Oireachtas Joint and Select Committees
Wednesday, 16 February 2022
Joint Oireachtas Committee on Jobs, Enterprise and Innovation
Development of Indigenous Irish Enterprise: Discussion
Maurice Quinlivan (Limerick City, Sinn Fein)
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I will start with some public health arrangements. The proceedings of Oireachtas committees are now being conducted without the requirement for social distancing, with normal capacity in committee rooms having been restored, thankfully. However, committees are encouraged to take a gradual approach to this change. Members and witnesses have the opportunity to attend meetings in the relevant committee room or online through MS Teams. All those who are attending in the committee room environment should continue to wear masks throughout the meeting, which may only be removed when addressing the committee. They should continue to sanitise and wash hands appropriately and often, to avail of sanitisers outside and inside the committee rooms, to be respectful of all of people’s physical space and to practice good respiratory etiquette. Members and all of those who are in attendance are asked to exercise personal responsibilities in particular to themselves and others from the risk of contracting Covid-19. If members are participating in the meeting remotely, it must be from within the Leinster House complex, as everybody is well aware.
Apologies have so far been received only from Deputy Shanahan.
We will start the discussion today on the development of indigenous Irish enterprise. Last month, Enterprise Ireland announced its results for 2021. Among the highlights for the year was net job creation in companies that are supported by Enterprise Ireland, which increased by 11,911 in 2021. This was the highest annual increase in net employment reported by Enterprise Ireland. Employment increase across all economic sectors was particularly strong, with jobs growth in life sciences, business services and digital technology. There were increases in employment across all regions in Ireland. In total, 20,342 new jobs were created by companies with the support of Enterprise Ireland. The total employment by companies that were supported by Enterprise Ireland in 2021 was 207,894. Corresponding strong progress also was made through local employment offices. I am pleased, therefore, that today we have the opportunity to consider this matter.
I would like to welcome online from Enterprise Ireland Mr. Leo Clancy, CEO, Mr. Paul McKeown, chief financial officer and executive director and Dr. Carol Gibbons, divisional manager with responsibility for regions and local enterprise. I welcome from the network of local enterprise offices, Mr. Padraic McElwee, chairperson and Mr. Oisín Geoghegan, the former chair.
Before we start, I will read the note on privilege and a note to witnesses. I wish to explain some limitations to parliamentary privilege and the practice of the Houses in regard to references they may make to other persons in their evidence. The evidence of witnesses who are physically present or who give evidence from within the parliamentary precincts is protected, pursuant to both the Constitution and statute, by absolute privilege. However, witnesses are giving their evidence remotely from a place outside the parliamentary precincts and, as such, they may not benefit from the same level of immunity from legal proceedings as a witness who is physically present does. Witnesses have already been advised that they may think it appropriate to take legal advice on this matter, if they so wish. Witnesses are again reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity, by name or in such a way as to make him, her or it identifiable, or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction.
The opening statements by Enterprise Ireland and the network of local enterprise offices have been circulated to all members. To commence the consideration of our matter today, I now invite Mr. Clancy to make his opening remarks on behalf of Enterprise Ireland.
Mr. Clancy is having technical issues, so we will suspend the meeting for five minutes.
Maurice Quinlivan (Limerick City, Sinn Fein)
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Apologies for the technical issues. I invite Mr. Clancy to make his opening statement.
Mr. Leo Clancy:
I thank the Chairman and committee for the opportunity to meet with them today. I am joined by Mr. Paul McKeown, chief financial officer and executive director of Enterprise Ireland, and Dr. Carol Gibbons, divisional manager with responsibility for regions and local enterprise. I am also joined by Mr. Padraic McElwee, chair of the Network of Local Enterprise Offices, who will address the committee shortly, and Mr. Oisín Geoghegan, former chair of the local enterprise offices. As will be noted from our strategy and presentations, close collaboration between Enterprise Ireland and the local enterprise offices is a key priority for us.
Today, I will cover our 2021 performance and related achievements, as well as our new strategy and targets to 2024. The purpose of Enterprise Ireland is to help Irish companies to start, grow, innovate and win export sales. In this way, we support employment, regional development and sustainable economic growth. The past two years have been highly challenging for the people of Ireland and the Covid-19 pandemic has affected all of us. Our thoughts are with those who lost loved ones and livelihoods during the pandemic. I take this opportunity to acknowledge the people on the front line of our health and other public services and also those who worked at companies across the country to ensure that essential equipment was available and manufacturing and trade could continue during those difficult days.
Covid-19 has brought many challenges in relation to Irish business. Key issues at the height of the pandemic included immediate liquidity pressures, a reduction in customer demand in certain sectors and supply chain issues resulting in increased operational costs. The rapid move to remote working further added to these challenges. Over the past two years, under the sustaining enterprise fund, Enterprise Ireland approved €183.1 million in funding to 740 companies, sustaining 30,000 jobs across the country. We supported over 8,000 companies with advice and guidance on dealing with Covid-19. We also provided direct support to companies unable to travel overseas through our network of 40 offices around the world. These significant supports made a very important difference to company performance and have led to the results we are now seeing in recovery.
Enterprise Ireland client companies saw strong employment growth in 2021 and the highest increase in net jobs created by Enterprise Ireland client companies in a single year, at 11,911 net jobs. Employment increased across all economic sectors.In total, 68% of new jobs created were outside Dublin. The positive jobs figures saw increases in employment across all regions with, for example, employment increasing by 9% in the north west and west and by 7% in the south east. Our teams internationally helped Irish companies to win 1,375 overseas contracts and helped 184 companies enter new markets despite the pandemic-related restrictions. In 2020, companies supported by Enterprise Ireland spent €29 billion in local economies across the country.
In terms of 2022 and beyond, this is a time of very significant change. The world of business and the world in general are being transformed by factors such as climate change, the accelerated adoption of technology and changing trends in globalisation. There are also immediate concerns in the global and Irish economies, including inflation, skills availability, continuing uncertainty arising from Covid-19 and the changed trading relationship with the UK, all of which have the potential to impact on the competitiveness of the Irish enterprise base. All of these trends represent both challenge and opportunity.
In the context of that changing global environment, we launched our three-year strategy, Leading in a Changing World, which is supporting a vision for Irish enterprise to 2030. Underpinning our vision for Irish enterprise are five strategic ambitions, which provide the key areas of focus for our strategy. Our ambitions are for Ireland and Irish enterprise, as well as for the organisation we wish to be and the service we offer to our clients. The first pillar of our strategy is seeing Irish companies continue to deliver sustainable employment and economic growth at national and regional level. In this context, we are planning to assist the creation of 45,000 new jobs over the period of the strategy, maintaining a strong regional focus. We are also targeting a significant increase in the level of exports from Irish companies of all sizes to €30 billion, as well as the overall number of Irish companies exporting.
In terms of the second pillar, Enterprise Ireland will target fostering further entrepreneurship, leading to increased start-up activity across the country and this will be done in collaboration with the LEOs. We will also put specific focus on scaling of companies, enabling Irish firms to grow faster and further in global markets, including through increased leadership capability. We are targeting support to 450 early stage companies over the next three years, growing our high potential start-up cohort by 20% over the previous strategy.
Our third pillar is for our clients to achieve increased productivity through higher levels of operational focus, more innovation and further digital adoption. We are targeting a research and development spend of €1.4 billion by Irish companies to support this activity. In terms of the fourth pillar, in line with Government climate action targets for enterprise and with an increased global focus on environmental, social and governance requirements, Enterprise Ireland will work with Irish enterprises to transform their sustainability performance. We will also work to enable innovative Irish companies to realise global opportunities from the low carbon transition, accelerating Ireland’s green tech sector. By way of the fifth pillar, Enterprise Ireland will focus on being a future-ready, highly connected, agile organisation that can help Irish companies at all stages of development.
As I mentioned, a key focus for us will be to collaborate closely with our colleagues in local enterprise offices around Ireland to achieve these goals. That closer integration is a key theme in our strategy document, about which Mr. McElwee and Mr. Geoghegan will speak further shortly. We will also continue to strengthen our relationship with IDA Ireland to ensure that Irish enterprise has access to and benefits from the multinational base here in Ireland.
Our focus on continuing to build the innovation capabilities of Irish enterprise is a very important one and we will continue to work with colleagues across Government and industry to strengthen our research and innovation base. As I outlined, Irish enterprise is well placed to recover and continue to grow following two very challenging years, but challenges continue for companies and we must continue to build and strengthen the Irish enterprise base across all sectors and regions. Enterprise Ireland, working with the Department of Enterprise, Trade and Employment and our colleagues in the local enterprise offices, has a key role to play in every community across Ireland.
I welcome any questions and I again thank the Chairman and the committee for the opportunity to engage with them today.
Maurice Quinlivan (Limerick City, Sinn Fein)
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I thank Mr. Clancy. I invite Mr. McElwee to make his opening statement.
Mr. Padraic McElwee:
I thank the Chairman and the committee for the inviting us to this meeting to discuss this very important topic. I would like to be associated with the sentiments expressed by Mr. Clancy.
The local enterprise offices are the first-stop shop for any small business looking to start or grow access to business. The LEO vision is to develop and sustain a positive enterprise ecosystem at local level throughout the country that will drive new added-value start-ups, facilitate further growth of micro and small businesses and enhance local economies. The local enterprise offices were established in 2014, replacing the 35 county and city enterprise boards.
The local enterprise offices are located in all local authorities around the country. The LEOs are an integral part of each local authority and facilitate close collaboration with various supports and enablers delivered by the local government sector. From an economic perspective, local authorities play a critical role in putting in place initiatives to stimulate the local economy and to support business in creating employment. Never has this role been more critical than in the past two years. Local authorities work closely and in partnership with Departments and key State agencies to deliver on this promise.
As Mr. Clancy outlined, the integration with Enterprise Ireland is key to the success of the local enterprise office and ensures businesses of all sizes are assisted on their development journey from start-up to scaling. Our core collective objectives are to boost the productivity of established businesses and connect enterprises with innovation opportunities at home and internationally, maximising their growth and job creation potential.
In 2021 we saw our eighth consecutive year of strong job creation spread across the country. We financially support 7,158 companies operating in the manufacturing and internationally-traded service sector. They employ over 35,000 people spread among our towns, villages and rural communities with 85% of those jobs being located outside Dublin. In 2021, these businesses created 7,440 new jobs and we experienced net jobs growth of 3,000. During that period we also transferred 114 companies to Enterprise Ireland.
In 2021, we approved funding to 121 businesses of over €24 million. We trained over 60,000 entrepreneurs and owner-managers. Of those trained, just under 6,000 participated in our Start Your Own Business programme. We also supported over 14,149 business owners supported with one-to-one mentoring with people with specialist skills specific to the needs of that business. We play a key and increasing role in developing innovation and facilitated the approval of 27 projects under the Enterprise Ireland agile innovation fund. In the latter part of 2020, we supported 444 lean initiatives or interventions and 293 green consultancies.
Covid had a dramatic impact on microenterprises with many owner-managers finding themselves isolated and needing support more than ever. The local enterprise offices were on the front line of proactively assisting these businesses. This provided an invaluable lifeline throughout the pandemic.
We also play a key role in collaborating with various other bodies in our locality across numerous plans. Examples of this include local community development committees, local economic and community plans, regional enterprise action plans, regional skills fora and the regional enterprise development fund projects.
We also have established protocols with a number of agency partners that govern the dissemination of information, signposting and inter-organisation referrals. Local enterprise offices will continue to implement these protocols on an ongoing basis and review locally as required.
Our strategic ambitions in the years ahead are very much aligned with the recently-published Enterprise Ireland strategy outlined by Mr. Clancy. The overarching ambition is enhancing the capability and competitiveness of microenterprises to grow, develop and create employment. In particular, we will work closely with those enterprises that have a global ambition to ensure they have the supports and resources necessary to succeed in global markets. In numeric terms, we have a number of challenging targets that are outlined in our submission document. I would be happy to elaborate on them at a later point. Appendix 1 to the document submitted also outlines the range of supports we offer that will drive that growth.
