JOINT COMMITTEE ON ENTERPRISE, TRADE AND INNOVATION debate -
Tuesday, 14 Dec 2010

Enterprise Ireland Annual Report 2009: Discussion

Chairman

I welcome Mr. Frank Ryan, Mr. Feargal Ó Móráin and Ms Julie Sinnamon, global business development, Enterprise Ireland, and Mr. Barry O'Leary and Mr. Billy Burry from IDA Ireland. I thank them for their attendance and their patience while we attended to housekeeping matters.

I draw the witnesses' attention to fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to this committee. However, if witnesses are directed by the committee to cease giving evidence in relation to a particular matter and they continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given. They are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name, or in such a way as to make him, her or it identifiable.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official, either by name or in such a way as to make him or her identifiable.

I invite Mr. Ryan to address the committee. He will be followed by Mr. O'Leary. Is that agreed? Agreed.

Mr. Frank Ryan

I thank the Chairman and the members of the committee for the opportunity to attend this meeting and contribute to the committee's work. I wish to introduce my colleagues from Enterprise Ireland, Ms Julie Sinnamon, executive director, and Mr. Feargal Ó Móráin, executive director.

A return to export-led growth will lead Ireland's economic recovery. In that sense, Enterprise Ireland has absolute certainty of purpose. Exports equals jobs and high-quality, innovative and internationally competitive Irish companies are fundamental to Ireland's future prosperity. Enterprise Ireland client companies showed great determination and resilience in seeking out new markets and customers in 2009. As a result, they recorded new export sales of €693 million. Irish companies have the ambition and capability to identify opportunities in the most difficult economic conditions and build strong, export-focused businesses.

In 2009 Enterprise Ireland focused on ensuring that Irish enterprises emerged from the global downturn in the strongest possible position. We helped vulnerable but viable companies to stabilise, to retain and build their current exports, and introduced them to new buyers and markets. Enterprise Ireland implemented a number of financial and non-financial initiatives to help companies through the economic recession. We focused on winning new sales, supporting access to finance, working with new start-up companies and promoting capabilities in innovation and leadership.

While total export sales fell by 10% to €12.9 billion, a number of key growth sectors, including software, internationally traded services and life sciences increased exports. In 2009, Enterprise Ireland's priority was to consolidate the position of Irish exporters in key markets such as the United Stated and the United Kingdom. Enterprise Ireland also had a particular focus on helping client companies win new sales in the eurozone countries and, for selected clients, increased support for developing business in high-growth markets.

Accessing finance represented a major challenge for companies in 2009. In response, Enterprise Ireland prioritised providing access to finance for client companies through new and existing funding supports and through enhanced co-operation with the main banks. Approximately 7,800 jobs were sustained in the companies supported under the enterprise stabilisation fund, established to help viable internationally trading enterprises survive the global downturn. During the year the fund, administered by Enterprise Ireland, approved direct financial support of €68 million to 180 projects across all sectors. Under the first round of the employment subsidy scheme, temporary, administered by Enterprise Ireland on behalf of the Department of Enterprise, Trade and Innovation, a total of €66 million was approved for 455 companies to subsidise 7,275 jobs. As a result, those companies committed to maintaining more than 34,500 jobs as part of the support agreements under the scheme.

Strengthening the leadership and management capability of Irish companies is of critical importance. During the year, 60 chief executive officers participated in the Leadership 4 Growth programme which helps companies achieve significant international scale by enhancing the leadership and strategic capabilities of the senior team.

Enterprise Ireland acts as the bridge between companies and publicly-funded research institutions to build collaborative links and ensure that commercially viable knowledge is translated into economic return but more particularly, job creation and prosperity in Ireland. In 2009, Enterprise Ireland focused on supporting short-term, in-company research and development projects. Client companies' commitment to research and development is stronger than ever. By the end of the year, 52 companies were investing in excess of €2 million per year on research and development projects and 704 clients were spending more than €100,000 per year. A total of 492 innovation vouchers were redeemed in 2009, while Enterprise Ireland continued to support collaborative research through the competence centre initiative, applied research enhancement centres and industry-led research networks.

