I thank the Chairman and committee members for the opportunity to present an overview of the Enterprise Ireland annual report, the first with which I have been associated since my appointment approximately 12 months ago.
The 2003 annual report summarises Enterprise Ireland's activities last year and the overall performance of our client companies. It outlines the various ways Enterprise Ireland has worked in partnership with those companies and other parties throughout 2003 to lay the foundation for future success.
Our role is to work closely with Irish companies, to assist sales and export growth and to improve innovation levels within companies, ensuring they have the capability to compete successfully in overseas markets. In terms of employment, Enterprise Ireland's activities are focused on creating new jobs by supporting entrepreneurs establishing companies that have very high growth potential, and retaining and creating new jobs in existing companies.
In presenting the main results of the annual report, it is relevant to briefly refer to the general economic conditions in which our client companies operated in 2003. Obviously, for a small open economy and one truly integrated into the world economy, Ireland's economic performance is dependent on external developments.
A number of key economic issues impacted on our clients last year. First, below potential global economic growth made for a more difficult trading environment. Second, the significant appreciation of the euro, up 19% against the US dollar and 7% against sterling over the year, threatened Irish export competitiveness and market share. Third, subdued prices in both domestic and export markets dampened revenues. Finally, competitive pressures from lower cost economies, notably China, eastern Europe and the newly acceded EU member states, continued to intensify. Despite operating in trying economic circumstances, our client companies continued to show the resilience for which they are renowned. They have worked hard to maintain market position and I am glad to report their overall progress remained positive and steady.
Enterprise Ireland focused its efforts on four critical areas over 2003, namely, assisting clients to achieve export sales; promoting innovation and productivity in client companies; creating start-ups and assisting companies at early stages of development; and driving regional enterprise.
I will briefly cover those four areas, starting with the achievement of export sales. Supporting client companies in achieving success in overseas markets remains at the heart of Enterprise Ireland's work programme. Many exporters have had to navigate stormy trading conditions in recent years yet are well positioned to capitalise on opportunities. We have a client base ready and able to take full advantage of resurgent overseas markets. Overall in 2003, Enterprise Ireland's client companies achieved €10.2 billion in export sales, an increase of approximately 1% over 2002. More specifically, on a market basis, the strongest export market remained the United Kingdom, increasing by 1.1%. Many clients successfully diversified into continental Europe, achieving growth of 4.7%. Exports to the United States increased by 0.8% to a total of €1.1 billion, while exports to Asia were down 8%, partly demonstrating the difficulties inherent in breaking into and maintaining this market.
Both here at home and throughout our overseas office network, our people worked intensively with companies, creating and implementing successful strategies for market entry. A variety of trade fairs, trade missions and buyer meetings to promote Irish companies were held. Over 9,000 buyer meetings were arranged and 1,300 clients participated in trade fairs and trade missions while 168 companies entered new markets, 110 of whom were first time exporters. Moreover, approximately 160 Enterprise Ireland client companies established an overseas market presence during the year.
Last year, overall productivity in all sectors averaged 3.6%. We constantly work with companies to ensure they are fully focused on developing their productivity levels and improving innovation capabilities. Enterprise Ireland has formulated several measures to support client companies in those areas.
Our ultimate aim is to foster a culture of innovation in Ireland. Facilitating product development and innovative service provision are at the core of company activity. To that end, Enterprise Ireland invested over €40 million in support of more than 186 research and development initiatives through the RTI competitive fund and the research and development capability fund last year. Regarding research and development awareness, our campaign programme resulted in approximately 90 companies applying for assistance. The campaign targeted companies with either no research and development activity or low to medium spending to generate awareness among clients of the long-term benefits to be gained from research and development investment. The new competitiveness fund was launched in 2003. It was designed specifically to improve competitiveness, especially in companies in more traditional sectors. Last year the fund totalled €10 million and supported 97 individual company development projects.
On collaboration, Enterprise Ireland's commercialisation fund offers a range of supports designed to commercialise university-based research and knowledge. The fund was restructured in 2003 and allows researchers either to test the feasibility of an idea through a proof of concept phase or to put resources behind applied research to bring an idea to a marketable stage through a technology development phase. Over €16.9 million was committed in 2003 to 116 high quality applied research projects in areas that included life sciences, ICT and photonics. Moreover, €11.5 million was invested in research in university and other third level groups working with companies to deliver specific applied research initiatives. Other transfers of high technology were requested by companies.
