Minister for Jobs, Enterprise and Innovation
Richard Bruton TD today announced five major initiatives aimed at
commercialising Irish R&D; supporting innovation and high growth
businesses. Announcements included a first centre in cloud computing to make
Ireland a world leader in this high growth sector. The announcement appears like more
funds for the failed 'smart economy' project before there is a serious
assessment of the €2.5bn annual science budget.
The announcements were made as part of speech to
the Irish Internet Association’s annual conference, entitled “Open for
Business,” but so far, while there are several reports on spending produced
each year, there is little data on outcomes for a reason.
University research will never become a jobs
engine and even in the best technology universities in the world, the number of
spinouts from research is insignificant. For the Irish taxpayer, the key problem
is that the default route for a spinout with potential, is to be sold to a
bigger American firm, before there is any significant value added for the Irish
The Minister’s announcements include:
- A €5m applied research centre in cloud
- A €6m research centre in energy/smart grid
- €44m in funding for Principal Investigator
research teams in life sciences, ICT and energy
- Funding and supports for 25% more
high-growth and high-potential start-up companies
The 'smart economy' project was launched in
December 2008 as a rebranding of existing science policy with the objective of
it becoming an engine of jobs growth.
The Innovation Taskforce report was published in
March 2010 and is a flawed set of aspirations where the vision of creating a
Silicon Valley in Ireland is set forth with potential for creating 117,000 to
235,000 new jobs in high-tech over a decade.
It ignores the need for a market, which has been
crucial to success in the United States. It also ignores the related issue of
responding to market tastes as exemplified in the phenomenal success of the
reborn Apple under the stewardship of Steve Jobs - - now the world's most
valuable technology company.
Finfacts wrote last month that
high-tech innovation is a popular focus of political leaders, including
President Obama and Prime Minister Cameron. However,
while innovations in various countries
will help employment grow over the long term, as new technology spreads
throughout an economy and transforms other, larger sectors, the sector itself is
not a job creation engine.
Eurostat, the EU's statistics
office, says that in 2006, 1.1% of total employment in the EU27 was in high-tech
manufacturing. In Ireland the rate was 2.7% with 53,000 employed and US-owned
Intel the biggest employer. Manufacturing as a percentage of total employment
was 18.2%, 13.3% in Ireland and 22% in Germany.
McKinsey, the management
consultants, say that the semiconductor and biotech industries, each employ less
than one-half of 1% of US workers.
The so-called smart economy
has got the lion's share of Irish enterprise public funding in recent years with
research and development spending in higher education almost trebling from
€322m in 2002.
As a ratio of GDP (gross domestic product), it is now above the average for the
OECD area of mainly developed countries.
According to Forfás, science related public spending across 39 government
departments and agencies rose from €1.2bn in 1999 to €2.5bn in 2009.
While research can have
several benefits, direct commercialisation is not a significant one. For
example, in the US the income from intellectual property is 4% of university
research spending and in England in 2009, only £73m was earned.
The OECD says there is
"little evidence of success"
in the commercialisation of university research and according to
Enterprise Ireland, it has assisted 100 spinout companies from universities and
public research institutes over a decade and about 1,000 jobs were created.
The brutal reality is that
the default route for the odd spinout with international potential, is to be
acquired by a US firm - good news for founders but not the taxpayer.
A UCD study shows that in
2009, firms supported by venture capital companies, employed 9,700 people.
We said in April that
Minister Bruton must do a reality check on the high-tech sector that is not led
by the many vested interests. He must also reject arguments that Ireland should
aim to spend 3% or more of GDP on R&D like for example Sweden and Finland.
These countries have world
class indigenous companies while multinationals will continue to do little
original research in Ireland.
Irish enterprise policy must
be driven by an understanding of the science personnel demands of the
multinational and indigenous sectors. Otherwise, we as a bankrupt state, may be
producing highly skilled people for other countries.
