Ireland - The Next Generation
Chief Executive: Sean Dorgan
Chairman: John Dunne
In IDA we have the privilege of being close to and understanding the mind sets of leading global companies. Their view of Ireland, and how we have achieved our recent success, makes us optimistic and confident about the future. But we have to continue to work hard for that future.
In our Annual Reports and other commentaries over recent years, we have outlined the many individual issues impacting on the continued growth of inward direct investment in Ireland.
We have focused on issues such as education, infrastructure, business services, access, regional development and many others, including the role of IDA itself. Each of these issues is critical to Ireland remaining competitive, not just for inward investment but for the prosperity and sustained development of the economy as a whole. This has been echoed many times over and reinforced during the year by many other organizations.
Continued development requires a co-ordinated and driven approach across all aspects of the economy. Addressing individual issues randomly and without the total perspective will not achieve the end goal of improving Ireland's overall wealth. The fundamental need is to deliver improved competitiveness and growth in productivity, so as to continue the unprecedented performance of the past decade in growing Ireland's overall wealth, thereby improving the nation's living standards
Ireland has come a long way in the past decade. This success can be sustained and continued. But the issues clearly impacting on growth need addressing in an integrated and cohesive programme nationally.
IDA therefore has welcomed the National Spatial Strategy as a 20 year development framework and believes it is also critical that the National Development Plan 2000-2006 be continued to its full implementation and completion in every possible aspect. The consultation and research work involved in the preparation of both of these has been comprehensive and expert. They provide the solutions for most of the key issues impacting on the economy's long-term development. Every possible step to deliver these programmes to schedule, and to completion, will give the nation the expected payback many times over.
Competitiveness in its broadest sense is critical to our future development. In the past competitiveness meant low costs (in wages, services etc) but it means much more than that today. Ireland is moving up the value chain and the foundation for our future success will be based on innovation, education, skills and research. Each location in Ireland also needs to be competitive in what it can offer, so as to have the opportunity to win inward investment against other similar locations in Ireland, across Europe or globally. As we seek to attract the higher levels of knowledge based investment and higher added value we must be seen as premiership players in the big league.
The future will, without doubt, be based on knowledge and innovation - based on the skills, expertise and creativity of the workforce. We see the success of the Irish economy to be not about "making more things" as it has been in the past, but about making things better and making better things, preferably emerging out of the knowledge and creativity of the new Irish mind.
To achieve this improved level of productivity and innovation we have adopted a series of interlinked programmes of work in IDA. They are based on the four primary requirements to deliver that next step in growth in the inward investment arena:
- Renewal of existing overseas industries, so that we hold the businesses that are here, and they deliver the best results for their corporates while embedding themselves further in the Irish economy. Our Strategic Competitiveness Programme is the main instrument in this strategy.
- Replacement of the inevitable losses is the tough challenge, as many regional locations can suffer badly from the loss of one industry. In many cases substantial work is required to enhance that location to make it more attractive and competitive and we work very closely with local authorities and third level colleges to deliver the best solution. In many cases this also requires a response from national infrastructure providers and this can be a slower programme of delivery. But, as we illustrate later in this Report, we frequently deliver strong results on replacement industry and the new investments invariably have greater sustainability.
- Greenfield inward investment continues to be a critical aspect of our activity and with the sharply focussed and targeted approach to this we are delivering important results both in the scale and strategic importance of some of the new investments won.
- Seeking out niches of business in which Ireland can carve out world market leadership is a medium term objective that needs to be vigorously pursued so as to continue the growth and development of the economy. Leadership and partnership are the hallmarks of this strategy and IDA has formed many new networks and relationships to work towards developments in new areas. In this respect the single most important contributor to this growth will be the level of workd class innovation arising out of the strengthening links between business and third level education and other research centres in the country. Science Foundation Ireland also has a key role to play in this development
Ireland has embarked on its journey into the 21st century from a very solid foundation built up over the past decade. Our vision is to simply the best in designated aspects of international business. To achieve this we must invest in and support our greatest assest - our people and their innovation and knowledge.
RESULTS 2002
During 2002 many international companies decided that Ireland was the place to be for new strategic investments, both greenfield and expansions, that will play an integral role in the success of their global businesses. The number of new investments secured was up by two thirds on 2001, with 55 new projects in manufacturing and international services being negotiated by IDA compared with 33 in 2001. These projects are committed to creating 8,700 new jobs as they come on stream over the next few years.
More high value activities are also being added to the Irish operations of overseas companies, particularly in research and development, where we negotiated support for investments by 31 companies totalling nearly m120 million in R&D activities in their Irish operation, supporting this with nearly m30 million in grants. This is a very strong commitment by these companies and will raise the calibre of their Irish operations significantly.
