I welcome Mr. Frank Ryan, chief executive of Enterprise Ireland, who will brief us on his agency's 2004 annual report. Mr. Ryan is accompanied by Mr. Michael Leahy, Mr. Colm Hackett and Mr. Paddy Hopkins. I welcome Mr. Ryan and his delegation and commend him on the work he has done, particularly on the visit to China. The Taoiseach, the Ministers and I could see the work Enterprise Ireland was doing in China. It was a memorable visit and I congratulate the agency on the work done for that. I invite Mr. Ryan to make the opening submission, which will be followed by a question and answer session.
Enterprise Ireland: Presentation.
On a procedural point, I suggest that the written submission be synopsised rather than read. The committee members have received the written submission.
Is that agreed? Agreed.
Mr. Frank Ryan
I thank the Chairman and the committee members for inviting Enterprise Ireland to present an overview of the agency's annual report for 2004 and to convey some of the significant developments that have taken place since I last made a presentation to the committee in October 2004. I refer in particular to Enterprise Ireland's strategy for 2005-2007, entitled Transforming Irish Industry, launched in May by the Minister for Enterprise, Trade and Employment, Deputy Martin. I wish to introduce my colleagues Mr. Colm Hackett, manager of the regions and entrepreneurship business unit; Mr. Michael Leahy, head of policy department; and Mr. Paddy Hopkins, manager of corporate services division.
The year 2004 was one of strong performance for Irish companies in a difficult environment overseas with limited world growth. An increasing number of companies used the year to switch to a new business model and to compete on the basis of a much stronger understanding of customer needs overseas. They also developed their Irish operations to include research and development and brought an innovation process to many companies. By adopting the new business model, many companies succeeded in export markets.
There was strong growth in most sectors and food did particularly well. The strongest percentage growth came in the software and services sector. There was also a strong regional performance. Overall exports in 2004 rose by 5.6% in comparison with 0.8% in 2003, indicating a very strong performance by Irish companies during the year.
That is a succinct synopsis. I wish to ask the obvious question of where we are in 2005 and where Mr. Ryan thinks we are going for the rest of the year.
Mr. Ryan
The indications are that the economy remains strong and that our companies continue to be successful overseas. The companies winning overseas are those producing value-added products and services and bringing such sophisticated products and services to overseas markets. Companies that have traditionally remained in the commodities sector have been affected in a negative way by increasing costs in recent years. They are less competitive than they have been and are less successful in overseas markets. We are confident we are in a steady year of continued growth.
The area of Enterprise Ireland's work by which I was most impressed during the visit to China was the opportunity for Irish manufacturing companies to engage in joint ventures in the Chinese market. How is that progressing?
Mr. Ryan
I wish to put on record our appreciation of the Chairman's valued contribution to the Irish trade mission to China in January this year. The joint ventures are proceeding apace and this is an area on which we are putting considerable emphasis. Most companies with which we deal are small Irish ones that do not have the financial resources to launch products on a worldwide basis. They need partners and we encourage Irish companies to form partnerships to address market opportunities overseas.
From the point of view of the agriculture industry, an important development was the agreement signed by the Minister for Agriculture and Food, Deputy Coughlan, regarding pork. There exists the possibility of that market opening up and many contracts relating to the education market were also signed. Do these agreements remain solid?
Mr. Ryan
Yes. This was the largest trade visit in the history of the State and contracts signed during the visit totalled €125.9 million. It was the most successful trade mission we have had. We are working closely with colleagues in Bord Bia in respect of the development of the pork market in China. We are in the positive situation whereby we experience growth across all sectors. The timber and construction sectors in Ireland increased exports. We have confidence in the current situation.
I welcome the distinguished delegates from Enterprise Ireland and wish them well in their important work for the country. They referred to technologies of crucial importance for the future. Technologies such as those in the information technology, pharmaceutical and medical devices sectors have driven the success of the past ten years. What is the next generation and are we succeeding in laying the groundwork for this? In particular, I am interested in the interaction and experiences to date between Enterprise Ireland and Science Foundation Ireland.
The report refers to Opsona Therapeutics, a model campus company. How many such companies exist? Several members of this committee had the privilege of accompanying the Tánaiste, who was then Minister for Enterprise, Trade and Employment, on a previous mission to Canada and the United States. We saw how campus companies worked successfully in Canada.
That was in Waterloo University.
Yes, we examined the home of the BlackBerry. This point is linked to a question on regional development. Is there a prospect for campus spin-offs outside the immediate milieu of the university? This would allow for a regional spread on that sort of technology.