What is the
result of the billion spent on university research?:
vested interests would claim that university research could become an engine
of Irish jobs growth:
a clear signal of failure, last November the Government established the
fourth advisory group or taskforce since December 2008 to advise on the
floundering 'smart economy' strategy:
permeates Irish enterprise policy and university presidents as lobbyists and
fund-raisers feed this corrosive system;
example of Germany shows that high university enrollment is not
necessarily a predicator of economic success;
to Enterprise Ireland 100 spin-outs from university research resulted in the
creation of 1,000 jobs in 10 years;
tech firms never exceed a staff of 10 workers;
default exit for a venture capital investment in a young Irish tech firm is
a sale to an American firm before the taxpayer sees any value-added;
the market for a large number of Irish firms that have a 25% chance of
reaching a seventh birthday?
domestic market, it's difficult for a firm to become a successful exporter;
are essential for growth in an economy but innovation is a lot more than in
the narrow area of high tech;
of knowledge workers in rich countries and low-cost manufacturing elsewhere
is becoming increasingly redundant;
foolish to believe that
high spending on R&D is a guarantee of success;
using scarce tax funds to subsidise other countries through graduate
December, the Irish National Pensions Reserve Fund (NPRF)
announced a $50m investment in US venture capital firm Polaris Venture
Partners. Taoiseach Brian Cowen said it was a 'coup' that the firm decided
to open an office in Dublin, even though we
are paying them for it;
2000/05, Ireland invested €35.5m in MediaLab Europe, a digital research
service using Massachusetts Institute of Technology (MIT) branding. Before
it failed in 2005, MIT collected €10.6m directly and €24.9m was paid by the
Government to the company. It also made a property which had cost €22.5m
available to the company for its operations at a nominal rent. It too was a
The biotech industry made its first profit
after 42 years, in 2008 -- the 3 biggest firms were responsible for the
lion's share of the earnings;
exception of Israel, which was the beneficiary of the greatest movement
of intellectual capital in history over a limited time, after the
collapse of the Soviet Union, the Silicon Valley model has not been
successfully replicated elsewhere. Israel had the advantage of developing a
commercial high tech sector as it already had a significant defence research
January, it was announced that the latest Irish high tech hope, Norkom, was
to be acquired by UK defence industry giant British Aerospace;
full-time equivalent researchers on the public payroll.
“Today’s announcement represents a
series of initiatives aimed at addressing the commercialisation gap, to ensure
that good ideas can become great businesses which create jobs," Richard Bruton said today. “In my
statement on Tuesday’s Jobs Initiative I said, as I have been arguing for some
time now, that if we are going to grow the economy and create jobs we have to
focus on three things: 1) reducing costs to business 2) improving access to
finance, and 3) encouraging research, developing and innovation.
“I was pleased that the Minister for Finance announced, as well as substantial
measures on costs and access to finance, a significant change to the R&D tax
credit regime to make it more attractive for multinationals to employ
researchers and locate R&D facilities here. Today I am delighted to announce a
series of measures that my Department will be implementing in the short term to
significantly improve the supports to the innovative Irish companies that will
create the jobs of the future.
“If we are to develop the companies of the future in Ireland, we must not only
fund high-tech research in our universities and support high potential start-up
companies, but also crucially address the gap in between the two
-commercialisation. The Programme for Government commits to addressing that gap
in order to develop ideas into workable businesses so as to create the jobs of
the future and get the economy growing again. Applied research centres and
principal investigator teams are highly advanced models which partner
researchers with both universities and industry partners, to ensure that
commercialisation can happen.
“In particular, cloud computing is an area which both Fine Gael before the
election and the Programme for Government identified as a key priority.
According to a recent report by Microsoft, Ireland’s cloud computing industry
could be worth €9.5billion per annum and employ 8,600 people by 2014. The new
applied research centre announced today, which will connect both multinationals
and Irish enterprises with researchers, can see Ireland take the lead in this
crucial high growth area."
Summary of projects:
1. Applied research centre in energy/smart grid, €6m (Science Foundation
The Government will provide €6m to immediately commence a new energy research
centre, funded through Science Foundation Ireland under its Strategic Research
Clusters programme. This new Energy SRC, which is being hosted at UCD, will
support the employment of 40 high-quality research personnel. This is an area
where Ireland is already strong and has the potential to become a world leader.