Enterprise Ireland is committed to supporting entrepreneurs to ensure that emerging technologies and innovative business ideas with export potential become a commercial reality. These entrepreneurs start high-potential companies that create jobs throughout Ireland. During 2009, more than €21 million was approved to 73 new high-potential start-ups. In addition, 13 prospective high potential start-ups in the ICT and life sciences sectors emerged from State-funded third-level research. Those companies are expected to create more than 900 new jobs and achieve total sales of more than €600 million in the following three years.

As 2010 is almost at an end it is timely to provide a flavour of our year to date. We had to adapt quickly to provide the assistance our companies required in a context few previously experienced. While 2010 proved difficult, Enterprise Ireland moved from sustaining client companies in 2009 to positioning them for future growth. Feedback from our client base leads us to believe that a significant amount of the exports lost in 2009, perhaps up to 70%, have been regained. That is notable given the severity of the global economic crises. Consequently, the outlook for employment is more positive in 2011. Throughout 2010 we worked in partnership with exporters, helping them to maintain and build their business relationships with existing and new customers. Our primary focus remains unchanged, namely, aggressively seeking to generate foreign earnings and exploiting opportunities which emerge for client companies. This in turn will lead to sustained employment growth and wealth creation throughout the economy. Clearly, much depends on the economic performance of our trading partners. Uncertainty remains but economic contraction is not expected in 2011.

Recovery in the United Kingdom and the eurozone strengthened in the second half of 2010. While the United States economy slowed somewhat, our exporting base will benefit from even subdued growth. New economies such as China, Brazil, India and countries in the Middle East are leading the emergence from economic downturn and will be the drivers of world economic growth next year. We have remained focused on the opportunities those countries will present throughout the economic crises and have seen an increase in companies seeking to export for the first time to those markets to exploit the significant opportunities.

Our 31 overseas offices provide a range of services to client companies, supplemented by group events such as trade missions, trade fairs and inward market visits. We organised a greater number of targeted sectoral visits and a number of cross-sectoral visits led by the Taoiseach and Ministers to strategic overseas markets, including Russia, the Kingdom of Saudi Arabia, Brazil, the United States and Australia. Such visits showcased the innovative capabilities of the Irish enterprise base to key global influencers and buyers.

Success in overseas markets is not simply about export capability; excellence throughout the business is required. Innovation, efficiency, excellent management capabilities, skilled staff and access to required funding are all necessary elements for success and Enterprise Ireland supports are designed to address these needs collectively.

There has been a fundamental shift in Irish enterprises' approach to innovation and research and development. Despite the recession, EI client companies increased research and development by 2% to almost €600 million in 2009. We tailor our support according to company need. Our innovation vouchers, for example, provide a link between small and medium enterprises and the research base. The vouchers show innovation and collaboration can form part of business strategy regardless of size, sector or region. Up to 30 November, around 460 innovation vouchers have been redeemed in 2010. To date, 72 EI companies have been approved research and development funding in excess of €100,000 and more than €24 million was approved, with a number of significant research and development approvals worth more than €1 million.

EI supported 73 high potential start-ups in 2009. To November this year, 69 innovative HPSUs have been approved. Over the past two decades, almost a thousand such innovative start-ups have been supported, with half located outside Dublin. This demonstrates the regional importance of nurturing entrepreneurs and sources of innovative business, including commercialisation of research.

We remain focused on ensuring companies develop their own capabilities for sustained growth. Programmes such as Leadership 4 Growth, our international selling programme, and Lean Agenda all seek to embed a culture of leadership, sales and competitive improvements in companies. Three "Leadership for Growth" programmes took place in 2010, one for sustainable built environment and two for engineering life sciences, medical devices and service technology companies. We have evolved the concept and in October a strategic leadership for chief financial officers programme was launched with Stanford University.