Many of us examining the current situation in Ireland have a fear about declining manufacturing. Although employment rates are historically high and unemployment rates historically low, I recall the quip made during President Ronald Reagan's time. When it was stated that he had created 1 million jobs the reply went: "I know, I need three to survive." There is no value in jobs per se unless they are value-added jobs that have a real, sustainable wage.
I am interested in the observations of the delegation as I know how vulnerable my county, Wexford, is to the construction industry. A figure approaching 30% of employment is now dependent on that very vulnerable, cyclical sector. What does the delegation have to say on the retention and development of quality manufacturing?
Various changes have taken place in the way in which Enterprise Ireland deals with its property portfolio. I had difficulties on a couple of occasions with regard to local entrepreneurs getting access to land controlled by Enterprise Ireland because it is for export companies. At the heart of all our enterprise policy should be the development of the indigenous sector, and I am interested to know whether there should be more flexibility. In the Japanese model it feeds into the multinational sector. What is Enterprise Ireland's policy with regard to that and what is its policy for acquiring new enterprise sites?
Regional policy links into my first point. Community enterprise centres were referred to earlier. In my experience some of them are extremely good, such as the one in Wexford which the Taoiseach recently visited. How successful are they regarded as a model? How strategic are they with regard to building incubator units to give support to someone with a good idea but without business acumen? What degree of development does Enterprise Ireland wish to see in that sector? Grant aid policy to that type of incubator unit is linked.
Mr. Ryan
Committee members are correct to state the future will be technology driven. Each year we support approximately 65 or 70 high potential high tech companies. Approximately 70% of those is made up of companies trading on technology that start their existence as a research and development project. Gone are the days when one set up an assembly line at the start of the process. We financially support them to undertake a research and development project. It usually involves taking an idea or technology they have through the commercialisation phase. It takes time and further research before they get to a point where they can introduce the product to the marketplace.
Technologies areas in general have not changed that much over the past number of years, such as information and communications technologies and medical devices. Engineering is proving to be extremely resilient. The performance of a stainless steel company in Wexford is an example of a traditional engineering company that has made the transition to operate in a completely different way to how it did five years ago. Our major challenge is to have more companies make a similar transformation and transition.
We have commercialisation and technology transfer officers on the campus of most of the main universities.
How many companies exist?
Mr. Colm Hackett
At this stage we have approximately 15. Bear in mind we invested a significant amount of money this year in many of the campus incubation centres which are not yet built. That number will increase substantially.
How many companies have become commercially independent? How many incubator units and campus companies have detached themselves and become sustainable employers?
Mr. Hackett
I do not have that figure. I will return to it.
Mr. Ryan
The number is freely available.
Would any be associated with universities?
Mr. Ryan
Yes they would. We fund incubator units in every institute of technology in the State. Five have completed construction and the balance are under construction. Every institute of technology will have an incubation centre. The nearest one to Deputy Howlin will be in Waterford. The idea is not to build up the number of companies in them, it is that companies would occupy the accommodation for a short period while they generate their idea.
While it is spun out.
Mr. Ryan
Yes. We have an increasing success rate in that area.
With regard to other areas of technological interest, Ireland has an international reputation as a leader for e-learning, given the performance of Riverdeep and other such companies. We must be stronger and have more sectors in which we have a world recognised position as opposed to being a player.
The issue of the decline in manufacturing is of immense importance to Enterprise Ireland. We are strong supporters of manufacturing activity in Ireland and intend to continue to be so. Manufacturing remains in every developed economy throughout the world. It is a key feature in the United States, Japan and Germany and there is no reason why it should not continue to be a key feature in Ireland's economic engine. However, in the future it will be either semi-automated or automated manufacturing and will not be assembly based. This is because of the cost pressures and the efficiencies that can be gained through automation.
Enterprise Ireland does not own any property apart from that of the organisation on behalf of the State. The property is owned by the IDA, which has central ownership and responsibility for developed land. In an increasing trend Irish companies occupy IDA factories and land——
There is resistance to that.
Mr. Ryan
Any resistance is part of the changeover taking place. I was recently at the opening in Bray of the research and development facility of an Irish company called Megazyme. It is located in Bray Technology Park which was specifically constructed for foreign direct investment, however today Irish companies occupy 60% of the park. The trend will be to see strong Irish companies located beside strong overseas companies and we want to encourage that.
Our experience with the community enterprise centres is extremely positive. We are reviewing the success of the previous two programmes with the intention of making recommendations for the Department in the second half of the year. We learned that the managers of the centres significantly influence the success of the centres. One of the most successful is in Wexford where they do a super job. It is all down to the strength of the management. It is also down to the mentors linked to the companies within the centres. We learned along the way and will take what we learned on board with regard to the development of a new strategy. We are keen on the community enterprise centres because they stretch into every county in Ireland. That is positive because it gives employment opportunities on a local basis.
