Tánaiste and Minister for Enterprise, Trade and Employment Mary Coughlan announced on Thursday, Dec 17, 2009 that US multinational firm, Maxim Integrated Products is to establish a new international business operation in Dublin, with the creation of 50 staff initially, rising to over 100 by 2012.

IDA Ireland, the inward development promotion agency, on Monday issued a statement on its 2009 performance and said its support companies had lost a net 9,000 jobs in the year, while new companies investing in Ireland for the first time were at 37 - - a rise of 11% on 2008. However, there was no value put on the investments and it could be well be less than recent years. The total jobs in the agency-assisted companies, fell below the level in 2000.

The IDA said that "globally foreign direct investment decreased by 30% during 2009 and the average scale of investment was smaller than in previous years. Ireland continued to attract FDI despite challenging global circumstances with the number of investments decreasing by 4% on the level achieved in 2008."

This statement relates the fall in the number of Irish investments to the global fall in the value of investment. However, some of the announcements made this year, were for projects with job creation of 20-30 people over 3 to 5 years.

We at Finfacts would wish that we didn't have to de-spin these announcements from State enterprise agencies.

Research & Development, has been expanded in recent times to  Research, Development & Innovation (RD&I), which has coincided with the expansion of the R&D tax credit scheme.

What R&D really is - -  is a subject for some investigation and a very good multi-lingual technical support Hewlett-Packard project, was won earlier this year.  It was announced that an element of the operation will also involve research and development.  We do not know if the IDA has categorised all the investment as RD&I.

The IMF report on Ireland last June, said that Ireland has lost market share in the global and Eurozone flows of FDI (foreign direct investment). FDI inflows into the Eurozone have tended to fall as a share of world FDI flows.

However, Irish FDI shares have fallen faster. In recent years, Ireland has become the most expensive location in the Eurozone, with the possible exception of Luxembourg. The transformation from a location for low-cost manufacturing to a center for high value added production and services is ongoing. However, the IMF says research shows that FDI flows to a country are highly influenced by recent momentum - - increased global competition for FDI implies that task for Ireland is increasingly harder.

The number employed in IDA-assisted companies has fallen from 141,000 in 2000 to 136,000 in 2009.

Finfacts article: The challenge of creating 160,000 new Irish jobs

IDA statement:

Despite the difficult global economic environment Ireland continues to attract foreign direct investment (FDI) from many of the world’s leading companies. Companies investing in Ireland for the first time in 2009 included Bentley Systems, Maxim Integrated Products, Big Fish Games, Lumension Security, Vattenfall, Hovione, Everest Reinsurance, Gerson Lehrman, Buy.com and Success Factors.

Globally foreign direct investment decreased by 30% during 2009 and the average scale of investment was smaller than in previous years. Ireland continued to attract FDI despite challenging global circumstances with the number of investments decreasing by 4% on the level achieved in 2008.

Investment highlights:

• A total of 125 foreign direct investments won

• New companies investing in Ireland for the first time up 11% on 2008

• Investments in Research, Development & Innovation (RD&I) in excess of €500m

• 49% of investments were RD&I

• 69% of investments from existing companies

• Over 4,500 new jobs were created in 2009

• Exports from IDA client companies increased to €110bn

IDA Ireland CEO Barry O’Leary said, “Ireland’s relative position as a leading international location for value intensive FDI remained strong in 2009 despite challenging economic circumstances, with IDA securing 125 investments. Almost 70% of these were from existing IDA clients further investing in Ireland and reinforcing Ireland’s reputation as a key strategic global business hub.”

In such turbulent economic times it is extremely significant that many of the world’s leading companies continued to invest in Ireland in a wide array of activities including high end manufacturing, global services and RD&I.

Among the existing clients expanding their operations in Ireland were HP, McAfee, Paypal, Abbott, Trend Micro, Merck, Activision/Blizzard, Gilead, Rottapharm, Facebook, Gala, and Bank of New York Mellon.

The number of investments in RD&I increased 10% on 2008, in keeping with the Government’s Strategy to develop the Smart Economy. This equates to 49% of all investments secured during the year. The level of RD&I investments was in excess of €500m; with IBM, Boston Scientific, Citi, Intel, Pfizer, Helsinn, HP, Paypal, Colgate-Palmolive, Alps Electric and SITA some of the key investors.

