Survey of MNCs in Ireland 2013 - Corporates & Institutions of MNCs in Ireland 2013 Results of the Annual Competitiveness Survey Conducted by Irish Management Institute & Danske Bank

Survey of MNCs in Ireland

Results of the Annual Competitiveness Survey

2013

Survey of MNCs in Ireland 2013Results of the Annual Competitiveness Survey

Conducted by

Irish Management Institute & Danske BankNovember 2013

DANSKE ADVERTISEMENT?

Think Foreign Direct Investment into Ireland and there’s one name you need to know - Danske Bank.

For more information, contact Stephen Mullin on+353 (0)1 484 2841 or [email protected]

LC6417Danske Bank A/S (trading as Danske Bank, Danske Bank Markets and Danske Bank Corporates & Institutions] is authorised by The Danish FSA in Denmark and is regulated by the Central Bank of Ireland for conduct of business rules.

Consult the big fi sh this side of the pond

DKE046-NY-A4-V3.indd 1 30/10/2013 08:43

2

Acknowledgements

The authors would like to thank the following

for their support and assistance throughout

this project: in the Irish Management Institute

we would like to thank Dr. Jonathan Westrup,

Elaine McMahon, Frank Condon, Margaret

O’Neill, Gary Selby, Eva Maguire and Neasa

Athey; and in Danske Bank we would like to

thank Caroline Douglas. We would also like

to thank Fergal O’Connor and Conor

MacManus, OLAS, for their assistance

with and development of the survey website.

We would particularly like to thank all the

Chief Executives and senior managers who

responded to the IMI Danske Bank MNC

2013 survey. Their time and contributions

are greatly appreciated.

About the Authors

Dr. Déirdre CroweSustainability, Management and Research Consultant

Déirdre has considerable research and report

writing experience for a wide variety of clients

in the management, education, socio-economic

and sustainability sectors. She also currently

mentors at the Irish Management Institute

on the Business Research Programme and

conducts Management Practices Profiling.

In addition she teaches with Dublin City

University in the areas of Management and

Education for Sustainability. Déirdre studied

in University College Dublin and she was

awarded a Ph.D. from the School of Business,

Trinity College Dublin.

Owen CallanFixed Income Strategist, Danske Bank

Owen joined Danske Markets Ireland in 2003,

originally as an FX trader and later as a money

market trader, managing Danske’s liquidity and

interest rate risk in Ireland. He moved to the

Fixed Income and Derivatives team in 2010

which has taken on a fresh focus with Danske

becoming a Primary Dealer for Irish

government bonds. He is a regular contributor

to the eurozone debate in the media and holds

a Bachelor of Commerce degree from UCD.

Acknowledgements3 Contents 4

Table of contents

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Chapter 0: Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

0.1 Introduction & Structure of Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

0.2 Administration of the 2013 IMI MNC Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Chapter 1: Economic Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

1.2 Global Economic Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

1.3: Irish Economic Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

1.4: Future Prospects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Chapter 2: Profile of Respondent Firms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

2.2 Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

2.3 Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

2.4 Strategic Role . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Chapter 3: Issues of Importance for Competitiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

3.2 Cost Base of Operations in Ireland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

3.3 Skills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

3.4 Irish Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

3.5 Competitors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

3.6 Strategic Role of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Chapter 4: The Current Business Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

4.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

4.2 Growth and Expectations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

4.3 Competitive Strategies of Firms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

4.4 Recent Developments and Prospects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Chapter 5: Engagement in Local Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

5.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

5.2 Relationships with Irish SMEs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

5.3 Relationships with Irish Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

5.4 Engagement in Community, Social or CSR Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Appendix: 2013 Questionnaire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

The Chief Executives and senior managers of Irish and foreign owned multinational companies (MNCs) operating in Ireland were surveyed in late summer 2013. The results are presented in this report which represents the fifth collaboration between the Irish Management Institute and Danske Bank. The purpose of the survey is to gain insight into the attitudes and experiences of the leaders and senior management of MNCs based here. It presents their views on the strengths and weaknesses of doing business in Ireland and the impact, if any, of recent developments on their operations and on the general competitiveness of the Irish economy.

Economic Outlook

While it has been another tough year for most

of the major global economies, f leeting signs

of a sustainable recovery finally appear to be

coming together as we exit 2013. In addition, the

Eurozone sovereign debt crisis seems to have

stabilised. The global trading situation remains

positive, open and likely to see fresh opportunities

created rather than the closure of existing ones.

The Irish economy has continued to recover

modestly and with mixed results in 2013,

building on the stability the economy has been

experiencing since the start of 2011. With the

external environment picking up and expected

to rebound quite sharply in 2014, the outlook

for the Irish economy should also improve in

parallel. At Danske Bank, we would look for

growth of between 1.5-2.0% in 2014. 2013

marks the final year that the Irish government is

forced to conduct their fiscal planning under the

direct supervision of the EU and IMF. The 2014

Budget, though still tough in nature, was the first

budget since the crisis began to show signs of

a lessening of austerity by an Irish government,

when compared against previous pledges made

to the Troika. While this loosening of the purse

strings was relatively modest in nature, the

budget enacted by Minister for Finance Michael

Noonan did offer some encouraging pro-business

and pro-growth initiatives. It also managed to

avoid too many anti-growth taxation measures.

Minister Noonan also made some moves to

ensure that Ireland is not viewed as a tax haven

by either the US or EU. This closed off some of

the more controversial corporation tax loopholes

which had risked impacting negatively on Ireland’s

ability to compete for new FDI.

Profile of Respondent Firms

Respondents to the 2013 survey represent 121

firms employing almost 112,000 people. The

majority of firms are foreign owned and there is

a mix of manufacturing and services. The foreign

Execut ive Summar y5 Execut ive Summar y 6

Executive Summary

It is also encouraging to note that a significant

proportion of firms that experienced growth in

the past two years expect to continue to grow

next year. The majority of firms (70%) that

decreased employment last year have ceased

downsizing. Almost half of firms experiencing

a decrease in turnover in the past two years

expect a turnaround in fortunes and expect

to grow again next year.

Most firms have competitive strategies

including most Irish owned firms. Quality and

service, innovation and new products are the

most common strategies as well as cost

reduction and efficiencies. More Irish firms

are focusing on new markets than foreign

firms whereas more foreign owned firms

are focusing on operational excellence.

Ireland’s international reputation has improved

considerably with clients and overseas

operations of respondents in the past year,

resulting in a significant positive effect on

business. When asked to comment on the effect

of recent international discussions on taxation

and global transactions, respondents were

generally positive about the opportunities here

but cautious that changes could be adverse.

Increasing confidence in Ireland’s long-run

economic stability is evident in this year’s survey

with the majority (69%) of respondents viewing

it as moderate and 16% as strong. This more

positive outlook concurs with the expectations

for growth in employment (35%) and turnover

(43%) by firms in the next year.

Engagement in Local Economy

The level of engagement in the local Irish

economy is reflected in the business and social

inter-linkages and relationships a firm develops.

Over half of respondents purchase essential

product related supplies from local SMEs while

almost half engage professional and third party

vendor services from local SMEs. Nearly a

quarter of foreign owned firms are working

with the IDA for R&D and 14% for innovation

networks. The relationship with Enterprise

Ireland (EI) is the equivalent for Irish owned

firms and 28% of Irish respondents indicated

they work with EI for R&D and 17% are engaged

in EI innovation networks. All major universities,

research organisations and institutes of

technology were represented in the linkages

specified by respondents.

