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JOINT COMMITTEE ON ENTERPRISE AND SMALL BUSINESS debate -
Wednesday, 15 Feb 2006

IDA Ireland: Presentation.

I welcome Mr. Sean Dorgan, chief executive of IDA Ireland, who will brief us on the agency's 2004 annual report. Mr. Dorgan is accompanied by Mr. Martin Burbridge, secretary and head of corporate services, and Mr. George Bennett, head of communications.

Before asking the delegates to address the committee, I remind them that while members of this committee have absolute privilege, the same privilege does not extend to witnesses before the committee. Members are reminded of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable.

We tried on previous occasions to bring this matter before the committee but were prevented from doing so last year because of our ongoing investigation into the insurance industry. We may, however, resume the practice of conducting mid-summer reviews following the publication of future accounts. I thank Mr. Dorgan for his forbearance with regard to our deliberations on the insurance inquiry.

Mr. Sean Dorgan

The 2004 annual report summarises our performance, shows how we are planning for the future and sets out our financial statements for the year. We have used the report to explain the context in which Ireland now competes internationally for investments and to illustrate some of the successful outcomes.

In 2004, we agreed 106 new investment projects, 37 of which were greenfield investments, 33 expansions of existing activities and 36 research and development investments. Among the highlights of 2004 were Intel's announcement of its FAB24-2 investment in Leixlip, Guidant's plans to double its workforce in Clonmel, Centocor's announcement of a major biopharmaceutical investment in Ringaskiddy, new high value research and development centres from IBM and HP, Bell Labs's announcement of a ground-breaking research centre in conjunction with nine of our universities and institutes of technology and involving 120 researchers, Merrill Lynch and Yahoo growing their Dublin centres, and Kellogg's European headquarters. I am glad to say that all these developments are proceeding well. They show the success of the strategic repositioning which has taken place in recent years and which must continue.

The year 2005 was also very good for us in the depth and quality of the investments won, the spread of investment by multinational companies throughout the regions and the development of research and development investments. The many significant research and development investments in 2005 included Microsoft's establishment of a software research and development centre at its European operations centre in Sandyford. Xilinx, Bristol-Myers Squibb, Pfizer, Citigroup and Genzyme are investing of over €50 million in new, leading-edge research and development projects and facilities to develop world-class products, processes and services for their international markets. Wyeth Research, in conjunction with UCD, is opening one of the first discovery research centres in pharmaceuticals here.

Among other notable wins in 2005 were Google expanding its centre in Dublin and developments involving financial firms such as BISYS in Waterford, International Fund Services, Drogheda, AXA, Athlone, and PFPC, Wexford and Navan. We were very glad to be able to open 2006 with the announcement by Amgen, the largest biotechnology company in the world, of its $1 billion investment in Cork.

While these investments show that Ireland is competitive for high-value, knowledge-based activities, competition is relentless and global. We must, therefore, be world class in everything we offer and keep improving. The type of investment for which Ireland can now compete and win is different from that of ten or 15 years ago. Owing to the fact that manufacturing is still at the heart of all advanced economies, it is important and valuable to us. All of the major pharmaceutical, medical device and IT companies are manufacturing here. However, the type of manufacturing is changing and is now more complex and sophisticated, requiring additional qualifications and skills. High-value service activities, such as shared service centres, financial services and software, are areas where we can continue to compete at higher levels. In these areas also activities are becoming more global and sophisticated in nature. Our ability to handle that sophistication will differentiate us from other cheaper locations.

The national spatial strategy and the national development plan are critical to regional development and to attracting investment into the regions. In general, higher value investments tend to seek out urban areas, which have a critical mass of skills and services, so each region must have a strong urban centre to act as a pole of development and as an attraction for investment. The provision of world-class IDA Ireland business and technology parks — in all there are 28 throughout the country — has been continuing in practically every key location. This is an important part — but only a part — of what we offer investors. The latter also seek a good base of business support services. They want quick and easy access, cost-competitive services and good, positive, forward-looking attitudes. As a result of our being serious about our regional responsibilities, the challenge for us is to show that these attributes are as strong throughout the country as investors perceive them to be in Dublin or Cork.

The accounts for 2004 show that IDA Ireland received Oireachtas grants of €83 million — compared with €119 million in 2003 — grant refunds of almost €22 million and profit on sale of assets of almost €31 million. Our expenditure was €123 million in total, of which grants paid to industry amounted to €65.5 million, promotion and general expenses amounted to €36 million and depreciation charges and provisions amounted to €14 million. In total, expenditure was €32 million less than in 2003, mainly as a result of lower grant payments to industry in 2004. I hope this introduction has been useful for the committee and I thank the Chairman for the opportunity to deliver it.

I have two questions. A serious fire occurred at C&D in Longford, a major employer of 500 people in the midlands, which will not be easily replaced. I am aware that IDA Ireland has done everything in its power in that regard. Does Mr. Dorgan have an update on the progress in respect of this matter? We all look forward to the completion of the 68 acre business and technology park in Mullingar, particularly for the 6,000 people who travel from Mullingar and north-west Meath to Dublin every day to work. This is a godsend to the people of the midlands. I ask for an update on that matter.

I welcome Mr. Dorgan and his team. Did the grant refunds of €22 million in 2003 come from IDA Ireland backed enterprises that closed down and repaid grants? What moneys are outstanding from companies that may have withdrawn from the Irish market and have not yet made repayments?