Access to capital remains an issue but Enterprise Ireland is working to provide access to different sources of finance. Our enterprise stabilisation fund supports vulnerable but viable companies to undertake growth projects. To date, 239 projects have been approved €85.2 million to sustain 9,939 jobs in Ireland. The €500 million innovation fund was launched in September. Enterprise Ireland will contribute €125 million to this fund. A total of €4 million investment will be made in 20 clients by the Halo Business Angels Networks by the end of the year and EI will co-invest in all of them.

The enterprise base is constantly evolving, adapting and innovating. It requires a banking sector that evolves with it. This requires a much greater understanding and deeper appreciation of the Irish exporting base. We continue to work practically and positively with the banks through secondments, bank representation on trade missions and knowledge workshops.

Our client companies have worked extremely hard in 2010 to make their businesses more competitive, take advantage of the opportunities that presented and win sales in overseas markets. This work in preparation will stand to them in 2011 as markets continue to recover. We will be relentless in our determination to support our clients in every way possible to ensure they capitalise on the global recovery. By securing exports in international markets, Irish companies will help drive job creation at home.

On my behalf and on behalf of my colleagues, I thank the committee for inviting us to appear today and we will be pleased to respond to any questions.

Mr. Barry O’Leary

I thank the committee for the opportunity to address it today. With me is Mr. Billy Burry, the chief accountant of IDA Ireland.

IDA Ireland is responsible for attracting foreign direct investment into Ireland. We have 1,000 companies approximately in our portfolio and they account for €110 billion in exports, more than 70% of all exports and, directly and indirectly, 240,000 jobs. They spend about €19 billion in the economy, of which €7 billion is payroll. They pay more than 55% of all corporation tax in Ireland and account for 73% of all business spending on research and development.

In the areas we have targeted to attract to Ireland we have tended to get a high market share. We have eight of the top ten US technology companies in Ireland, eight of the top ten global pharmaceutical companies, 15 of the top 25 medical devices companies and almost half of the leading global insurance funds and financial institutions.

When we go around the world and use our network to market Ireland as a place for foreign direct investment, there are three business models: global services, high end manufacturing and research and development. We are trying to attract these to Ireland. We tend to concentrate on six main areas: the life sciences, incorporating pharmaceuticals, biopharmaceuticals and medical devices; the technology, or ICT, sector; financial services; digital media; engineering and diversified industries; and clean tech.

In recent years, foreign direct investment around the globe has been declining. In 2008, the global FDI reduced by 18%, in 2009 by 30% and in 2010 by 8%. Despite that, Ireland has continued to win foreign direct investment. I realise it is almost 2011 and this is a different landscape, but the investment highlights in 2009 would include investments from 125 multinationals and the number of new companies coming to Ireland for the first time increasing by 11% to 39. In addition to the underlying base of research and development spend by multinationals, a further €500 million of research and development was committed and negotiated. Of all of the investments attracted to Ireland, half of them involved research and development either exclusively or in part.

The number of companies from our existing base where we won business now accounts for 69% of all investments. More than 4,500 jobs were created in 2009, with a range of brand new names like Big Fish Games in Cork, for 100 people, Bentley Systems for 150 people in Dublin, Maxim in Dublin for 100 people and Lumension in Galway for 50 people. The main large research and development spenders were Boston Scientific, with around €90 million, followed by Citibank with €30 million, Intel and IBM. The existing client base continues to invest heavily in companies like McAfee in Cork, PayPal, Abbot, Trend Micro, while Facebook continues to expand its operations in Ireland.

In March, IDA Ireland published its new strategy, Horizon 2020, where we set out the high level goals for the period 2010 to 2014. Around that we are undertaking a number of initiatives to ensure we will deliver on the ambitious targets set out. A few involve driving company transformation and strengthening Ireland's value proposition and I will return to those. There is a particular focus at the moment, however, on winning employment intensive services. Services are growing globally and it is important Ireland capitalises on that growth. A major advantage in capitalising on services growth is that employment delivery is very quick, there is no delay with planning permission to build a facility.