The majority of firms (66%) are engaged in an

impressive array of charity and community

activities. Education was the most popular

specified area of activity with 16 firms engaged

in education and an additional 6 involved with

the Junior Achievement programme.

Execut ive Summar y7 Execut ive Summar y 8

owned firms (excluding retail and wholesale

distribution) represent over half of aggregate

FDI employment in Ireland. In over half of the

foreign owned firms, including two thirds of all

US owned firms, the Irish operation is a strategic

centre for either a region, a product or a service.

Issues of Importance for Competitiveness

The operating cost base, skills and culture

are issues which affect the competitiveness

of firms. The pattern of a high operating cost

base continues in Ireland with the majority

saying that costs are higher here than in

equivalent operations elsewhere. Over half of

respondents stated that their cost base in

Ireland was rising this year and over one third

stated that it remained unchanged. The most

expensive operating costs are energy, labour,

transport and telecommunications.

The respondent firms have highly skilled staff

with over 80% of respondents estimating that

more than a quarter of the employees have a

third level degree. In over one quarter of firms

it is estimated that more than 75% of employees

have a third level degree. However, the majority

of firms (57%) specified some difficulty in

acquiring the right skills to support their growth

plans. Particular skills shortages noted were:

engineering, combined language/technical

skills, IT, science and quality expertise.

Respondents had a mostly positive view of Irish

cultural factors which influence competitiveness

of operations here. Flexibility, work ethic, a

positive approach and friendliness were the

most noted cultural attributes mentioned.

The location of the greatest competitors was

dependent on the firm and the sector. The UK

(17%), US (17%) and China (14%) were among

the most mentioned countries. The competitors

in the UK and the US were split evenly between

manufacturing and services whereas in China

they were mostly manufacturing. Ireland was

named as the location of the main competitor for

over one tenth of firms. Half of these were Irish

and half foreign owned. Approximately half of

competing operations were from within the

same organisations as the Irish firm.

Approximately one third of foreign owned firms

had a change in mandate in the past two years.

Enabling this change were mentioned skills and

expertise (25%) and the Irish tax regime (13%).

The Current Business Environment

Respondents are quite optimistic about growth

prospects in the next year. More than one third

of firms (35%) expect employment numbers to

increase and 43% expect turnover to increase in

this year’s survey. Over half (52%) expect their

employee numbers to remain the same.

The Chief Executives and senior managers of

Irish and foreign owned multinational companies

(MNCs) operating in Ireland were surveyed in

late summer 2013. The results are presented

in this report which represents the fifth

collaboration between the Irish Management

Institute and Danske Bank. The survey was last

conducted in the summer of 2011.

The purpose of the survey is to gain insight into

the attitudes and experiences of the leaders

and senior management of MNCs based here.

It presents their views on the strengths and

weaknesses of doing business in Ireland and the

impact, if any, of recent developments on their

operations and on the general competitiveness of

the Irish economy. It seeks to understand current

priorities and the conditions which may assist in

improving business and mandate opportunities

for Irish based operations.

The report broadly follows the format of previous

years’ and offers some comparative analysis. It

opens with a description in Chapter One of the

general economic context and developments

which have influenced employment and MNC

activity over the past couple of years and the

outlook and prospects for the global and Irish

economies.

The following Chapters present the results of the

2013 IMI Danske Bank MNC Survey starting with

a brief profile of the respondent firms and their

Irish based operations in Chapter 2.

There follows, in Chapter 3, a look at issues

affecting the competitiveness of the Irish

economy such as the cost of various business

activities compared to other countries, the skills

needs affecting growth and productivity as well

as cultural factors which may influence

performance. The focus of the analysis then

shifts to the strategic role of the Irish based

foreign subsidiaries in the context of their

parent group and whether this role has changed

in recent years. It looks at the factors which have

helped operations to win new mandates as well

as possible factors impeding desired changes.

Introduction

Chapter 4 looks at the current business

environment. It describes the recent and

expected growth of firms and goes on to explore

current competitive strategies. Then it reports on

Ireland’s reputation among respondents’ clients

and overseas operations as well as the impact of

recent international debates on taxation or other

developments internationally which may affect

business or competitiveness of operations here.

Finally, the respondents view on the prospects

of the Irish economy is reported.

The level of engagement with the local economy

is examined in the final Chapter, 5. Business

relationships with Irish small and medium sized

enterprises (SMEs) are discussed as well other

relationships such as research and recruitment

with Irish third level institutions and other state

or semi-state bodies. The Chapter concludes with

an outline of social, community and corporate

responsibility activities.

Administration of the 2013 IMI Dankse Bank

MNC Survey

The survey was carried out using an on-line

questionnaire in late August and September

2013. A sample of Chief Executives and senior

managers in 393 Irish based multinational

operations was drawn from the IMI database.

They were contacted by email which provided

a secure hyperlink to the questionnaire website.

The questionnaire was in five sections: a. Basic

Profile of Irish Operation; b. Labour Force Activity;

c. Engagement in the Irish Economy; d. Business

Environment; and e. Perception of Ireland in

2013. A copy of the questionnaire is included

in the Appendix.

A total of 180 respondents completed 145

usable questionnaires from 121 firms

(representing a 31% response rate from firms).

Table 0.1 shows the job categories of

individual respondents.

Job Category of Individual Respondents % respondents

CEO / Managing Director / General Manager 31

Financial Controller / Finance Director 20

Director Production/Operations/Manufacturing 8

Director Human Resources 8

SVP/VP/Director/Partner/C-level 7

Head of Operations / Production/Supply Chain 5

Director Regional/Division 4

Director IT/Quality/Marketing/Supply Chain 4

Director Corporate/Global Affairs/Communications 3

Finance Manager 5

Manager/Manager Sales/Marketing/Manager HR 3

Manager Production/Operations 3

Foreword & Introduct ion9 Foreword & Introduct ion 10

Table 0.1

Economic Outlook11 Economic Outlook 12

Chapter 1: Economic Outlook1

1.1 Introduction

It has been another tough year for most of the

major global economies. However, f leeting

signs of a sustainable recovery finally appear

to be coming together as we exit 2013. In

addition, the Eurozone sovereign debt crisis

seems to have stabilised, with yields on

peripheral government debt receding, and

fears of a Euro-exit from Greece now much

reduced. 2014 looks set to open up on a much

more positive and stable footing than would

have been forecast at the start of 2013.

1.2 Global Economic Outlook

Although the moderate rebound in the US is

still heavily reliant on the large amounts of

quantitative easing still arising from the Federal

Reserve, unemployment continues to decline,

the housing market continues to recover, and the

stock market continues to push higher, despite

the occasional wobble. GDP in the first half of the

year has averaged 1.8% on an annualised basis.

Growth should accelerate in the second half of the

year and into 2014, provided the US government

shutdown in the latter part of the year doesn’t

throw the recovery off track.