I wish to ask a question of a parochial nature. In Carlow, we are concerned about a €12 million business and technology park which has been lying idle for some time. Some local business people built a 17,000 sq. ft. advance factory there but there are no tenants for it. In the context of the serious economic difficulties encountered by Carlow following the closure of Irish Sugar last year, what steps does Mr. Dorgan envisage coming down the line for the people of Carlow and the region?

Mr. Dorgan

Everybody sympathises with the employees of C&D Petfoods. It was a shock and a setback to see the amount of damage caused by the fire. C&D is not an IDA Ireland company; it is an Enterprise Ireland company, so I will not attempt to speak on it.

There is a good Longford man looking after IDA Ireland's interests in the midlands and I am sure his heart is where he was born.

Mr. Dorgan

There has been good progress in Longford in recent years, particularly with the Abbot investment, which is top-scale and top-value, with a very high proportion of graduate employment. The investment in the business park in Mullingar is well advanced. We have spent a considerable amount on it and it will be a great attractor, particularly in view of its access to Mullingar. It is within an hour of the airport and the metropolitan area network is in place. We envisage a good take-up of the investment in the park, which is one of the many high-standard parks that have been developed around the country.

The same applies to Carlow. The park in Carlow was developed to attract investment. In its absence, it would be difficult to achieve what we think is possible. In the past year, representatives of seven companies visited Carlow to examine what it has to offer. We are focussing on service, financial services and international service companies which would match the skills and talents available in Carlow. We hope that, in a relatively short time, one of the companies we have introduced to Carlow will take up what is on offer there. I cannot say that this will happen immediately.

Refunds of grants are from companies that have closed down their operations or reduced their workforces and that have a liability to us. When we undertake a grant agreement with a company, we set conditions for the performance of its business plan and tie it to commitments in respect of which we provide grant aid. At any stage, there are companies which, for market or business reasons, have not been able to sustain activity for which they have received grant support. The refunds to which I referred were in respect of both closures and reductions of employment where there was a grant liability attaching to the employment. There are a number of millions of euro outstanding at any particular point. In general, we have little difficulty obtaining refunds from companies. Our right to a refund occasionally may be challenged or there may be a delay but it is not, in the main, a difficult experience for us.

I welcome the delegation. I listened to the discussion on "Morning Ireland" earlier in respect of the substantial fines imposed by the EPA on a particular company for non-compliance. Will that have an impact on IDA Ireland's work in trying to attract companies to Ireland? The law is in place but its implementation did not seem to be very rigorous.

We have heard much about upskilling, which does not occur until a company is in serious danger of closing down or has closed down. I refer here to GN Resound in Cork, which closed overnight for no reason other than that the management wanted to retrench and return to its home base. If anybody should know what skills are required by companies considering investing here, it is IDA Ireland because it talks to such people and knows the environmental factors, tax breaks, skills and population base they are seeking. Does IDA Ireland have any contact with FÁS, the agency responsible for upskilling?

In light of the changes brought about by increasingly sophisticated technology, what is in store for the future? Mr. Dorgan's answer will be that if he could tell me he would bet €20 on it at Paddy Power's and give up his day job. Ten years ago it became very obvious that information technology was the future. Is IT still the future or is it research and responses to information technology? If IDA Ireland does not know what the future is, we might as well all give up.

I wish publicly to thank Mr. Dorgan and his colleagues, Jim Murren and Emmanuel Dowdall, for their recent announcement in Ballinasloe. The town has suffered from unemployment for some time since Square D and AT Cross closed down and Dubarry downsized. It was not easy to bring a substantial factory to Ballinasloe but they did so and we wish them luck in the future. This development has brought confidence back to the town, although we will talk more about it when we meet in Ballinasloe on 6 March.

I understand that IDA Ireland has acquired a sizeable amount of Teagasc land in Athenry. Has that land actually been purchased? When does Mr. Dorgan envisage that development will take place on it? Can he update the committee on the vacant IDA Ireland factories in Gort and Tuam?

It is interesting that I am following my constituency colleague.

I scheduled it that way to save time.

I will take a slightly different line from Deputy Callanan. I come from the Galway East constituency and I attend this annual ritual religiously. I hear about jobs for the remainder of the country but I never hear about jobs for Galway East, with the exception of the factory to which Deputy Callanan referred in Ballinasloe. Has IDA Ireland any relevance at all to Galway East? If it does, then where is the proof? IDA Ireland's annual report continually refers to regional development in order to comfort people and encourage them to think that their areas are being considered. What, however, is IDA Ireland doing about the regions?

Our guests referred to the national spatial strategy in order that they can leave the meeting and be pleased with themselves. What is IDA Ireland doing to bring all the elements together? The Minister for Enterprise, Trade and Employment must discuss with IDA Ireland what the future holds for the regions. Of course we must ask if there is a future for the regions because the record to date suggests that there is not. I attend this meeting every year and leave deflated. I hope that next year, if we are still here, IDA Ireland, rather than making glib references to the regions and the national spatial strategy, will offer something substantial that will allow us to feel that at last the regions are being catered for and taken seriously.

Mr. Dorgan

Deputy Lynch referred to the EPA fines for failures in environmental protection and the impact on inward investment. The work of the EPA has been hugely helpful to Ireland's reputation in respect of having a clean environment and enforcing high environmental standards. The fact that, on occasion, companies are fined for breaches is in no way a disadvantage because it shows that we work to achieve high standards.