To drive regional development, we committed to delivering 50% of all business to the non-Dublin and Cork area. We also set out by 2014 to land 20% of all new greenfield business into Ireland out of emerging markets. We have expanded our footprint around the globe to facilitate that. In recent months we opened in Singapore, Shenzhen in December and we will open in Bangalore in January to drive business from that growth area. A big campaign of building brand Ireland abroad and online is very important in the context of some of the global media exposure Ireland has had in recent months. Extra effort must be put into enhancing and rebranding Ireland.

We have many of the leading global players here already and it is important to ensure they maintain their operations in Ireland. We are involved in intense negotiations with the major number of our portfolio, in particular the top 65 companies that account for some 80,000 employees, on the transformation of their operations in Ireland. If they do not transform their operations in Ireland over the next three to four years, it is a warning sign about their future in Ireland. What do we mean by transformation? As part of companywide initiatives, we examine technology uplift, skills uplift, driving costs through better process development, energy efficiency and research and development through product development. We have a suite of interventions or products that we can help co-invest with the companies to ensure they invest in Ireland.

What attracts companies to Ireland? We refer to Ireland's value proposition or offering and this is built around the cornerstones of the talent pool, the corporation tax rate, the track record and technology capability, as well as ease of doing business in the English language. That is not enough in its own right so we must consider that extra aspects to enhance the value proposition in areas like the State's investment in Science Foundation Ireland, the National Institute for Bioprocessing, Research and Training and the efficient regulatory environment in the pharmaceutical industry are all parts of Ireland's value proposition. We are well into the first year of Horizon 2020 and we believe we have made good progress to date. The number of investments and the scale of impact have increased and on 4 January 2011 we will launch the 2010 results as part of our annual global conference with our team from around the world.

My submission to the committee includes the names of some companies that made recent announcements in 2010. World leaders such as Merck and Lilly are investing in new European financial shared services centres in Ireland. Hollister in Ballina is adding 250 people,Stream Global Services, which supports the Microsoft Xbox game, is recruiting 400 people in Swords. In a similar business area, EA is employing 200 people in Galway, and eBay and PayPal combined their sister companies, employing 250 employees. Some of the new wave of companies such as LinkedIn, Enercon, the European HR services centre of Telefonica and Dun and Bradstreet are brand-new companies coming to Ireland for the first time. There has been a particular growth in the international financial services sector and allied areas. Several companies in the broadly defined area of insurance and banking funds, such as United Health Group added more than 200 people in Letterkenny, 250 people from Citi and State Street has recruited more than 200 people. There is buoyant recruiting in the financial services centre.

The big area of growth has been the technology or ICT sector. Companies like Webroot from Colorado and salesforce.com continue to expand. In the past two weeks, Citi has announced employment for 250 people. Accenture is an interesting model in global analytics. It is part of a global network ranging from Dublin to Milan, Chicago, San Jose, Delhi, Bangalore and Mumbai as part of a global team and it will recruit 100 professionals. Yesterday HP in Galway announced 105 jobs in research and development, while two ICT companies in the past week, Genband and Aspect, made announcements. There have been large research and development investments such as the IBM smart cities project, an investment of €65 million and 200 researchers, and United Technologies in Cork.