The past two years have highlighted the key role LEOs play in supporting local businesses and the benefits of having local support for local business. During this period, many businesses faced loss of customers, uncertainty and potential loss of their livelihood. It was a challenging time on numerous fronts, including economically and at the personal level. We saw businesses open virtual doors when their physical ones had to shut using our trading online vouchers. We saw over 70,000 people avail of LEO training during the first year of the pandemic. This equipped them with the new skills required to sustain their business, be that selling online, social media, HR or financial skills. We saw thousands of businesses access mentors to rewrite their business plans and pivot their company. Sometimes this was to sustain it but in many cases we saw them grow and find new markets and opportunities. The figures from last year indicate many small businesses were able to bring back on board those jobs that were lost in 2020 and across the board we saw good growth. There are green shoots and the outlook for the future is positive. The Look for Local advertising campaign run by the LEOs played an important role in encouraging our communities to support their local businesses and ensure their continuing viability. It merits acknowledgment that communities responded positively to this call for support and in fact many discovered new treasures on their doorstep that will have a longer-term beneficial impact.
We should be very proud of Ireland’s small business community for what they had to endure in the past two years in the name of keeping the public safe. While some sectors remain challenged, many of those businesses have emerged stronger for the experiences they went through. The staff members of every local enterprise office take great pride in the role we played to help small businesses over the past two years and we will continue to do so in whatever way we can over the coming years. The ability and capacity for LEOs to proactively engage and support early-stage enterprises are fundamental to the future economic viability of our many towns and villages. We play a key development role in identifying and nurturing early-stage enterprises with the ambition to become world-class Irish companies and achieve leading positions in global markets. This focus highlights the important development role LEOs play in the wider economic development remit of the local authorities. LEO supports underpin economic activity, job creation, job retention and vibrant communities. Enterprise Ireland's strategy identifies the importance of the early-stage supports LEOs deliver and the platform this provides to achieve our shared vision of Irish businesses creating solutions for global challenges and delivering sustainable prosperity throughout Ireland. I thank the Chairman for this opportunity.
Maurice Quinlivan (Limerick City, Sinn Fein)
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I thank Mr. McElwee. I invite members to discuss any issues they may have with Enterprise Ireland EI, and the local enterprise office network. I remind members participating remotely to use the raise hand function in Teams to indicate and more importantly, to take it down when they are finished speaking. Deputy O'Reilly was first to indicate. She has 14 minutes.
Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I thank the officials for their attendance. To be parochial for a second, I commend those involved in the Look for Local campaign. It was very successful in my own area of Fingal and I have received very positive feedback from local businesses. It was a great initiative. It hit the mood of the time. People wanted to shop local. I think we all felt that and it really chimed. As it was very successful, I commend everyone involved with that.
I have a couple of questions and if my time expires, I may get a chance to come back in. This is going to be a bit confusing because Leo is from EI and we have the LEOs as well. I have a question for Mr. Clancy on the skills shortage. Is there scope for upskilling workers, retaining those who are out of work and further education in order to meet the skills gap? That is one part. Are there broader issues, as I believe there are, around pay and conditions that need to be addressed on the business side? While there are workers who may be out of work for the moment and who are, we hope, getting upskilled and getting themselves ready for the labour market, is there something that should be done on the other side by business? A follow-on question to that for both witnesses is on issues around workers' rights. Obviously, their roles are more on the business side but I imagine there must be a focus, they can elaborate on this, not just on jobs and job creation but on the creation of decent and sustainable jobs. I ask that they talk briefly about this. I will contact both officials because I am very interested in continuing this in a more in-depth way. Will they elaborate on how workers' rights are stacked into their work on a daily basis? How is it done? Time and time again we see, through the Workplace Relations Commission, WRC, and other inspections, issues around workers' rights being exposed.
Can something be done at the start of the process to ensure workers' rights are stacked into every transaction and every campaign?
Mr. Leo Clancy:
I will address those two points, starting with the workers' rights and pay and conditions elements of the Deputy's questions. As she said, it is clear we do not have a direct role in this space, but we work with employers across the board every day of the week. My experience is there is high awareness of the need for continually improving pay and conditions. We are in a very competitive labour market. The Deputy will have heard in my opening comments that labour and skills remain one of the two major issues for employers at present, if inflation and supply chain challenges are included as the other. In that context, employers are very aware of the need for competitive pay and conditions. At the same time, the workers' rights agenda is very much the domain of our parent Department of Enterprise, Trade and Employment. It is certainly something that is focused on and, from an employer point of view, it is very much considered. Where we give support to employers through capital or other types of grant, we always looks at the cost-benefit analysis and value for money to the State of those investments and, within that, is a consideration of the level of pay for the job. There are a number of areas where we contribute to this although it is not our core area of responsibility.
The upskilling of workers for the labour market is critical. Everywhere I have gone, and for every employer I have met in the eight months I have been in this job, there is a very strong focus on skills as well as labour. Employers know that in order to retain and attract people they need to provide a lifelong learning environment. I have seen some very good examples of this in, for instance, engineering settings, where we have automating of processes for welders whereby people can add skills in software and automation to their core skills. They continue to maintain the trade they had but also to upskill themselves in new areas. I have seen a couple of very good examples of that in recent months. Both points are very important and the upskilling piece is certainly a focus.
We also work very closely with SOLAS, the national further education body, on programmes that can be relevant to employers. We work with Skillnet Ireland, which works with a number of business associations, to ensure we have skill pathways for workers to come back into work. There is lots of positive work happening in that space. Labour and skills is certainly an area that will need to continue to be focused on.
Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I thank Mr. Clancy for his response. I appreciate it is not a core area of responsibility, but it should be. I will outline the difficulty. It is not a question but more of an observation that we can perhaps pick up at a later date. Where there are issues around breaches of workers' rights and entitlements or non-recognition of trade unions, or where a trade union is active and a WRC recommendation is received, it is not desirable, certainly on the part of the workers, when they hear these companies are, in some instances, in receipt of State funds and engaging with the State, but at the same time, when there is a recommendation from the WRC, they walk away from it. I am not suggesting for a minute, by the way, that workers' rights can be bought; they cannot because eventually the price becomes too high and it is not a good way to be. I am just putting it into the representatives' heads that there is that kind of juxtaposition, which is not lost on workers who see that the State operates in a favourable way to employers, but does not then place an onus on employers to recognise the machinery of the State. There is work that needs to be done. It is an issue I have raised with business representatives in other arenas. I know the witnesses are not representing business here, but I have raised that issue. We have a lot of work to do because it is not good enough to say we know they need to up their game on terms and conditions. As I said, that is more of an observation.
I have a question for both witnesses on the innovation opportunities for Irish companies specifically in renewable energy and the green economy. Do they see this as a specific area for Irish companies to maximise growth and job potential? Will they give us an overview of the plans and, specifically, the growth of job potential in the area of renewables and the green economy?
Mr. Leo Clancy:
I will start on that and hand over to Mr. McElwee shortly. As I mentioned, pillar 4 of our newly launched strategy includes a focus on decarbonisation of our clients and making their approach more sustainable. What is more exciting to me is the focus on building a green economy offering for Irish companies exporting into global markets. We are incredibly well placed on that. There are some very ambitious targets at a national level. The ESB strategy was launched on Monday, which again doubles down on that. We are engaged with the ESB with regard to its plans at Moneypoint. We are engaged with actors throughout the State on how we can help amplify that opportunity. We are seeing a very exciting pipeline of innovative companies come to us through our high potential start-up unit and some of the research and innovation projects we are seeing in electrification and other areas. There are significant opportunities for us.
Green hydrogen is another technology that is at a very early stage. Ireland certainly has a role to play in that, given the abundance of our offshore wind resource. I am very excited about this. It will be an absolutely key priority for our agency in the coming years to focus on maximising the innovative capacity of Irish firms to play in this global market. I will hand over to Mr. McElwee for a follow-on comment.
Mr. Padraic McElwee:
I echo the sentiments of Mr. Clancy. We are seeing many individuals on the ground starting to come forward with potential innovations. These are at a very early stage, but particularly along the west coast, as Senator Garvey will know, we have very progressive plans off Moneypoint. In Clare, where I am located, we are starting to see that evolve. In our start your own business programmes, we are seeing many people exploring the opportunity and early stage businesses starting up. As I mentioned in my opening statement, the access local enterprise has to the Enterprise Ireland agile Ireland fund is key. That will be a critical pathway to develop those very early stage innovative companies. It is then key that we work with the high potential start-up unit because that is the agency that will help those innovative companies start to explode.
Our job numbers are interesting. I can only speak specifically for Clare, but we see job growth coming in that sector this year, which was pleasing to see. I had not expected it. We can definitely see that sector beginning to grow.
Louise O'Reilly (Dublin Fingal, Sinn Fein)
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It is an issue on the east coast as well as the west. People on the east coast would also like to see the same emphasis on job creation in this area, which will definitely come, maybe not this year, but in future.
I have a question for both witnesses. We recently heard from the National Competitiveness and Productivity Council, NCPC, which told us: "The attractiveness of a location cannot be focused solely on it as a place to work;...[but] also...as a place to live." Almost every business representative body and agency that has appeared in front of the committee has referenced the impact of the cost-of-living crisis we are in at present. Specifically, the issues of the housing crisis, energy, transport, and the cost of education and childcare, are significantly impacting on people who are on ordinary incomes. Does Enterprise Ireland share the view of the NCPC on the State and its capacity to remain an attractive location? We know the cost-of-living crisis is there and is referenced by everybody, but what will happen if housing, transport, education and childcare costs, specifically, are not addressed? Does Enterprise Ireland have a view on whether these costs need to be addressed and on the impact the current crisis is having on the capacity of firms to expand or attract workers? I am not talking about workers who may come here temporarily on one of the Government's visa programmes. I am talking about sustainable, decent, long-term jobs. I am not focusing specifically on the low-wage economy but low-income to middle-income earners, what my mother would have called people on ordinary money, and the impacts this is having on them.
Mr. Leo Clancy:
I will start. I am a member of the NCPC as a function of my role.
I am very aware of the statements on cost made by the council. I support them. It would be remiss of me to say we do not have concerns around all the input costs for workers because those costs go straight to the bottom line for employers. They are key factors for employers in terms of cost of labour and availability. As Deputy Louise O'Reilly said, they are also key factors for people locally who are looking for mobility within the country and for people who are coming from overseas. They are certainly issues for employers and areas about which we remain concerned.
There are regional and global issues in light of these factors. We are seeing inflation across the world. We are seeing housing challenges in most developed countries, particularly in urban centres. We are certainly not alone. There are counterbalancing factors, which mean that Ireland is still competitive as a business location. That is to the good. However, these are areas on which we need to continue to focus, both for the good of the workers and of the employers, so as to maintain their competitiveness. I will hand over to Mr. McElwee for a comment.
Mr. Padraic McElwee:
I thank the Deputy. From our perspective, we are very much looking at the small and micro sector, which probably has different challenges locally. We have a high level of concern about their input costs and ability to sustain competitiveness at a local level. However, in providing employment, there is one big advantage that we have, as an agency, which is that we work with local businesses. That affords people in our local towns and villages an opportunity to get employment locally. That is hugely important. Another advantage of our micro enterprises is that they can offer a degree of flexibility, which suits more appropriate work patterns. Those are their "benefits", for want of a better word, as distinct from those of larger organisations. It will be challenging across the board. That is why we will work proactively with those businesses. Job retention is important to us, as is job creation. I have no doubt, given the experience of the last two years, that many of our small businesses have demonstrated that capacity to meet challenges. I am confident that they will meet this one as well.
Maurice Quinlivan (Limerick City, Sinn Fein)
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Deputy Louise O'Reilly's time is up. The next speaker is Senator Crowe.
Ollie Crowe (Fianna Fail)
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I sincerely thank Mr. Clancy and Mr. McElwee for their contributions this morning. I commend the work that has been done by Enterprise Ireland and the Network of Local Enterprise Offices. For obvious reasons, LEO-supported companies had an extremely difficult 2020. However, the bounce-back in 2021 was very impressive for companies backed by Enterprise Ireland and local enterprise offices. Achieving positive figures in job creation over the course of Covid-19 deserves great credit.