The Deputy also referred to upskilling and asked what skills were needed. Any economy needs a variety of skills across the entire range of activities. More and more activities, particularly those in manufacturing, require ever higher skills. What is needed is well summed up in the FÁS One Step Up programme, which involves taking every member of the labour force and moving them up one step. People with few or basic skills can move one stage higher and aspire to better jobs. Not everybody in this economy will be a scientist, an engineer or a professional in accounting or law. We will need more of those as well, so they are important, but it is also important that the semi-skilled become skilled and that technicians across a span of activities can step up their skill levels. That has actually happened significantly, year on year, and is the basis on which so many multinational companies continue to bring new activities to Ireland. They do so because they are confident in the ability of the Irish workforce continually to improve to higher skill levels.

We work very closely with FÁS in trying to identify skills and offer support in areas where particular skills are required. A good example of that is the commitment, with Government support, to establish a national institute for bioresearch and training, an €80 million investment to be situated on the UCD campus in Dublin. Separately, FÁS is developing a centre in Cork for training in the same area. There is a good understanding and connection between the two developments.

We work also with the expert group on future skills and have been involved in projecting skill needs in international services, financial services, medical technology, information technology, engineering and digital media. In summary, we need to be at the cutting edge to win the most high value investments. We must develop fourth level education and increase the number of people who do postgraduate work and doctorates, particularly in sciences and engineering. We also need business, science and engineering skills at graduate level and at technician or undergraduate level. We need to improve the business and communication skills of everybody involved in any type of business at every level. The education and training sectors, especially the institutes of technology, have been good at taking those steps. We work closely with them to help identify some of the needs, nationally and regionally.

I thank Deputy Callanan for his comments regarding Ballinasloe. We are in discussions with Teagasc regarding the possible purchase of a significant portion of lands in Athenry because we believe the location has a good potential for high value investments. These may be in the information technology area or biopharmaceuticals.

In the past year we have developed some lands in Oranmore and received advance planning permission from Galway County Council for a biopharmaceutical plant there. The planning permission was sought and received on the basis of a generic design, which offers the opportunity of going to leading biopharmaceutical companies around the world and indicating they could save a year in the timeframe of bringing drugs to market because the site is already developed and has planning permission. The company could then build the plant within the planning permission.

A similar project would be possible in Athenry. We are trying to achieve agreement soon with Teagasc on the land purchase and to have advance planning permission for a generic plant. This could be for information technology, as was the case in Grange Castle in Dublin in the past month or so, or in biopharmaceuticals. By doing this we can go to some of the leading companies in the world and indicate to them that their time to market can be shorter in Ireland than anywhere else because we have made a major investment in facilities.

Deputies Callanan and McHugh are interested in Tuam and Gort. We were glad to see Ulbrich moving into Gort in the past year. Deputy McHugh has asked what we are doing for the regions. We see the west as a region because Ireland, the west and Galway East must all compete internationally. The competition is not between a single constituency and another place in Ireland. The competition is between any location in Ireland and any location globally.

For the type of investment for which we are competing, we are looking at regions with a population of at least 400,000 or perhaps a million people. Companies can then believe they have a good chance of getting 100 industrial engineers, 200 chemists, 50 physicists or 200 accountants, for example, for the type of activity they might bring to Ireland. We must think in terms of a large population base and a strong urban centre which provides the type of business services that these companies need.

When a company such as USCI goes to Ballinasloe, it does not just consider the town of Ballinasloe, although it finds it attractive to locate there. It must take in all the expertise, developed over 20 or 30 years, in that region and Galway in particular. This company can locate in Ballinasloe because it can see connections that can be built with other companies such as Medtronic and Boston Scientific in Galway, the National University of Ireland, Galway and Irish companies such as Creganna and Mednova which operate there. It is the clustering effect of a whole industry and the industrial specialism and expertise in the region rather than an individual town that wins high value investment.

We must think of larger areas within our regional effort rather than single towns, constituencies or counties. Cork would be an exception as it has a population of 450,000. Other single counties otherwise tend to be too small to be able to compete on their own globally. We must achieve a position where regions think and act cohesively and use all the strengths of the area to attract international investment. This is why the national spatial strategy is so important. It must underpin the success of Tuam, Gort and Ballinasloe as much as Galway and Roscommon. Roscommon will play off the strengths of the midlands and the west. A region must be positioned to succeed in this context.

In the past year we have been pleased with the relative success of having 46 of 71 investments which came in either on greenfield or expansion basis land outside Dublin. It is important that investments land in Dublin, as that region is attractive from an international perspective. Some investments tend not to go beyond Dublin. Approximately 65% of the investments went outside Dublin compared with approximately 50% in the previous year. This is the result of a sustained effort in marketing locations throughout the country and the consistent investment in infrastructure, facilities, skills and developing the attraction of a series of regions through Ireland. We cannot succeed by promoting single towns against city regions elsewhere. We must promote regions against city regions elsewhere.

Why are business parks developed in places such as Tuam? Why waste money if what is effectively being stated is that no enterprise will locate there?