Ireland's improving competitiveness, which is much needed, leads us to believe we will win some more traditional manufacturing business. While it is too early to be absolutely confident, companies such as Merit Medical added 100 people in Galway, the research and development office of Valeo in Tuam is getting into manufacturing and Kostal in the clean tech area and Warner Chilcott in Dundalk give us hope. Although there is a subdued global foreign direct investment market, there is plenty of business to be won for Ireland. Competitiveness improvements have been made but we need to ensure we have a strong focus on it. The education system must react to where employment opportunities are, as must the regulatory environment. There is improving competitiveness and the simple demonstration is that one of the ICT companies recently signed a deal for 48,000 sq. ft. in Dublin. Two years ago the company was quoted €40 per sq. ft. The deal was closed at €16 per sq. ft. I stress that we must put the emphasis on education in the future and I refer in particular to our reputation arising from recent events. There is no doubt Ireland's brand has suffered in the international media. When the brand of a country is not as solid as we would like, foreign direct investment is one of the areas that can be hit. Ireland is well capable of winning further foreign direct investment and there is a market for it. The recent confirmation of the corporation tax rate of 12.5% is extremely helpful.

Deputy Kieran O’Donnell

I welcome Mr. Ryan, Mr. O'Leary and their colleagues. I thank them for their comprehensive presentation. We are looking at historical figures for 2009. Can both delegations give us an indication of the figures for the end of 2010, the level of new jobs expected by the end of 2010 and what will be delivered by 2011? Can this be presented in terms of the number of jobs gained and lost? I ask also for a regional perspective on this.

Can the witnesses indicate what they perceive to be the major challenges in 2011 in attracting foreign direct investment and generating indigenous business through Enterprise Ireland? What are the major difficulties for the two organisations and the businesses with which they deal? The core element is jobs.

I have corresponded with Mr. O'Leary about my area, Limerick. He referred to the jobs created but Limerick was the one area not mentioned. Dell continues to be a great employer in Limerick with more than 1,000 jobs but more than 2,000 manufacturing jobs, which were backed by the IDA, have been lost in Limerick since 2009. In 2009, not one job backed by the IDA came to Limerick. For the period since the Dell manufacturing closure, outside of Dublin, can the delegates elaborate on the point that 50% of all IDA-backed jobs go outside of Dublin and Cork? What percentage comes to Limerick? Since Dell announced the closure of its manufacturing and while I recognise the continued high-end jobs Dell provides in Limerick, there have been 20 announcements amounting to 1,050 jobs in Cork and 16 announcements amounting to 799 jobs in Galway. In Limerick, there have been three announcements amounting to 60 jobs, 50 of which will be with Dell. One of the Limerick announcements was of Analog's research investment of €23 million. KEMP Technologies announced ten jobs in the past week. Will Mr. O'Leary indicate the number of jobs and projects that will be created in Limerick? He might elaborate on IDA Ireland's emerging markets.

The grant aid that the IDA can give in Limerick and the mid-west has increased to 10% for large companies, those being firms of 250 of more employees. Limerick needs jobs, but a significant number of IDA backed jobs have been lost. Of the regions outside Dublin, Limerick has received only 3% of jobs since the Dell manufacturing closure. Since 2007, we have seen less than 10% of the IDA backed jobs in the cities of Cork, Limerick, Galway and Waterford. Will Mr. O'Leary give us some hope and direction? What we need are jobs. I would like to hear both delegates' responses.

Chairman

Will Mr. O'Leary respond first?

Mr. Barry O’Leary

We will release the figures on the 2010 outturn in jobs and the employment situation on 4 January. However, they will be significantly better than last year's in terms of gains and the decreased number of losses. We will be in the plus range overall, but the numbers will not be released until 4 January.

The IDA has a national mandate to win foreign direct investment, FDI. In most cases, we compete with Switzerland and Singapore. The competition is not within the island of Ireland itself. That all of it is open to international competition is important. When choosing Ireland, Singapore or Switzerland, large multinationals usually require a population base of 1 million people. Only one Irish city has that population base. This is a challenge. In Singapore, every city has 4 million or 5 million people and is within 25 miles of other cities. Limerick has not been helped by not having grant aid available until recently. The Commission has permitted us to give grant aid up to 10%, a decision which will help.

Deputy Kieran O’Donnell

For large companies.

