I thank the Chairman and members of the committee for giving me the opportunity to present an overview of Enterprise Ireland's 2006 annual report.
The 2006 annual report summarises Enterprise Ireland's activities and the performance of our client companies in that year. It outlines the various ways Enterprise Ireland has worked in partnership with those companies and other relevant bodies, including other development agencies, Departments, and the third level sector throughout 2006 to drive the development and growth of the Irish enterprise base. Enterprise Ireland is mandated to work with manufacturing and internationally trading services companies throughout the regions and offers a range of financial and non-financial supports to help their development.
In working with our client companies we are focused on assisting their export growth and improving their innovative capabilities ensuring they can compete successfully in overseas markets. Enterprise Ireland is also focused on creating new jobs by supporting entrepreneurs to establish companies that have high growth potential and creating the conditions for new job growth in existing companies. The development and sustained growth of Irish-owned companies will be the foundation on which future regional and national prosperity will be based. This vision will be achieved only if the challenges faced by Irish enterprise are met head on.
We launched our strategic plan, Transforming Irish Industry 2005-2007, in late 2004 in the context of the Government's enterprise strategy action plan. This recognised that the internationalisation of Irish-owned companies and their ability to compete successfully were essential for Ireland's future economic success. It clearly outlined the activities we are implementing to transform Irish enterprise into market-focused and innovation-driven businesses that can compete successfully on world markets
In 2006, Enterprise Ireland continued to meet the needs of our clients and to focus on achieving five high level strategic targets specified in our strategic plan which were designed to support the development of indigenous industry to end 2007. Significant progress was made in 2006 towards achieving these targets. Enterprise Ireland client companies employed 141,091 in 2006 with net job gains of 1,261. The north east accounted for the largest proportion of the gains, followed by Dublin and the mid east. The midlands, the north west and the west also enjoyed job gains.
By continually repositioning and strengthening our overseas network offer, Enterprise Ireland maximises support for our companies in their marketing and export drive. As part of Enterprise Ireland's strategic plan, our 32 overseas offices now report to a central international sales and partnering division and are subdivided into five key geographical areas. Enterprise Ireland client companies performed strongly in all these key export markets in 2006, achieving a €1.699 billion increase in new international sales leading to a growth of 12.1% in overall client exports to €11.8 billion.
Exports to northern Europe, including the United Kingdom, increased by 10.6% to €6.74 billion. The United Kingdom remained the strongest export market for client companies with €5.248 billion in exports, an increase of 9.4%. Exports to the Americas region increased by 12.4% to €1.299 billion. The US market delivered strong business for Irish companies while South America continues to develop as an export market. Southern Europe, the Middle East and Africa also provided strong sales opportunities for Irish companies with exports growing by 22.6% to €1.377 billion. Exports to Germany, central and eastern Europe increased by 13.5% to €894 million. Exports to Asia reached €654 million, an increase of 24.3%, making Asia the largest growth market for Enterprise Ireland client companies in 2006.
On a sectoral basis strong export growth was evident in 2006 across the key industry sectors of software, services and emerging sectors, industrial and life sciences, and food and retail consumer markets. Food and retail consumer markets continues to be our largest export sector, achieving €7.849 billion in exports, a rise of 11.4% over 2005. Industrial and life sciences market exports grew 11.9% to €2.493 billion. The largest percentage growth was demonstrated in software, services and emerging sectors which increased 16% to €1.437 billion.
I now turn to other export related activities in 20O6. Enterprise Ireland at home and overseas, works intensively with companies, creating and implementing successful strategies for market entry. During 2006, the agency secured 6,469 sales meetings for clients, organised 36 high profile trade missions to overseas markets, participated in 29 international trade fairs and organised 45 inward buyer missions to Ireland. In 2006 Enterprise Ireland commenced the appointment of overseas in-market business experts and established advisory boards to help clients accelerate their international success.
The Enterprise Ireland trade mission to India, early in 2006, led by the Taoiseach, accompanied by Senator Donie Cassidy, then Vice Chairman of the Joint Committee on Enterprise and Small Business, was the first all-island overseas trade mission. The mission visited three key business centres, in Bangalore, Delhi and Mumbai, and involved 85 Irish companies, industry associations and organisations from a broad range of sectors, including biotechnology, software, IT, educational services, sports and arts, and food and beverages. Over 500 meetings and three major networking events were held and 13 companies entered into contracts and partnerships estimated to be worth more than €35 million over a three-year period. A number of third level colleges and industry associations were successful in signing partnership agreements with Indian counterparts. During the visit, the Taoiseach announced the opening of an Enterprise Ireland office in Delhi to better service the needs of Irish companies in the Indian market. Significantly, this mission included delegates from 12 Northern Ireland companies.