The Galway local enterprise office, which is based in the Galway County Council offices on Prospect Hill, helped to create well in excess of 200 jobs. That is a significant number, especially during difficult circumstances. I highlight the excellent work that is done by Breda Fox and her team.
The trading online voucher scheme, which the LEO offices ran, was particularly helpful and provided vital support for SMEs. Obviously, online trading has been increasing annually for a long time. That trend does not seem to be slowing down. I know of a number of businesses in west Galway and Galway city that use the scheme. They were extremely grateful for the support. From speaking to business owners, and I could cite various cases, I learned that the local enterprise office was very helpful and went above and beyond the call. It is important to acknowledge that because public representatives, including me, are often critical. During the pandemic, when owners looked for assistance LEO staff went to extreme measures to help. They supported business throughout the period.
Having said that, a significant number of businesses need to make the transition and enhance their digital platforms. In the strategic ambition of the statement, there is an objective to provide 5,000 online trading vouchers up to 2026. I appreciate that considerable work has been done already, with over 17,500 businesses being supported over the past two years. However, it appears that many businesses would still use the scheme, including perhaps some which are not aware of it. Could more outreach efforts be made to ensure all SMEs are aware of the scheme? If there is a greater demand, is the budget available to go beyond the objective of providing 5,000 online vouchers?
Mr. Padraic McElwee:
I thank the Senator for his kind words of support, particularly for the team in Galway, with whom I am sure he is very familiar. The trading online voucher scheme has been a phenomenal success. The Senator touched on one key objective that we will have. Having helped over 17,000 businesses establish an online presence, we must now work with those businesses to make sure they maximise that opportunity. There is, therefore, a significant amount of upskilling needed. It is one thing to go online. The next challenge is to make that effective.
On our targets, we are seeing a reduced demand because we helped a significant number of businesses. The Department has been hugely supportive of this scheme. We have recently conducted a survey analysis, the results of which will be published shortly. The analysis has been largely positive. The scheme has been effective, delivered real growth into those businesses and created employment. I am confident that we will have a sufficient budget to meet demand.
On promoting the scheme, we do a significant amount of activity through local media. However, we find that our best outreach is through social media. That is where we get the best traction. All local enterprise offices are actively engaged. We simply cannot meet the demand on our digital marketing programmes around upskilling. The demand is there and we are challenged to meet it, but we will meet it.
Ollie Crowe (Fianna Fail)
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I have first-hand awareness of the terrific work because I was a member of the county and city enterprise board for five years, from 2009 to 2014. I am, therefore, particularly aware of this issue.
I have a couple of questions for Mr. McElwee and Mr. Clancy. What do they intend to do to assist companies that are too big for LEOs because they have more than ten employees and do not export or are not big enough to fall under the remit of Enterprise Ireland?
It seems to me and people with whom I speak that our trading relationship with the UK is a significant challenge. That is certainly the case with the food exporting sector, particularly with regard to beef. Companies in west Galway are especially concerned about this. While I know that exports remained relatively steady in 2021, there is concern that UK trading deals with Australia and New Zealand will have a significant negative impact on Ireland’s market share.
The Government has made significant investments to help food producers to diversify and attract new markets and customers. The markets Ireland targets are often already served by local food producers. Will Mr. Clancy detail how Enterprise Ireland views this challenge and how it plans to address it?
Mr. Padraic McElwee:
I will take the question on ten-plus companies, those with more than ten employees, before handing over to Mr. Clancy. It is important to be aware that we support companies that are in the ten-plus category. They can access all of our training and mentoring supports. Importantly, they can access our lean consultancy, which is about addressing their cost base. That will be very relevant in the weeks and months ahead. Equally, we understand that we probably need to enhance support for that sector. We are working with the Department of Enterprise, Trade and Employment to develop a framework for how we can enhance supports into that sector. I will hand over to Mr. Clancy to answer the second part of the Senator’s question.
Mr. Leo Clancy:
I would echo that. We have worked with many enterprise offices in latter part of last year to ensure that companies with more than ten employees can continue to be supported, where appropriate, by the local enterprise office. That has been an agenda item for quite some time for politicians. We are keen to see it supported.
I will address the Senator's question on the UK trading relationship. I am conscious of the time. We have deployed a huge amount of support in preparation for Brexit. The Senator will know that the key dates have shifted at various times. As a result, we have seen a number of false dawns. That said, we have run programmes like clear customs financial support and supported the ready for customs grant scheme. We have supported more than 1,000 positions within Irish enterprise that are focused on Brexit readiness. We have certainly put a huge amount of effort in.
We are seeing some risk into the UK market. The Senator specifically mentioned other jurisdictions and potential trading displacements. What we have been seeing in recent months with the resurgence of the global economy is that countries such as New Zealand and Australia are actually seeing more access to more markets in their own locations. New Zealand in particular is looking potentially at further unfettered access to China in the coming period. We are also seeing that markets in those locales are opening up. It is a balanced picture in terms of the global economy.
Ireland is still the closest trading partner of the United Kingdom and will certainly be a key player. What we are hearing from our clients is that they have made themselves ready generally. There are still concerns about the way things may go depending on the final shape of agreements but we think that industry is generally in a pretty good shape. There will always be uncertainty until there is a final agreement but we are actually hearing a lot of optimism about the market for the future. Some of those global forces that were there in the past are abating a little bit as a consequence of some of the inflation and resurgence of economies around the world.
Maurice Quinlivan (Limerick City, Sinn Fein)
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I thank Mr. Clancy. I thank Senator Crowe. The Senator's his time is up.
Ollie Crowe (Fianna Fail)
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The Chairman might let me come back in again during the second round if he can.
Maurice Quinlivan (Limerick City, Sinn Fein)
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The Senator can come back in again later. That is no problem. The next block is a Fine Gael Slot. Deputy Staunton is sharing with Deputy Bruton.
David Stanton (Cork East, Fine Gael)
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I went first the last time so Deputy Bruton may go first this time.
Richard Bruton (Dublin Bay North, Fine Gael)
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I thank Deputy Staunton very much indeed. First, I would like to take the opportunity to congratulate Mr. Clancy on his appointment at Enterprise Ireland. I know he has a difficult act to follow but I have no doubt that he will make a great job of it. I congratulate Ms Julie Sinnamon on her tenure, which was an exceptional period.
I have a few questions on which I would be interested to hear answers. I am very interested in the circular economy concept, that is, this idea of taking the environmental damage out of the entire supply chain. This will be significant for competitiveness in the long term. In sectors that would be vitally important, such as food and others where these credentials will be crucial, what work is going on beyond the climate agenda to make sure that is a key element of strategic planning in all dimensions?
I would be interested to hear how Mr. Clancy sees the performance of high-potential start-up companies versus the more standard start-ups that come through either the local enterprise offices, LEOs, or Enterprise Ireland. Mr. Clancy put a strong emphasis on high-potential start-ups, but there has always been the slight niggling fear that they grow to a point and then get sold off and the benefit goes into the multinational system. Is that changing?
The arrival of town centre renewal and remote working is a key strategy of Government. What new initiatives is Mr. Clancy taking to push, say, enterprise centres into the hearts of towns in order that we create a living centre? Enterprise Ireland can be a very key strategic player in this area.
How have linkages with multinationals developed? We had trade missions to Ireland in difficult times in the past but the difficulty seems to be getting into these global supply chains. Have many Irish Enterprise Ireland companies made that leap into the global supply chain at this point?
Mr. Leo Clancy:
First of all, I thank the Deputy for his very kind words. I am doing my best to follow a very hard act in Ms. Julie Sinnamon so I really appreciate that.
I will take the Deputy's questions, as raised, and ask my colleague, Dr. Gibbons, to cover the town centre regional hubs in a minute because we have done an immense amount of work in that space. I will cover the circular economy first. I met only yesterday with a company that is looking at transitioning some of its packaging to a circular economy approach to be ready for a demand it sees coming for the future. There is, therefore, certainly much activity happening on the ground. There is activity happening in certain university settings as well. University College Dublin, UCD, has a very strong focus in this space. We are supporting that also through a lot of our regional funds. Wherever there is a focus on environment, there is a focus on circular economy as well as the more carbon-intensive aspects of the circular economy. It is, therefore, certainly something that is on the minds of companies and continues to be on our minds also.
The Deputy asked about high-potential start-ups versus standard start-ups. We are seeing success across the board. We might look at some of our companies that have been clients for longer, for instance, Kirby Group Engineering. One of the first announcements I was present at last June in Limerick was about that company growing 300 jobs. That company had been in the electrical sector in Ireland for many years and has actually found a really good export market in high-value construction. It has grown very nicely and we are seeing quite a bit of that.
We are seeing high-potential start-ups grow also. The Deputy will have seen the announcement of a number of unicorns in recent months, many of which are our clients. I cannot quite remember if Wayflyer is our fourth or fifth unicorn in a short period of time but companies like Wayflyer and Flipdish are achieving global scale. For people's benefit, a unicorn is a company that is valued at more than €1 billion. We now have four or five; I am just not quite sure of the number. We expect to see more.
Our strategy is geared towards creating more and helping companies grow in scale while remaining Irish through that. We are still seeing a trend of our leading companies being sold to multinational companies. That is incredibly positive for the companies involved and mostly for the employees. What tends to happen in our experience is that those companies continue to grow. Irish companies by their nature are very innovative so they become very innovate parts of those companies that acquire them. The activity generally stays in Ireland. That said, we would like to see more public limited companies, plcs, out of Ireland. We would like to see more companies growing.
We had wonderful results this morning from Kerry Group, one of our proudest Irish independent plcs. Our ambition for Irish enterprise is that we will see more companies like Kerry Group in the coming years that can be leaders in their fields and remain proudly Irish. In the context of where the global economy is and the increasing drive towards digitalisation, it is also entirely possible that a person can start a company now out of Ireland that can become fully global. It is very positive.
Before I come back to the Deputy's question on town centres, I might move straight to the linkages with multinational companies. That is an area that is strengthening all the time. I have had a number of engagements IDA Ireland. For the benefit of members, I come from IDA Ireland. I worked with IDA Ireland until last May. We have very deep linkages across the board. Multinational companies are increasingly helping Irish companies to grow on the global stage. If I pick companies like Stripe, Amazon and Microsoft, they are very vocally and practically supporting companies to embrace, for instance, digital technologies and online sale, complementing some of the things about which Mr. McElwee spoke earlier in terms of trading online. That is a really positive linkage and it is growing. Introductions to companies are still something we do in the context of the trade missions the Deputy mentioned. We continue to focus on that.
With that, I will hand back to Dr. Gibbons to speak a little bit about our focus on town centres, remote working and remote hubs.
Dr. Carol Gibbons:
I thank Deputy Bruton for the question. If we look at town centres, in particular, and connections to hubs for remote working, we work across government in that regard and particularly with the western development agency and Department of Rural and Community Development. There are approximately 500 hubs across the country now that are linked on connectedhubs.ieto give people an idea of where they can go within their locality.
I will look at enterprise centre development and pick out a couple of areas in our regional development funds. We have supported enterprise hubs in cities and counties. The Portershed in Galway, for example, is an enterprise hub we have supported for the region, looking particularly at start-ups in areas such as medtech, adtech and technology across the board, which are really important. It has worked with approximately 30 start-up companies in total to date and more in terms of the actual network itself.
In Dublin, we have supported the Guinness Enterprise Centre in terms of its expansion and again, we are looking at working with companies in the cities and in the regions in particular.
Tallaght would be another good example in terms of social and local and again looking at food and artisan and the connections across into the community as well. Across the regions, Enterprise Ireland has supported 68 projects under the regional enterprise development funds, with support from the Government of just over €100 million. Those centres and hubs are at different stages of development at this point. I will hand back to Mr. Clancy.
Maurice Quinlivan (Limerick City, Sinn Fein)
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Is Deputy Bruton happy with the answer?
Richard Bruton (Dublin Bay North, Fine Gael)
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Yes, I am happy with that. I thank the witnesses.