With regard to our grant aid policy, in the past our policy has been to have two competitive schemes in county enterprise centres whereby communities are encouraged to put forward submissions for consideration. Primarily local communities fund it and the State is a small funder of those activities through Enterprise Ireland. Recent research shows that, nationwide, we have extremely high occupancy levels and a growing number of jobs arising from them. We wish to continue with it.
I am glad to see Enterprise Ireland discussing the annual report before the committee today and I welcome the delegation. How many people are employed by Enterprise Ireland and in what categories? How many are employed in the organisation's overseas offices?
Enterprise Ireland is an influential State organisation, directed and regulated by Government. It can adopt a carrot and stick approach to industry, using grant aid. If companies do not want to do what Enterprise Ireland demands, it does not have to pay grants to them. The organisation is in charge of industrial development in all of the indigenous areas in Ireland. How much duplication is there between Enterprise Ireland and IDA Ireland, both at home and in the international market?
Perhaps this is more relevant to FÁS but, with regard to the discussion on traditional industry, it appears that two sets of skills are becoming a thing of the past, namely, those of fitters and printers. The mention of fitters brings to mind stainless steel, steelworks, etc. Why, apart from the fact that Ireland is a high cost country in terms of wages, is traditional industry failing? What are the other reasons?
Traditional industries provide employment in many rural areas. I must declare my position as my failure to do so in the past has caused problems. I am a farmer, involved in intensive farming and I also have a keen interest in the food industry. How strong is the baby food industry and has there been expansion in that sector recently? I come from north Cork in Munster, which is a traditional agricultural area, but I am not overly impressed with the policy pursued by Enterprise Ireland in that region. A number of years ago there was an enormous expansion of the pig industry in Munster. Documents promoting the idea of bringing the industry up to 4 million pigs, in order to be competitive and to produce substantial quantities of pig products for the export market, were produced by Enterprise Ireland and the food sector. There is a certain amount of rationalisation taking place within that sector now.
Last year, the closure of the Dairygold slaughterhouse was announced and I understand Enterprise Ireland approved of this. There are two major secondary processors in the country which have the brands in place but which must either import product or buy it from other commodity processors. The main commodity processor on the island is Glanbia. It slaughters the majority of pigs in the country and the other processors are expected to buy their products from it. I do not understand why Enterprise Ireland has not been more supportive of the brands, that is, Denny in Kerry and Galtee in Cork. I do not see how Enterprise Ireland can tell the consumer or the housewife that the products on the shelf are fresh when they actually come from secondary processors. Is it the policy of Enterprise Ireland to support secondary processors, the numbers of which seem to be increasing rapidly and some of which should not be in business?
If one examines Moy Park in the North of Ireland, which is in the poultry business, it has its own supply farms and its own fresh product. A pig industry co-operative in Spain — I believe it is called Bal — has its own product, guaranteed from birth to slaughter and on to the consumer, which provides assurance to customers. Denmark has over 20 million pigs and Crown is the major processor there. There are secondary processors in Denmark but they are tied in to the Crown operation, which I have seen. I fail to understand what is happening here in this regard but current policies will have disastrous consequences for the Irish pig industry.
The sugar beet industry, which is a major employer in my area, is on its knees and the WTO and the change in EU policy are to blame for that. However, the major employers in rural areas in the farming sector are the peripheral sectors like the sugar beet, pig and poultry industries. In terms of employment, dairy and beef farming do not make a major contribution.
We must vacate this room by 11.45 a.m. and other members wish to address questions to Mr. Ryan. I will give Deputy Ned O'Keeffe a chance to ask further questions later.
I had only started with my questions.
The Deputy has only started.
The Deputy has asked some important questions. Let us see if we can get some answers. There are some soul-searching questions for Mr. Ryan.
Mr. Ryan
First, I have some numbers that may be of interest to the Deputy. There are 907 posts in Enterprise Ireland, while almost 950 people work for the organisation. The disparity in numbers is accounted for by job sharing. There are 130 staff, across 33 offices, located overseas. Most of the staff are located in three large offices in London, Dusseldorf and New York. There is very little, if any, duplication between our organisation and IDA Ireland, primarily because Enterprise Ireland targets a different marketplace. IDA Ireland is responsible for foreign direct investment into Ireland, while Enterprise Ireland is responsible for establishing Irish companies in overseas markets.
