Dáil debates

Thursday, 12 July 2012

Other Questions

Industrial Development

7:00 pm

Photo of Martin FerrisMartin Ferris (Kerry North-West Limerick, Sinn Fein)
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Question 8: To ask the Minister for Jobs; Enterprise and Innovation the cost of each of the international offices of the Industrial Development Agency; and the number of jobs generated by each. [33874/12]

Photo of Richard BrutonRichard Bruton (Minister, Department of Jobs, Enterprise and Innovation; Dublin North Central, Fine Gael)
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The total costs associated with administering the IDA's 18 overseas offices in 2011 was €10.5 million. These offices are located in New York, Boston, Chicago, Atlanta, Irvine and Mountain View in California, London, Paris, Frankfurt, Tokyo, Shanghai, Shenzhen, Singapore, Mumbai, Bangalore, Australia, Russia and Brazil. It is not possible to give a breakdown of the cost of each individual office, but the total costs associated with the six offices in the US are €5.4 million; the three European offices are €2.5 million; and the nine remaining offices in Asia and growth markets are €2.5 million.

The IDA's network of overseas offices is required to underpin the agency's overall strategic plan, Horizon 2020. Its overseas offices are the first point of contact for potential new investors into Ireland and also provide ongoing contact between the agency and its existing clients. The opening of additional offices by the IDA in recent years is part of the Government's worldwide strategy to increase the IDA's international presence in the attraction of foreign direct investment.

By their nature multinational corporations are located in various regions globally. The sourcing of any individual project is a team effort involving negotiations with more than one branch of the multinational corporation. These negotiations take place in overseas locations and in Ireland and are carried out by IDA officials based in headquarters and regional offices in Ireland and in overseas offices. The United States remains a key IDA market, with 72% of foreign direct investment in Ireland originating from the US. Europe is the next biggest market, with Germany leading the way and then the UK and France. As the global economy, and in particular the European economy which is a primary target market for foreign direct investment clients in Ireland, is in a low growth phase, the challenge for the IDA is to continue to win foreign direct investment in this low growth environment.

The IDA has 1,004 client companies which provide full-time employment to more than 130,000 people. Just over 50% of these client companies are based in the United States. The European market accounts for 399 client companies providing employment to 29,000 people while the remaining Asian and growth markets account for 90 client companies employing 5,600 people. To date in 2012, 49 investment announcements have been made with the potential to create almost 5,500 jobs, and 37 of these investments were from US companies.

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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Foreign direct investment is extremely important given the collapse of the domestic market. We are supportive of the successes the Government has achieved with regard to foreign direct investment, but it is not nearly enough considering the major problem we have. We also have problems with the fact foreign direct investment operates in the State as an enclave. I have previously given the example in the House of the fact that 60% of exports comprise chemical and pharmaceutical products and 80% to 90% of their inputs come from abroad. As of yet, we do not significantly integrate foreign direct investment with the State.

We also have a problem with the fact that much of the focus has left the native entrepreneur and gone towards the foreign direct investment sector which is less sustainable. We have made the point previously that we have competing office structures, between the IDA, Enterprise Ireland and Invest NI in the North, and until these structures are merged, there will be cost inefficiencies. It is important to flag the fact that when the North of Ireland gets corporation tax powers of its own and its tax equates with ours, co-operation with this State will end because Northern Ireland will then be a direct competitor for our target FDI market. Therefore, it is important that a merger happens before then.

It should be possible to identify the cost of each office in each region. There is no Irish business operating internationally that could not tell us exactly how much that office costs. Also, do IDA staff who bring in jobs get incentives or bonuses for the jobs created? While those jobs are supported by another office, could they be tracked to just one office?

Photo of Richard BrutonRichard Bruton (Minister, Department of Jobs, Enterprise and Innovation; Dublin North Central, Fine Gael)
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I would like to take issue with the suggestion that foreign enterprise is some sort of an enclave. Foreign enterprise employs 150,000 people and the agencies supporting indigenous companies employ approximately the same number of people. The global spend of both sectors in the Irish economy is about equal. Foreign-owned export-oriented companies spend as much in the Irish economy as indigenous companies. They spend on services and materials, and while there has been a decline in materials, there has been a growth in services. Therefore, the sector is embedded.

As Deputy Sherlock would tell the Deputy, the development of the science clusters we have is crucial now. There are very close relationships between multinational companies and our higher education institutes, which provide research and links, through technology centres, to indigenous companies. We have been successful in creating strong clusters in many areas, such as financial services and medical devices, and these are a mix of indigenous and multinational companies working together. This has given us a competitive edge. Therefore, I refute the notion that we are some sort of enclave. Equally, many Irish people are now in key leadership positions within global companies. Our strategy is not some sort of oasis in the middle of an ocean, but is embedded. I accept we need to make it more embedded and that we need better linkages on all fronts.

On the question of bonuses and the performance of the different offices, the IDA operates the most stringent performance tests for its people. It works individuals hard and has bright and enthusiastic people working on Ireland's behalf overseas, who work to the highest standards. It is not a question of giving them bonuses. They see their job as delivering for Ireland overseas.

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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I have no problem with individuals getting bonuses for good work. That is not the point of my question. The point is that I want this Chamber to be able to review the work of individual offices, because while some offices may be successful, there is no reason we should not be able to measure what is happening in all of the offices. As a parliament, we should encourage such transparency.

Second, the export-to-jobs ratio in the FDI sector is far lower in this State than the domestic export-to-jobs ratio and far lower than the international average. While good work has been done with regard to clusters, FDI is less engaged with the domestic economy than the international average.

Photo of Richard BrutonRichard Bruton (Minister, Department of Jobs, Enterprise and Innovation; Dublin North Central, Fine Gael)
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That is a different issue. The Deputy suggested it was an enclave. We know that output per person in foreign-owned companies is much higher than output per person in domestic companies. That is the case for all sorts of reasons, such as the sectors involved. The pharmaceutical and biopharma areas, for example, have very low labour contents by and large, and that is true wherever they are located. The fact that these industries are significant in Ireland and that the companies involved are foreign-owned influences the figures.

I am sure we can look with more granularity at the different offices, but one does not need to be Einstein to know, for example, that offices in Mumbai and Bangalore or Shenzhen and Shanghai will not perform to anything like the level of offices in the US if we are talking about the number of jobs they deliver per office. However, these are long-term investments and we need to build long-term relationships in those BRIC countries to build for the future. We can try and get more information, but it cannot be simplistically interpreted. We cannot just look at the jobs delivered per office and decide to close one and develop the other on that basis. We need a long-term strategy to build the overseas opportunities.