Meanwhile, the Euro-area finally exited its longest

ever recession in the second quarter of the year,

after six consecutive quarters of contraction

previously. However, growth of just 0.3% is

indicative of just how modest the recovery has been

in the Euro-area so far. Furthermore, the chronic

mishandling of the Cypriot banking collapse

reminded the markets once more how dysfunctional

the Euro-area can be when a crisis hits.

However, in tandem with positive economic

signals from the UK and Japan, and with no signs

of a significant slowdown in economic activity in

China, the global economy appears to be finally

moving into recovery mode. It appears to be

gaining the momentum necessary to create

sustainable economic growth once more. This is

despite the drag that fiscal consolidation and

austerity is still having on many parts of the world.

Global trade is now expected to increase by 2.5%

this year, and by 4.5% next year, according to the

World Trade Organisation. Global GDP growth is

forecast to be 3.25% in 2013 and 4% in 2014,

according to the IMF.

1.3 Irish Economic Outlook

Closer to home, the Irish economy has continued

to recover modestly and with mixed results in

2013, building on the stability the economy has

been experiencing since the start of 2011.

Although the Irish economy only exited yet

another recession in Q2 2013, with growth of

+0.4% on the quarter (after a negative end to

2012 and start to 2013), other indicators such

as unemployment, consumer spending, PMI

surveys and the housing market are all

indicative of improving economic conditions. With

the external environment picking up and expected

to rebound quite sharply in 2014, the outlook

for the Irish economy should also improve in

parallel. At Danske Bank, we would look for

growth of between 1.5-2.0% in 2014.

Key to that will be, as usual, the output of the

international export sector of the Irish economy.

This has been an anchor of stability throughout

the last five turbulent years. However, after three

years of sustained and significant growth,

industrial production has been much more

volatile this year. Output has been significantly

less in 2013 than over the same period last year,

declining by 6.7% in the year to the end of August.

The major reason for this is undoubtedly the

so-called “patent cliff” in the pharmaceutical

sector. This contraction in activity saw Irish

goods exports running at 5.8% less than at

the same point last year.

These volatile pharmaceutical trade flows are

also no doubt impacting on the negative GDP

figures seen at the end of last year and the

Table 1.1: Global Economic Forecasts – real GDP growth

2013 2014

Ireland 0.5 1.8

UK 1.4 1.9

US 1.6 2.6

Euro-area -0.4 1.0

Japan 2.0 1.2

China 7.6 7.3

Table 1.1

13 14Economic Outlook Economic Outlook

beginning of 2013. However, declines in activity in

this sector of the economy are difficult to analyse

in terms of their impact on the broader economy.

As yet, they do not appear to have had any

significant negative effect on employment or tax

revenue levels. Furthermore, activity in the

agriculture and services sectors continued to

expand sharply and offset much of the contraction

in the chemical and pharmaceutical sectors.

1.4 Future Prospects

While the “Great Recession” of 2011-2013, and

the global financial crisis dating back to 2007,

would now appear to be behind us at last, the

economic recovery in most advanced economies

will be slower than would have been experienced

after previous recessions. This slower recovery

will be due to the long process of consolidating

public sector finances in most major economies.

This is in addition to the task of deleveraging and

re-capitalising many parts of the global banking

system, and related private sector balance

sheets, which is still incomplete.

A key part of this will be the major challenge

of creating a proper banking union within the

Euro-area, together with the implementation of

new Basel III regulation and capital requirements

in most of the world’s major banking systems.

The financial crisis, while now in the past for the

most part, will have many serious consequences

for the financial sector and the broader

economy for the rest of this decade, at least.

In most advanced economies, reducing

unemployment and stabilising public sector

indebtedness will be the main challenges facing

government and central banks in the period

between now and 2020. Labour markets and

monetary policy are unlikely to normalise for

at least another five years.

However, more positively, despite the joint

stimulus of easing of monetary policy and large

government deficits, most major economies have

yet to experience any significant inflationary

pressures. Indeed they are unlikely to do so in the

near future, given the scale of excess capacity

still working its way through the system. This will

at least keep the pressure off these central banks

to withdraw monetary stimulus in the short term

while giving government’s time to get their fiscal

houses in order before we see interest rates

rise appreciably.

Furthermore, despite fears that increased trade

and investment protectionism would eventually

arise as a result of weak growth and high

unemployment in many parts of the world, such

policies have yet to gain any major traction. The

global trading situation remains positive, open

and likely to see fresh opportunities created

rather than the closure of existing ones.

Prof ile of Respondent Firms15 Prof ile of Respondent Firms 16

Chapter 2: Profile of Respondent Firms

Ownership % FirmsNo. of

Employees

Irish Owned 21 16,190

Foreign Owned 79 95,599

Country of Ownership

US 43

Germany 8

France 6

UK 5

Switzerland 3

Netherlands 2

Italy 2

Luxembourg 2

Sweden 2

Norway (Ireland) <1

Spain <1

Japan <1

Singapore <1

South Africa <1

Other unspecified 3

Total 100 111,789

Number of Employees in Irish Operation

% Firms

<=49 16

50-99 9

100-249 19

250-499 15

500-999 14

1,000-1,999 12

2,000-4,500 13

4,501-14,499 0

14,500-15,500 2

*IDA, 2013, Foreign Investment in Ireland (Infographic updated June 2013), Industrial Development Authority, Dublin. http://www.idaireland.com/invest-in-ireland/fdi-in-ireland-2013/index.xml

2.3 Sector

There is a mix of services and manufacturing

firms represented in the survey (Table: 2.3). Well

over a third of firms (38%) describe themselves

as being entirely service-based operations. Of the

manufacturing firms over half (55%) are engaged

in a significant amount of service-based activities.

A broad range of exporting sectors is straddled

with the highest representation from chemicals

& pharmaceuticals, medical devices and the

information & communication technology (ICT)

sectors (Table 2.4). Approximately two thirds of

firms in both the medical devices and ICT sectors

are from the US.

Mix of Manufacturing & Services%

Firms

All Manufacturing (90-100%) 28

75% Manufacturing / 25% Services 19



All Services (90-100%) 38

Primary Sector of Respondent Firms

% Firms

Chemicals and pharmaceuticals 16

Medical devices 15

Information & communication technology ICT – Software

8

Information & communication technology ICT – Hardware

7

Information & communication technology ICT – both

1

Other electrical & transport equipment

4

Financial, insurance or real estate services

8

Engineering & construction services

7

Retail and wholesale trade 3

Professional and support service activities

3

Transport services 1

Food, drink and tobacco 6

Agribusiness 2

Oil & gas industries 3

Packaging 3

Other 13

Source: IMI Danske Bank MNC Survey 2013

22.1 Introduction

The survey represents 121 firms operating in

Ireland. Of these, 96 (79%) are foreign owned

firms & 25 (21%) are Irish owned firms

operating on a multinational basis (Table 2.1).

More than half of the foreign owned firms are from

the United States (US). Thirty-seven firms (39%)

are from Europe, mostly Germany, France, United

Kingdom (UK) and Switzerland. These proportions

are roughly similar to the IDA’s figures of FDI

in Ireland.*

2.2 Employment

Total employment in respondent firms is 111,789

with over 95,599 of these in foreign owned

enterprises. Of these, retail and wholesale

distribution account for 18, 700. The remainder,

76,899, is spread across manufacturing and

other service industries. This represents more

than half of the aggregate FDI employment in

the state which is approximately 153,000 (IDA,

2013). Total employment in Ireland in the Irish

owned respondent firms is 16,190.