With the greatest respect, the question regarding the skills of fitters and so forth would be best answered by someone from FÁS. The issue of the failure of traditional industry in Ireland is at the heart of the strategy launched by Enterprise Ireland. The good news is that an increasing number of companies are producing much higher value added products which customers overseas want. These products have increasingly been developed with customers overseas and are items for which there is a strong market pull. The companies involved have research and development capabilities and competences and have established a physical presence in their overseas markets. This allows them to develop strong relationships with their major customers.
I did not realise that the Deputy would be raising specific questions on pork but, in overall terms, last year the food industry grew by approximately 4.1%, with the strongest percentage growth in primary meats. There was also strong growth in the consumer foods sector. Ireland continues to be an attractive location for the baby food sector.
Enterprise Ireland is responsible for one element of foreign direct investment, that is, in the food industry. We deal with all of the major overseas food companies. It makes sense for us to do this because we deal with such a large part of the indigenous food sector. While I am bound by confidentiality concerns, we believe that, in terms of investment opportunities the baby food sector is a fertile area for the future.
The last time I met Deputy Ned O'Keeffe was in Fermoy and I expressed my grave disappointment regarding what happened in Mitchelstown and the loss of so many jobs. Enterprise Ireland can assist Dairygold with the development of a major research and development centre. Dairygold and all other food companies must have a strong competence in research and development, in technological understanding and know-how, with regard to the types of food demanded by consumers in the future, in order to be more successful in export markets. Concerns about health and well-being are having a dramatic effect on the types of products that will be developed and sold on international markets. The consumer now wants products that are, for example, low in fat, sodium, etc.
Enterprise Ireland is confident that there is a healthy future for the food industry in Ireland. Dairygold and the Minister for Enterprise, Trade and Employment recently announced the development of a new research centre, at a cost of €15.6 million. The Minister also announced the €10 million investment by Kepak in Cork in the heat-and-serve meals area, which will provide 155 new jobs over three years. The value of future exports will be €55 million.
Green Isle Foods is to carry out an expansion, building a facility in Naas at a cost of €20 million and creating an extra 130 jobs. About two weeks ago, a research and development centre for Glanbia, which cost €15 million, was opened. We have confidence in the future of the food industry.
I will briefly refer to secondary processors as I realise I am spending much time on these issues. We have established a strategic management development programme for pork processing companies, and it has been running for about three months. It is important that the management teams in these companies are strengthened. We are working with the Danish pig industry as consultants to that group. We now have the number one or number two most senior person in 15 of the secondary pork processing companies ensconced in this, with a development plan resulting that will assist in developing and more successfully addressing export markets.
Everyone must get a chance to ask a question.
I welcome the delegation from Enterprise Ireland before the committee. With regard to manufacturing, McHale Engineering in Mayo is a very successful company which has a world-class product being sold on the world stage. Will this company run into problems and perhaps have to outsource in future? It appears strange that companies such as this one can survive but others cannot. It would be a shame if a company like this, producing a world-class product, would have to outsource, especially as the west of Ireland suffers badly from a lack of employment.
We have seen, with regard to technology companies, the loss of hardware manufacturing. We had success some years ago with companies such as Baltimore, Horizon, Riverdeep and other companies. I have not recently seen new software companies appearing or the sector growing. I am worried that countries such as China and India will be in competition with Ireland in this area. Does Enterprise Ireland see a problem arising because of competition in the software area from countries such as China and especially India?
What is the procedure on the ground between Enterprise Ireland and the IDA with regard to providing sites for a company? If, as Deputy Howlin suggested, a person has a good idea and needs manufacturing space, would the person's company get a greenfield site? If the company would like to put jobs in a certain area and the IDA has no land or building there, would Enterprise Ireland approach the IDA? Would it not be a better situation if the whole system was under the control of Enterprise Ireland, which is not now the case?
I welcome the Enterprise Ireland delegation before the committee and compliment the body on its good work. Following on from Deputy Howlin's query regarding property, I am glad that a change is occurring and that Enterprise Ireland is co-operating more with the IDA on the issue of sites. It was almost impossible a few years ago for Irish manufacturers to be placed on IDA lands. Ballinasloe and its surrounding area lacks employment, and although many sites exist, finding companies to use them is important. IDA and Enterprise Ireland are doing their best in this regard.
With regard to the food industry, it was previously stated that jobs are being created in the value-added product sector. Is there much work still to be done in this area? In the past, meat factories especially were used to the intervention system, where the whole carcass was placed into intervention and no value-added product was produced. Such a process may have left Ireland behind other countries because of the reliance on intervention.
