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News : Irish Last Updated: May 3, 2013 - 10:13 AM

Friday Newspaper Review - - Irish Business News - - May 03, 2013
By Finfacts Team
May 3, 2013 - 9:06 AM

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The Irish Independent reports that new figures provided by the IDA show a number of blackspots around the country that are missing out on jobs created through foreign direct investment (FDI).

Last year, the IDA recorded its strongest net job performance in a decade, helped by 11,766 jobs created in client firms.

However, the statistics provided by the Minister for Jobs, Enterprise and Innovation Richard Bruton show that not a single IDA job was created in north Tipperary last year – south Tipperary fared little better where only 10 IDA jobs were created.

The figures – provided in a written Dail response to Deputy Joe McHugh (FG) – show that three other counties recorded new IDA jobs of less than five with one IDA job created in Leitrim, two in Laois and three in Monaghan.

The figures show that Dublin continues to dominate, grabbing 6,389 – or 54pc – of the IDA jobs created last year.

Dublin was far ahead of the second-best performing centre Cork – where 1,979, or 17pc, of the overall FDI jobs were located.

Galway was the only other centre to record in excess of 500 IDA jobs created with 859 jobs – 400 jobs were created in Limerick followed closely by Louth with 386.

A spokesman for the IDA said yesterday: "A county-by-county breakdown of job creation trends reveals virtually nothing about how Ireland is performing in attracting FDI."


He said: "IDA doesn't market individual counties to foreign investors, but sells the attributes of regional gateway locations, hence reliance on county-by-county data alone presents an entirely incomplete picture.

"The opportunity for many locations outside of Dublin and Cork remains with the existing base of multinational companies which IDA works with on an ongoing basis with a view to ensuring their operational sustainability, job retention and growth.

"In that context, 2012 saw the lowest amount of job losses from IDA's portfolio in over a decade as existing employers, many of them in regional locations, embedded their operations in Ireland even further."

He added: "With regard to new name business, the final decision on where to locate an investment ultimately resides with the client company, despite IDA efforts and financial support available in some regional locations."

Fianna Fail Laois-Offaly TD Sean Fleming last night said that the IDA's record in Laois "is abysmal and disgraceful".

Two jobs were created in IDA companies in Laois last year and Mr Fleming said: "The minister should instruct the IDA to include Portlaoise as one of the priority towns for investment in the Midlands along with Athlone, Tullamore and Mullingar."

Independent TD for Roscommon-South-Leitrim Denis Naughten said last night that "far more needs to be done to make areas like Leitrim attractive to multi-nationals".

One IDA job was created in Leitrim last year and Mr Naughten said: "Not only in terms of IDA marketing the region, but the area's broadband and gas infrastructure needs to be improved to make it more a level playing pitch with the large urban centres."

Mr Naughten said that the IDA's efforts in south Leitrim have been taken up with trying to protect existing jobs at the Bank of America's operation in Carrick on Shannon.

The Irish Independent also reports that savers will be the big losers from the ECB decision to cut its key lending rate.

Deposit rates have been falling every month for more than a year, as banks attempt to improve their profit margins.

Experts said yesterday's cut would prompt a new round of deposit-rate reductions.

And ECB president Mario Draghi hinted that he may take the unprecedented step of charging banks to park excess cash with the ECB overnight.

So-called negative deposit rates would be instead of paying interest to banks that deposit spare funds with the ECB.

He also hinted that another cut in the main lending rate is possible.

Simon Moynihan of comparison site Bonkers.ie said savers have been badly hit. They now earn substantially less on their money than a year ago with interest rates now almost 1.5pc lower than May last year.

Among the best rates on offer at the moment is the 12-month fixed rate from KBC Bank paying 2.8pc. But this is down from 4.15pc last year. Nationwide UK Ireland is paying 2.75pc for its 12-month fixed rate.

Deposit interest retention tax (DIRT) is now 33pc and inflation is 0.5pc, which means most savers are losing money by putting money on deposit.

The Irish Times reports that 400,000 homeowners on tracker mortgages will benefit from the 0.25 per cent interest rate cut announced by the European Central Bank yesterday but none of the State’s main banks have plans to pass the rate cut on to variable rate customers.

A similar number of homeowners have such mortgages and the gulf in interest rates between them and those on trackers is now as high as 3 per cent – a gap which will see a person with a €300,000 variable rate mortgage paying more than €500 a month more on loan repayments than someone with a tracker of the same size.