David Stanton (Cork East, Fine Gael)
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I thank the witnesses for attending. Our news media are dominated by negativity every day, yet there is so much positive stuff going on. Perhaps they should fly the flag a bit higher and give people some hope. There are a lot of amazing people out there setting up their own businesses. It takes a lot of courage and bravery to take the risk and provide employment for others who do not want to take the risk or who probably cannot do so. Well done to the witnesses.
I am aware of the supports that have been given to small businesses across the country since the pandemic hit. Many businesses have survived because of that. Through the witnesses, I congratulate the Enterprise Ireland team across the country and staff in the LEOs on what they have done. It has been remarkable. People have gone above and beyond the call of duty in many instances and have saved jobs and livelihoods. I thank them for that.
As I have the floor, I will pose a few questions. I am interested in the lean approach to micro. Last year, there were 449 lean interventions and it is planned to scale them up to 2,000. In terms of climate action, there were also 293 green consultations and it is intended to increase that to 2,200. Does Enterprise Ireland have its own team of people in-house to do that? In my part of the world a company, the Leading Edge Group, does both lean and climate action supports for companies.
Could the witnesses comment on the need for export credit insurance? It was brought to my attention recently that some companies find it difficult to get export credit insurance. I know the Department commissioned a review on this recently and it is monitoring the situation. In the experience of the witnesses, are there companies under a bit of pressure in attracting export credit insurance? Has there been a change for some companies due to Brexit? Has some of the support dried up?
I am also interested in student enterprise education at second level and primary level. Has Enterprise Ireland carried out an evaluation of the student enterprise programme? I understand it has been running since 2003. It seems to be very successful. Has an evaluation been carried out on how many of those completing the programme have gone on to start their own businesses afterwards, as a direct result perhaps of the experience they gained of making their first euro through business, which can be very exciting for young people? What is the interaction of Enterprise Ireland with the third level sector in respect of that as well?
I also want to ask about the Open Doors initiative that has been established to help young people from disadvantaged backgrounds, migrants and people with disabilities to gain pathways to work. I know IDA Ireland is part of that process. Does Enterprise Ireland have any engagement with it?
The growth of Irish companies has been mentioned. It was stated that the aim is to have more public limited companies coming out of Ireland. Are there impediments to the growth of Irish companies? Is it the case that they grow to a certain level and then they get sold off? What is stopping them from growing further on their own? Quite a number of Irish companies grow to a certain level and are then bought up.
With respect to advance facilities, Youghal in my constituency has been devastated over the years and a lot of people leave the town for work every day. Reference was made to regional enterprise hubs and centres. Has Enterprise Ireland looked at the geography of the country and considered where there are blackspots, Youghal for instance, to establish advance facilities where people could set up companies? I have engaged with some people who have said Enterprise Ireland does not do that. Is it looking to move into that space?
The LEOs do a great job but I suggest that we need more of them in areas such as Cork, which is very large geographically. If there was access to excellent services in some of the more remote areas, it might improve matters a little.
Mr. Padraic McElwee:
I might address some of the questions specifically relating to LEOs and then I will hand over to Mr. Clancy. In terms of the lean for micro and green for micro programmes, Deputy Stanton identified one of the companies that we do use, the Leading Edge Group. It is very important that we get people with the appropriate expertise and knowledge to make those interventions with businesses. That represents good value for money. Each local enterprise office procures a panel of appropriately skilled mentors and facilitators to deliver the programmes. To be honest, that includes upskilling the staff within the local enterprise office as well to ensure we have a good working knowledge and understanding of the issue. They have the in-depth expertise, however.
The student enterprise programme is massively successful. You get a great buzz if you ever attend one. There is great enthusiasm. I do not have information on assessment. I would need to come back to the committee individually on that. Anecdotally, what we tend to see is that while a lot of student enterprises are great, they then go off and explore other opportunities. Quite a number come back to it, probably in their late 20s or early 30s. That is when we see the impact, not immediately, but they love participating in a programme like this.
I will make a comment on the Open Doors initiative. We did a pilot programme with Technological University Dublin on supporting people with disabilities. There were approximately 24 participants. We provided expert mentor support into it. My understanding from feedback is that four or five of the participants went on to start a business. We will now start to work with them through our normal channels and see if we can enable them. The positive news is that the programme has now got the support to be continued.
Maurice Quinlivan (Limerick City, Sinn Fein)
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I apologise for interrupting Mr McElwee but he is running out of time.
Maurice Quinlivan (Limerick City, Sinn Fein)
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I thank Mr. McElwee. Mr Clancy can respond but he will have to be very quick.
Mr. Leo Clancy:
I will be very quick in responding to a couple of questions. On the piece around growing companies further, that can be due to a number of factors. Usually, the offer on the table and the potential to scale a business further tend to be the swinging factors, as opposed to confidence in oneself to grow further.
On Youghal, we are constantly looking, with our parent Department, at the potential for new regional schemes. There have been 68 schemes under the regional enterprise development fund across Ireland and 11 under the Border enterprise development fund. We are not a formal member of Open Doors, but we see huge potential for migrant and other communities to contribute to the economy. We see that in every facet of work we do.
David Stanton (Cork East, Fine Gael)
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Could I get a comment on export credit insurance?
Mr. Leo Clancy:
The export credit insurance is something we are looking at with our parent Department. There is an access to finance group running within the Department of Enterprise, Trade and Employment and we are part of that, so we continue to monitor it. We are not seeing it as a huge blocker to business at present, but it is certainly something that we keep under review because we want to see the scaling agenda continue.
Maurice Quinlivan (Limerick City, Sinn Fein)
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I thank the witnesses. The next speaker is Senator Garvey who has seven minutes.
Róisín Garvey (Green Party)
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May I take Deputy Duffy's time as well? As the only Green Party representative, do I have 14 minutes in total given that Deputy Duffy is not here?
Maurice Quinlivan (Limerick City, Sinn Fein)
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I have explained this to Senator Garvey at every meeting when she raises the issue. She gets seven minutes. That is the roster agreed by everybody.
Róisín Garvey (Green Party)
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I thank the witnesses. Well done to them on their work so far. It has been a rocky two years and they have done a lot to help businesses to stay afloat. Unfortunately, it is impossible to save everybody. I have engaged with both the LEOs and Enterprise Ireland repeatedly in my role as spokesperson for enterprise, trade and employment. I might send a circular to Deputy O'Reilly about the supports provided to date, because despite what she says, the Department of the Environment, Climate and Communications and the Department of Enterprise, Trade and Employment have worked together to come up with lots of strong funding for the greening of the enterprise sector through LEOs and Enterprise Ireland. A significant amount of work is also being done in upskilling. There are hundreds of new jobs and courses in upskilling to get people into the workforce where we need them for Rebuilding Ireland and the green economy.
As a member of the Green Party, I will focus on that. I secured funding in the most recent budget to support LEOs, and Enterprise Ireland in giving better and more supports, and expertise, to small and medium enterprises on how they can go green and reduce their carbon footprints. It is now time to have targets. Let us see the carbon reduction. Green for Micro is welcome, as are the other initiatives, including the lean concepts. I would like to hear more about what the lean intervention actually is.
Mr. McElwee referred to 293 million green consultancies. I have two questions on that. Will he expand on what exactly that is? Are there targets of, say, a 10% carbon reduction or how is that being done so we know it is effective? What can we do to ensure more of an uptake? We need to see an increase in the uptake of the great services our guests are providing that will help to make businesses more economically sustainable, as well as environmentally sustainable. It is important that we all work together.
I do not think our guests' jobs are to talk about workers' rights. My experience of the SME sector shows that most employers, when they train somebody up, want to hold onto them. It takes a lot of time and energy to train somebody up. It is important we recognise that fact. I know many people who own small businesses and the last thing they want to be doing is losing employees and having to do it all again and employ somebody else. The SME sector has done very well in holding onto staff. It is not the case that workers' rights are being dismissed by businesses and employers do not take care of them. My experience of small businesses is that they take great care of their staff because they want to hold onto them. Our guests have probably found that too. They have probably not observed large amounts of people leaving small businesses because of mistreatment. We must have a nuanced debate around that. It is not simply a case of all workers need to get better pay and all employers do not take care of their workers.
The lean interventions and the green consultancy are important, as Deputy Stanton mentioned. I know there is two-day mentoring but what is the next step? Small businesses are busy. We nearly need to do more for them to get them over the line, whether that is packaging or looking at their heating system and turning it into an air-to-water system. I remember describing the air-to-water system to the Tánaiste, Deputy Varadkar, when I met him on the pre-budget submissions I made on decarbonising the SME sector. He committed €22 million to that programme. I am interested to see the roll-out of that and to hear how it is progressing. It is important to acknowledge the fact that the Minister for Environment, Climate and Communications, Deputy Eamon Ryan, and the Minister for Further and Higher Education, Research, Innovation and Science, Deputy Harris, have worked well and hard on creating new centres of excellence for upskilling through two-day and four-day courses for existing tradesmen and entire courses to get people into trades to prepare for the new green economy. I know for a fact the Minister for Environment, Climate and Communications met the Institute of Guidance Counsellors twice and there is a good circular available about all the green courses that are coming online. The Government, LEOs and Enterprise Ireland need to do more to promote those courses and get people into them. That is something on which we must look at doing more. We have created the courses and now we need to increase the uptake. It is good that the Minister for Environment, Climate and Communications has flagged that with the guidance counsellors. We need to do more work on that because we have created the courses and extra funding for tradesmen to take on apprenticeships. A great deal of work has been done but now we need to get it out there. That is why I wonder about the low uptake of the green consultancy and Lean interventions. There are not massive numbers availing of them, when you consider the amount of SMEs in Ireland.
That is all I want to say. Our guests are doing great work. It has been a tough two years so I do not want to criticise them. However, we do have a climate emergency. We need to forget about Covid-19 and go for it.
Mr. Leo Clancy:
I thank the Senator. I will start the responses to her questions, if that is okay. At the very top level, we published our strategy last month, as I said. The headline target under pillar 4 of our strategy is to adopt the Government target of a reduction of 29% to 41% in the enterprise sector by 2030. That is a critical and key target on which we are focused. With every support we offer in this space at present, we are asking questions about the tonnage of carbon that will be reduced as a result of the intervention, whether under the Lean initiative or a result of direct green support. If I go back one step, we have, in line with our strategy launch, created a new sustainability and climate action department. We have staffed it up. That team was active at an early stage last year but we have expanded it significantly. There are three broad elements to that. The first is to ensure we have funding supports available to business. The second is to ensure we are monitoring that target achievement. We have actions under the climate action plan to ensure we are monitoring the carbon output and actively working towards reducing it. The third element, to the point Deputy O'Reilly mentioned, is around ensuring we maximise the opportunities from the green economy because I think they are many. I know the committee will agree that there are considerable opportunities for Irish businesses if we can get the story right locally, and we are doing that. We will see a big dividend in jobs from this space. That is good.
On the Monday before last, I visited Tricel, a company of ours in Killarney. Tricel, along with the Sustainable Energy Authority of Ireland, was launching an intervention around oil usage and solar power, among other things. Tricel has done an extensive intervention on its plant. We have seen that across many other companies in our base and I think we will continue to see that. Companies are definitely on that track. There was a question for Mr. McElwee about smaller company supports. Certainly at the mid size, there is a lot of support available from Enterprise Ireland. The key support we offered last year was the climate enterprise action fund, which was a voucher for companies to take the first step. As Senator Garvey alluded to, we saw disappointing take-up of that, at least in the first half of the year although it improved towards the end of the year. COP26 was not irrelevant to the improvement of the trend in that regard. We want to drive that again this year and will do so. We are preparing to launch a further campaign. Awareness is the first step though, necessarily, that will not have targets associated with it because it is a small intervention. As the Senator said, it is about getting the headspace right and getting companies to start thinking about these issues. We see the same thing the Senator sees. SMEs are busy and until climate change is an impending and compelling challenge, they will not focus on it.
We have for a number of years had environmental aid support to help with capital interventions for companies, including GreenStart and GreenPlus, which are effectively Lean projects about how to integrate more green techniques into a business. Those supports are well established so we are not starting from scratch. We are trying to increase the take-up of those. We will see a lot more take-up of those during this year. The more companies I meet around the country the more heartened I am by the level of attention to these issues. We are absolutely heading in the right direction. Conscious of time, I will hand over to Mr. McElwee to talk about the microenterprise element.