Mr. Dorgan

It is certainly not the case that Tuam is doomed. It is worth making the investment within the context of the medical technology industry developing in Galway and its surrounding region. That is where investors in the medical technology industry are thinking of going. If they wish to come to Ireland, they look to go to the west. We want them to go to Tuam, Gort and Ballinasloe as much as Galway city, and that is why we make the investment. We can then show potential investors an attractive location that they can walk into and which could lead to success. Companies can build on the strength of the region, not just the town.

I welcome the IDA Ireland group. I wish to discuss broadband. This is important as a league showing broadband usage places Ireland almost at the bottom in comparison with our neighbours. In that league, we are below Hungary, Lithuania and Slovenia. Northern Ireland, in comparison, has excellent access to broadband. What effect does poor access to broadband have on IDA Ireland's role in creating job opportunities, especially through overseas companies?

Senator Quinn recently said that Ireland will plummet from third to 21st in a European league table measuring information and communications technology skills within the next two years. Will the delegates comment on this? As a Deputy representing County Clare and the mid-west region which has seen significant changes in job creation agencies recently, I would like Mr. Dorgan to comment on the Minister's recent statement that:

IDA Ireland's strategy for the mid-west region places emphasis on the gateway and hub locations of Shannon, Limerick, Tralee and Ennis. IDA Ireland's sectoral emphasis in the mid-west region is on attracting new knowledge intensive projects in information and communications technology, international services, medical technologies and life sciences.

My colleague Senator Coghlan may be interested in the fact that Tralee Town Council last week condemned IDA Ireland's record of job creation in Kerry. That may relate to Mr. Dorgan's previous answer. In my county of Clare, only one start-up company has been assisted by IDA Ireland since 2000. With the exception of locations such as Limerick, Galway and Shannon, there is a real problem in the west. Mr. Dorgan commented on that earlier. There is a major problem in attracting industry to the smaller towns. Is it because of a telecommunications deficit or some other reason that companies will not locate here? There are more people commuting out of Ennis, for example, than there are working in the county. Ennis appears to be suffering despite the fact that it was the first information technology town.

How does IDA Ireland intend to achieve its national spatial strategy objectives? Mr. Dorgan touched on that but it is an important issue and perhaps he might elaborate on it.

IDA Ireland has taken over the overseas investment function of Shannon Development and will be marketing the Shannon free zone. In light of the issues I mentioned earlier regarding regional development, will Mr. Dorgan comment on the role of IDA Ireland in Shannon in focusing industry on these regions?

I welcome Mr. Dorgan, Mr. Burbridge and Mr. Bennett. IDA Ireland has a strong standing in the international marketplace. On the links with Northern Ireland, is IDA Ireland competing with its counterpart in the North or do they adopt a joint approach to attracting industry from abroad?

On the general presentation, there is a case to be made for having Enterprise Ireland make a presentation on the same day as IDA Ireland because quite a number of the projects mentioned by the Chairman — C&D and others — are Enterprise Ireland-linked. If both organisations made presentations at the same time, we might get a better response to many of the questions put forward, which also involve Enterprise Ireland.

I commend IDA Ireland on its work on industrial and technology parks. It is developing one to the highest standards at Gallowstown, Racecourse Road, Roscommon. I would defend the investment by IDA Ireland in presenting those parks in an attractive way in planting, infrastructure and so on. I commend IDA Ireland on investing that money because these parks are very attractive to overseas investors in terms of what is available in towns such as Roscommon. IDA Ireland is moving in the right direction in that regard.

The project at advanced planning stage in Oranmore is something that should be put forward in other locations because it is an attractive option to go to a company and say that planning permission can be provided in advance by the local authority. That avoids all the objections which can arise in respect of any project and which can delay or place it in jeopardy. Like other members — and having served in the Department for a period — I found it extremely difficult at times to get that message across to overseas investors. They have the final say and, irrespective of the additional attraction that IDA Ireland can provide in respect of the BMW area — I would like Mr. Dorgan to confirm that — it can give a better package to an overseas company to locate in that area as opposed to Dublin.

I wish to be parochial for a moment. I come from the constituency of Roscommon-South Leitrim and the town of Carrick-on-Shannon is developing dramatically, and rightly so, and attracting a good deal of internal investment. Roscommon is an attractive location. Boyle is developing, although there have been setbacks in respect of a tourist project recently, as is Castlerea. Ballaghaderreen is not doing as well as it should, even though it is the headquarters for the BMW region.

I ask Mr. Dorgan to keep up as much pressure as possible, to allow us to show the benefits of locating in Roscommon and to include Roscommon county towns in IDA Ireland's inward investment portfolio tours. At one stage, Roscommon was not at the very edge, so to speak. I am aware of one project about which I was extremely disappointed, having spent a great deal of time bringing the person to the stage of buying the land from IDA Ireland at Racecourse Road. However, because so many barriers were put up, the company located instead in a part of the former East Germany. I was bitterly disappointed about that loss to the area. I was not a Member of the Oireachtas then but had I been, that project would not have been lost to Roscommon town because I would have been in a position to raise the way it was handled with representatives of IDA Ireland. I refer, in particular, to the fact that the industrialists involved were brought to areas to ensure they did not locate in Roscommon town. That is in the past, however, and we must look to the present and the future.