Mr. Barry O’Leary

Yes. Without a doubt,-----

Deputy Kieran O’Donnell

Will the IDA bring large companies' jobs to Limerick?

Mr. Barry O’Leary

Yes, whether it will be through our existing client base or new companies. We expect to announce three investments in the greater Limerick area not too long into the new year.

Deputy Arthur Morgan

Just before the election.

Deputy Kieran O’Donnell

Following this meeting. Will Mr. O'Leary indicate the total number of jobs and the breakdown of their types per industry? This is welcome news and I acknowledge, positive news. It is a bit late, but better late than never.

Chairman

Let Mr. O'Leary answer.

Mr. Barry O’Leary

Being more specific is not good because the media starts reporting and takes the comments out of context. Certain factors that can damage the location decision-----

Deputy Kieran O’Donnell

But we can expect three new announcements early in the new year.

Mr. Barry O’Leary

Three announcements from either existing or new companies in respect of the greater Limerick area. The Deputy referred to the statistics for Cork, Galway, Limerick, Dublin, and so on. It is true that Cork has received a good flow of FDI. This year, Galway received a particularly good flow. Each location has different merits. Galway benefited from having higher grant rates available than were available elsewhere. In the opening months of the year, there were zero grants in Limerick, so there could theoretically have been up to 30% in the Galway area. This is not to say that someone would get the 30%, but the possibility was there.

Clearly, Dell was a big blow, but it is encouraging to see it reinvesting and rehiring. Other companies are hiring, for example, Zimmer, Intel's research and development section, Cook and, as far as I know, Microsemi. A new facility is being built in Plassey by a life sciences company that does not want to make an announcement. If one drives around Plassey, one would see 200 construction workers constructing a new facility on the business park. It would be wrong to say there is no activity in respect of Limerick, but sometimes it does not come with a headline announcement.

Deputy Kieran O’Donnell

I thank Mr O'Leary. In terms of the three announcements, do the companies involved fall into the large or small category?

Mr. Barry O’Leary

Two will be large companies.

Chairman

Does Mr. Ryan wish to add anything?

Mr. Frank Ryan

As the Deputy is well aware, 2009 was a difficult year with 19,000 net job losses. This was unprecedented in any year of our experience. However, Enterprise Ireland client companies created more than 7,000 jobs in 2009. I do not have the final figures yet, but the 2010 figure will be similar. This year got off to a positive start, given the strong export growth in our client companies. We expect that 70% of 2009's export losses will be recovered in 2010. We also estimate that the balance will be recovered in 2011. Our objective is to be higher in net export terms by the end of 2011 than we were before the recession. Enterprise Ireland's strategy is focused on this. We have a good understanding of what is occurring in the marketplace. We have contact with our companies, we have overseas offices and we receive a range of data, primarily from the purchasing managers index, which confirm the situation I have laid out.

The challenge for Irish companies in 2011 will be to fund their activities and growth. The cost of capital might also be an issue. We are focused on the export side, but a strong dimension of our clients' business is in the domestic market. Therefore, a positive mind set in Ireland will be necessary to raise the domestic economy. People have become conservative in their thinking. One could say this is with good reason, but they may have overcorrected. I hope domestic spend will restart, as that will help Irish companies because they raise their revenue from it.

More Irish companies are exporting than ever before. More Irish people are capable of transacting international business in foreign markets than ever before. There is no evidence to suggest that the steady increase in our export performance will fall away. We cannot predict international recessions and so on but, in light of what we can see now, we are looking forward to 2011 with a degree of positivity.

Deputy Arthur Morgan

I apologise as I have to leave shortly to meet the Minister for Finance. I thank Mr. Barry O'Leary and Mr. Frank Ryan for their presentations. It is important to note that the delegates are at the coalface and we are depending on them to an even greater extent than ever before. We acknowledge that and wish them good luck with the work.