There is a large spread of firm sizes represented

in the survey (Table 2.2) with 16% employing less

than 50 people, over 60% employing less than

500 and 98% employing less than 4,500. The

two very large employers (14-15,500) are foreign

owned firms.

Table 2.1 Table 2.2

Table 2.3

Table 2.4




2.4 Strategic Role

The more strategic a role an operation can play

within the parent organisation the more likely it is

to embed in a local economy, retain employment

and support local suppliers. The nature of the

employment it provides is more likely to relate to

higher value activities and services, for example

Research and Development, and to be of a higher

quality with better pay and conditions. The

prospects and sustainability of a strategically

important operation are greater as the parent

organisation becomes increasingly dependent on

the expertise and activity conducted there when

compared to basic operations with lower value

mandates which are vulnerable to competitive

pressures.

Looking at the strategic role of respondent firms,

7% of foreign owned ones and, as expected, 70%

of Irish ones, embody the global strategic centre

for their organisation. Significantly, in over half of

the foreign owned firms, including two thirds of all

US owned firms, the Irish operation is a strategic

centre for either a region, a product or a service.

The activities of half of these strategic centres

are predominantly manufacturing and one third

are entirely services. The strategic role of foreign

owned subsidiaries is further examined in the

next Chapter.

Strategic Role of Irish operation%

Firms

The global strategic centre of company 19

A strategic centre for a region, product or service

46

Higher value support function 17

Basic product or service 17

Table 2.5

Prof ile of Respondent Firms17 Prof ile of Respondent Firms 18


*Industrial competitiveness of EU member states, European Commission - MEMO/13/816 25/09/2013http://ec.europa.eu/enterprise/policies/industrial-competitiveness/monitoring- member-states/files/ie_country-chapter_en.pdf

Chapter 3: Issues of Importance for Competitiveness

Comparison of Costs to Irish operation compared other countries% Foreign Firms (% Irish Firms)

Less expensive Same More expensive

Energy 2 (16) 24 (24) 73 (76)

Labour 8 (4) 21 (28) 69 (68)

Transport 3 (12) 38 (40) 59 (48)

Telecommunications 31 (4) 39 (56) 57 (40)

Legal Services 9 (1) 48 (64) 42 (28)

Rents 19 (20) 43 (48) 38 (32)

Construction 15 (8) 50 (68) 35 (24)

Other Professional Services

6 (1) 61 (56) 33 (36)

Water 23 (36) 54 (44) 22 (20)

3


3.1 Introduction

The competitiveness of doing business in Ireland,

or anywhere, depends on many factors. However,

it is also relative to conditions and developments

in other places, the combined effect of which may

continuously change in emphasis. The European

Commission recently gave a positive review of

Irish competitiveness. *

Competitiveness is the key theme of the IMI

Danske Bank MNC survey. As usual, the focus

this year is on the cost base as well as on the

skills and cultural factors which may influence

the attraction and retention of FDI, in particular

higher value mandates, as well as the productivity

and competitiveness of Irish owned operations.

3.2 Cost Base of Operations in Ireland

Over half of respondents stated that their cost

base in Ireland was rising this year and over one

third stated that it remained unchanged. This is

comparable to the previous survey of 2011.

Previously, respondents have also viewed the

cost base of operations here as being significantly

higher than in comparable locations. In this year’s

survey the costs regarded as more expensive by

the majority of respondents are energy, labour,

transport and telecommunications (Table 3.1 ) -

all similar to the 2011 survey.

Labour is considered to be more expensive

here by 69% of respondents, similar to 2011,

having being as high as 81% in 2009. Fewer

respondents this year also regarded the cost

Table 3.1

of construction as being more expensive (35%).

None of the cost items were regarded by a

majority as being less expensive compared

to other locations although more than one third

said water was less expensive compared to one

fifth last year.

Issues of Importance for Compet it iveness19 Issues of Importance for Compet it iveness 20

Other high costs of operating in Ireland specified

by respondents included commercial rates, legal

fees and the cost of recruitment.

As noted by several respondents, the answer

to whether it is more expensive in Ireland than

elsewhere depends on which country is being

compared:

“Labour rates in Ireland are much higher

than India but on a par with Singapore

in recent times. Ireland is a good bit cheaper

than U.S. (Silicon Valley) especially

in relation to graduate recruits.”

Also, the specific nature of the jobs may influence

costs. One respondent commented that technical

and professional staff are less expensive in

Ireland whereas plant and craft labour are

more expensive.

3.3 Skills

A highly skilled workforce is essential to attract

and retain higher value added activities. The

respondent firms have highly skilled staff with

over 80% of respondents estimating that more

than a quarter of the employees have a third

level degree. In over one quarter of firms it is

estimated that more than 75% of employees

have a third level degree. (Table 3.2)

From a short list of priorities (Table 3.3) for

improving competitiveness of their Irish

operations, openness to change is regarded

as critical by a large majority of respondents.

This is up from 75% in the 2011 survey.

Less than half of respondents agreed that

up-skilling of existing employees, work

readiness of new employees and broadening

of management experience were critical. All of

these options were regarded as either critical

or advantageous by everyone and hardly any

respondents regarded them as ‘not important’.

It may be argued that openness to change is

more of a cultural factor and this is highlighted

later where the flexibility of the Irish workforce

is commended and seen as a positive cultural

trait by employers (page 23).

3.3.1 Skills Shortages

When asked whether any skills shortages were

impinging on growth plans or productivity 43%

currently had no particular need or difficulty

finding the right skills. However, 57% specified

some difficulty (Table 3.4).

Almost one third (31%) of all firms had

difficulties finding suitable engineering skills,

particularly noted were software, industrial,

injection moulding, chemical and process

engineering skills. Several respondents

mentioned a combination of language and

technical skills (e.g. engineers, technicians,

scientists or accountants with languages).

13% of firms specified IT skills as being difficult

to acquire with some specific skills noted

(advanced skills, JAVA/SQL, ERP systems/SAP,

software for medical devices). Science and

quality expertise were each mentioned by

4% of firms.

Proportion of employees in Ireland with a 3rd level degree

% Firms

>75% 27

50-75% 25

25-50% 28

<25% 20


Table 3.2


Importance for improving the competitiveness of Irish operation (%)

Critical Advantageous Not Important

Openness to Change 85 14 <1

Up-skilling Existing Employees 41 58 <2

Work Readiness of New Employees 39 56 5

Broadening Management Experience 37 60 3


Table 3.3

Skills shortages impinging on plans%

Firms

Experiencing some skills shortages 53

Engineering Skills 31

IT Skills 13

Science 4

Quality 4


Table 3.4

3.4 Irish Culture

The role of culture in an organisation’s

competitiveness is harder to quantify but is

considered to be a crucial determinant in the

success of any workplace. Respondents were

asked if any particular cultural factors influenced

the productivity of their Irish operations either

positively or negatively. This was an open question.

One third of respondents didn’t specify any

particular factors affecting their organisation’s

performance. Of those who identified an influence

of cultural factors, a majority (57%) of respondents

noted positive factors and 30% noted some

negative factors. Flexibility, work ethic, a positive

approach and friendliness were the most noted

positive cultural attributes mentioned.