Record low

In a widely anticipated move, the ECB cut its main interest rates by a quarter of a percentage point to 0.5 per cent, a record low. While the rate cut was aimed at providing a shot in the arm for the European economy it will also reduce mortgage repayments for hundreds of thousands of Irish people with tracker mortgages tied to the Central Bank’s rates.

For every quarter of a point the ECB lowers its rates, the monthly cost of servicing a €100,000 tracker mortgage falls by about €15 so the average tracker mortgage holder with an outstanding loan of €300,000 will see monthly savings of €45 from the beginning of next month.

Rate reduction

As a result of the move – the fourth such rate reduction in the last 18 months – a person with a €300,000 tracker mortgage is now paying about €180 a month less than in the autumn of 2011, which amounts to a total annual saving of more than €2,100.

While the cut will be automatically passed on to tracker mortgage holders, people with variable rate mortgages are at the mercy of individual banks and with banks pushing variable rate mortgages up irrespective of the course of action being followed by the ECB, the possibility of rate cuts being rolled out across the board seems remote.

‘Variable rates’

Rachel Doyle of the Professional Insurance Brokers Association said that while the announcement was “very welcome for those on tracker mortgages, the impact will be marginal by comparison with what the Irish banks are attempting to do with variable rates”.

The issue of most concern to Irish consumers now, she added, “is Irish bank interest rates which have been creeping up surreptitiously.

“In recent days under cover of the potential ECB rate cut we have seen AIB and EBS move to increase rates by 0.4 per cent and 0.25 per cent consecutively, which comes into effect from the beginning of June.”

The Irish Small and Medium Enterprises Association called on the Government to take the “strongest action possible” to force banks to pass on the reduction.

Asked whether Minister for Finance Michael Noonan had any comment on whether banks should pass on the rate cut to standard variable rate customers, his spokesman indicated he would not be intervening.

“This is purely a commercial matter for the banks,” the spokesman said.

AIB, EBS, Permanent TSB and Danske Bank said that while they kept rates under review they had no plans to lower them. Ulster Bank was unavailable for comment.

The ECB also signalled yesterday that further interest rate cuts could be on the cards.

The Irish Times also reports that there was good news for the Irish jobs market today with the news that almost 300 jobs would be created around the country at three different firms.

Irish software company FeedHenry said it will create up to 100 jobs over the next two years as part of a €7 million investment in the firm.

The company, which provides a cloud-based platform that enables large businesses to build and deploy mobile apps integrated with their business data, said most of the jobs will be located in its Waterford and Dublin offices, bringing the number employed by the company to 140.

The funding round was led by Intel Capital and was also backed by existing investors Kernel Capital, VMWare, Enterprise Ireland and a number of private investors. ACT Venture Capital invested from its AIB Start Up Accelerator Fund

The investment will help FeedHenry to speed up the pace of its international roll-out of its cloud mobile application platform.

Recruitment for the new positions will begin immediately, with the company seeking software engineers, project managers and business analysts

“This investment will allow us to accelerate our growth plans across Europe and North America, and continue our commitment to a research and development base in the south-east,” said FeedHenry CEO Cathal McGloin.

Minister for Jobs Richard Bruton welcomed the investment, describing the company as "a great example of how a research project can grow to become a successful international business".

FeedHenry began as a research and development project in the Telecommunications Software and Systems Group (TSSG) in Waterford Institute of Technology (WIT). In November 2010, it was spun out, and was backed by the Bank of Ireland Seed Fund managed by Kernel Capital the following year.

Last month, Feedhenry was named winner of the Red Herring Top 100 Europe award, joining firms such as Facebook, Twitter, Google, Yahoo, Skype, Salesforce.com, YouTube and eBay.

“We recognised from the outset that FeedHenry fills a void in the mobile enterprise market by giving enterprises the opportunity to leverage the power of both mobile and cloud to develop employee and consumer facing apps, all from a single platform," said Niall Olden, managing partner of Kernel Capital. "This Series A investment is a demonstration our continued commitment to support ambitious, export-focused high-growth Irish companies.”

Separately, car parts and accessories e-commerce retailer MicksGarage.com said it was investing €2.3million investment in an expansion that would create 65 jobs over the next two years.

The expansion plans include localised MicksGarage websites for nine European markets including France, Germany and Sweden.