I hope we could have more links here in terms of what IDA Ireland has achieved. There is no mention in the report of any project that came to Roscommon at that point. Since then, a project has been approved and I welcome that. I ask Mr. Dorgan to keep up the pressure in that regard. I accept fully that IDA Ireland is competing with other countries, particularly China, India and Singapore. It is a very tough, competitive field and, fortunately, we have a Government in place that supports the continuation of low corporate rates. We will fight to maintain that in Europe because without it, we would be in greater difficulties in the future. This Government will continue that policy into the future, although I cannot predict what other Administrations might do. I will conclude my party political broadcast.

I thank the Senator on behalf of the people of Roscommon.

I also welcome Mr. Dorgan and his colleagues. What does Mr. Dorgan believe this committee should be doing to assist IDA Ireland in bringing more foreign direct investment to Ireland? He might say that we do not have to think of counties or constituencies but all these people would be dead in the water, so to speak, if they did not do so. Kerry has become something of an industrial black spot. Is there any future for us at all? Perhaps Mr. Dorgan might comment.

I must attend a meeting at City Quay at 11 a.m. and will be unable to be present for the remainder of the meeting. When I heard that Mr. Dorgan was coming to the meeting, I felt it was an opportunity to ask him a question. I compliment him and his team on an excellent report. The continued success IDA Ireland is enjoying throughout the country in terms of international investment is obvious but is there any evidence to date that the increasing public questioning of the use of Shannon by US military planes in regard to the war in Iraq is having an adverse effect on US investment?

That matter does not come under the remit of the business of this committee.

It is an important issue. We are talking to the chief executive——

It is a foreign affairs matter.

It is not a foreign affairs matter.

I am ruling that it is a foreign affairs matter. We are dealing with the 2004 report from IDA Ireland. Does the Senator have a question on the report?

I will put the question in a different way. This is the most serious issue in the country at present.

We are dealing with the 2004 annual report of IDA Ireland. I welcome the Senator to our meeting. She has achieved a great deal in industry and I compliment her and her family on that. She is welcome to put questions on the annual accounts to Mr. Dorgan in respect of IDA planning for the future to create jobs here.

That is what my question involves. The first page of the report states that 2004 was a very good year in the depth and quality of the investments but if our Government prohibits American military planes carrying rendition prisoners from landing at Shannon, will that affect American investment in Ireland? That is a legitimate question to ask Mr. Dorgan.

It is but the Senator should ask at a meeting of the Joint Committee on Foreign Affairs.

I am asking——

I call Senator Browne.

Mr. Dorgan reminds me of the Taoiseach who strung his party's backbenchers along for the past two months and then disappointed them all yesterday. Unfortunately, we have all tabled matters on the Adjournment in respect of the business parks——

The Senator would not turn down an appointment if he was in favour.

Who knows what will happen in the future? Many of us have tabled matters on the Adjournment concerning problems about business parks in our constituencies. We receive the same answers on each occasion and we are getting nowhere. I looked at IDA Ireland's website last night and discovered that Carlow is not unique. It has a 20-acre field, which cost €7 million or €8 million, with all the infrastructure in place but it is lying idle.

That matter was raised earlier.

I know. To be honest, people in Carlow, like their counterparts in other areas of the country, are blue in the face hearing from IDA Ireland — whether through replies to matters raised on the Adjournment, replies to parliamentary questions or even at business lunches attended by Mr. Dorgan — that our area is great and that it is only a matter of time before it attracts major investment. Meanwhile, years pass and nothing happens. I was born in 1973 and nothing new has come to Carlow in my lifetime. The last major investment in Carlow was by Braun and Lapple.

I was amazed to learn last night that the same problem was faced throughout the country. In Wexford, as is the case with Carlow, there is a 28-acre business park and an advance factory available. In Clonmel, site and property solutions are offered, while Portlaoise has a 17,000 sq. ft. office building available on a 27-acre park. Mullingar has an IDA Ireland business and technology park——

It is being built at present.

Yes, it is being built. The point is that there are plenty of business parks throughout the country so, in theory, IDA Ireland appears to be doing its job. The reality is, however, that there is no investment in these parks. What percentage of those parks are occupied? I can understand why IDA Ireland might do this because it suits. When IDA Ireland is asked a question, it can say that, although it has not yet secured investment, it is putting everything in place. However, these places are lying idle and are costing millions. It is shocking that, out of a workforce of 2 million, IDA Ireland is only partly responsible for 128,000 jobs. There is no proof of any proper regional development.

IDA Ireland is there to achieve regional development and not just development in the major towns. However, Mr. Dorgan is basically saying that it is only for places such as Waterford, Dublin, Cork, Limerick and Galway. Let us consider the number of employees in IDA Ireland supported companies. In Carlow, for example, in 1994 there were 1,400 employees in IDA Ireland supported companies. In 2003, it had decreased to 1,000. In Dublin and Cork, however, the number doubled. There does not seem to be a proper, coherent policy in place.

Who chooses the locations? I was bemused recently to see the Minister for Foreign Affairs, Deputy Dermot Ahern, announce new jobs for Dundalk, in his constituency, and the Tánaiste, Deputy Harney, who is no longer Minister for Enterprise, Trade and Employment but Minister for Health and Children, announce jobs for Clondalkin, which is in her constituency. The Minister for Enterprise, Trade and Employment, Deputy Martin, also announced jobs for Cork. Perhaps that is coincidental but there appears to be some political interference. I question IDA Ireland's independence and also the process it uses to reach its decisions.