Interestingly the flexibility of the work force was

mentioned by almost one third of foreign owned

firms but only by 10% of Irish ones. One could

speculate that this is due to the nature of the

firms themselves and the type of employees

they attract. In the section in the survey on

skills important for improving competitiveness

of the Irish operations, openness to change

was regarded as a critical skill by 85% of

respondents (Table 3.5).

Both Irish and foreign firms almost equally

mentioned the ‘can do’ attitude and work ethic

(30%) as well as the sociability of the Irish and

ease of getting on with many different clients

and cultures (14%).

On the negative side comments were very

varied and nothing particular emerged. Some

respondents commented on the lack of foreign

languages, vagueness and lack of attention to

detail. Four respondents in foreign owned firms

and one in an Irish owned firm mentioned the

influence of unions in resisting change and

maintaining a high cost base. One respondent

each noted the Irish drink culture and

absenteeism.

“The Irish ability to ‘get on’ with various

different cultures in the context of large

multi-national group is very important.”

“Irish people’s ability to navigate most cultures

- in that Irish people can work with

Asian people as easily as people from the US.

They also have a can do attitude and

usually deliver on their commitments.”

“Irish employees seen as having

a can do attitude with an excellence

in delivery and quality.”

“We have a great reputation within

our industry and within our global company.”

“Well educated and English speaking

workforce is huge advantage.”

“The sense of we are all in this together,

sense of achievement, f lexibility

and humour certainly help.”

3.5 Competitors

As noted previously in relation to labour costs,

the competitiveness of an economy or a firm

is relative and depends not only on its own

qualities and performance but also on those

of its competitors and market conditions which

also change continuously.

When asked which country was the greatest

competitor to the Irish operation based,

respondent firms named a broad range of

countries indicating that it is quite firm and

industry specific. As in previous years, the UK

(17%), US (17%) and China (14%) were among

the most mentioned countries. Although the

number of firms citing the US as the location

of a main competitor was only 13% in 2011, it

was the same in 2009 as this year (17%). The

competitors in the UK and the US were split

evenly between manufacturing and services

whereas in China they were mostly manufacturing.

Ireland was named as the location of the main

competitor for over one tenth of firms. Half of

these were Irish and half foreign owned.

Fewer firms mentioned India as the location of

their main competitor compared to the last

survey (5% this year - 11% in 2011) and these

were all manufacturing operations. Of note,

competitors located in eastern Europe (8%) and

Ireland (11%) were a threat to more services

based enterprises whereas competing

operations in western Europe were mostly

manufacturing. Approximately half of

competing operations were from within the

same organisations as the Irish firm.


Positive Cultural Factors

Foreign Firms% respondents

Irish Firms% respondents

Flexibility 31 10

Work ethic/positive/can do attitude 29 31

Friendliness/sociability/ability to get on with clients and different cultures

14 14

English language 6

Education 7


Table 3.5

Location of Greatest Competitors % Firms% of these which

are Manufacturing

UK 17 50

US 17 50

China 14 80

Germany/Netherlands 13 81

Ireland 11 46

France/Italy/Portugal 10 75

Countries in Eastern Europe 8 40

Costa Rica/ Puerto Rico 6 100

India 5 100

Singapore 5 66

Japan/Thailand/Taiwan/Asia 3 100


Table 3.6


Based on the nature of the operation and the

split between manufacturing and services, there

is not much difference between firms. Slightly

more manufacturing firms consider themselves

as a strategic centre for a product or service

(52%) compared to services based firms (47%).

Sixty percent of firms with a basic mandate are

entirely service based.

Approximately one third of firms had a change

in mandate in the past two years. A variety of key

factors enabling this change were mentioned

including skills and expertise (25%) and the Irish

tax regime (13%). Mostly there were no issues

relating to firms who have not changed their

mandate.

About half of respondents tried to win new

mandates for their operation in the past two

years or are currently trying. Many of these

relate to new product development, increased

responsibility and management of a European

region or function. Success broadly depends on

the performance of their own operations. A few

respondents mentioned support of the IDA and

financial support or skills.

When asked what critical structural

improvements or policies would assist firms in

winning the desired mandate a broad variety of

suggestions were put forward by the respondents

(Table 3.9). The greatest number of suggestions

related to a reduction in operating costs in general,

in particular energy, and the costs of employment,

as well as certainty and maintenance of the

current corporate tax rate.3.6 Strategic Role of Subsidiaries

The strategic importance of a subsidiary within

the global organisation reflects the dependency

of the parent on a subsidiary for expertise in a

particular product area, service or region and

will be a key factor in the security and

sustainability of the subsidiary.

The importance of higher value added activities

is that they bring greater income to the country

and to the employees as well as greater returns

on investment. They help to embed foreign owned

firms so they are not competing primarily on cost

and they depend on linkages developed within

Ireland for their success and development.

“Relationship with Ireland would be

stronger than going to a new site.”

As expected, 70% of Irish firms characterise their

operation as the strategic centre for their global

organisation. While this is the case in only 7% of

foreign owned firms, it is noteworthy that the Irish

operation is a strategic centre in over half of all

foreign owned firms including two thirds of the US

owned firms. It may be the regional centre for the

parent organisation or it may function as a centre

for the production of a particular product or

service either globally or regionally.

Role of Irish Subsidiary% Foreign

Firms

The strategic centre of global company

7


54

Higher value support function 19

Basic product or service 19


Table 3.7

Extent of authority the Irish operation has in developing

a new product or service % Firms

4- Complete Authority 13

3 28

2 36

1 - No Authority 24


Table 3.8

Critical Structural Improvements or Policies to assist in achieving desired growth or mandate

% Firms

Reduction in operating costs 12

Reduce cost of employment 9

Maintain corporate tax/certainty on rate 9

Reduction in energy costs 7

R&D grant/tax credit/Patent box 5

Improved broadband, ecommerce, mobile 4

Reduction/no increase in personal tax/remove pensions levy 5

More high skills & technology graduates & STEM 4

Better air-links (e.g. to US/out of Cork/Waterford) 3

More government capital spend 3

R&D/NPD focus & skills development 3

General education (languages, problem solving) 3

Capital & expense grants R&D grant aid 2

Reduce regulation e.g. no. of board meetings 2

Continue collective bargaining 2

Ability to attract talent from round the world 2

Roads infrastructure especially rural 2

International sales & marketing 2

Others 8


Table 3.9

4

4.1 Introduction

This Chapter looks at the growth of firms in the

past two years and their expectations for the

coming year as well as the nature of their

competitive strategies. Finally, it reports on

Ireland’s international reputation and whether

it has changed or had an effect on business in the

past year. It also reports any, or potential, impact

the recent international debates on taxation

may have had on operations here as well as the

effect of any developments in other countries.

The views of respondents on the position of

MNCs in the country in the next two years are

presented as well as their views on the prospects

for Ireland’s long-run economic stability.

4.2 Growth and Expectations

Respondents this year are quite optimistic about

growth prospects in the next year and they reflect

similar findings from recent global studies.*

Since the last IMI Danske Bank MNC Survey was

conducted in 2011, employment has increased in

significantly more firms (43%) than it has fallen

(16%). This positive outcome had been expected

in the survey of that year when 48% of firms had

expected employment to increase and 13% had

expected it to decrease. This survey shows

turnover had increased in considerably more

firms (45%) than it had decreased (12%) in

the past two years. This is not as good as the

expectations of the 2011 survey when 60%

expected a higher turnover.