This first all-island trade mission by Enterprise Ireland and Invest Northern Ireland paved the way for further successful collaborations. Later in the year, Enterprise Ireland and Invest Northern Ireland worked closely on an all-Ireland trade mission to Canada led by Deputy Micheál Martin, Minister for Enterprise, Trade and Employment, and Ms Maria Eagle, MP, the Northern Ireland Enterprise Minister.
A strong commitment to innovation through research and development leads to sustained export growth. Enterprise Ireland incentivises activities in a range of areas, supporting the following: in-company research and development; the commercialisation of research; and stimulating collaboration between industry and academia. In the context of the national science strategy research and development targets were set to 2007 to increase to 596 the number of companies investing over €100,000 in meaningful research and development and increase to 42 the number of companies investing over €2 million annually. In 2006, 601 Enterprise Ireland client companies engaged in projects involving research and development investments of €100,000 or more and 40 were engaged in significant research projects involving investments of €2 million or more.
In total, €52.9 million was approved in support of 194 in-company research and development projects. Of this, €31.3 million was approved in support of 112 in-company research and development projects outside Dublin. In 2006 Enterprise Ireland's research and development advocates programme resulted in 35 client companies seeking support to engage in practical research and development for the first time.
It is imperative that greater interactions between companies and research groups in colleges across Ireland are forged. To achieve this, Enterprise Ireland is working closely with the colleges and our partner agencies to ensure that the major investment in the research infrastructure made in recent years is sharply attuned and accessible to enterprise needs. The innovation partnerships initiative enables Irish industry and third level institutions to work together in developing cutting-edge products, product enhancement and new services. In 2006, Enterprise Ireland supported 63 company-college collaborative projects.
The agency's applied research enhancement programme provides opportunities for institutes of technology throughout the regions to develop research capabilities in areas of strategic importance to the individual colleges and which are relevant to industry in the regions. In 2006 the programme was introduced on a national, non-competitive basis and eight centres had been funded with €10 million by end-2006.
In addition, an innovation voucher initiative was introduced by Enterprise Ireland in April 2007. The establishment of this scheme was a key recommendation of the Small Business Forum's report Small Business is Big Business, in May 2006 - to drive interaction between the research base and small business. In the 2007 pilot phase of the initiative 428 companies received vouchers with a total grant allocation of €2.14 million. Some 292 of these companies were located in the regions and received a total grant allocation of €1.46 million. A further 20 companies received vouchers with a total grant allocation of €100,000 at the beginning of 2008. It is intended to have five more calls in 2008.
In tandem with the direct connection to enterprise, Enterprise Ireland continued to leverage publicly funded research by developing a supportive commercialisation process so that investments deliver optimal returns to the Irish economy. In May 2006, Deputy Micheál Martin, Minister for Enterprise, Trade and Employment, announced the provision of a €30 million fund designed to build stronger and more professional technology transfer functions within higher education institutions in Ireland. Technology developed as part of academic research is being identified, protected and transferred to companies through an active managed process with Enterprise Ireland working in close collaboration with academic institutions. This is now happening through a central support office and a network of key agency staff on-campus. The organisation is working with researchers to develop their projects through a comprehensive and responsive financial and advisory support system. Through the commercialisation fund, expenditure of €29.7 million was approved in support of 155 research projects through proof of concept and technology development phases.
Nearly €200 million was secured by Irish researchers under the sixth framework programme, a European Union fund supporting research and development among industry and research organisations across Europe. Enterprise Ireland was mandated to lead Ireland's seventh framework programme efforts with the establishment of a dedicated support unit. A target of €600 million in funding has been set for Irish researchers over the lifetime of the seventh framework programme.
An environment conducive to entrepreneurial activity throughout the regions is critical to national competitiveness. Our focus is on assisting and developing a cadre of vibrant, ambitious enterprises to harness the abundant creativity of Irish entrepreneurs. Enterprise Ireland has shown a strong record in supporting the creation and scaling of new high potential start-up enterprises. These new businesses will be the employers of the future and the drivers of regional and national prosperity.
In 2006, 76 high potential start-ups were established with Enterprise Ireland support across all sectors. Over half of these were located outside the Dublin region. The total investment in the 76 companies was €47.5 million of which Enterprise Ireland invested €17.5 million. These companies are expected to create approximately 1,260 new jobs and generate exports worth €110 million over the next two years. Of the 76 high potential start-ups established with Enterprise Ireland support in 2006, 41 were located outside Dublin. The level of start-up activities over recent years has been dynamic. Some 79 existing start-ups secured key international first reference contracts in 2006. Enterprise Ireland's challenge in the future will be to drive the growth of these start-ups and other established companies to significant scale.
Maximising the factors and opportunities that will drive cadres of sustainable companies of global scale and significance is a key strategic priority of Enterprise Ireland. In 2006 it worked intensively with a portfolio of 50 clients across all sectors and regions to maximise their potential to grow to scale and compete aggressively in international markets. Access to finance is a key challenge to firms. The agency invested €175 million in a new round of venture capital funding in 2006 which is expected to leverage an estimated €1 billion for investment in start-up, early stage and development stage businesses.
