Presentation by: Jennifer Condon & Doreen Mc Keown

State involvement in Industrial Development in Ireland

Enterpr ise I reland

Development of I r ish O wned I ndustry

I DA I r eland

I nward I nvestment by M N Cs

For f as

D epa rtm en t o f E n terp rise T rade & E m p loym ent

Agenda

The “Celtic Tiger Economy” The environment supporting Industrial

Development in Ireland Multi-National Industry in Ireland Irish Owned Industry Doing Business in Ireland

The “Celtic Tiger” Economy

Historical Perspective

1922: Ireland achieves independence 1920s - 1950s: primarily agricultural Late 1950s-1960s: Policy of Direct Foreign Investment 1960s-1970s: Process of industrialisation 1973: Ireland joins EU 1980s: Stagnation 1990s: Rapid growth

4.5

2.6

8.8

7.0

10.4

7.7

10.8

8.9

7.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

%

1986-1990 1991-1993 1994-1998 1994 1995 1996 1997 1998 1999 (f)

Annual Real GDP Growth 1986-1999

Europe’s Fastest Growing Economy

9.24

3.42 3.36 3.14 32.34 2.3 2.28

1.84

0123456789

10

%

Average growth in real GDP 1995-1999

Source: OECD Economic Outlook, 1999

(1999 projections)

GDP Growth 1994-2000

(Source: OECD)

Ire OECD EU Swe Fin Neths Den UK

10.5 3.3 3 2.9 4.4 3.2 3.2 2.9

7.59.3

7.8

1820 20

14.516.4

12.5

0

5

10

15

20

1991 1992 1993 1994 1995 1996 1997 1998 1999

%

Manufacturing Exports 1991-99 (Annual Volume Rise)

Export-led Growth

Exports Exports Imports Imports

1990 1999 1990 1999

% % % %

UK 34 22 42 32

EU 44 42 27 22

N America 09 16 15 17

Other 13 20 16 29

Trade Diversification

LABOUR FORCE DEVELOPMENT1980-1990: lagging behind…...

-100,000 0 100,000 200,000 300,000

Population

EMPLOYMENT

Labour Force

UNEMPLOYMENT

+105,000

+62,000

-22,000

+84,000

LABOUR FORCE DEVELOPMENT1990-1998: racing ahead…...

-100,000 0 100,000 200,000 300,000

Population

EMPLOYMENT

Labour Force

UNEMPLOYMENT

+202,000

+273,000

+293,000

-40,000

MIGRATION:the flow reverses…...

-30000

-20000

-10000

0

10000

20000

30000

INFLOW

OUTFLOW

1980 1990

2000

The Environment Supporting Industrial Development in Ireland

Macro-Economic Policy Framework

Investment in Education

Investment in Telecommunications

Reduction in Tax Burden

Reduction of Public Debt

Partnership Process/Negotiated Governance

Ireland’s Demography

Total PopulationTotal Population

Labour ForceLabour Force

Full-time EducationFull-time Education

3.66 million3.66 million

1.51 million ( 41% )1.51 million ( 41% )

0.95 million ( 26% )0.95 million ( 26% )

Availability of Skilled Labour

Free Education policy at second level & University 7 Universities & 13 Institutes of Technology All primary & secondary schools have Internet

connectivity Education Technology Investment Fund – supported the

development of Technical Degrees Projected 40,000 per annum new entrants to labour force

to 2006 Over 50% graduates have technical qualification Close liaison with industry to assess skill & number

requirements

Investment in R&D

Research & development in Universities & Institutes of Technology

National MicroElectronics Research Centre – Cork Science Foundation Ireland

Informatics Bio-Technology

Media Lab Europe

Major Advances in Telecommunications Infrastructure

U.S.$5bn investment in digital networks

Full liberalisation of telecoms market

Major new investment to extend

Broadband access regionally

Current broadband

capacity between

main towns and cities is

2.5Gbit/s

Dublin, Galway, Limerick and Cork linked

with 40Gbit/s capacity

Broadband backbone capacity

Taxation Policy

Corporate Tax Profits derived from eligible manufacturing

and qualifying services are subject to a tax rate of 10% until 31 December 2002 and 12.5% from 1 January 2003.

