Blog Article 03 Jan 2019
The mission of IDA Ireland has been constant, since its foundation by the government of the day in 1949—to promote the growth and development of industry in Ireland. In the early years of the Irish Republic, the economy was inward-looking, with high tariffs on imported goods, a strategic focus on indigenous industry and limited export trade.
 
A MISSION IN MIND
IDA Ireland was formed as part of the Department of Industry and Commerce, with a brief to “stimulate, support and develop export-led business and enterprise in Ireland”. Foreign investment, industrialisation and exports were key to re-energising the country’s fortunes. The distinct strategies employed in pursuit of this goal were often radical, and usually successful, bringing a host of international businesses to put down roots in Ireland. IDA Ireland quickly recommended to government that restrictions on foreign capital be eased, removing the protectionism enshrined in the Control of Manufactures Act of 1932, which sought to keep industries Irish controlled.
 
The protectionism of old was swept aside during the 1950s as government strategy shifted to maximise foreign investment, removing restrictions on foreign capital and introducing competitive corporation taxation for exporting companies. This combination of policies became, as Padraic White, managing director of IDA Ireland from 1981-1990, put it, their “most distinctive investment incentive, and over time its most powerful single weapon in the international industrial promotion battle”.
 
Foreign direct investment has been a keystone of Irish economic policy since IDA Ireland was founded in 1949.
 
The announcement in 1958 of the First Programme for Economic Expansion by Taoiseach Seán Lemass and TK Whitaker heralded a new era of cohesion and forward thinking economic strategy in which IDA Ireland flourished. During the 1960s, 450 foreign companies negotiated new projects or major expansions with IDA Ireland. By 1972, the figures spoke for themselves with 34,000 new jobs created.
 
DYNAMIC AND INDEPENDENT
IDA Ireland was outgrowing its government nest and The Industrial Development Act 1969 gave it full control over its own international operations, with the relatively youthful (42 at the time) Michael Killeen appointed director designate of the ‘new’ IDA Ireland. This ushered in a new and highly dynamic era for the organisation. Within a few months IDA Ireland, with its six overseas offices had grown to 230 staff, and was brimming with energy, expertise and ambition. The organisation’s activity was increasing exponentially. In 1971 the IDA made presentations to 105 different companies; by 1973 that number increased to 2,600. The number of foreign offices had tripled to 18 by 1979. IDA Ireland was hard at work across the world, challenging the perception of Ireland as a backward rural country, and promoting its educated workforce and business-friendly tax incentives, with the added benefit of access to the common market when Ireland secured EEC (now EU) membership in 1973.
 


From the mid-1970s onwards IDA Ireland focused on attracting pharmaceutical and electronics manufacturers, two sectors pinpointed as having significant growth potential in global terms. The first wave was purely components manufacturing, but later R&D and higher value work followed. By1982, some 130 of the world’s leading electronics companies had manufacturing facilities located in Ireland. By the end of the 1970s the organisation employed almost 700 staff, had brought in client company investment of £2.7bn (up from £130m in the 1960s) and creation of 192,000 jobs (up from 45,000 for the 1960s).
 
In 1983, the Telesis Report called IDA Ireland “arguably the most dynamic, active, efficient and effective organisation of its kind in the world”, but with a note of caution recommended that it begin to encourage the establishment of R&D facilities by foreign firms, and the fostering of closer links with Irish businesses.
 
FOCUSING ON KEY SECTORS
One step ahead, IDA Ireland was already moving on its next steps: the Strategic Plan for 1982-92 called for a focus on high-output growth using the best technology available. Apple has already set up a Cork plant in 1982 and soon, other companies at the forefront of the personal computer space arrived—most notably IBM, Microsoft and Lotus—and IDA Ireland responded with employment grants to boost hiring. In 1990, IDA Ireland developed a package to attract Intel to set up its European base in Leixlip, Co Kildare. The gamble paid off with the provision of 2,600 jobs, a figure which has continued to grow and is now at 4,500.
 
IDA Ireland was also central to building up the Irish Financial Services Centre (IFSC), which was founded in 1987. The idea behind the IFSC was to provide a hub for firms involved in all aspects of international finance—global money management, foreign currency dealing, equity and bond dealing and insurance activities.
 
Under the provisions of the Industrial Development Act, 1993, three agencies were created and IDA Ireland was to focus exclusively on the development and promotion of high-quality FDI in Ireland.
 
Over the next few years, between 1990 and 1994, Ireland attracted 40% of US electronic investment in Europe, with companies like Dell, Gateway 2000, Compaq, HP, Xerox, Ericsson, Matsushita, Philips, Siemens and Hitachi all following suit. By the late 1990s, roughly a third of all European PC production happened in Ireland.
 
It was also a boon to indigenous industry with a significant number of firms emerging to supply these businesses. Throughout the global banking crisis and Ireland’s self-inflicted property bubble around 2007/08 IDA Ireland continued to win investments, under the astute leadership. FDI proved resilient, with investment increasing in response to improving competitiveness as the Irish economy restructured.
 
Ireland’s location on the edge of Europe makes it perfectly placed to act as a global technical support hub, with a particular focus on Europe and the Middle East. Increasingly, technology companies are moving high-value engineering functions to Ireland. The early investors are still going strong with Apple, Intel, Microsoft and IBM continuing to invest, and Microsoft celebrating the opening of a new hi-tech campus in Leopardstown this year underlining its commitment to Ireland.
 
Major tech players including Google, LinkedIn and Facebook continue to expand and have been joined by the new wave of sharing economy companies such as Airbnb and Uber. Manufacturing in the bio-pharmaceutical, medical devices and micro-electronics sectors continues to thrive also; companies like Alexion, Regeneron, BMS and Shire are all making significant capital investments, and MSD (Merck in the USA and Canada) has already announced two new investments this year, totalling over 500 jobs.
 
AMBITIOUS STRATEGY
IDA Ireland’s current strategy, launched by CEO Martin Shanahan in 2015, covers the 2015-2019 period. The aim was to create 80,000 new jobs in client companies, and win over 900 new investments for Ireland. For the first time it also set public regional targets for investment and focuses strongly on spreading investment throughout the country, not just in main cities.
 
Today IDA Ireland has been instrumental in creating over 229,000 jobs in foreign industry in Ireland, has a network of 30 offices globally (nine in Ireland) and a total staff of 340. Year-on-year it continues to operate at the highest level, in the face of continuing challenges, threats and opportunities, from Brexit to global tax reform and beyond.
 

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