Section 5 pf the report deals with world-class productivity and management development. Improvements in productivity lead to stronger competitiveness in world markets and are crucial to the success of Irish industry. A range of initiatives to enhance productivity among Enterprise Ireland client companies was run over 2006. These included initiatives around supply chain management, benchmarking, e-business and management development.
The productivity improvement fund, PIF, provides advisory support and financial assistance aimed at driving sustained improvements in productivity in fund recipient companies, thereby increasing exports or establishing a base from which they can develop their exports. In 2006, Enterprise Ireland supported 150 productivity improvement projects involving total investment of €102 million supported by €28.6 million from Enterprise Ireland. Some 81% of this funding was assigned to regionally located companies. In addition, Enterprise Ireland supported over 60 client companies' supply chain-enhancing projects. Building on the success of the PIF, a new growth fund for small and medium-sized enterprises seeking to increase sales and develop exports through improved productivity and competitiveness will be launched in early 2008.
The international selling programme, initiated in response to the Enterprise Strategy Group action plan recommendation, began in February 2006. This programme, provided by the Dublin Institute of Technology, is designed to assist exporting companies to develop medium and long-term international sales strategies. Some 32 participants from 30 companies completed the course in November 2006. A second programme took place in 2007, with 50 participants in Dublin and Cork, and a third programme will commence in February 2008.
The Leadership 4 Growth programme is a unique management development programme specifically designed for the CEOs of companies who have the ambition and potential to achieve significant scale in their chosen markets. Thirty-one CEOs of leading software and technology companies commenced the programme in 2006 and completed it in September 2007. As a result of the success of this programme, a second programme commenced in December 2007 with 32 participants from software and technology and life sciences companies. A third programme specifically designed for the construction sector will be launched in 2008.
Section 6 deals with driving regional enterprise. Achieving balanced regional development has been a guiding principle in the provision of Enterprise Ireland supports to client companies and in the formulation of initiatives to improve business infrastructure in the regions. In 2006, 70.9 % of all Enterprise Ireland company-related funding was approved to regionally located clients. Enterprise Ireland continued to work closely with local industry and research organisations to stimulate start-up activities throughout the regions. Initiatives included a variety of knowledge sharing and networking activities. For example, there were 400 attendees at the First Step seminars and 170 potential entrepreneurs took part in 14 EnterpriseSTART programmes. Enterprise Ireland also financially supported 84 participants on the regional Enterprise Platform programmes. Other support for entrepreneurs included the Business Angels Partnership formed in conjunction with InterTradelreland.
Establishing essential business and technology infrastructure is a priority for Enterprise Ireland. Significant strides have been made to date to put in place enterprise space, third level enterprise incubation facilities and specialised staff to further the development of new businesses. Enterprise Ireland's focus is on improving the business climate for enterprise and influencing the conditions which facilitate increased levels of entrepreneurial activity and sustainable business development in the regions.
In 2006, Enterprise Ireland approved grants of €7 million for 24 community enterprise centre scheme projects throughout the country at a total building cost of €26 million, including 14 new-builds and 10 extensions to existing centres. Enterprise Ireland carried out a review of its community enterprise centre, CEC, programme in 2007 with very positive results. The 105 CECs operating had an average occupancy rate of 87% with almost 1,000 enterprises employing 4,850 people in locations throughout the country.
It should be noted that in 2007 Enterprise Ireland established the county enterprise board support unit, which is part of the entrepreneurship and regions business unit headquartered in Shannon. The objective of this unit is to provide a range of supports to the county enterprise boards, CEBs, which will ultimately enhance their effectiveness and efficiency and enhance the impact of the CEBs on the future development of micro-enterprise.
By the end of 2006, Enterprise Ireland had invested over €46 million in business incubation activity covering 25 incubation centres, 16 of which are based in institutes of technology throughout the regions. These centres strengthen links between academia and industry and provide space and support to entrepreneurs.
In conclusion, strong results were recorded in both 2005 and 2006 under Enterprise Ireland's three-year strategy, 2005-2007: Transforming Irish Industry, and this momentum continued in 2007. The results for 2007 will be reported on later this year. Enterprise Ireland will build and advance on the progress made in 2005-07, ensuring that continued growth is achieved. Enterprise Ireland's new strategy, 2008-2010: Transforming Irish Industry, was launched by the Minister for Enterprise, Trade and Employment, Deputy Martin, in October 2007. A core objective over the period of the strategy will be to achieve the ambitious target of €4 billion in new export sales from Irish companies. Innovation across all aspects of business will be central to securing the company growth required to fuel the economy.
I am grateful for the opportunity to present an overview of Enterprise Ireland's 2006 annual report. My colleagues and I will answer any questions committee members may have.