What help is provided by Enterprise Ireland to small industries that are starting up? For instance, can marketing abroad be funded for such companies? Does Enterprise Ireland still operate the seed capital scheme, which gives back funds from tax in certain situations?
I am delighted that of the 11,898 jobs created, 67.8% were created outside Dublin and 36% came into the BMW area. The BMW area has been in decline and it is important that Enterprise Ireland pushes as many jobs as possible into the area. I compliment Enterprise Ireland on the jobs it is creating and the work it is doing. I would like to see a lot more of Enterprise Ireland in Ballinasloe.
I must leave the meeting and Deputy Callanan will chair until the end of the meeting. Where is the one who does not love the land where he or she was born, in my case Mullingar? Enterprise Ireland is carrying out terrific work in the Athlone area and the body has its regional office there, but I wish to know if anything is planned for Mullingar. The representative can respond to the questions from Senator Paddy Burke, Deputy Callanan and myself. Senator Leyden, Deputy Ned O'Keeffe and Deputy Kehoe will have further questions.
I would like to mention an issue relevant to the Chairman before he leaves. I compliment Enterprise Ireland for working with the committee and I note the mention of the Chairman's presence on the China mission. A resource is present here, through the Chairman of the committee, that Enterprise Ireland should work with. I know the body will do this, and I will discuss further my link with trade, as I am at present undertaking research in this area. I thank the people involved. Enterprise Ireland has many resources available on this committee which should be used and I am delighted that the role of the Chairman in the trade mission to China has been recognised.
Deputy Callanan took the Chair.
Mr. Ryan
I will comment on Senator Paddy Burke's question without mentioning any particular engineering company. We are in an era where all Irish companies will not produce their entire product ranges within the country because of the cost base. Some of the process will be sourced overseas. We believe the lower value-added products in ranges will be sourced elsewhere, be it in China or one of the countries who have recently joined the European Union. In theory, one might say that a process could be automated and kept in Ireland, but in many cases the small volumes of the products concerned do not lend themselves to effective automation.
Companies who must adopt this approach enter into the area of supply chain management, where they must control, for the first time, shipments and sourcing of products at various locations in the world. This is a completely different scenario from sourcing material from the primary facility that is used daily. To assist companies in managing this and ensuring that delivery schedules for customers are not delayed, Enterprise Ireland earlier this year introduced a specific incentive as part of a new strategy to encourage companies to embed a supply chain management competence. This competence is not normally found in current Irish companies. In future, these companies will need this competence in a global environment.
On the issue of technology companies, the area of strongest growth last year was in the software and services area, which grew by approximately 11%. We believe the companies involved will be household names in the future, as Iona Technologies and Baltimore Technologies have been.
With the joint committee's permission, I will not mention them here today. However, within the organisation we have established a dedicated unit focused on the rapid scaling of those companies which we believe can grow through the €20 million turnover barrier right up to turnovers of €50 million and €100 million. We have a growing number of companies in that category. I can confidently reassure the committee that we will have winners in the future.
As to the issue regarding the sites, the current situation is that the IDA's property operations are run from Athlone and when any company raises a query with us, we immediately contact our counterparts in that office. They have central control of the land and the business technology parks. That might answer the Deputy's question in respect to property.
As far as the food industry is concerned, we have a highly valuable and valued food industry today which we must do everything possible to preserve. We believe that by working on this new agenda with food companies to bring them into research and development, health and well-being and the production of functional foods, there is a strong future for the Irish food sector, in terms of both meat side and consumer foods.
Very little primary meat goes into intervention. A remarkable transformation has happened. The extent of the change is one of the unnoticed developments in the economy. When we compiled our own statistics with the ESRI last year on the performance of the food sector, we noticed that with the exception of a small amount of product going to third world countries and to Russia, 90% of the product now goes into retail and multiple stores, particularly across Europe. This is a remarkable achievement by the food companies and is where the future lies. As far as assistance to small companies is concerned, my colleague Colm Hackett will provide the joint committee with a brief outline of the supports we can offer to smaller companies.
Mr. Hackett
The small company programme, which is particularly focused outside of Dublin although it also applies there, is largely conducted in co-operation with other players, including the county enterprise boards. We examine the profile and prospects of people who wish to start their own business. Some are handled by the county enterprise boards and others — who fit a profile — are handled by Enterprise Ireland.
In terms of early supports on offer to those who wish to explore the possibility of starting a business, we have a modular six-week course in which they can take part to help develop the idea. If people wish to move forward with that business or concept and put more time and effort into it, we have a full-time enterprise platform programme, in which they can take part and be assisted. All people doing that will receive mentorship. A mentor is an experienced business person who will help them develop the idea.