To be fair, the Senator's party was good at it as well. Good news is always allowed to be shared and it is nice to receive it.

Yes, but the problem is that it is not being shared. Regions are being ignored. A glance at the figures for the number of employees in IDA Ireland supported companies proves it. Every year the major cities get jobs but nothing happens outside the urban areas. What makes it worse is that there are empty business parks. IDA Ireland tells us how great we are and that there is no problem but still no jobs arrive. Is there a problem? If there is, we should be told in order that we can rectify it locally. If IDA Ireland was abolished, would it make any difference? Would the country attract the same jobs in any event?

I worked in Carlow 30 years ago and there is a considerable difference between then and now.

There is a difference in the retail sector but not in industry.

A wide range of questions has been put by Deputy Pat Breen and Senators Leyden, White, Coghlan and Browne.

Mr. Dorgan

I will try to cover all of them. Deputy Pat Breen asked about broadband. It is important to see broadband from two perspectives. The statistics to which he referred relate primarily to broadband penetration in the home, where Ireland is low in the international leagues. However, when one looks at broadband availability for the businesses that need it, we rank very well. We have both availability and low cost. That is owing to the significant investment around 2000 made by the Government — IDA Ireland was involved in this — in huge international connectivity.

Broadband in the home is very important for industry and business because many people work from home.

Mr. Dorgan

Broadband in the home is important for a number of reasons, both for direct use in business terms but also in respect of facilitating the knowledge society so that every family and child can use a computer and, through it, obtain information from anywhere in the world. We are keen to ensure that much higher penetration is achieved quickly. However, we do not lack broadband availability for business, although there might be some regional areas where it is not as extensive as we would like. The metropolitan area networks investment has been hugely helpful in that regard and Shannon Development has done a great deal in the mid-west in particular to increase broadband availability.

Is it not true that broadband is more expensive in rural areas than in cities?

Deputy Pat Breen should allow Mr. Dorgan to respond to all the questions. I will allow the Deputy to pose an additional question thereafter.

Mr. Dorgan

We also rank well on IT skills. Internationally, we are among the best in that regard, although some of the international statistics can give a different result from time to time. What is of concern is that in recent years, particularly since 2000, there has been less take-up in IT skills. People have seen a boom go to bust but there will continue to be a strong need for IT skills, both in the IT industry and across all business in the coming years. We should aim to maintain a national competitive advantage in having those skills.

The Deputy referred to Clare and the role of Shannon Development. Of all the counties, Clare, at 15%, has one of the highest levels of people employed in multinational companies. A large part of that is down to the Shannon free zone and the work that has been done over many years by Shannon Development, which deserves great credit. There are great companies in the Shannon zone but there are also very good companies elsewhere in Clare and in Limerick.

The number of jobs in IDA Ireland supported companies in Clare increased by 10% last year. That was primarily in companies such as Transitions Optical, Olympus and Roche. The necessary legislation is not yet in place but we look forward to assuming responsibility for the Shannon zone, as well as for the rest of the country, and we will work closely with Shannon Development on that. Shannon Development will continue to have responsibility for property development throughout the mid-west and for regional promotion generally.

Senator Leyden asked about Northern Ireland. We compete with Northern Ireland but we also work with our sister agency, Invest Northern Ireland, particularly in the north west. Donegal is very integrated with the west of Northern Ireland and Northern Ireland generally. It would be impossible to sell Donegal as a location without support from Northern Ireland. Equally, Derry needs the critical mass of Donegal supporting it to be successful. The agencies both compete and co-operate.

We have made a good investment in Roscommon. We envisage further prospects both with Elan, in the south of the county, and Innocoll in both Roscommon and Athlone. Harmac is doing well in Castlerea. Advance permission is important for the possibility of winning further investment.

Senator Browne asked who decides what goes where. The investors do so. It is the company making the investment that decides and no amount of pushing or——

It is purely coincidental that it is in the Minister's constituency.

The Senator should allow Mr. Dorgan to respond.

Mr. Dorgan

——or cajoling will change the business logic that causes investors to go where they think it will work best for them.

What are those reasons?

Mr. Dorgan

Senator Coghlan referred to the——

I asked Mr. Dorgan to outline the reasons.

I will allow the Senator to ask a supplementary question at the end. He has asked all the questions and should allow Mr. Dorgan to respond.

Mr. Dorgan has only answered a fraction of my questions.

The Senator must understand that he is attending a hearing of the Joint Committee on Enterprise and Small Business.

I call on Mr. Dorgan to continue.

Mr. Dorgan

Senator Coghlan asked what the committee might do that would assist inward investment. The most important thing this committee, which has a broad span of responsibilities covering a wide ambit, could do is to ensure that the business environment in Ireland remains as business-friendly, flexible and supportive of investment as it has been for a great many years. Ireland has a tremendous reputation internationally for being a place where investment is welcomed and supported. It is also seen as a place where all the issues or concerns that might arise in making things happen are dealt with quickly and flexibly. Every county council, public authority, agency, Government Minister and political party is supportive of investment and is willing to continue achieving the sort of step changes that have been achieved in recent years.