The optimism of the 2011 survey regarding

employment was reflected in the survey this year.

More than one third of firms (35%) expect

employment numbers to increase and 43%

expect turnover to increase in this year’s survey.

Over half (52%) expect their employee numbers

to remain the same. This is a much more

positive outlook than in previous surveys

when only 11% in 2009, and 27% in 2010

expected their workforces to grow. It is also more

positive than the 2011 survey expectation for

workforce stability (40%). In the current survey,

employment and turnover is expected to decrease

in only 13% and 10% of firms respectfully in

the coming year.

Chapter 4: The Current Business Environment

* McKinsey 2013, Global Survey Results, Economic Conditions Snapshot, September 2013. http://www.mckinsey.com/insights/economic_studies/economic_conditions_snapshot_september_2013_mckinsey_global_survey_results

Change in Employment

Expectations in 2011 survey

Actual change in past 2 years -2013 survey

Expectations for next year -

2013 survey

% Firms % Firms % Firms

Increase 26 43 35

Broadly Unchanged 51 41 52

Decrease 23 16 13


Table 4.1

The Current Business Env ironment27 The Current Business Env ironment 28

It is also encouraging to note that a significant

proportion of firms that experienced growth in the

past two years expect to continue to grow next

year. Of the firms where employment increased,

59% expect employment to expand and in firms

where turnover increased in the past two years,

64% expect a continuance of growth.

Firms that experienced a contraction in

employment numbers tend to be more cautiously

optimistic in outlook. While only 11% expect

some growth in numbers in the coming year,

58% expect numbers to remain the same

indicating that almost 70% of these firms have

ceased downsizing. In the case of turnover,

almost half (47%) of firms experiencing a

decrease in the past two years expect a

turnaround in fortunes and expect to grow again

next year. Firms where turnover has remained

broadly the same (69%) tend to be quite stable

and expect to continue as is.

4.3 Competitive Strategies of Firms

The development and implementation of a

competitive strategy is widely regarded as

essential to the success of firms particularly in the

export market. The majority of firms (84%) stated

they have a competitive strategy including all but

one of the Irish firms, which is very positive, and

81% of foreign owned firms. The general nature of

these strategies is outlined in Table 4.5.

The emphasis on innovation and new product

development by Irish owned firms (28%) is very

positive. And, while another 28% of Irish firms had

a strategic approach to cost reduction, only 3%

mentioned operational excellence or productivity

improvements as a strategy compared to a fifth of

foreign owned firms. The converse applies regarding

new market strategies which feature in the plans of a

quarter of Irish owned firms but were mentioned by

only 3% of foreign owned firms. A focus on service

and quality was the most common strategy amongst

foreign owned firms (24%) and also featured in a

significant number of Irish firms (21%).

4.4 Recent Developments and Prospects

4.4.1 International Reputation

Ireland’s reputation is improving considerably with

overseas clients and operations over the past year.

According to 41% of respondents the country’s

reputation had improved, an increase of 10% from

2011 (31%). Only 13% of respondents felt that our

reputation had disimproved compared to 30% in

2011 which was the year after the IMF/EU bailout.

There was no significant difference between foreign

and Irish owned firms.

There has been a significant positive impact on

firms’ ability to do business with 27% of respondents

stating that the improved reputation has had a

positive effect on business while only 7% stated that

the effect was negative. The majority stated that

there had been no effect of the country’s

reputation on ability to do business (Table 4.6).

4.4.2 International Debates

When asked to comment on the effect of recent

international discussions on taxation and global

transactions, respondents were generally positive

about the opportunities here but cautious that

changes could be adverse. In some cases the

discussions have prompted reviews and an

increase in transparency and have actually served

to highlight opportunities for international firms.

However, any changes in taxation law in other

countries or here, and the treatment of transfer

pricing, could have an impact on their operations here.

Change in Turnover

Expectations in 2011 survey

Actual change in past 2 years -2013 survey

Expectations for next year -

2013 survey

% Firms % Firms % Firms

Increase 60 45 43

Broadly Unchanged 27 43 47

Decrease 13 12 10


Table 4.2

Focus of Competitive StrategiesForeign Firms

% respondentsIrish Firms

% respondents

Service & Quality 24 21

Innovation/New Products/IP 19 28

Operational excellence/productivity/lean 19 3

Cost reduction/efficiencies 18 28

Skills/talent/expertise 10 14

Market positioning 12

Performance within global group 10

New markets 3 24

Focussing on core business/unique selling point 5 3

Brand 3

Growth through outsourcing or diversification 2

Leveraging Ireland's tax structure 2

Corporate Social Responsibility 1


Table 4.5

Effect of recent international discussions on taxation, global transactions etc.

on Irish operation

% Respondents

Yes 43

No 57


Table 4.6

Impact of any recent developments in other countries to affect the competitiveness or mandate of your Irish operations

% Respondents

Yes 20

No 80


Table 4.7

Change in Ireland’s reputation with overseas clients/operations

over the past year

% Respondents

Improved 41

No Change 46

Disimproved 13


Table 4.3

Any material impact on business

% Respondents

Positive 27

No Effect 66

Negative 7


Table 4.4


4.4.3 Impact of Developments in other Countries

Given the relativity of competitiveness, it is

important to keep abreast of significant

developments in other countries which may have

an impact on firms operating here. A minority of

respondents (20%) felt that recent developments

in other countries had affected the Irish

operations with about half of these referring

to the UK Patent Box which was introduced

earlier this year. This treats profits from patented

inventions and other innovations favourably.

“If Ireland is viewed as a tax haven it will impact negatively on Irish sites’ ability

to compete for new business.”

“Ireland remains a global hub for our business and the home of key brands. Therefore any change to Irish taxation policy has

the potential to impact on this.”

“Positively highlighted opportunity.”

“Perception of country - think we are losing the PR battle.”

“Decision makers are less convinced now that tax system changes imposed by

the European Commission will not increase their tax bill in Ireland in the future.

Any speculation or fear about tax system changes in Ireland causes delay and doubt

in investment decisions.”

“Seen as a ‘Red Herring’.”

“Changes in American tax law that may be introduced could have an adverse impact.”

“Countries like the UK are building a better tax proposition than in the past and the emergence

of capable low tax economies in Eastern Europe.”

“1) Most of our Irish located clients are international companies. Any perceived threat

to the tax position of Ireland could impact future investment decisions by them.

2) Our own operations have become internationalised. Any improvement or

simplification would be positive.”

“Patent Box has had a very significant impact.”

“If the tax rate changed it would cause many services to be outsourced to Poland.”

4.4.4 Single Euro Payments Area

The introduction of the Single Euro Payments Area

(SEPA) will not affect a small majority (55%) of

firms but is expected to have a positive impact on

operations for about 45% of firms. Generally, the

impact expected is not viewed as significant but

as a welcome improvement and standardisation

which will ease international payments and the

ability of firms to more effectively use enterprise

and accounting systems.