As far as money is concerned, Enterprise Ireland has fairly substantial financial packages available to the companies, depending on what they want to do, where they want to spend the money and how we can help. This is done in close co-operation with other players in the region and we are highly active in this regard. However, we certainly target what we call the higher technology areas. This does not necessarily exclude manufacturing. Many people in the manufacturing and food sectors have new and innovative ways of doing things. Such individuals may also be included in the category of innovation entrepreneurs being sought by the agency. We give every assistance in terms of soft supports such as business help with mentors, in addition to the hard support of actual financial assistance.
I know that Mr. Ryan wants to leave shortly, so I ask members to be as brief as possible.
I welcome Mr. Frank Ryan, Mr. Michael Leahy, Mr. Colm Hackett and Mr. Paddy Hopkins and congratulate them on the excellent results achieved for 2004. I commend them for their work. From my experience of working with Enterprise Ireland and the IDA both at home and abroad, they are highly professional organisations and I commend them on that. In respect of exports, is it true that a single commodity from Cork has a value of approximately €1 billion or more? Sometimes the figures can be slightly misleading. There are a small number of jobs involved in the production of Coke in County Cork with an extremely high export value, which may be in the region of €1.5 billion at this stage.
Is there close co-operation with Bord Iascaigh Mhara and Bord Bia as far as exports are concerned? We should avoid duplication of services or offices overseas and concentrate our services. The relationship with the Department of Foreign Affairs and the ambassadors is good. Most ambassadors now regard themselves as both trade delegates and diplomats. This is a change, because at one stage they were reluctant to become involved in trade. It has now become a priority and it will be important to include a trade delegate in the new embassies that are opening, because of the tremendous opportunities in those markets.
As the witnesses are aware, when I get the opportunity I carry out some research work to assist Enterprise Ireland, particularly into the export side — the former An Bord Tráchtála wing — of Enterprise Ireland. I thank Mr. Ryan, Mr. O'Brien, Mr. Treacy and others for their co-operation. They assist me in any way they can. I may join some of the trade missions later on in the year. I reiterate that this joint committee participates willingly with Enterprise Ireland in the national interest. The involvement of the Chair of the joint committee on a trade mission was very welcome. I would like that approach to be expanded over the next two years.
I welcome the representatives of Enterprise Ireland before the joint committee. I was in Australia last year and met a representative from that organisation in Sydney. I compliment Enterprise Ireland on the way it runs its business there and the manner in which its representative met me and filled me in on its activities. I have two or three brief questions. What sort of feedback does Enterprise Ireland receive from its staff in other countries? How does it monitor its inquiries? What level of interest does it attract? What sort of results does it get from the expressions of interest and inquiries it receives? While I was there, some sort of call centre had expressed an interest in working with Enterprise Ireland. Perhaps the witnesses can also give the committee an update on that matter, as they are probably familiar with the details pertaining to the call centre in Australia. This took place ten months ago and as it was a private deal, the Enterprise Ireland representative could not really tell me what happening. What was the outcome?
The witnesses are probably aware of the advance factory in Enniscorthy. I am being parochial in this respect. It has been lying idle but I have been informed that there is some interest in it at present. Can the witnesses provide the committee with some information in this regard? Some days ago, I met the IDA about a factory in Enniscorthy in conjunction with an Irish company that currently employs up to 90 people. I could not believe the red tape involved when an Irish company tries to buy IDA land. It must go through the property committee of the IDA and it must then go through the Minister. The witnesses are aware that IDA land has been lying idle in Enniscorthy for several years. When a proactive Irish company is interested in buying IDA land, it should be facilitated in every way. The company in question could increase its business and its staff to as many as 120 or more employees, if it was given the opportunity to buy this land. I would appreciate the witnesses' thoughts on this matter and I hope I can discuss it with them after the meeting. I do not wish to go into details before the committee.
I am not happy with any of the answers given to me by Mr. Ryan. I got no answer to my question.
The Deputy should try to be brief.
I will be brief.
We seldom meet Enterprise Ireland, only once a year I think. As the dairy industry is fragmented, it is the job of Enterprise Ireland which is responsible for giving grants to show leadership. I was looking at the position in the Finnish dairy industry in which one organisation co-ordinates everything. Finland is equivalent to Ireland in many respects. In EU terms Ireland only has a figure of 5 million tonnes for milk, the same as Denmark. New Zealand has a figure of approximately 14 million tonnes. Our dairy industry is fragmented, with everyone doing his or her own thing. This is where Enterprise Ireland must use a carrot and stick approach. The carrot is grant aid for farmers while the stick is the threat that it will withhold funding. If we are to have a structured farming industry, much depends on how State agencies operate and the influence they exert over farmers. The industry is fragmented because everyone is doing his or her own thing and, as a result, going nowhere.