Overall, IDA supported companies created 11,740 new jobs during 2002 with some slow down in job losses, at 14,700 jobs lost compared with 17,800 in the previous year. This resulted in total employment in the 1,094 IDA supported companies falling by 2.3% during the year and 133,246 people now directly employed. Productivity is continuing to rise significantly as IDA supported companies increase their sales and exports by around 10%. Their value in the economy has increased to nearly m16 billion per annum through their local expenditures. Sales from IDA supported companies now total over m65 billion, with exports valued at m60 billion. These results were compiled by Forfás from the latest figures available - year ending 2001.
PHARMACEUTICALS AND HEALTHCARE
2002 was strong for the pharmaceuticals and healthcare sectors. The confidence of global companies in Ireland's ability to continue to support high value activities can be seen from the range of new investments made in 2002 by companies such as Medtronic and Abbott Laboratories in Galway, Amersham Health in Cork, Takeda in Clondalkin and Servier in Arklow. The substantial progress made by Wyeth Medica at its major new biopharma facility in Dublin and the opening of the Genzyme biotechnology facility in Waterford focused increased attention on Ireland as a leading base for biotechnology-based pharmaceuticals investments.
ICT
While the information and communications (ICT) sector suffered an overall decline in employment of 5.2% during 2002, Ireland continued to attract some key investments in the high value, technologically advanced areas. These included examples such as the establishment by Motorola Semiconductor Design Centre in Cork of a dedicated research team which confirms the Cork Centre as the key centre-of-excellence in R&D for Motorola's complete mobile radio subsystem and Symantec Corporation in Dublin, a world leader in Internet security, who established the company's only anti-virus response Centre for Europe and expanded its existing customer and technical support centre.
The re-commencement of the Intel Fab 24 investment during the year was a particularly important signal to the world of our competitiveness for such strategic projects. Overall the ICT sector created nearly 4,000 new jobs and it was interesting to note that the top 10 ICT companies in Ireland continued to hold their overall employment levels steady during the year.
INTERNATIONAL SERVICES
Some of the internationally traded services sectors performed well, particularly financial services, and in the sector as a whole over 5,600 new jobs were created. In shared services our ability to attract high value activities that are knowledge based and skills-led was again proven by the number of new investments made during the year. The diversification of activities involved in the sector were seen in the investments made during the year by companies such as MBNA in Carrick-on-Shannon, AOL in Waterford, Churchill Insurance in Galway and GMAC in Mullingar and their geographical spread into the regions highlighted the sector's importance in contributing to the regional development objective.
INNOVATION AND EXCELLENCE
A key element of IDA work now is to ensure that Ireland also attracts the levels of innovation and world-class excellence in its business infrastructures that is required in a modern developed economy. Some quality investments were made in 2002 by companies such as Bausch and Lomb in Waterford in developing back of the eye treatments and Dow Corning in Cork establishing a new plasma R&D centre. (See page 22 for more detailed story on this.) A critical feature of this type of high level activity is the development of strong partnerships and collaboration between industry and universities, undertaking together substantial R&D, be it in product, process, technology or the management of innovation. IDA is working closely with Science Foundation Ireland (SFI) and expects to see significant growth in industry/university collaboration in the years ahead.
Extensive IDA time and resources have also been allocated to seeking out new niches of business in which Ireland can be a leader. For example, in the digital media sector e.learning, games and content management can be developed to significant world-class levels, given the right support, and IDA and Enterprise Ireland are working to a common strategy in these fields to facilitate such development. Other areas of potential include communications management software (which we discuss in more detail on page 24) and the opportunities emerging from the convergence of the biotechnology, pharmaceuticals and healthcare sectors.
REGIONAL DEVELOPMENT
Our commitment to regional development is stronger than ever and now with the National Spatial Strategy in place IDA is determined to see the emergence of strong magnets of attraction in each region. For their successful development each region needs to have clear, competitive reasons why companies would wish to locate there, rather than elsewhere. Much of the work needed to achieve such competitive advantage is outside of the scope of IDA but through working in strong partnership with other organisations at national and local level IDA can support and influence the delivery of some of the required solutions.
PROPERTY SOLUTIONS
In 2002 IDA continued to contribute significantly to balanced regional development through the provision of new Business and Technology Parks designed and built to international standards. Work continued during the year to deliver high quality Business Parks in Athlone, Ballina, Carlow, Castlebar, Drogheda, Fermoy, Letterkenny, Portlaoise, Sligo, Tuam, Tullamore, Westport and Wexford. IDA's budget on such activity totalled m38 million in 2002, with a further m35 million available in 2003. The provision of the new buildings on these Parks involves additional significant expenditure by private developers who are providing great leadership to bring economic development to these regions in partnership with IDA.