The online retailer made the announcement as it opened a new 32,000 sq ft warehouse and office facility in Dublin.

The business, which was founded in 2004 by brothers Ciaran and Michael Crean, currently employs 32 people.

The new funding was secured from the Ulster Bank Diageo Venture Fund managed by NCB Ventures, the AIB Seed Capital Fund managed by Dublin BIC and private investors.

Taoiseach Enda Kenny said it was “hugely encouraging” to see an indigenous e-commerce company demonstrate the capacity to expand and develop its business throughout the world.

Managing director Ciaran Crean said it was a “proud day” for the company.

“ We had a vision when we started the company that MicksGarage.com could become a successful e-commerce business which would create jobs and expand outside of Ireland,” he said. “The investment capital which we have secured will allow us to realise our ambitions for the business, part of which involves 65 new jobs over the next two years.”

MicksGarage.com is currently recruiting for number of positions including web developers, web designers, PPC online marking specialists and customer care.

Elsewhere, Donegal firm Zeus Industrial Products (Ireland) Limited is set to create over 100 new jobs with the expansion of its facilities in Letterkenny as part of a €10 million investment. The company is submitting a planning application to Letterkenny Town Council to construct a 55,890 sq ft expansion of its existing facility in the IDA Business Park in the town.

South Carolina-headquartered Zeus develops and manufactures specialised medical and industrial fluoropolymer tubing products, which are also used in the automotive and aerospace sectors. The company employs 120 employees at its Donegal facility, and the phased expansion will allow it to support up to 225 staff.

The Irish Examiner reports that former Dublin Docklands Development Authority (DDDA) board members, Seanie Fitzpatrick, Lar Bradshaw and Paul Moloney will be called before the Oireachtas Public Accounts Committee (PAC) to explain their role in the controversial €412m Irish Glass Bottle (IGB) site debacle.

Department of the Environment official Mary Moylan sat on the board of the DDDA to represent the public interest. She appeared before the PAC yesterday to unveil the chain of events that led to the DDDA — a State body — entering into a 26% joint venture (JV) with the now-bankrupt developer Bernard McNamara in one of the biggest loss-making property deals in the history of the State.

PAC member, Fine Gael TD Paschal Donohue, said he found “incredulous” some of the testimony given by Ms Moylan.

The PAC meeting focused on three DDDA board meetings in 2006, on Oct 3, 20 and 24. The first meeting took place in San Sebastian, Spain, as all eight board members were in the city on a study trip to see the port development and conference centre. DDDA chief executive Mr Moloney told the meeting a developer was interested in forming a JV with the State body to develop the IGB site. Ms Moylan said the developer’s identity was confidential at this meeting, but she could “infer who it was”.

Mr Moloney wrote to Ms Moylan on Oct 12 to advise that the valuation of the site was €220m. At the DDDA board meeting on Oct 20, it emerged the valuation of the site was between €275m and €375m. Mr Donohue wanted to know why there was significant change in value over eight days. Ms Moylan said the change was based on plot density and a changing mix of residential/commercial development. Mr Donohue said he was not satisfied with this answer.

At the meeting of Oct 24, which took place by teleconference, board members Seanie Fitzpatrick, Lar Bradshaw and Declan McCourt declared conflicts of interest. Mr McNamara had sought funding from Anglo Irish Bank and Bank of Ireland. Mr McCourt was a board member of Bank of Ireland and the others were board members of Anglo.

However, the DDDA board received legal advice that there was no material conflict of interest, as none of the three sat on the credit committees of the banks.

Mr Donohue asked if the DDDA had spoken to any other developer about developing the site. Ms Moylan said the DDDA got legal advice it was not in breach of public procurement policy.

A price of €375m was agreed with Mr McNamara, but this rose to €412. The then minister for the environment was not informed of the price throughout the process, as there was no statutory obligation to do so, said Ms Moylan. The only consent needed from the minister was to raise the borrowings for the JV and to enter the JV.

Ms Moylan said the board got advice that the property market might have been overheating. To protect the DDDA, it insisted Mr McNamara pay the difference between €375m and €412m himself. Moreover, of its 26% stake, it put 30% (€36m) in equity and the rest in bank borrowings.

The site is now valued at €60m and is in Nama. Mr McNamara sued the DDDA over the failure to develop the site, but these proceedings were struck out.

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