I was disappointed to hear the Senator refer to Kerry as a black spot, which is a term I try to avoid. I try to encourage public representatives to avoid using that term also because it is not helpful in winning investment. Kerry is clearly doing well on the indigenous side with tourism. There are good investments in Kerry in Liebherr, which has been strong in Killarney since 1958. In recent years, the company installed a research and development facility. There are also companies such as Astellas, which is the new name for the Fujisawa Klinge pharmaceutical company in Killorglin, and Amann in Tralee. In common with every other county, Kerry is ambitious for further investment and we want to help achieve that.

Senator White asked about Shannon. I do not wish to go beyond saying that Shannon has not arisen as an issue for us. We hope it does not to so.

As regards the Carlow business park, it is disappointing when the existence of such parks and buildings to attract investors is seen as a source of criticism. That need not be the case. The fact that such an investment has been made is a visible commitment for the future. We are conscious of the visibility of the Carlow park. We would like to see more investment there, sooner rather than later. It is disappointing, however, when it is a point of criticism that the investment is made and is visible, rather than being praised as a commitment for the future. That is what we are seeking to achieve throughout the country. Carlow has made enormous strides in recent years, although, like other towns, it has experienced setbacks. It is important, however, that such towns show they are ready, willing and able to attract further investment. As I said, there have been site visits to Carlow by seven different companies in the past year and we want to encourage further visits. We now have a building where such activity can take place. That is important from the viewpoint of marketing Carlow.

The point I am making is that for years in Carlow we were told we could not attract industry because we did not have a business park. Now we have a business park but three or four years later it is still lying idle. The worrying aspect for us is that it is happening not only in Carlow but all over the country. That is coming across loud and clear here today. I am concerned that it suits IDA Ireland to throw back that exact answer to try to justify its inactivity in particular areas. The bottom line is that people everywhere — not just Carlow, but also in Portlaoise, Tullamore, Kerry and elsewhere — want to see jobs being created.

In hindsight, I would prefer to see half the number of business parks full, as opposed to having such parks lying idle all over the country. In some cases they occupy an area of 28 hectares or 70 acres but we see little proof of anything happening. Those advance factories are being put in by private investors, so IDA Ireland cannot necessarily take credit for them. They were provided under a different scheme. It suits IDA Ireland to throw that answer back at us wherever we ask a question. We are told not to pose awkward questions and to be positive instead but one cannot be positive forever. I am sick of repeatedly hearing the same answers. The bottom line is that we have seen no new industry in Carlow for the last 33 years.

I also welcome the representatives from IDA Ireland. I wish to start by declaring that I have an interest in an advance factory in New Ross, as I had in two previous factories in Wexford and New Ross.

There are three parts to the question I wish to pose. First, there is much discussion about competitiveness and other issues within our economy at present. What are the main challenges facing IDA Ireland in attracting overseas investment to Ireland, given the competition from previously developing countries and the emerging developing democracies?

Second, coming from a small provincial town, I have a concern that the spatial strategy honed in on the regional centres and hubs. I have heard IDA Ireland executives saying that in future their attention will be focused on those centres and hubs. Obviously, that will be to the exclusion of other towns. I question that because it will force people to travel distances to work when one would think that, with modern day traffic congestion, the thrust should be to try to centre jobs where people are living. Senator Browne referred to a vacant factory in Wexford but there is not one there. There are two, however, in Enniscorthy and New Ross, which have been idle for approximately four years. What hope is there for towns such as these if they are not located near a hub or centre? Historically, I have found IDA Ireland to be extremely professional, and quite successful, at what it does. I have come to that conclusion following my dealings with IDA Ireland. There was a reorganisation within IDA Ireland a number of years ago and I have some concern that it seems to have lost something in that changeover. I refer here to communications and partnership with investors. The number of overseas visits to the factories to which I refer is certainly at a much lower level, which probably reflects the international situation.

The third part of my question relates to the internal policy of IDA Ireland. Traditionally, over 50% of industry coming into Ireland focused its attention on Dublin. It did not want to locate outside the capital because of the airport links and the educational and other facilities that are available. Given that IDA Ireland's brief is to place 50% within the BMW region, it really does not leave anything for the remainder of the country. My prognosis would be that this is exactly what is happening. I want to mention specifically the case of PFPC. There is anecdotal evidence in Wexford, reputedly from senior executives of the company, that when they chose the town serious attempts were made by IDA Ireland to persuade them to go elsewhere. My concern is for the south east, in general, and Wexford, in particular, because we are on the periphery of the country. I apologise for being parochial.

Before we conclude, I wish to ask Mr. Dorgan a question. The Intel announcement regarding Fab 24 was of major importance to the entire island of Ireland. It is of huge importance to the Westmeath and Longford areas. Does Mr. Dorgan have an update on how Fab 24 is progressing? He might mention it in his concluding remarks.

Does Senator Browne wish to ask one further supplementary question?

Can Mr. Dorgan answer the question I asked concerning how many business parks are lying idle and what percentage of them are occupied? It is a fair question.

I ask Mr. Dorgan to conclude.

Mr. Dorgan

Globally and in Ireland, the situation has changed enormously in the past ten years. There are now far more locations available globally, including India and China, which were not open for investment 15 or 20 years ago. Central and eastern Europe were not open 15 or 20 years ago. There are far more locations which can compete for the type of investment we won ten or 15 years ago. Ireland's conditions have changed considerably. Our costs are somewhat higher and we do not have the surplus of people we had when unemployment stood at 15% or more. For us, competitiveness must be about being at the leading edge and having the highest value activities rather than basic activities which suck up lots of jobs. It is not the number of jobs that is the best measure of our success; it is the quality of those jobs. For us as an agency, it is also the location of activities about which we are serious.