Maurice Quinlivan (Limerick City, Sinn Fein)
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I call on Mr. McElwee to be very brief because the time limit for this slot is up.
Mr. Padraic McElwee:
I will be brief. Lean is about sending a consultant into a business and identifying where that business can save costs and improve its productivity. On average, business that participate in that programme save approximately €30,000 annually, which is very positive.
Micro for Green is a pilot programme. We have been encouraged by the take-up of it. An evaluation will be done. The early analysis suggests that most of the savings that have been achieved by businesses under the green consultancy can be done in-house. They do not need a financial support to achieve those savings. Our objective is to build on that support. I am happy to sit down with the Senator and elaborate on those points at a future date.
Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I want to ask our guests for their views on the scope for growth for workers' co-operatives. I am sure they are more than aware that there is legislation in train to reform the area of co-operatives. As they will know and as I know, the co-operative model has been found to be very productive and highly resilient across Europe, which is very relevant to the conversation we are having now. The model is also competitive. Countries such as Scotland, France, Italy and Spain make great us of co-operatives. What role do our guests see for workers' co-operatives in our economy into the future? Perhaps we could focus on the medium term rather than the long term. I think we all agree that workers' co-operatives are a good idea. I want to understand how our guests think co-operatives might fit in terms of their development models and plans for the future.
Mr. Leo Clancy:
I will start the reply and will ask my colleague to speak afterwards. I am conscious there is legislation in train in this space, which I have watched with interest.
Co-operatives are businesses. We are here to support business. Unless the legislation that emerges precludes us from doing so, I will be more than delighted for Enterprise Ireland to support workers’ co-operatives as a type of business. The more diversity we can have in the types of businesses that are developing in Ireland, the better. We are currently working with some social enterprises. I certainly want to broaden that agenda in the way we can support social enterprises. We are very well placed to support both those social enterprises and co-operatives. I would very much welcome the emergence of any legislation. Enterprise Ireland will do its part to support workers’ co-operatives in whatever form they can emerge here.
Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I apologise for interrupting Mr. Clancy but does Enterprise Ireland have a specific unit? Going back many years, and I am showing my age now, there used to be a specific co-operative development unit and it was very focused. It was not simply a case of saying a co-operative is a business and if you rock up to the business space we will deal with you as a business. I am specifically talking about the benefits in terms of resilience and all the rest of it. Is there a particular focus? Co-operatives are a business and that is fair enough. That is their job and they are in the business arena but they are a little different from other businesses.
I would argue they are significantly better than other businesses in some instances but not all. Is there a specific unit with a specific focus? Would Enterprise Ireland be planning to put something like that in place when this legislation goes through? I think we would agree that if the legislation goes through and precludes the development of co-operatives, we would all work together to make sure that does not happen. I do not think that is on the horizon. In the event that this legislation goes through and we know what it seeks to do, will Mr. Clancy’s organisation and Mr. McElwee’s organisation be able to come together and specifically focus on workers’ co-operatives because they are different and are not the traditional model?
Mr. Leo Clancy:
I thank the Deputy for the clarification. At present, we do not have a unit focused specifically on workers’ co-operatives. We would consider the volume. Like anything we do within the agency, we will consider what is the appropriate way to address that but workers’ co-operatives are a very positive development. They are owned and self-managed and they certainly give people an opportunity for more ownership, equity and longevity within businesses. We would certainly consider how best to support them. I will not say today that we would set up a specific unit within the organisation but pursuant to the legislation we will certainly look at what is the appropriate way to address that and we will support them fully.
Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I thank Mr. Clancy for that.
Mr. Padraic McElwee:
I would probably echo Mr. Clancy’s sentiments but the local enterprise office has a particular role and the way we would do this is to upskill and provide workers’ co-operatives and social enterprises generally with the skill set to run a business profitably. That is a key role for us. As alluded to by the Deputy, they have a completely different make-up. They are not uniform. There are different types of enterprises. Therefore, it is a matter for us to match what they need and then to provide them with the tools to make that co-operative a success.
Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I thank Mr. McElwee for that response. I have another question specifically for Mr. McElwee concerning the difficulties SMEs and microenterprises experience when competing with the massive global multinational corporations such as Amazon. Recently the chief executive of the IDA Ireland said:
It is great to see Ireland continuing to attract investment and playing such an important part in the future plans of this global company. Amazon’s ongoing commitment to Ireland is most welcome.
Many people in SMEs, microenterprises and family-run businesses were shocked by those comments and they contacted me. Amazon’s business model does nothing other than it has served, in some instances, to undermine the local small to medium-sized business enterprises and that is before we even consider its record on workers’ rights. Has Mr. McElwee heard much from the companies and businesses he is working with about the potential threat from organisations such as Amazon and how they can stack up their resilience against those big massive players in the field? They are far bigger than any of the enterprises Mr. McElwee's organisation is supporting. We want to grow our own enterprises, as it were. Has Mr. McElwee heard that from the companies he works with because I certainly have?
Mr. Padraic McElwee:
Yes. We have had that feedback and it is a challenge but it is a business challenge. Our role is to equip our businesses to meet that challenge. The Deputy alluded earlier to the Look for Local campaign. The feedback we got from an evaluation of that campaign is that it supported approximately 69% of respondents to buy from their local businesses. In a way Covid-19 highlighted the competitiveness of the services our local businesses can offer. I had a view prior to Covid-19 and I hold it even more strongly now that the trading online voucher is about giving our local businesses the tools to compete in a virtual world with the likes of Amazon. For a period during the pandemic it was easier to buy from Amazon than it was to buy online from a local business. As the Deputy will know, most of our young people operate in a digital world. Equally, to be fair to some of the large players, they provide quite good training supports to our small businesses to equip them with the necessary tools and skills. I have seen some small businesses become digital exporters and they are starting to win business form overseas. I agree it is a challenge. We will work with them and I am confident our really good businesses will meet that challenge.
Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I thank Mr. McElwee For that. My time is up.
Maurice Quinlivan (Limerick City, Sinn Fein)
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The next speaker is Senator Crowe and he has seven minutes.
Ollie Crowe (Fianna Fail)
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I wish to raise three brief issues. First, I want to highlight the terrific work Dr. Gibbons mentioned in her contribution that is being done by Galway City Innovation District, which is also known as the Portershed in Galway. Nearly 300 engineers are employed there and there is great scope and investment there. I have issued an invitation to the Minister, Deputy Darragh O’Brien, to visit it when he next visits Galway. Will Dr. Gibbons outline what is required for continuous growth there for 2022?
I wish to raise with Mr. McElwee the online voucher scheme. He explained it in his response to Deputy O'Reilly's question. Can there be future development and investment in more businesses? Can we expand them? All politics is local, particularly in Galway city. There are empty units in Shop Street and in areas in the inner city of Galway, even though is a vibrant city. We must ensure the heart of the city is helped as much as possible. I appreciate the continuous work that is going on.
Can Mr. Clancy ensure full allocations are spent every year? What process is in place to ensure that happens? I will leave it at that.
Dr. Carol Gibbons:
The Senator mentioned Galway specifically. The regional enterprise fund is incredibly important in delivering that infrastructural need across the country. Galway, in particular, and the wider region have seen growth in enterprise in the form of companies. Chanelle Pharma is one such company of which the Senator would be aware. Specifically our focus with respect to Galway would be to continue the work on the ground, to embed more med-tech, to look at more entrepreneur development and to work hand in hand with our regional executive and directors and with Galway City Innovation District in particular. I would also mention the imminent announcement by the Government of the regional enterprise plans. The priority across the regions is very important.
As the Senator is aware, we have worked hand in hand with those committees to prioritise Enterprise Ireland's strategy across the regions to 2024. We have also prioritised working with our colleagues in the LEOs. I hope that answers the question.
Mr. Padraic McElwee:
I might pick up on the online vouchers. I covered it quite well but the Senator touched on an important point about the empty units in some of our towns and villages and the impact of online trading. Our colleagues in the north east, in Louth, Cavan and that area, have done a pilot programme on how we might be able to work to support the retail sector. We will evaluate the outcome of that programme and that is something we might be able to lend further support to. All LEOs work with the local chambers of commerce to see how they can help that sector. It is important that online trading is another complementary channel and it is not one or the other. That is part of the educational message we are putting out; we are saying to companies that online is just another way to make it easy for people to buy from them. It goes back to town centre renewal. While there are many challenges, the supports are there and it is a case of evaluating and seeing how best we support it. I am optimistic.
Mr. Paul McKeown:
Each year we work closely with our parent Department on what our requirements are and we fully expect to hit our approval targets in the year. The underlying payments in the case of companies depend on when those companies, in line with their business activities, claim the money from us. Year to year, there can be some variability on payments. On some offers we are over, while on others we are under, but we work closely with the companies on that. The key point is that once we have made an approval to a company, that is a commitment from us. Regardless of whether the company claims it this year or next year, as long as it claims it in line with its letter of offer, we will make that payment to it. Many of our programmes have a multi-year aspect in that they will span more than one financial year. There is, therefore, always a degree to which we manage the overs and unders on particular programmes in line with our budget management and our parent Department.
Ollie Crowe (Fianna Fail)
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I thank Dr. Gibbons for the answers and I thank Mr. McElwee, Mr. Clancy and Mr. McKeown for their detailed responses.
Garret Ahearn (Fine Gael)
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I thank Mr. Clancy and Mr. McElwee for their opening contributions and wish Mr. Clancy well in his new role. I know it is seven or eight months now but in Tipperary we are always impressed and delighted when one of our own gets to such a good and significant role. It is not that Mr. Clancy will have any bias towards his home county but he was talking about regional and rural development and Tipperary and the south east are key areas for that.
The LEOs have done a phenomenal job over the years, particularly in the last two years. Clonmel is a good example of a LEO that has succeeded. Mr. McElwee will be familiar with the Questum Acceleration Centre building in Ballingarrane just outside Clonmel. We are at a point where the companies are growing so fast we do not have space to develop. Conversations are taking place between Tipperary County Council, the LEO, and IDA Ireland to build a second phase of that Questum building so that companies that have expanded can move into a bigger space. Is that a problem the witnesses are seeing across the country or is it unique to Clonmel and Ballingarrane?
The Minister for Rural and Community Development, Deputy Humphreys, has put aside an awful lot of money to find remote working hubs around the country. We have two remote working hubs with which a LEO assists in Tipperary town and Carrick-on-Suir. Are the witnesses finding that demand for remote working hubs is exceeding the speed at which we are developing them? These remote working hubs provide a huge opportunity to benefit rural areas and regions that have struggled in recent years.
On road infrastructure, we have a strategic road in Tipperary, the N24, which runs from Limerick to Waterford. Mr. Clancy might be familiar with it. There is a proposal to develop this road in the coming years. Post Brexit, is it beneficial to small companies, just as it would be to foreign direct investment, to have good road infrastructure between Limerick and Waterford and Shannon Airport and Rosslare Europort? Does that play a role for companies Enterprise Ireland represents?
We always talk about businesses that have more than ten employees because the LEOs can no longer support them when they grow beyond that. There is also a problem for small FDI businesses that do not get the kind of support they probably need and are left in limbo between IDA Ireland, Enterprise Ireland and the LEOs. Is there something the Government can do to support or facilitate the LEOs to support these businesses at an early stage? It seems like some of these companies are just left on their own. I know we want to predominantly look after Irish companies but these companies are employing people and may employ more people in the future. Is there something the LEOs or Enterprise Ireland could do to support them?
Mr. Padraic McElwee:
I will take the questions on the Questum Acceleration Centre. I am familiar with that building and my colleague, Anthony, facilitated a visit there. I would like to have such a centre in Clare because what it has done for the region has been fantastic. To answer the Senator’s question, we can build that capacity because that model has been effective. What is important about that is the collaboration between the companies. It is a model that could be replicated and that will support our innovation culture. I would not say there is a capacity issue there. I would see it more as an opportunity to grow and develop that. We will work with our colleagues in Enterprise Ireland on that.