The value of these investments is of vital importance in embedding existing operations and helping secure future business from multinationals. Significantly, 73% of Business Expenditure on Research & Development (BERD) is from IDA client companies. [1]

In 2009 many international companies deferred capital expenditure programmes, focused on re-structuring and re-engineering their business models and were much slower in making investment decisions. Despite these pressures, significant investments were realised. Although the world economy is going through one of the most dramatic downturns in living memory there are increasing signs of some recovery in North America, Asia and Europe. IDA believes that Ireland is particularly well placed to secure investments during 2010 and beyond with the resumption of global economic growth.

During 2009 IDA launched a major communications campaign focused on the North American market positioning Ireland as a key location for innovation and foreign investment. IDA redesigned its website www.idaireland.com to showcase the advantages of doing business in Ireland. The new communications campaign consists of television, internet, newspaper and airport advertisements and is based on the theme of innovation, highlighting Ireland's ability to deliver the fresh thinking and creativity which innovation needs to flourish. The campaign has been positively received, with one of the leading media columnists in the US, Stuart Elliott, recently penning a very complimentary article titled "When Irish Ads are Dialling" featured in the New York Times. In addition IDA has focused on increasing its exposure to international media and secured a number of studio interviews on high profile leading television business shows on CNBC (US and Europe) and Bloomberg.

IDA’s strategic challenge is to proactively identify future FDI trends and the associated employment opportunities. Every year an average of 7-8% of jobs within the IDA portfolio are lost as part of the normal business lifecycle. The reasons for this include competitiveness, market downturn, global economic trends and business model re-structuring, particularly as a result of merger and acquisition activity.

In addition to the normal level of job losses many IDA client companies announced significant reductions in their global workforces. IDA Ireland CEO, Barry O’Leary noted “Ireland was not immune to these changes with net employment within IDA supported companies falling by 13,400 or c.10% from last year. In excess of 3,500 of these job losses resulted from two high profile companies.” He added “These losses should be viewed in the context of 183,000 less people in employment in the Irish economy in the past year. It is also noteworthy that 82% of job losses were as a result of downsizing, not closures. Maintaining a large number of existing multinationals here will help position Ireland as a competitive location when the global economy recovers from 2010 onwards.”

In order to maximize the potential for benefiting from the global economic upturn a continuing focus on improving competitiveness throughout the economy is critical. While there have been a number of positive improvements in competitiveness, a firm focus must be maintained.

IDA continues to place a strong focus on transformation within client companies, and has continued to work with existing clients on up-skilling programmes, investments in technology uplift and new process developments, in order to deepen their commitment to Ireland. This encourages future business in areas which are compatible with our skills base and which are sustainable within our economy in the longer term. O’Leary added “Few economies in the world have gone through such change as Ireland in the last 40 years. IDA too has had to continually adapt and respond to what is needed to win the next wave of investments and technologies”. IDA Ireland is in the process of completing a strategic review of its business and the intention is to publish a new ‘Strategy 2020’ during Q1 2010.

Despite difficult economic times and much negative sentiment it is important to recognise that Ireland continues to develop into a “Smart Economy”. Within this ambition the hugely significant role played by foreign owned companies must be acknowledged. They remain a critical element in portraying Ireland as a leading international location for innovation and investment and this is endorsed by their continuing commitment to invest in Ireland during the economic downturn.

IDA supported companies directly employed c.136,000 people and also accounted for €110bn or 70% of total exports. These companies were responsible for €19.1bn in direct expenditure within the Irish economy comprising €7.1bn on Payroll, €9.7bn on services and €2.3bn on materials from Irish sources.

American Chamber of Commerce

“Ireland's strategic policy of promoting inward investment in high value and knowledge led jobs needs to continue as we strive to regain competitiveness in the changing global economy," said Joanne Richardson, Chief Executive of the American Chamber of Commerce of Ireland.

"Of particular importance in today's statement is the assertion that half of all investments this year have been in the Research, Development and Innovation (RD&I) category. Business units of multinationals that actively pursue R&D projects in Ireland further cement their importance within their own organisations, whilst simultaneously developing local mandates into new areas with positive benefits for jobs and sustained long term investment" continued Ms Richardson.

“If we are to secure greater levels of R&D investment in order to deliver the Smart Economy we believe that companies should be allowed to off-set the R&D tax credit against either Corporation or Payroll taxes. This measure would enhance Ireland’s competitive position against other inward investment locations as it would allow subsidiaries of multinationals to book the tax credit against labour costs on a quarterly basis”.

The American Chamber of Commerce represents the interests of US multinationals in Ireland.  Today almost 100,000 people are directly employed by 590 US companies in Ireland.