Enterprise Ireland's €7 million innovation management initiative has seen the involvement of over 840 companies since its inception. That programme provides companies with training, innovation and research and development management and is designed to achieve value-added research and development by capturing the creative potential of employees. Enterprise Ireland also supported clients' education, training and development, investing some €12 million last year in areas of human resource development. That was part of a total industry investment of €31 million.
An environment conducive to entrepreneurial activity is critical to national competitiveness. Our focus is on assisting and developing a cadre of vibrant, ambitious enterprises to harness the abundant creativity of Irish entrepreneurs. Our supports are clearly focused on new, entrepreneurially led business entities with a solid base in innovation, intellectual capital and the capability to become internationally competitive within a short period.
Enterprise Ireland supported 61 new high-potential start-ups in 2003, an increase of 13%. The software and international services sectors had the highest number of start-ups, at 35, followed by industrial product sectors, with 20. Enterprise Ireland also supports entrepreneurs through its campus business development fund. During 2003, approximately 117 initiatives were supported in 12 different centres. Enterprise Ireland's investment totalled €3.4 million for the year, up €1.4 million. Moreover, our mentor programme for owner-managers continued throughout the year. Under it, successful business people work with companies, typically in their first three years of operation.
As the Chairman knows, driving regional enterprise is central to the activities of the organisation. In that respect, in 2003, Enterprise Ireland client companies provided permanent and full-time jobs for approximately 142,000 people across all regions. Those companies are making invaluable contributions to many local economies, providing employment opportunities where only a few years ago there was none. The ambition and creativity of those business people and the positive contribution that they make to the lives of Irish people across the regions is to be applauded. In 2003, 11,207 full-time jobs were created in Enterprise Ireland client companies, offset by job losses of over 14,000, resulting in a net loss of some 3,000 jobs. In part at least, this shows the recent instability in the global economic environment, as well as the increasingly competitive international environment faced by Enterprise Ireland client companies. More fundamentally, it demonstrates yet again the significant sectoral evolution that has occurred in our economy over the past decade and the changing nature of many of our client companies.
The internationally traded services sector, which includes software, has grown at an extraordinary pace over the period. In 1994, companies in the sector accounted for 6.9% of our client base. Today it is almost 20%. Employment in internationally traded services companies increased from approximately 8,000 in 1994 to 26,000 in 2003. That represents an increase in employment of a massive 226% in the period from 1994 to 2003.
Enterprise Ireland remains committed to stimulating enterprise activities in all regions. We build and support regional enterprise through the provision of both funding and infrastructural supports. We provide preferential funding for companies which are expanding or establishing a business outside Dublin. In 2003, regional infrastructure projects included the continued provision of incubator facilities in both the institutes of technology and the universities. For example, €5 million was approved for incubation space in Sligo and Limerick, bringing total investment in that category to €30 million. That brings the total number of incubator centres to 14 in the institutes of technology around the country. A further €2.5 million was made available for management and business development support. Another major development was Enterprise Ireland's approval of €3.3 million for five bio-incubators in 2003. That investment provides laboratory space for companies in the key life sciences university campuses, including UCC and NUI Galway.
Enterprise Ireland has also maintained a focus on two other very important regional infrastructure projects, namely, community enterprise centres, or CECs, and webworks. Both are playing an important role in developing businesses at grass-roots level. Last year we approved funding for 15 new and expanding community enterprise centres, including the approval of a CEC for Tuam and Letterfrack. Moreover, extensions were completed at Killarney, Wexford and Wicklow. All of those are providing high-tech accommodation for technology-based projects. In all, there are now over 80 community enterprise centres which have been assisted by Enterprise Ireland, with a further 34 either under construction or at an advanced stage of planning.
The webworks programme is aimed at addressing the specific requirements of start-up companies. The main objective of these technology hubs, or webworks facilities, is to provide the environment to create and sustain the development of high-tech industries. Planning is at an advanced stage for buildings in Galway and Cork, and it is expected that those buildings will be complete in 2005.
I express my thanks for the opportunity to present the main points of the Enterprise Ireland 2003 annual report. My colleagues and I would be delighted to answer any questions that committee members may have.
