with the leading enterprises in Ireland in this industry and with academia and other state agencies to maximise Ireland's potential in this sector. A CMS forum of multi-national and Irish companies has been formed, along with a CMS website, to pool ideas and methodologies. Research in CMS at third level is being funded by Science Foundation Ireland (SFI).

IDA through its on-going marketing and its recently launched Strategic Competitiveness Programme (SCP) is targeting new developments in this area.

An example of the growth in the CMS software cluster is Ericsson repositioning its operations in Ireland as a key design hub for radio network management and as a leading edge research group for next generation mobile solutions. Ericsson Ireland has established an applied research laboratory involved in the management and control of radio networks for next generation Internet-enabled applications, including peer-to-peer and ad-hoc networks. Ericsson is also currently consolidating all Group Operations Support Services (OSS) testing in Athlone.

ADC in Galway is another example of growth in this business. IDA has assisted ADC in Galway to undertake research into key component areas of telecommunications network management - billing and performance management. The research group is working on solutions across a range of products and services, including a performance-engineering centre, to support benchmarking on the next generation of products. ADC Galway is part of a global company that provides network equipment software and systems integrations services for high-speed Internet data, video and voice services.

In seeking to build strong clusters such as this, we are prioritising areas which have:

• Solid identifiable competence in Irish and foreign industry
• Recognised quality in our educational and research institutions
• Potential based on competencies, which may be transferrable and not readily substituted
• A pivotal position, with wider impact and commercial value to other sectors
• Sufficient scale to create economic impact
• Good fit with the National Development Plan

Other areas where we are currently working on niche opportunities include Life Sciences, Digital Media and Wireless areas.

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