Remote working hubs are well catered for. A number of State agencies and private operators are facilitating them. It is hard to assess demand because Covid restrictions meant some of the capacity was restricted but that was due to social distancing. It will be more informative to assess how effective they are as we return to a greater degree of normality in the next month or two. They are hugely important for what was mentioned. It would be beyond my remit to comment on the small FDI companies. That would be a matter for the Government and Members of the Oireachtas but Mr. Clancy might touch on it, given his background in IDA Ireland.
Mr. Leo Clancy:
I thank the Senator for his kind comments and it is something I look forward to. I have been familiar with the Questum Acceleration Centre for a number of years. The Senator’s question on capacity is interesting. It is interesting that in recent weeks I have met two large companies with well over 100 staff which told me that remote working during Covid-19 had been the saving grace for them as regards office space and continuing to grow because they have been able to bring their people back, even though they probably have 150 staff and room for only 100 of them. Remote and blended working is a positive for them when it comes to capacity. The same is true for remote working hubs. There are probably business model challenges for a number of the remote working hubs in attracting back people who will want to take long-term desks in a physical centre with the advent of home working. That is a challenge on one side. There is an opportunity for them to become hubs in a much more general sense. The one certainty is that every town that has a hub believes it is important to the vibrancy of the town to have a centre where business gets done. Whether that becomes the place where people work all the time or where they come for events, advice and other services is a question that will be asked more often in the next 12 months. It will be interesting to see the results of that.
We are always positive on developing road infrastructure.
Some sites in our base would not necessarily be as large as some of the very large foreign direct investment, FDI, sites, but infrastructure development is positive for all business.
We can look at the very small FDI on a case-by-case basis with our colleagues in the Industrial Development Authority, IDA. We are open to and have had discussions in the past on that. It is a discussion we can take away. We can see what each of our agencies is allowed to do under statute and the services order and make appropriate arrangements. We are happy to hear about any specific cases in that vein and to follow up with the Senator offline.
Garret Ahearn (Fine Gael)
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Thanks very much.
Maurice Quinlivan (Limerick City, Sinn Fein)
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We have one slot left on round 1 which is Deputy Paul Murphy. We will then move on to round 2 for which a number of people have indicated.
Paul Murphy (Dublin South West, RISE)
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I thank the witnesses for their presentations. My questions are mostly for Mr. Clancy. Ambition 4, as set out in the opening statement and the Enterprise Ireland, EI, strategy, is "Irish enterprises leading globally on sustainability and achieving climate action targets", which is mainly measured in terms of the climate action plan target of a 29% to 41% reduction in emissions from the enterprise sector. How does that tally with the big emphasis on increasing exports? Does that not contradict it to some degree? Goods exports are transported around the world by fossil fuels. The WTO says approximately 20% to 30% of total carbon dioxide emissions are associated with international trade. More than 7% of greenhouse gas emissions come from international freight transport. If one increases goods exports, it seems very difficult to achieve reductions in carbon emissions.
Mr. Leo Clancy:
There are a couple of elements to that. First, the Irish enterprise sector is more manufacturing based than services based, at present. I see that changing in the coming years. I mentioned Wayflyer, Flipdish and a number of our other new unicorns. I strongly believe that many of our exports in the future will be digital and services based and much of the growth will be in that space. That said, we anticipate continued growth in the manufacturing sector. All of what the Deputy has said is hugely relevant.
If one looks at this strategically, many of the goods that are shipped to any country in the world come from a very far distance away. China is one of the very large producers, at present. If one looks at where we are focusing on exporting to, we see much growth in northern Europe and the eurozone. Those will continue to be key growth locations. Our exports to those locations may compete with exports from even further away. In that context, Ireland will still be a greener choice for exports to those locations.
Coupled with that, increasingly with the climate action plan, we are a high-quality jurisdiction in terms of our adherence to laws and regulations and traceability of carbon, in particular. That will stand to us in terms of how Ireland can stand up and make the case that we certainly have an industry that is greener. Many of our clients are thinking about their supply chains in terms of scope 1, scope 2 and scope 3 emissions and are looking at plans both for offsets and reductions in carbon. It is a fair question, but in order to answer it fully, one has to look at the global context and the services and digital opportunities before us, which will grow very significantly.
Paul Murphy (Dublin South West, RISE)
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Transporting goods, at present, uses considerable fossil fuels and it is one of the most difficult sectors to decarbonise, according to the OECD's international transport forum. It predicts that trade-related freight and transport emissions will rise fourfold by 2050 which, again, goes contrary to the whole world's goal. I see what Mr. Clancy is saying about how people in northern Europe will buy things from Ireland instead of China and therefore, overall, we will reduce emissions. However, China is not similarly planning for that. The whole world plans to continue to compete on the basis of exporting more and more stuff. What is the breakdown between air freight and sea freight in terms of goods-exporting Irish companies? There is quite a difference. Air freight is much more carbon intensive than sea freight.
Mr. Leo Clancy:
I do not have the numbers to hand, but we can certainly take a look to see whether we can find any trace of that. However, it is much more sea based when one looks at our export base, predominantly in areas such as food and engineering. It is definitely much more sea based than air based in terms of the goods. That has gone to the heart of some of the challenges Irish enterprise has seen in the past 18 months, in particular, with the costs of containers and supply chains going up significantly. It is certainly more sea based but I do not have a breakdown of the figures, exactly, in that regard.
Paul Murphy (Dublin South West, RISE)
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I do not expect Mr. Clancy to have the figures here, but does he have them in the office? Are the figures collected by Enterprise Ireland? Surely, these things should factor into funding and grant decisions. If Enterprise Ireland is serious about ambition 4, surely, it should take into account how goods are exported and whether that is something in which it wants to promote and invest.
Mr. Leo Clancy:
I am also not sure we have the data on sea freight versus air freight in our client survey. We survey our clients in terms of their business costs and imports and exports, annually. That survey is ongoing. We can certainly take it on board and have a look at it. However, we are looking at the overall carbon footprint of our clients. That includes all of the emissions that go to the business. We will look at it in line with all aspects of the business. Overall, we have a target for carbon reduction for the businesses. That tends to be where our focus is. It is more sea based. Air freight, necessarily, would be limited to small numbers of suppliers with very high-value light goods. Our economy is more weighted towards food and heavy engineering on the Irish enterprise sector and, increasingly, services.
Paul Murphy (Dublin South West, RISE)
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However, Mr. Clancy is saying when Enterprise Ireland looks at the carbon footprint of companies, it takes into account the impact of freight, be it sea, air or whatever.
Mr. Leo Clancy:
I am not sure how far we take that into account. I can certainly look into the question and come back to the committee. I do not know how far we go. It depends. We are at the early stages of measuring our carbon impact for a number of our clients. The Deputy will see, under the climate action plan, we have targets around some of the emitting sectors. We will look at that. I cannot commit that we do have it in all our schemes, at present, but we will integrate it. We have committed that during quarter 1 this year, we will have a process of assessing carbon emissions as part of any grant application we make. We will certainly take the Deputy's comment into consideration.
Paul Murphy (Dublin South West, RISE)
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Surely, Mr. Clancy would accept it would be bizarre not to include the impact of freight when one looks at the environmental impact of a company. If the company is set up to export goods, that is an integral part of it.
Mr. Leo Clancy:
Our companies will have that because all companies are starting to measure their scope 1, 2 and 3 emissions. It will include the freight, as well as the heat that goes into making the product and any of the ancillary elements. It makes sense to include it. I just cannot comment on whether we, as an agency, have those data. However, I know from talking to all our clients that sustainability is top of mind. Sustainability, carbon footprint and carbon emissions will be absolutely vital to our clients in terms of how they sell into their supply chains. We see that the market is pulling clients in that direction. I am absolutely certain that the data exist. I cannot commit to the Deputy what we have, specifically, but he makes an excellent point and we will take it on board.
Paul Murphy (Dublin South West, RISE)
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Can I ask one overarching question? It is kind of where I am getting to.
Maurice Quinlivan (Limerick City, Sinn Fein)
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Very quickly. The Deputy's time is up.
Paul Murphy (Dublin South West, RISE)
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Does Mr. Clancy not see that it would make sense to focus on consumption and production here, such as the Look for Local scheme, as opposed to this emphasis on exports?
Mr. Leo Clancy:
We are a small island economy. It is very important for us to be active in global markets. If one looks at some of our peers around the world, no economy of fewer than 10 million people would say any different. We are very fortunate to be part of a trading bloc, but we are a small economy and for businesses to grow, thrive and prosper, they need to be export orientated from the start, especially those that are in leading edge economies.
The focus on exports is right and proper. It has led to increased prosperity on the island. In the context of globalisation and all of the progress we have made as a global economy over the past 50 years in particular, I do not think that reverting to a hyper-localised economy would serve us well. It would damage our economy severely if we took that approach. I am firmly of the view that we should continue to be an export-led economy and that that is right and proper. The opportunities for prosperity and the flourishing of all of our citizens is strengthened by that.
Paul Murphy (Dublin South West, RISE)
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I thank Mr. Clancy.
Maurice Quinlivan (Limerick City, Sinn Fein)
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Before we move to a second round, I would like to comment briefly. I thank the witnesses for their presentations. I represent the city of Limerick and north Tipperary. In Limerick, we have a number of unemployment black spots. There are others across the State but eight of the top ten unemployment black spots are in the city of Limerick. Has there been any engagement by Enterprise Ireland with the LEOs about how we could target those black spots? It has been an ongoing issue for a number of years. The area might change but it is still an unemployment black spot. Unfortunately, seven or eight of the top ten black spots are always in Limerick city. Are there any specific actions that Enterprise Ireland or the LEOs could take? Could a grant be provided so that we could do something for those particular areas? I would welcome a brief comment from Mr. Clancy and Mr. McElwee.
Mr. Leo Clancy:
At this point in time, Enterprise Ireland does not have a specific programme that is focused on unemployment black spots. However, one could argue that all of our programmes are targeted at unemployment black spots. We have a unique opportunity now. Everywhere I go, in particular over the past six months, I hear there is massive demand from employers for labour and skills. We are very happy offline from this meeting to understand more fully the unemployment black spots and what has been done to date. We have made a number of investments under the regional enterprise development fund with Innovate Limerick and in various other spaces to ensure that Limerick is enabled to grow. Companies in the region are very focused on how they access skills. We have a number of programmes in that regard. As I said, Enterprise Ireland is more than happy to meet colleagues in Limerick to understand if there is something we can do in a targeted way to address the issue. We do have the tools within our current toolboxes to do something in this regard. I am happy to engage offline with the Chairman. I will pass over to Mr. McElwee for brief comment.
Mr. Padraic McElwee:
I am familiar with Limerick city. I will make two points. Regional skills fora have a big role to play. I am chairman of the regional skills forum for the mid-west. How we upskill that sector of the population is very much identified as a core activity. Not to pre-empt any announcements in and around the regional enterprise action plans, but I think that theme will be reflected in the mid-west regional enterprise action plan. I am confident that it is a targeted focus and actions will arise from that to, hopefully, at least, improve the situation.
Maurice Quinlivan (Limerick City, Sinn Fein)
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I thank Mr. Clancy and Mr. McElwee for their responses. I will make contact with them both on the matter. We now move to a second round. I will take members in the order they indicated, starting with Deputy Bruton, followed by Senator Garvey, Deputy O'Reilly and Deputy Stanton.
Richard Bruton (Dublin Bay North, Fine Gael)
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I am delighted to hear the regional enterprise strategies, which I introduced when Minister, have had a positive impact. There was scepticism about the initiative at that time, but it has proved its value. In the years ahead, it will show that we can consolidate regional development on the basis of strong enterprise. I note from the LEO returns that they had a fantastic year, but nonetheless 4,500 jobs were lost. What is the take across the LEO network and Enterprise Ireland with regard to companies that have got into difficulties in the face of Brexit or Covid and have been more dependent on domestic markets? Are we going to see significant companies getting into difficulty? In regard to the new low-cost examinership process, is it anticipated that it will come into play for some of the Enterprise Ireland companies?