Capital Gains Tax halved to 20% since late 1990s

Reduction of Personal Taxation (partnership agreement balance against wage restraint)

General Government Debt as % GDP

110.6

93.1

52

39

0

20

40

60

80

100

120

1988 1993 1998 2000

% GDP

Partnership process

Five tri-partite programmes of growing sophistication since 1987

1987: “National Recovery” 1991: “Economic and Social Progress” 1994: “Competitiveness in Work” 1997: “Partnership 2000” 2000: Partnership for Prosperity & Fairness

Other key Factors

Legislative Framework eCommerce Bill Copyright Establishment of Independent Telecomms Regulator

Strategic deployment of EU Structural and cohesion funds through the National Development Plan

Information Society Commission Initiative Programme for eGovernment

Multi-National Industry in Ireland

The role of IDA Ireland?

State Agency

Funded by Government Targets Foreign Direct Investment into Ireland as a key

element of Ireland’s economic development strategy Assists existing companies to build and strengthen

strategic value in Ireland

Provides incentives for foreign investors

IDA Strategy

Sectoral Focus (we can’t be good at everything)

Concentrate on our Strengths People Skills EU Access (Euro Adoption – English Language) 10% Corporate Tax Rate (to 31/12/2002) Excellent telecommunications Competitive costs

Focus on High Growth Sectors

Key Sectors

Information Technology Pharmaceuticals/Healthcare International Services

Software Teleservices/Shared Services

Financial Services - IFSC eBusiness

Information &Communications Technology

Apple Computer 3Com Compaq Dell Ericsson Fujitsu General Electric

• Hewlett-Packard

• Hitachi

• IBM

• Intel

• Motorola

• NEC

• Nortel

• Sun Microsystems

• Xerox

300 companies - 67,000 employment

Exports: IR£13 billion

Pharmaceuticals & Healthcare

Abbott American Home Products Bausch & Lomb Baxter Boston Scientific Bristol- Myers Squibb Elan Eli Lilly Johnson & Johnson

• Leo Laboratories• Medtronic• Merck• Pfizer• Pharmacia & Upjohn• Roche• Schering-Plough• Glaxo SmithKline • Yamanouchi

No. 1 location in Europe155 companies - 19,000 employmentExports: IR£12 billion

International Services – including Software

• Gateway 2000• Hitachi• IBM• KAO Infosystems• Lotus• Merrill Lynch• Microsoft• Motorola• Oracle• Philips• Sun Microsystems• UPS• Whirlpool

DECDellEricssonDECDellEricssonSAPComputer AssociatesAccenture

Financial Services - IFSC

AGF American Airlines AOL Bertelsmann Apple Bankers Trust Bear Stearns Chase Manhattan Citibank Compaq Credito Italiano

507

188

168

222 5960

USUKGermanyRest of Europe

Asia/PacificRest of World

Source of Foreign Investment

Unique Importance of FDI

1,200 IDA-assisted companies

> 140,000 employed

> 50% of manufactured output

> 80% of manufactured exports

> 35% of GDP

€15.1b Irish Economy Expenditure

€1,650m corporate tax paid

Technology and management skills

Future Focus – eBusiness & Digital Media Most competitive infrastructure/deregulation Legislation

Non-discrimination between electronic/paper transactions Copyright/Intellectual Property

Business-friendly environment Digital Media District Excellent connectivity National Digital Park

The Development of Irish Owned Industry

The role of Enterprise Ireland

Semi-State Agency - funded by Government Focused on Irish Owned Companies Identify and assist High Potential Companies in the

process of their business development Emphasis on companies with potential for

Internationalisation and exports Foster innovation in companies

Enterprise Ireland Strategy

To help client companies develop a Sustainable Competitive Advantage leading to increased profitable sales, exports and employment

The client base of Enterprise Ireland will be comprised of companies which are Irish based and whose growth and development can be enhanced through working with Enterprise Ireland