The Energy SRC will partner with industries involved in developing the smart
grid, ESB, Eirgrid, Bord Gais, Intel, Ericsson, Siemens, and many others. The
industry partners already employ in excess of 20,000 people in Ireland and this
initiative will help to secure these jobs and will underpin future job creation.
The 25 industry partners connected to this Energy SRC have committed a further
€2.3m in funding over 5 years.
Ireland’s natural advantages in this area include its very high wind
penetration, abundant wave power and moderate climate. These factors provide an
ideal test bed to rapidly develop, pilot, and integrate new technologies and
together with the high profile of the industry
collaboration, have been pivotal in increasing the demand for engagement with
the new Energy SRC.
The Sustainable Energy Authority of Ireland acknowledges that the smart grid
will play a critical role in underpinning the energy needs of a revitalised
Irish economy, and will lead to the creation of significant employment
2. Principal investigator research teams, €44m over 5 years (Science Foundation
44 Science Foundation Ireland funded Principal Investigator (PI) Awards will
support close to 300 top-class researcher positions in a broad range of areas.
The areas of research covered by these awards will include:
- in the Life Sciences – cancer, early
diagnosis of the childhood cancer Neuroblastoma, lung disease, genetics for
improved disease treatment, investigation of therapeutic interventions for
Alzheimer’s disease, Huntington’s disease, and Improved crop and plant cell
- in the ICT area – neonatal neurological
monitoring, graphics for gaming, resource management in data centres,
advanced telecoms networks, autonomic management of smart cities,
- in energy – wave energy, and energy
conversion and storage devices.
The 44 research projects have attracted 23
industry partners including Inercept Pharma Ltd., Pevion Biotech Ltd, Sigmoid
Pharma (Ireland), as well as informal collaborators such as Nestle, Kerry Group,
and Alimentary Health. On the ICT side, industry partners include Intel Labs
Europe, IBM, Alcatel-Lucent/BLI, Aquamarine Power (Edinburgh), Infineon, Disney
Research, ESBI, France Telecom, Howard Science (UK), and a host of others.
3. Applied research centre in cloud computing, €5m over 5 years
The Programme for Government identified Cloud
Computing as an area of particular future potential.
Cloud Computing provides for the delivery of hosted services via the internet
and can represent significant cost savings to the end user, for example through
avoiding the initial financial investment in hardware, ongoing maintenance, and
necessary technical staff. It also represents a huge opportunity for companies
in Ireland to develop products and service which capitalise on this new approach
Indeed, a recent report commissioned by Microsoft predicts that Ireland is
poised to capture a significant piece of the world cloud computing market. The
report suggests that by 2014, the cluster of firms involved in this industry in
Ireland could generate €9.5bn per annum and employ about 8,600 people. The
availability of Cloud Computing will boost the formation of new businesses and
the creation of new jobs across the Irish economy.
I can announce that a new applied research centre in Cloud Computing will be
established as part of the Government’s efforts to support the development of
cloud computing in Ireland.
4. Competitive start-up fund, €750,000 (Enterprise Ireland)
Following on a pilot programme launched by Enterprise Ireland for start up
companies in the internet and games apace, a further competitive fund for start
ups will be rolled out in Cleantech, Industrial and Life-sciences sectors. This
will be launched end May 2011.
The total value of fund this year will be €750,000 and it will support 15
companies. It will be a competitive process for companies which will each
receive a €50,000 equity investment to support the company to deliver their
product or service or to get the project to a key funding milestone.
Companies will also be provided with a mentor who
will work with the company for a period of about 10 days.
5. Increased resources for the High Potential Start Up programme (Enterprise
In recognition of the importance of High Potential Start Up companies to job
creation in new and emerging areas of opportunity, the Government will increase
resources available to support HPSUs, so that by 2014 100 will be created each
year compared to 80 in 2010.