In the bigger picture of dependence on British companies, traditionally the smaller Irish companies were 40% to 50% dependent on the UK market. Have we seen much shift in that in the past two years to diversify some of those companies that could be vulnerable in the current situation?
Mr. Leo Clancy:
I will start and then hand over to Mr. McElwee. Many companies have had difficulty in the lead-up to Brexit and Covid. Thankfully, the lead-up to Brexit has been longer than we had anticipated and so it has given companies more time to be ready. Enterprise Ireland has been supporting companies since 2016. We got out of the blocks very early in terms of supporting companies, as did the LEOs. The extended period has served people well in terms of being ready. In the period leading into Christmas last, where we had a deadline of 1 January, which was subsequently deferred, we saw a lot of registrations from smaller companies in particular that would not have had them. There were some encouraging signs that companies are ready. Large companies are very ready. Anyone to whom I have spoken on the large company side, or even the medium side, have said they have made appropriate provision. That said, I do not doubt that there may be some negative consequences yet to come from Brexit.
In terms of the overall picture, post Covid, of company stability and the potential for examinership or difficulties, we are not seeing huge trend data and we are not hearing massive concern from our client base that they will be in trouble. The results last year speak to that. There was a very strong resurgence. Companies had been able to reopen gradually during 2021. That said, there will be examinerships. The low-cost examinership process that has been put in place is very welcome. There will be companies that get into difficulty. The bigger concerns at the moment are inflation, the cost of goods and the cost of shipping for companies. Those are the areas that potentially are driving difficulty, maybe more so than market difficulties because markets have reopened to a large extent. We are not seeing massive signs of difficulty.
In regard to the question around diversification, we have seen significant and continued diversification from the UK market over the years. That has happened in a really positive way. Since 2010, the UK has accounted for approximately 50% of our exports. In 2022, that figure stands at 30%. That is a proportion that we intend to maintain. We think that 30% into the UK is a level we are going to maintain over the coming years. That diversification has gone elsewhere. Even in the context of the percentage diversification, we have seen the absolute amount of exports into the UK continue to grow over time. We are targeting the same over the coming four or five years such that we will see exports to the UK continue to grow, albeit at a lower rate than might have been the case. Exports elsewhere will continue to grow. Through programmes such as Enter the Eurozone, we are very focused on particularly highlighting the eurozone as an opportunity for clients. In my view and that of my colleagues, Irish companies are not availing enough of the opportunity that being part of the Single Market presents us. That is a huge opportunity area for us in the coming years. I will hand over to Mr. McElwee for any follow-on comments on company closures in particular.
Mr. Padraic McElwee:
On the job losses and the local enterprise offices, it is, probably, the nature of the cohort of clients that we deal with. The reality is we deal with early stage start-ups and not all of them will succeed. Some of that might be by choice in that people often get into business and decide it is not for them and they opt out. There are a lot of transient jobs as well. People might take a job with a local firm for a year or two but then decide to move on. We focus so much on the net job position because that gives us a true test of the stickiness of those jobs. I should also make the point that we transferred 114 companies to Enterprise Ireland, which included approximately 825 jobs. That is a number that would not be reflected in our numbers this year. They are our high-growth companies.
On the export side, the Deputy is correct that among smaller businesses in particular there tends to be an understandable focus on the UK market. That makes sense. It is easy. Culturally we are fairly similar and it is an English-speaking country. We are working very closely with Enterprise Ireland particularly in regard to the more advanced ambitious companies to broaden their knowledge of the wider European market.
That will be a work in progress. I see that as a significant opportunity for many small businesses in Ireland. In a way, Covid has opened their eyes to opportunities because they took the time to step back. We will work very closely with Mr. Clancy and his teams around the country to achieve that objective.
Róisín Garvey (Green Party)
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Deputy Paul Murphy raised an interesting point on one level looking at indigenous goods as opposed to imports. I take the point that we are a small island but it is more complicated than just saying "look at the carbon footprint" because if we look at freight alone, we must miss a piece around the carbon footprint of the production of it abroad. I have seen this in the past where the carbon footprint of something indigenous is actually higher than something produced abroad even if we take freight into account so it is not as simple as just looking at where it came from and saying if it came from abroad, it is worse. That is not the case, unfortunately, in proper carbon calculations. It is not all about the freight. We must look at how and where it was produced.
I know big businesses are quite good at this so they can employ people full time to look at it but we need to see carbon targets if we are going to tie into the climate action plan. Nobody has yet raised the circular economy. It now makes more economic sense to be ecological in looking at where you get your stuff and end of use, waste and cost of waste as opposed to looking at the different components of every part of your business and how you can keep things back in the economy and reuse, reduce or repurpose in some shape or form. We are way behind on that level. I see best practice in other countries. I was at the Rediscovery Centre yesterday, which has a good display model of some things around furniture, bicycles, paint and clothes, including fast fashion, but there is a significant piece of work to be done with small businesses around the circular economy. They are going to need help with that to look at components, where they are sourcing stuff and even packaging. It is now trendy to have compostable and biodegradable packaging but a lot of that stuff is only industrially compostable so we must be careful about greenwashing. When we move towards a climate-focused economy, we must look at greenwashing and make sure what we are doing will genuinely reduce waste and carbon footprints so we must up our game in that regard. This is where we might need upskilling across the people advising us. Consultants can be great but sometimes they just make sure it looks green. We must make sure it really is green, which is why I go back to the carbon calculations and carbon targets.
Sometimes the SME sector just needs funding for capital to help upgrade existing equipment, which would be more energy-efficient, and buildings. Then they might be able to take on more employees. Some small businesses are successful but perhaps what they need most of is capital funding to help them improve their buildings and equipment so that they can be more efficient and afford to take on new employees.
Are the witnesses looking at specific supports around the circular economy? As Deputy Paul Murphy said, the more we can produce in Ireland, the better. We could not even produce face masks. Manufacturing is very weak in Ireland yet I have seen CNC routers and 3-D equipment that can do this stuff. I do not think we are really going for it in this realm. I have seen a CNC router make a bicycle. Most children's bicycles are coming from Indonesia. I would like to hear about work being done in the circular economy if we are going to be serious. I firmly believe that with the right supports, businesses can be economically viable and very ecological. We must watch out for just saying the word "sustainable" everywhere and greenwashing. We have been doing that for years. We need to be very genuine. We need carbon calculations and investment in the circular economy if we are serious about this as we move forward to be a resilient island.
Mr. Leo Clancy:
There is a lot there. In respect of the Senator's point about the circular economy and how we support clients in that regard, I have been part of a number of conversations directly with clients where we have spoken about innovation support we can offer directly through research innovation grants. Mr. McElwee mentioned agile research and development earlier so that is certainly a support we can use. If a company is looking at changing its packaging format and needs some additional help or incentive to make that happen, that is somewhere we support.
We also support innovation partnerships, which is work that can be placed with the university. I mentioned UCD and its focus on the circular economy earlier. If a company finds an academic it can work with in a university setting, we will provide very substantial grants for the work that can be placed with those in order to achieve that outcome for them. There are a number of areas like that.
The other thing mentioned by the Senator was the elimination of waste. We spoke about the Lean For Micro scheme. We also operate the LeanStart, LeanPlus and LeanTransform programmes. These programmes are very focused on productivity but the essence of productivity is that you cut waste out of your business be that time waste of employees or, more specifically, material waste. That is possibly a precursor to the circular economy. It involves avoiding the creation of a product that needs to be recycled in the end. Those are two of the key areas where we support the circular economy. It involves avoiding the creation of waste and excess packaging and other things being created in the first place and supporting companies with changing their methodology. A recent conversation I had involved changing from a non-recyclable pack to a recyclable one. This is an area where we would look at providing innovation support directly to the company as well as what could be provided by universities.
I agree with the Senator's point regarding freight and the carbon footprint abroad. It works both ways. In the context of the Senator's point and that of Deputy Paul Murphy, Ireland's increasing move towards a renewably powered economy provides us with significant opportunities to be greener in this space. If we are an economy that will have significant amounts of our industry fuelled by wind and possibly by green hydrogen over time, we have an opportunity to be that country that even with any transport emissions still has a greener product produced here than somewhere that might be relying on coal-fired stations elsewhere so there are significant opportunities for us in that space. The Senator's overall points are very welcome. I know she started with the small and micro enterprise side. I might hand over to Mr. McElwee to comment on that.
Mr. Padraic McElwee:
We do capital equipment funding as part of our traditional measure one funding. In the next few weeks, we will also launch a digitalisation voucher that is aimed at how we digitally enable our small businesses. That will feed into upgrading equipment, etc. I will hand over to my colleague, Mr. Geoghegan, to address the points about the wider economy.
Mr. Oisín Geoghegan:
In the local enterprise offices, we are very keen to ensure that our micro businesses in particular are aware of the necessity for them to become more sustainable. It is not only good for them and their profit margins, particularly in the light of increased energy costs, it also involves how this movement is shifting. We believe that in the future, the businesses that are not sustainable and are not demonstrating that they are serious about their carbon footprint will be probably be pariahs in our society. Much of the work of the local enterprise offices involves getting businesses on board in all of this. That has been particularly difficult over the past two years because businesses have had to deal with a crisis. Mr. McElwee mentioned the Green for Micro programme earlier, which has thrown up a lot of really interesting cases of businesses that have begun to understand the necessity of looking at how they are using their resources and ensuring there is resource efficiency there. A lot of programmes relating to the circular economy are in their infancy. Tor example, the MODOS programme in Dublin has been doing very good work and is an excellent model the local enterprise offices are working within the local authorities to achieve.
Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I have one question and then must leave the meeting.
This is something that we will follow up on in a more detailed discussion. I had an engagement with Mr. Clancy recently and we will have further engagements. I am trying to understand the point at which issues around workers' rights, supporting decent jobs and so on enter the process. Perhaps Mr. Clancy might enlighten us as to the point at which Enterprise Ireland starts speaking about workers' rights, how they can be respected, how there can be decent jobs, etc. We all talk about decent jobs and how that is what we want. Luckily, most of us on this call have decent jobs, but I am speaking about people who do not. When Enterprise Ireland speaks to its clients about workers' rights, how does that work itself into Enterprise Ireland's process and conversations? Every person at this meeting is supportive of workers' rights, decent jobs and so on, but my question is on being proactive in that regard and giving practical effect to that support. We are speaking about companies that are supported by the State, which itself says that it supports decent jobs and workers' rights, however that assertion manifests. When State funding is at play, how do these sides marry together?
Mr. Leo Clancy:
I thank the Deputy for her questions. Providing good employment is an imperative for all employers. We are in a tight labour and skills market and people are compelled to offer good employment. They have a statutory responsibility to respect workers' rights as far as those are protected within legislation. All of our clients are aware of their statutory responsibilities-----
Louise O'Reilly (Dublin Fingal, Sinn Fein)
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Sorry. That was an interruption. Please, continue.
Mr. Leo Clancy:
That is fine. We have a team within our leadership and skills division that is specifically responsible for our HR advice to companies. Similar to many other bodies, we provide advice to clients on how to deal with certain issues. We are not a statutory body in this regard, but we run webinars and advice seminars on the retention of people. For instance, one of the matters that we ran programmes on last year was hybrid work, blended work and people evolving their workplaces to ensure that they are attractive to employees. In that context, it is part of the conversation. Being the best employers they can be in order to attract and retain the best talent is definitely on the minds of all the employers I have met irrespective of sector. That is where we come in.
We conduct cost-benefit and value for money analyses of the projects that we support financially. These include the levels of salary paid and other elements. That is the remit level we tend to have. We are supportive of workers' rights being respected – that goes without saying. Beyond that, I am unsure as to at what further level the Deputy considers we should be interacting.