Over 90% of Irish Owned Companies are SMEs

EmployingCompanies Sales JobsExports

TOTAL 100% 100% 100%100%

Under 10 19% 2% 2%3%

10-50 63% 25% 33%21%

50-250 16% 35% 35%35%

250 + 2% 38% 30%41%

Current Structure by Sector

Food£11B (55%)

Internat'l Services

£2B (12%)

Consumer5%

Industrial Products£5B (28%)

SALESSALES

Current Structure by Sector

Food£5B (61%)

Internat'l Services

£1.1B (13%)

Consumer6%

Industrial Products

£1.7B (19%)

EXPORTSEXPORTS

Current Structure by Sector

Food37%

Industrial Products

46%

Consumer6% EMPLOYMENTEMPLOYMENT

InternationalServices

11%

Exports by Market Region (Growth)2000

UK EUROPE US ROW

£3.5B

(+10%)

£2.3B

(+17%)

£1.2B

(+25%)

£1.0B

(+18%)

TOTAL

Sectoral Trends

Emergence & Growth

Decline

Software I.T

PreparedConsumer Foods

Textile & Clothing Commodity Foods

Selected Sectors

Sectors

Software and International Services (700+ companies)

Healthcare, Pharmaceuticals, Chemical, Print & Packaging, Construction (700 companies)

Electronics and Precision Components (350 companies)

Engineering (350 companies)

Irish Owned Software Companies

Over 640 Irish owned companies

40-50 new high potential start-ups annually

Revenue Over £1 Billion

Revenue growth 20% + per annum (95-00)

Export growth 25% + per annum (95-00)

Exports represent 75% + of production (‘00)

USA largest market for Irish software companies - 36% of exports

Irish owned Healthcare Companies

75 companies Includes 10 of the top 15 Medical Device companies

Medical Disposables Opthalmic Products Orthopaedic implants Medical Electronics Diagnostics Kits

Niche companies in Medical Devices, Components,

Pharmaceuticals, Diagnostics, Chemicals and Biotechnology Small Players internationally/no strong proprietory technology Employment 12,500 Annual Exports US $2bn

Irish owned Biotech Sector

18 companies / total of 348 people employed

Key players are Trinity Biotech, Biotrin, Megazyme and Plant Technology - collectively employ 248

Trinity Biotech and Megazyme had their origins overseas

All companies were established over the past 10 years

Growth in employment has averaged 26.5% over the period 1995-1999

ElectronicsCompany Focus

Electronics Subsupply Telecommunications Process Control – particular growthInstrumentation

Proprietary TechnologiesNiche MarketsSuppliers to MNCsSub-contract manufacture

Software

Electronics

Localisation

Shared Services

Call Centres

Financial Services

Medical & Healthcare

Future focus – Internationally Traded Services

Future Key Opportunity Sectors

Informatics including software

Digital Media

eBusiness – transition & new businesses

Healthsciences – including Bio-informatics

IR£m IR£m

Exports Imports

1997 11.508 1.997

1998 7.348 4.328

1999 6.302 5.155

2000 9.486 11.332

Ireland - Lithuania Trade

Doing Business in Ireland

Why companies choose Ireland

Unique Return on Investment

Unique Return on Investment

Competitive Cost Environment

Competitive Cost Environment

Highly educated and flexible workforce

Highly educated and flexible workforce

EI / IDA Assistance

EI / IDA Assistance

Low Corporation Tax

Low Corporation Tax

Telecommunications Infrastructure

Telecommunications Infrastructure

Supportive Business Environment

Supportive Business Environment

Ireland – a key location in the EU

• EU: 370m Single Market

• EURO implementation

• English Speaking

• Export orientation

• Business friendly environment

• Equal treatment for foreign/Irish businesses

Doing Business in Ireland

Think Partnership – mutual benefit Remember the size of the Irish Market Many Irish Companies are focussed on opportunities in

markets outside of Ireland High tech companies are particularly export oriented Agencies can help – BUT they need to be clear about

your requirements!