In competitiveness at the higher level, what matters is the depth of expertise available, namely, how many people with really good qualifications we have in the sciences, engineering and business, what the third and fourth level qualifications are, how many of those people are available and what are the sophisticated business services. A good example of how that manifests itself is in Galway where, over a number of years, the medical technology industry has grown. In recent years Galway has launched cardiac drug eluting stents to global markets. It is the launch location for a number of companies because the depth of skill and expertise which has been developed there over a number of years has grown. That, and the types of business support services and access which are available, means Galway must compete as a region.

A company thinking of investing and seeking high level people will think about how many such individuals are available where it is going. It will not think of an individual town but of a region or of Ireland as a whole. We must sell Ireland, and a region therein, to it. We then try to achieve a spread of that investment to particular towns. If a company wants 100 industrial engineers, it knows it will not find them in an individual town. If, however, it casts its net within a 40 or 50 mile radius, it will stand a good chance of getting them.

In the south east, New Ross is doing well because Lake Region continues to grow and it is within easy reach of Waterford. Things are also happening in Wexford, with PFPC and Waters. We know of other companies thinking of making serious investments.

Mr. Dorgan

We see that as a region which has great potential and we must sell it as such, along with everything that goes with it.

In terms of the policy, we want to spread investment throughout the country. In 2000, we were explicit in saying that the Border, midland and west region needed particular attention because, through the 1990s, an excess of the investment that entered Ireland came into Dublin. The latter was far and away the winner during the 1990s. That has changed in this decade, partly because of the efforts of IDA Ireland. We set ourselves an ambitious target. It was not an exclusive target in terms of our saying that we would only serve the Border, midland and west region. However, in an explicit and visible way, we said we would change our focus and, by doing so, achieve different results for Ireland. We have achieved them in considerable part but it is true that not every county has benefited equally yet.

Another important change that has happened in Ireland in the past ten years, which we should recognise, is that not every county now depends on inward investment from overseas for its success. That is a great advance. It is not at all against IDA Ireland to say that not every county needs to depend on it for its success. Kerry has succeeded because, 25 or 30 years ago, a small farmer co-operative there converted itself into the leading food ingredient company in the world. If Kerry and a small farmer co-operative can do that, other counties can do so too. IDA Ireland, as an inward investment agency, need not be seen as the only solution for development in every county. We willingly and gladly offer to play our part in that but we do not represent the only solution.

What we do is designed to help achieve change and advance and a good example of that is the investment made in Intel since 1989, when it was first attracted to Ireland significantly, but not exclusively, through the efforts of IDA Ireland. Intel has since invested €6 billion in Leixlip and employs close to 5,000 people. I am glad to say that the Intel Fab 24 project is proceeding well. The site and Ireland have a good reputation in the Intel corporation and that is the basis on which we will win further investment. I refer here to the reputation of Ireland for being supportive and the quality of the people, almost all of whom are Irish, who work in the plant. That is the basis of our future success.

I do not have to hand a figure for Senator Browne on the proportion of business parks in which there is no activity at present.

Can Mr. Dorgan come back to the committee with it?

Mr. Dorgan

Yes. However, I do not regard it as a failure or a fault that we have parks which are ready for new investment. It is part of our need that we have parks which are ready for new investment. If every park was full, or almost full, we would be failing in our provision.

There is a need for a balance of industry. In Carlow, for example, we have quite a healthy indigenous industry and quite a good manufacturing industry. We also have a successful retail industry. However, we would be vulnerable if something went wrong in one of them. We need an industry that will bring significant wages into the town and create a spin-off. People going to the bank manager looking for a mortgage cannot use an empty business park as a source of revenue.

That is a commercial decision taken by the private sector.

People need wages. Business parks are fine but they need to provide jobs for workers.

Having, as Chairman of the committee, travelled all over the world in the past three and a half years — including to China, India, Hong Kong and South Africa — I am in a position to state that we have learned a great deal. Availability is a big plus factor. I welcome the new 68-acre site in Mullingar, which will open in the future. Carlow and Mullingar are similar because they are both situated 50 miles from Dublin. Access was our problem until now. However, we now have the motorway and people can travel straight to Dublin Airport. I cite the example of eBay and the experience trying to encourage it, through the good offices of IDA Ireland, to come to Athlone. Access is improving. I look forward to the next two years and to seeing what we can achieve for Senator Browne's and Deputy Nolan's town of Carlow and for Mullingar in my constituency.

I thank Mr. Dorgan, Mr. Burbridge and Mr. Bennett for attending. It is enlightening to be brought up to date on what is happening in IDA Ireland and to listen to the concerns of members and hear about the pressures they face, particularly in light of the fact that we are experiencing probably the best times the country has ever witnessed, with almost full employment. There is an obligation on public representatives to do the best they possibly can for the areas they are elected to represent. I compliment all members who tried to tease out the issues with Mr. Dorgan, who is held in high esteem by all sides. I also compliment the delegates on what has been achieved by IDA Ireland. I look forward to working with IDA Ireland in the next year and a half or so or for the remainder of the lifetime of the Government.

The joint committee adjourned at 11 a.m. until 9.30 a.m. on Wednesday, 1 March 2006.

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