4.4.5 Position of MNCs in Ireland

A good proportion (22%) of respondents saw

an improvement or a shift to higher value

activities (11%) when asked their views on the

position of MNCs in Ireland changing over the

next two years. Slightly fewer saw little or no

change (17%). Pressure from low cost economies

or operations were seen as the greatest threat

(16%) with some respondents also referring to

competitive pressure from the UK (4%). Tax

was mentioned by one tenth of respondents

as a critical issue. Retention of talent was

also mentioned (4%) as becoming challenging

as the economy improves.

“They must move up the value change, it is unlikely they can compete at the low

end production & manufacturing.”

“Emphasis on higher value add activities.”

“Increased drive to locate closer to emerging markets India/China.”

“Become more service based as manufacturing is sourced to lower cost

economies such as China/India etc.”

“In financial services - regulation is going to be challenging, however low corporation tax is an important USP.”

“Deepen roots or die.”

“As cost of manufacturing becomes cheaper in the US, the Irish tax and

R&D credit scheme will be more important in retaining existing and attracting new

companies to invest in Ireland.”

“Retention of key talent/skills will be critical; competitiveness will remain challenging.”

“ Irish MNCs will have to move further up the value chain.”

4.4.6 Ireland’s Long-run Economic Stability

Increasing confidence in Ireland’s long-run

economic stability is evident in this year’s survey

with the majority (69%) of respondents viewing it

as moderate and 16% as strong. Only 14% view

the prospects as weak, significantly fewer than

in the two previous surveys of 2010 and 2011

when both equally recorded more pessimistic

views (29%). This more positive outlook concurs

with the expectations for growth in employment

(35%) and turnover (43%) by firms in the next

year (see page 28/29).

“Overall Ireland is good place to do business. The attitude of the workforce is generally very positive. It is a pity that we are losing

so much of our talented young people to immigration.”

“As a country we need to learn some lessons from the past 5-6 years.”

“Greatest current opportunity is local in energy transmission.”

“I believe the greatest opportunity is in the manufacturing and supply of emerging

technologies such as those in the Energy renewables area, medical instruments,

and robotics. These are all global growth markets with investment being made

at the very highest level.”

Impact of Single Euro Payments Area (SEPA)

% Firms

Positive 45

No Impact 55


Table 4.8


Change in MNC Position%

respondents

Improving 22

No change 17

Pressure from lower cost operations/economies

16

Shift to higher value roles 11

Tax issues critical 10

More Services 7

Pressure from UK 4

Retention of talent critical 4

Consolidation 4


Table 4.9

Ireland’s Long-run Economic Stability

% Respondents 2013 2011 2010

Strong 16 13 8

Moderate 69 59 63

Weak 14 29 29


Table 4.10

55.1 Introduction

The level of engagement in the local Irish

economy is reflected in the business and social

inter-linkages and relationships a firm develops.

Apart from the benefits of employment and

business generation, the spill-over effect through

the transfer of skills, best practices and learning

to indigenous SMEs in a firm’s supply chain is

viewed as a significant benefit of the presence of

MNCs. Other benefits include relationships with

third level institutions for promoting research

and development as well as graduate recruitment

or as purchasers of training. Such higher level

relationships are viewed as important elements

in embedding firms in a given location. Other local

community benefits may fall under the corporate

responsibility banner such as volunteer work,

skills development and sponsorship.

5.2 Relationships with Irish SMEs

Over half of respondents purchase essential

product related supplies from local SMEs while

almost half engage professional services and

third party vendors from local SMEs (Table 5.1).

Dealing with local SMEs was not generally

viewed as difficult. Approximately one third

of respondents specified some challenges

(among others, cost was mentioned by 14% of

respondents, scale or capacity by 8%, quality

and continuous improvement by 3%).

Chapter 5: Engagement in Local Economy

5.3 Relationships with Irish Institutions

Table 5.2 shows the nature of institutional

relationships developed by firms such as

research and development (R&D) and

training programmes. In most cases the level

of engagement is higher among Irish owned

firms. Nearly, a quarter of foreign owned firms

are working with the IDA for R&D and 14% for

innovation networks. The relationship with

Enterprise Ireland (EI) is the equivalent for Irish

owned firms and 28% of Irish respondents

indicated they work with EI for R&D and 17%

are engaged in EI innovation networks. All

major universities, research organisations

and institutes of technology were represented

in the linkages specified by respondents.

Other institutes specified: DCU (4), UL (6), Waterford IT (3), Tyndall, Queens, Athlone IT, Cork IT, NIBRT (2), NUIG, Irish Dairy Board, Teagasc, ACCA/CIMA, American Chamber of Commerce

Level of engagement with Irish-based SMEs - % Foreign (% Irish)

EssentialSome

Non-CriticalNone

Suppliers - inventory or product related parts or services

58 (54) 30 (39) 13 (7)

Suppliers - non-product related parts or services (e.g. office)

38 (18) 52 (68) 10 (14)

3rd party vendors 44 (21) 34 (61) 20 (18)

Customers 38 (54) 30 (25) 33 (21)

Professional services 49 (39) 44 (54) 7 (7)


Table 5.1

Engagement with Irish 3rd level institutes, other institutions, state or semi-state bodies

% Foreign (% Irish)

Institution R&D TrainingInnovation Network

Campus Company

Graduate Programmes

RecruitmentSpecify Other Activities

IMI/UCC 10 (14) 22 (42) 4 (3) 0 (0) 18 (21) 13 (14) 1-client

UCD 7 (14) 3 (7) 5 (0) 0 (0) 12 (17) 14 (14) 1-sponsor

TCD 9 (3) 3 (0) 3 (0) 0 (0) 9 (10) 11 (7)1-client, 1-alumni, 1-sponsor

IT 4 (3) 3 (3) 3 (3) 0 (0) 10 (7) 11 (10) 1-client

IDA 23 (3) 7 (3) 14 (7) 1 (0) 0 (0) 0 (0)

3-grants, 1-networking, 1-capital, 1-collaboration

FÁS/Solas/VEC 1 (0) 11 (7) 0 (3) 1 (0) 1 (0) 8 (14)

Jobridge 1 (0) 3 (10) - - 3 (7) 14 (7) 1-Work experience

Enterprise Ireland

9 (28) 3 (10) 10 (17) 0 (0) 0 (0) 1 (0)Marketing, business, lean, collaboration

Bord Bia 1 (0) 2 (3) 3 (3) 1 (0) 1 (0) 0 (0)1-Farm agr. 1-Support

Specify Other Institute/Body

5 (3) 2 (3) 1 (3) 1 (0) 12 (3) 10 (7)


Table 5.2

Engagement in Local Economy33 Engagement in Local Economy 34*IDA, 2013, Foreign Investment in Ireland (Infographic updated June 2013), Industrial Development Authority, Dublin. http://www.idaireland.com/invest-in-ireland/fdi-in-ireland-2013/index.xml

5.4 Engagement in Community, Social or CSR Activities

Responses to the question on community, social or Corporate

Social Responsibility (CSR) engagement related mainly to the

charitable activities of firms and their employees. The majority

of firms (66%) are engaged in an impressive array of charity

and community activities (70% foreign & 53% Irish). Eight firms

specifically mentioned that they have a CSR strategy and three

firms mentioned that they were members of Business in the

Community Ireland (BiTCI).