Louise O'Reilly (Dublin Fingal, Sinn Fein)
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That might be a conversation we have at a later date. Mr. Clancy mentioned cost-benefit analyses and other analyses of Enterprise Ireland's investments. Obviously, salaries form part of that but we have a voluntary system of industrial relations. Sin scéal eile as to whether that works, but it is what it is. Mr. Clancy mentioned statutory requirements. In many instances, those are only to adhere to the minimum wage. In almost all instances, the statutory requirement is the bare minimum. It is the floor. It is what any worker in any business can expect to achieve. We can follow up on the analyses at a later date, but would Enterprise Ireland be open to including a more rigorous analysis of workers' rights in terms of more than just pay? Pay only tells us part of the story. Would Enterprise Ireland be open to including a reference to workers' rights, adherence to Labour Court recommendations, matters of industrial stability and so on in the overall analysis? Looking at pay, even if it is brilliant pay, does not provide the whole picture of how workers are faring within a specific business or industry. Where the State is spending money, we want to see workers' rights being respected, upheld, encouraged and much better than the statutory minimum that all workers can expect. Regardless of what their employers say, workers have an entitlement to the pay floor that the State has set.
Mr. Leo Clancy:
We would have to consider what is appropriate for us in the context of legislation. We could not impose those limitations unless there was a solid legislative basis on which to do so.
While pay is not the only determinant of workers' rights, pay in Enterprise Ireland-supported companies is significantly above the average in the economy – it is €52,000 on average versus the Central Statistics Office-reported average of €44,000. We feel that our clients are good employers. As the Deputy mentioned, pay is not the only determinant, but it is a substantial one. We would be happy to have a further conversation with her on this matter offline, as she has suggested.
Louise O'Reilly (Dublin Fingal, Sinn Fein)
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Excellent. I thank Mr. Clancy and the other witnesses.
David Stanton (Cork East, Fine Gael)
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It has been a long session, so I will be brief. I will follow up on what Deputy O'Reilly said about decent jobs as the matter relates to migrants, under-25s from disadvantaged backgrounds and people with disabilities. Although there are mobility and transport supports for people with disabilities, people in these three groups find it difficult to get jobs. I have been involved in the Open Doors Initiative since the start. Has Enterprise Ireland engaged with the initiative or would it consider getting involved? The IDA and many other State agencies are engaging with it. It seems that many employers want to get into this space and support these groups, who face challenges. The initiative gives employers an opportunity to do so while also gaining some badly needed labour and good workers.
Is broadband proving a challenge to setting up businesses and so on in various parts of the country? A great deal of work is being done on this and broadband is rolling out commercially and through National Broadband Ireland.
Has Enterprise Ireland any role in establishing enterprise centres? Hubs and the like have been mentioned. People want to stay in their own towns, particularly in rural areas – one I am familiar with is Youghal in County Cork – and not have to travel long distances into cities to work in industrial parks. Many are under accommodation pressure. Has Enterprise Ireland any role in setting up enterprise centres in towns in rural areas?
I referred to the great work that was being done at second level. Mr. McElwee spoke about his satisfaction in visiting schools and seeing what was being done. I agree that it is heart-warming to see what they are doing. It is happening a little at primary level as well. What is happening with third level students, though? Has Enterprise Ireland any engagement in that regard or has it considered doing so?
Some Enterprise Ireland companies found it difficult during the pandemic to engage with the likes of the HSE because of procurement rules in particular. A company in my area was involved in manufacturing PPE but was virtually excluded by the HSE for a while. Does Enterprise Ireland have any role in this regard? Has it examined procurement challenges and does it assist companies in that space?
Mr. Leo Clancy:
There were many questions there. I might address some of the points and then hand over to my colleague, Dr. Gibbons, to comment on enterprise centres, which we fund. I might then hand over to Mr. McElwee on student entrepreneurship.
We are not a member of the Open Doors Initiative but we will look into whether becoming a part of it would be appropriate for us. We are supportive of diversity in all its forms. Like the Deputy, we acknowledge that it will be fundamental to the success of our citizens first and foremost, but also to the success of our businesses. Nearly every business I have spoken to has recognised that proactively and has not had to wait to be asked.
Broadband provision is improving. The national broadband plan will make a significant difference to residential and business broadband around the country. We look forward to it rolling out fully. Broadband presents a problem for companies in certain areas.
If it did not, the State would not be intervening in the way it is with the national broadband plan.
We have been extensively involved in procurement. We run our own programme called small business innovation research in conjunction with certain Departments and State bodies. That is something we have focused on. During the pandemic, we were heavily involved in helping Irish companies engage with the Health Service Executive and we found that to be a very positive engagement from the HSE's side as well. There is further and increased scope for public procurement relationships to be smoothed. As there is a willingness on all sides to make that happen, we are in a positive place in that regard.
Dr. Carol Gibbons:
Deputy Stanton mentioned the enterprise centre in Youghal, County Cork. Enterprise Ireland has supported Youghal in that and is delighted to do so. We have accepted enterprise applications or applications from consortiums and we evaluate and assess those applications as they come into Enterprise Ireland, specifically within some of the regional funding. The priorities for regions and towns are important here. We assess those applications on their eligibility criteria, including impact measures, collaboration, participation and visibility. Effectively, we are assessing them on their financial stability as they go forward, which is very important. We are very proactive within the regions in that regard. I might clarify this afterwards with the Deputy but I believe we have funded 117 enterprise centres across the country. Our regional executives are working hand in hand on the proposals that come into us with regard to that financial stability and evaluation. I hope that answers the Deputy's question.
Mr. Padraic McElwee:
My apologies, I did not answer the Deputy's question about third level. We ran a programme called Ireland's Best Young Entrepreneur, which was targeted at third level students. We are evaluating that programme. As the Deputy can appreciate, we felt it was inappropriate to run that programme during the two-year period with Covid so we will evaluate the merits of that. A number of my colleagues, myself included, interact with many of the third level education providers and deal with their entrepreneur sections or their societies. I regularly get invited to speak at events in Limerick and judge things, such as a boot camp, for example. Interaction is quite strong there. It is an area of focus because that is where some of the high-potential start-ups evolve. Enterprise Ireland does a lot of work on the background there as well.
Róisín Garvey (Green Party)
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It is great to hear that the witnesses are supporting the Town Centre First initiative, as well as the digihubs. If they are dealing with local authorities on this matter, can they please make sure the digihubs are not located in an industrial estate 2 km or 3 km outside the town, which most people would have to drive to? I have unfortunately seen that quite recently. I will not name the place but I decided to use this town's digihub as a meeting room, in order to support it, and it was 2 km outside the town. It works well in Ennistymon, for example, where it is right in the heart of the town, which is brilliant. It is not as if we do not have empty buildings in town centres. We will not even go there. If the witnesses have influence with local authorities, can they make sure the digihubs are not put outside the towns? We want to bring things into towns, as the witnesses all know. That is just one thing I wanted to flag. Maybe they could learn from the mistake made with the particular digihub I mentioned.
Having worked with organic food and lots of producers, I know about producing food. We still have issues around the branding of Irish food and how it can stand out from food imported from other EU countries or non-EU countries. I have fallen foul of this myself and have bought things like rashers or cheese as I was convinced through the labelling that they were Irish products. I was raised to buy Irish where at all possible and it is getting more competitive now. The price of quality food and organic food has come down so it is becoming more affordable as we increase food production but the branding can be quite deceptive and it can be hard to distinguish. Is there anything we can do about that? I know there are EU regulations and so on. I just wanted to flag that as an issue if we are serious about supporting indigenous food producers. The Minister of State, Senator Hackett, launched a grant last week to help with food packaging, which is good, but we need to support the indigenous food sector. It has not been mentioned yet here today. We talk about carbon footprints, and of course it depends on how the food is produced, but we are producing very little food in Ireland and we import an awful lot. We bring in 80,000 tonnes of spuds from England and 30,000 tonnes of seed potatoes from Scotland every year. If we are serious about indigenous jobs, there is huge potential for jobs in the food sector. I know some organic growers who have created lots of jobs on their small family farms through producing good-quality food.
The supports for the digitalisation of equipment are good. However, there is other equipment that does not need to be digitalised but just upgraded, and that can be quite costly. Going back to the capital grant, sometimes people just need help with capital funding to improve their old equipment. That will enable them to increase their employee numbers. Unfortunately, it is not all about digitalisation, especially in the food sector.
The witnesses are doing great work but we are under pressure. There is a climate emergency and we need to get this country to become resilient in so many different ways. With the loss of biodiversity, we will not be producing food any more. It is huge, so I will try to push the witnesses on it, unfortunately. I have emailed both organisations to arrange meetings. I will be meeting Enterprise Ireland's climate group, as well as Mr. McElwee about the lean and the micro and what else we can do. This is something I am passionate about and I look forward to working with the witnesses on it.
Mr. Leo Clancy:
I thank the Senator. We look forward to meeting her. It is a pleasure. She should keep pushing us. That is what we are here for so she should not worry about that. I agree with her about digitalising equipment. Sometimes a capital upgrade is what is required. Last year we launched the capital investment scheme in food, where we approved more than €70 million worth of grant aid for refreshing capital equipment. Many of those projects included upgrading the sustainability of the products and services being offered. It was a multipronged approach. In many of those plants, those were some of the first investments in quite some time. It was certainly a huge support to the food industry in being able to do things to make it more sustainable, more productive and more future-ready. Critically, it will give it an edge in export markets. That scheme has been awarded and is under way. It is certainly helping.
On a day-to-day basis, we have a capital investment incentive scheme that is availed of by companies to upgrade equipment. We roll that out keenly. We usually do so in conjunction with the lean products I mentioned earlier. We want to make sure that if people are using valuable capital, not to mention the State's contribution, it is done in the right way and is as optimal as possible. That is something we do.
Again, I agree with the Senator about the branding of Irish food. I met a food producer in the last couple of weeks who is in exactly this space. They said that the supermarkets were some of their favourite clients because they clearly brand the food with the IE markings and so on. This is very important. It is more a matter for Bord Bia and its branding and brand guidelines, which are quite strong. It does a lot of work on this and has run advertising campaigns around consumer awareness. It is continuing to drive that. We send the message to our clients that everyone has a part to play in making sure people understand what excellent Irish food is. The opportunities for organic and artisan Irish food are huge. We can achieve an awful lot and we are supporting small artisan producers all the time. Many of those producers were in trouble during the Covid period and many of the recipients of our sustaining enterprise funding were those artisan producers and people who were producing high-quality products for the Irish and overseas markets. We are glad to have been able to support them.
On digital hubs and remote working hubs, the trend is firmly towards towns.
The mood definitely reflects that. I recently gave a video interview from Ludgate Hub in Skibbereen, in the heart of the town. We see many other good examples of that around the country. Being able to walk to the hub from where you are staying when you spend a day in west Cork and being part of the community are important. That is a growing trend. We talked in a similar vein to Senator Crowe about PorterShed in Galway. That is certainly the direction of travel. I thank Senator Garvey for the questions. I do not know whether Mr. McElwee would like to add anything.
Mr. Oisín Geoghegan:
I thank Senator Garvey for the questions. The local enterprise offices have always been very active in the food sector. As members know, the sector creates a lot of employment in every town and village in Ireland. It is a sector that is really important to us. There are three key initiatives that we deploy at national and local levels to encourage and enable food entrepreneurs and ultimately ensure they can compete, perhaps against foreign producers. The first initiative is the Digital School of Food, which has proven to be very effective. It is an online learning platform. It has been particularly helpful during the pandemic years. The second initiative is Food Starter, an intensive two-day programme for food entrepreneurs to equip them with the skills necessary to run their own businesses. The third, Food Academy, has been running for a number of years in partnership with Musgrave Group's SuperValu. It has been a huge success. It is for small producers throughout the country. Locally throughout the country, local enterprise offices are involved with food networks and so on. This is an area we are particularly passionate about.
On support services, the Senator mentioned support through capital grants. Many food producers are funded. A significant proportion of the grants for a local enterprise office companies are for food businesses.
Maurice Quinlivan (Limerick City, Sinn Fein)
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As nobody else has indicated a desire to speak, that concludes our consideration of the matter. I thank Mr. Clancy, Mr. McKeown and Dr. Gibbons from Enterprise Ireland and Mr. McElwee and Mr. Geoghegan from the local enterprise offices for assisting the committee in its consideration of this important matter. I wish both Enterprise Ireland and the local enterprise offices continued success in their work over the coming years as the economy recovers. The committee will continue to devote attention to the progress being made in this regard. That concludes the committee's business in public session. It is now proposed to go into private session to consider other business. Is that agreed? Agreed.