The figures for the industry are roughly 40% added value and 60% commodities. We hear so much about commodities today and how they are going nowhere in the commodities market. I do not know if that is true but it is what I have been told. I look at Danone in France which is now subject to a takeover. It spent many millions on research and development which actually burst the company. While I think its shares would do well today, we are not talking about the financial level at Pepsi-Cola in recent days. I give this as a simple example. Danone got involved in all these high cost areas and there was no payback.
The food industry faces a climate in which plcs are taking over from the ordinary farmer. The rich are getting richer and the poor poorer. Five or six individuals at the top of such plc companies receive shares and go off with millions. As a legislator and politician, this is obscene.
Enterprise Ireland made a contribution regarding the value of the food industry to the economy. I would take three quarters of Bord Bia which is operating in a separate sphere from Enterprise Ireland and get them to work together. I have an interest in the corner shop but rarely see the Bord Bia emblem on breakfast or lunch food products on the shelves in many shops and markets. Recently I opposed Enterprise Ireland's view on the research and development being undertaken in the south because I did not see any payback. In my area we have University College Cork, one of the finest universities in the country. It is very innovative and I am not being parochial when I say this but the research and development — a few million euro is involved in Glanbia — is leading us nowhere. It is an example of taxpayer's and EU money going down the river and we must take corrective action.
In Northern Ireland I am involved in an operation involving chickens from birth to slaughter. In the Republic we have Castlemahon which until recently was unique. There are secondary processors which import on a large scale. Why can they not do what my operation does? It is the job of Enterprise Ireland to support and encourage this type of development.
Mr. Ryan did not give me an answer when I said Glanbia was now a commodity operator which slaughtered pigs, that Dairygold Co-operative Society Limited was a buyer of commodities, with one of the finest brands on the island of Ireland, followed by Denny's in Tralee. It is the job of Enterprise Ireland to encourage and support such brands. In terms of employment, if something is not done, this country will return to where it was before Brian Boru. That is the current trend. I say this as a farmer who does not depend greatly on farming for his livelihood. However, I understand the needs of farmers and working people. While I do not discount what Enterprise Ireland is doing, I am not happy with it.
I have three questions. I agree with Deputy O'Keeffe. This is the job of Enterprise Ireland and the delegation should not rush off when it comes to meet a committee. We do not see its members too often.
To clarify the matter, our meeting has gone on far longer than expected. The delegation was waiting.
Fine.
We must be fair.
I have been waiting for the delegation to come for a long time because there are a few points I want to make.
The delegation was waiting for us for approximately one and a half hours.
I have many questions to ask and much to say but have not been given the time to do so today. I will just ask three or four questions.
Many small businesses believe Enterprise Ireland has no time for them; that it only has time for multinationals. If they are Irish, they find it very difficult to obtain support from the county enterprise boards or Enterprise Ireland. The county enterprise boards should be re-examined and in many places scrapped because they are only talking shops which offer jobs for the boys on the council.
It has been brought to my attention by many manufacturers that the IDA and Enterprise Ireland encourage Irish companies to manufacture abroad. Will the delegation tell me if this is true? I spoke to a man who employs many in my county and who was encouraged by the IDA and Enterprise Ireland to extend his business to China. Apart from wages, what are the other costs causing problems for manufacturers? What are the big issues?
I am aware that the IDA aims to attract big business to Ireland while Enterprise Ireland aims to help Irish businesses and manufacturers to grow. We lost 300 jobs recently in Allergan in Westport. Twenty five years ago we had the IDA building factories and paying operators on contract for 30 years. This happened in Ballinrobe and other parts of the country. In one case over €180,000 per week is being paid to an individual for 30 years while the factory remains unoccupied. Out of the 25 years the factory has been in place, I think it has been occupied for 18 months.
The new trends appears to be to have industrial land banks on which small industrial units with nothing in them are built. We have one in Westport. I would like to see Enterprise Ireland put some effort into trying to find occupants for such units because the loss of 300 jobs in a town like Westport is like losing 1,000 jobs in any part of Dublin. I am worried because when one has a company which employs nearly 1,000 people and cuts back to 300, one wonders what is coming down the line.
What is Enterprise Ireland doing to try to create employment in the west? The Government stated it would be biased towards it because it is an Objective One region, yet we do not seem to be getting the jobs we should be getting.