Many activities were non-specific such as ‘supporting local

charities’ or ‘community events’. Others were area-focussed such

as sports and education. Only a handful of charities or activities

were specifically named. Of all the activities the one which was

most named was the Junior Achievement* programme which

helps to keep students in education – six firms are involved in

this programme. Education was a popular area of activity with

16 other firms engaged in this area such as working with local

schools. Other charities or activities named were Unicef, DCU

Access Programme, Galway Arts Festival, Tidy Towns, Smurfit

Kappa Foundation, Jobcare and Focus Ireland.

Execut ive Summar y 7*Junior Achievement Ireland http://www.juniorachievement.ie/

Type of Social/ Community Activity

n

Local Charity/Community 50

Other Education 16

Sponsorship 12

CSR strategy 8

Junior Achievement 6

Sports 6

Volunteer staff hours 4

Other Youth 2

Fundraising 4

Health 3

Business in the Community Ireland 3

Tidy Towns 2

Jobcare 1

Employ staff with special needs 1

Arts 1

Recycling 1


Table 5.3

Engagement in Local Economy35 Engagement in Local Economy 36

Q1: Is your operation Irish owned or foreign owned?

Irish Owned

Foreign Owned

If foreign owned please specify the country:

Q2: How would you characterise your Irish operation:

The strategic centre of global company


Higher value support function

Basic product or service

Q3: In what sector is your Group/Company primarily engaged?

Food, drink and tobacco

Agribusiness

Chemicals and pharmaceuticals

ICT - Hardware

ICT - Software

Other electrical & transport equipment

Medical Devices

Financial, insurance or real estate services

Retail and wholesale trade

Professional and support service activities

Engineering & construction services

Logistics and SCM services

Transport services

Other

Specify Other

Q4: Approximately, what proportion of your Irish operations is manufacturing based, and what proportion is services based?

Entirely Manufacturing

75% Manufacturing / 25% Services



Entirely Services

Other

Specify Other

Q5: What are the principal products of your Irish operations?

Appendix: IMI Danske Bank MNC 2013 Online Questionnaire

Section A: Basic Profile of Irish Operation

Q6: How many people do you employ in Ireland?

How many people do you employ overseas?

Q7: Approximately, what proportion of employees in Ireland have a 3rd level degree?

>75% 50-75%

25-50% <25%

Q8: In terms of improving your Irish operation’s competitiveness, how important are the following:

Up-skilling Existing Employees

Broadening Management Experience

Openness to Change

Work Readiness of New Employees

Q9: Identif y any specific skills shortages in Ireland which are impinging on your growth plans or productivity:

Q10: What Irish cultural factors af fect your organisation’s performance (either positively or negatively)?

Q11: Did employment numbers or turnover of your Irish operations change in the past 2 years?

Employment in Past 2 Years

Increased

Remained Broadly Unchanged

Decreased

Approximate % change

Turnover in Past 2 Years

Increased


Decreased


Section B: Labour Force Activity





Appendix37 Appendix 38

Q12: How do you expect the employment numbers turnover of your Irish operations to change in the coming year?

Employment in Coming Year

Increased


Decreased


Turnover in Coming Year

Increased


Decreased


Q13: Do you have a competitive strategy?

Yes

No

If yes, please describe the key elements

Q14: What are your current actions plans and priorities?

Q15: How much authority does your Irish operation have in developing a new product or service?

No Authority Complete Authority

1 2 3 4

Q16: Has there been any change in the mandate of your Irish operations in the past two years?

Yes

No

If yes, please explain the nature of this change?

What were the key factors inf luencing this change?

1.

2.

3.

If no, please explain if there is/are any particular reason/s?

What were the key factors inf luencing this change?

Yes

No


Q17: Are you currently trying to win any new mandates for your Irish operations?

Yes

No

If yes, what is the nature of the desired mandate?

What would assist in achieving this mandate?

Q18: What is your level of engagement with Irish-based SMEs:

Suppliers of inventory or product related parts or services

Supplier on non-product related parts or services (eg of fice supplies)

3rd party vendors

Customers

Professional services

Q19: What are the challenges / opportunities you encounter when dealing with Irish SME suppliers?


Section C: Engagement in the Irish Economy

None Some Non-Critical Essential






Q20: Are you engaged with Irish 3rd level institutes, other institutions or state/semi-state bodies?

Please place x in box

If Other Institute/Body was selected please state the Institute/Body here

Q21: Is your business operation engaged in community, social or CSR activities?

Yes

No

If Yes Please Describe

Section C: Engagement in the Irish Economy

Q22: Cost: How do the following elements of cost to your Irish operation compare with those of your sister plants overseas?

Please place x in box

If Other was Selected Please Specify:

Q23: Is your cost base in Ireland rising in 2013, unchanged or falling?

Rising

Unchanged

Falling

Q24: In what country is the greatest competitor to your Irish operation located?

Q25: Is your greatest competitor from within your own global company or from an external one?

Internal

External

Q26: What critical structural improvements or policies would assist in achieving the desired growth or mandate for your Irish operations?

Q27: How do you see the position of MNCs in Ireland changing over the next two years?

Section D: Business Environment

Institution R&D Training Innovation Network

Campus Company

Graduate Programmes Recruitment

Specify Other

Activities

IMI/UCC

UCD

TCD

IT

IDA

FÁS/Solas/VEC

Jobridge

Enterprise Ireland

Bord Bia

Specify Other Institute/Body

Less expensive Same More

expensive

Labour

Transport

Telecommunications

Energy

Legal Services

Other Professional Services


Q28 Has Ireland’s reputation with your overseas clients/operations changed over the past year?

No Change

Improved

DisImproved

And if so, has it materially af fected your ability to do business?

No Effect

Positive

Negative

Q29: Have your Irish operations been, or will they possibly be, af fected by the recent international discussions on taxation, global transactions etc?

Yes

No

Please Explain:

Q30: Do you expect any recent developments in other countries to af fect the competitiveness or mandate of your Irish operations (eg recent intellectual property changes in UK)?

Yes

No

Please Explain:

Q31: Will the forthcoming Single European Payments Area (SEPA) positively af fect your operations in Ireland?

Yes

No

Please Explain:

Q32: What is the greatest opportunity for your Irish operation, as the global economic climate improves?

Q33 How do you rate Ireland’s long run economic stability?

Strong

Moderate

Weak

Q32: Finally, would you like to make any further comments or observations?

Section E: Perception of Ireland in 2013 Notes


The Irish Management Institute (IMI) is a membership organisation that refl ects a spectrum of Irish industry including some of the world’s largest multinationals. For sixty years IMI has pioneered the development of executive education in Ireland. The IMI acts as a “business partner” for organisations that are looking to align comprehensive learning and development strategies to support the execution of business growth strategies. In 2013, the IMI was recognised for the fi fth year running as the only Irish business school to be ranked globally by the Financial Times for the provision of customised executive education. Visit www.imi.ie/tailored-solutions/ to fi nd out more about our business partner solutions.

Your Learning Business Partner

Expertise you can put into practice

1800 22 33 88www.imi.ie

Documents

Survey of MNCs in Ireland 2013 - Corporates & Institutions of MNCs in Ireland 2013 Results of the Annual Competitiveness Survey Conducted by Irish Management Institute & Danske Bank