Throughout the year major progress was also made on the IDA childcare initiative to enable the development of high quality childcare facilities on IDA Business Parks across the country. It is expected that the first of these will be operational in Galway and Athlone by September 2003.
OPPORTUNITIES IN 2003
While we are disappointed that global conditions continue to have a negative impact on the flow of investment internationally and that the IT sector continues in the doldrums globally, Ireland is still proving attractive for high quality investments. We are winning more than one new investment project, on average, per week and also signing up some important research led projects.
The healthcare and pharmaceuticals sectors continue to be the strongest, with key investments announced by companies such as Abbott, Altana, Recordati, Taro Pharmaceuticals and Inamed. Most significantly in the Internet arena the first half of the year saw the arrival to Ireland of the two leading names - Google and Overture. In the software sector leading companies such as Microsoft announced further expansion of its customer relations activity into Dublin, SAP expanded into Galway with the establishment of a new European Support Centre and Schlumberger established its global technology shared service centre in Cork. In other services Pfizer expanded its financial services activity in Dublin while Ingersoll Rand opened its global export sales and service trading company in Swords.
Foreign Direct Investment (FDI) continues to change rapidly, with some important new sectors emerging, which could have enormous potential for Ireland. It is essential that we all commit to the implementation of new policies and investments in areas such as education, support services, infrastructure and property solutions to enable Ireland to be a driving force in the development of these new sectors. The effort and co-operation required by all will reap significant benefits for the future development of the FDI sector in this country.
The Wyeth Biopharma Campus
Wyeth is expanding its operations in Ireland through the investment of over $1billion in a new biopharmaceutical campus in Ireland located on a 90-acre site at the Grange Castle International Business Park in South County Dublin. The new development will be the largest single-site biopharmaceutical campus in the world and will involve the creation of 1,300 new jobs at full production – bringing total Wyeth employment in Ireland to over 3,000.
The new Campus will manufacture a range of healthcare products for the prevention or treatment of serious illnesses including rheumatoid arthritis and pneumococcal disease in young children.
The planning application was submitted to South Dublin County Council on 4 July 2000 and final planning approval was received on 15 September 2000. Site development work commenced on 2 October 2000 and the first steel was erected on 19 February 2001.
Within two years over 90% of the total construction has been completed and all major utilities are now operational on site. Wyeth has been delighted with the construction progress over the last two years. The project has met all major construction deadlines and has had an excellent safety record with over three million hours completed without a lost time accident.
Already 450 full time staff are employed on site at Grange Castle and it is envisaged that a further 420 staff will be recruited during 2003.
Dr. Reg Shaw, Managing Director of the Wyeth BioPharma Campus, is delighted with the excellent progress on both construction and recruitment. "The support of government agencies, local authorities and the local community in Clondalkin has been instrumental in helping us meet all our deadlines to date. We have built a world class Campus and we are now attracting world-class candidates to work here.
INTEL IRELAND - 2002 IN REVIEW
The highlight for Intel Ireland during 2002 was the announcement in April that construction would restart on Fab 24. The restart of construction on the m2 billion facility was a strong endorsement by the Corporation of Intel Ireland's key role in its future technology and manufacturing plans. Substantial progress on construction had been made by the end of the year.
Intel Ireland is very excited about the new 300mm 90-nanometre technology, which will manufacture Intel's most advanced microprocessors when it comes into production in 2004. Intel Ireland's employees consistently prove their ability to master the engineering, scientific and manufacturing disciplines involved in the world's most advanced technologies. Their commitment and achievements are the vital ingredients in winning continued investment in the site.
The existing Ireland Fab Operations has been busy making microprocessors and chipsets to support the Intel PentiumŪ 4 processor and that organization continues to look at other advanced semiconductor technologies that can be adopted in the facility.
Intel's cumulative investment in Ireland is e4 billion and total direct employment by Intel currently is around 3,200. In addition, some 1,000 people work on site in companies that have contracts with Intel to supply support or services. There are a further 92 people employed at Intel Communications Europe located in Shannon, Co. Clare which is the Ireland product development arm of Intel's Communications Product Group and is dedicated to the design and development of advanced broadband technologies for network access devices.
| Total new IDA supported jobs filled | 11,743 |
| - of which first time jobs | 8,771 |
| Total full time IDA supported employment | 133,246 |
| Change in full time employment in IDA | -3,202 |
| supported companies | (-2.3%) |
| Number of IDA supported companies | 1,094 |
| Projects fully agreed for IDA support | 55 |
| - of which Greenfield | 31 |
| - of which Expansion | 24 |
| Corporation Tax paid (estimated) by IDA | |
| supported companies | c. m2.2 billion |
| Total IDA grants paid | c. m116 million |