Mr. Ryan
On the question of export statistics for Cork raised by Senator Leyden, the large amounts referred to by the Senator may apply to an overseas company. As a result, they may not be included.
This is an Irish company.
Mr. Ryan
These are the companies with which we deal.
It is an IDA company.
Mr. Ryan
We receive strong co-operation from Bord Iascaigh Mhara and Bord Bia which has a certain number of offices overseas. We represent it where it does not have an office of its own. We have a very good working relationship and memorandum of understanding with both agencies. We run strategic management courses on the management of food companies. We have a similar programme for the main processors in the fishing industry which are also restructuring their businesses.
We have an excellent working relationship with the Department of Foreign Affairs on which we rely heavily overseas and from which we receive enormous support, from embassy staff and ambassadors in particular. They play a very important role. In many cases, when small Irish companies enter countries such as China, the ambassador's invitation to key customers to meet with him or her at the embassy is hugely influential. We very much value this support.
We are pleased to facilitate the committee in any way we can in its ongoing research on exports. I cannot say what the exact position is in Australia. All I can tell the committee is that it is not the first to praise our colleagues in Australia which is of increasing importance to us in terms of financial services, software for software companies and agricultural equipment. It is a big buyer of agricultural equipment from Ireland. The information and communications technology sector in general is also doing very well.
We conduct client feedback surveys about every 18 months. One is currently in progress and we will have the results in or around September. We poll our clients on an ongoing basis regarding their experiences in respect of our relationship with them in Ireland or in specific overseas markets. If it is acceptable to the Deputy, we can speak afterwards about the Enniscorthy factory.
What is the current position of the advance factory in Enniscorthy and attempts to bring employment to the area in general?
Mr. Ryan
I do not have details about such a specific area with me but I would be happy to check on the matter and discuss it with the Deputy.
On Deputy Ned O'Keeffe's comments, I fully realise that his views are genuine and that he has been in a difficult position for the past 12 months.
I have no difficulty but I do not like bad decisions. I wonder about their origin.
Mr. Ryan
Regarding the research and development issue, which we are only now starting to support, it is important for the food companies to raise their expenditure as a percentage of turnover to a much higher level in this area. If they do not invest heavily, they will not be successful in overseas markets.
Concerning our approach to small businesses, the economy is expected to grow solidly this year and in 2006 but thereafter, it will increasingly rely on the growth of indigenous industry. We are very conscious of this fact. We extend our services to as many Irish companies as can possibly benefit from them. Our one proviso is that we are focused towards achieving exports. Many companies starting up in Ireland supply the domestic market and have no interest in exporting. We regularly hear that we do not do anything for these companies, which is true. Our mandate and mission is to assist companies to break into export markets. We are at an advanced stage of discussion with Enterprise Ireland regarding the establishment, in line with the Government's decision, of a county enterprise board co-ordination unit.
In respect of the other issues causing problems, there are always challenges to small industries. I refer, in particular, to oil prices and the increased costs arising therefrom at present. Development charges levied by local authorities on developments for small companies are of significant concern. There are a number of ongoing issues, such as the cost of electricity and insurance, although there has been improvement in the latter situation in the past 18 months. At present, the two major areas of discussion are oil prices, including the knock-on effect of the cost that everyone in the chain experiences, and the cost of development charges at local authority level. I hope I have not left anything out.
What about the China issue?
Mr. Ryan
We have no policy of assisting companies. If, however, representatives of a company visit our offices in China, we will not turn them away.
Are they being encouraged to go to China?
Mr. Ryan
No. There is no policy of encouraging companies.
I hope not. It is difficult enough to get them to come to Ireland.
I know the value of a pound but after hearing this morning's discussion on the food industry, I will not be happy when I leave this meeting. This type of activity happens everywhere. Ireland needs a national food agency that would follow the money spent in the industry so that we could target and focus our efforts to get value for money. Otherwise, we will never see the results of the money spent on research and development or know where it went, whether it went drown the sinks of the laboratories or wherever. Due to Mr. Ryan's answer to my question on the food industry, particularly in respect of bacon and pork, I will leave this meeting with no confidence in the matter whatsoever.
I thank Mr. Ryan, Mr. Leahy, Mr. Hackett and Mr. Hopkins for attending and for being so informative. This was a good morning's work. I apologise for the delay due to continuing a previous meeting. We hope to have the witnesses visit again in the near future.
Mr. Ryan
We look forward to it.
It is important for us that we know what is happening with all of the agencies.
The joint committee adjourned at 12.05 p.m. sine die.