I agree with the emphasis on education. I am restraining myself from interrogating the delegates on what announcements may be made in respect of County Louth and although I will not stand in the next general election I am genuinely interested. If there is anything they can share with me, in terms of big companies or small companies - they have all the criteria from Deputy Kieran O'Donnell - they are all welcome.

In regard to Enterprise Ireland, can Mr. Ryan give an indication of how many of his personnel are tied up with the banks in terms of retraining them away from bonuses and blind gambling and when that work may come to an end? Clearly, if the banks have lost their skills, which they did, except in specialist fees and bonuses, there is no hope, even with recapitalisation, of their meeting the huge need for credit streams to SMEs in particular.

Enterprise Ireland is dealing with vulnerable but viable businesses. Given the huge number of such businesses, has it had to recruit additional expertise in the legal area, company law or accountants? When Enterprise Ireland was established some years ago, there was concern that there could be some duplication. I value the work the delegations and InterTradeIreland do and I do not see a conflict of interest. I would like to hear a brief comment on that relationship.

Mr. Frank Ryan

Clearly over the past 12 years the relationship between banks and Enterprise Ireland certainly drifted and continued to do so up until two-and-a-half years ago. The banks are primarily Bank of Ireland, AIB and Ulster Bank. We started to reform that relationship in the interests of our client companies. Several of our programmes including the enterprise stabilisation fund specifically encourages that engagement. With the permission of companies the three parties sit down around the table - the banks, the company and ourselves - to discuss development plans for companies. The more that happens the better. Everybody knows what everybody else is doing, leading to a better result. We have had a number of banking personnel on secondment to Enterprise Ireland. We have had one person from Enterprise Ireland on secondment to the Bank of Ireland, another is going into AIB and we plan to do likewise with Ulster Bank.

We are developing also a working relationship with HSBC and Barclays Bank, Ireland who will play a role in the development of the economy as well. It is a welcome role.

Deputy Arthur Morgan

It is.

Mr. Frank Ryan

The relationship with the banks is improving. We have some way to go yet. We would like to see them more export-focused in their outlook with the products our companies need to be successful, particularly in markets that are very challenging such as the Middle East, Brazil, China and so on

Deputy Arthur Morgan

Will the exchange of personnel last into the foreseeable future or perhaps another year or longer?

Mr. Frank Ryan

It is an ongoing programme and, in fairness, they are very open to that. We had to recruit additional expertise particularly in the financial advice area. We have supplemented our resources in that area to enable us deal with the demands of 2009 and into 2010 in particular.

Deputy Arthur Morgan

We regard that as very positive.

Mr. Frank Ryan

We have a very good working relationship with InterTradeIreland and Invest Northern Ireland and have a memorandum of understanding with InterTradeIreland. Under that agreement, Northern Ireland companies can participate in our trade missions abroad and our companies can participate in its trade missions abroad, therefore, our relationship has advanced in terms of co-operation for the benefit of both sides. In regard to InterTradeIreland, there are several specific programmes on which we work together. The most significant in recent years has been the public procurement initiative that Enterprise Ireland undertook about 24 months ago to increase the number of SMEs getting access to such contracts in the South. InterTradeIreland delivers a go to tender programme under that initiative. The response from the small and medium enterprise companies is very positive. We have an ongoing relationship with both of those agencies.

Chairman

Does Mr. Barry O'Leary wish to comment?

Mr. Barry O’Leary

It is more a comment than a question-----

Deputy Arthur Morgan

I would welcome comments or announcements, anything Mr. O'Leary wants to call them.

Deputy Kieran O’Donnell

It is all about the result.

Mr. Barry O’Leary

Certainly Warner Chilcott was a very good win for Dundalk, being the first really big pharmaceutical company. There is something else in another area that we are working on but it is too early to say.

Chairman

Deputy Morgan is safe, he can go.

Deputy Arthur Morgan

I was going to pursue the question. I will speak to Pat Doherty, the man in Dundalk. He might be-----

Chairman

Will the Deputy change his mind?

Deputy Michael P. Kitt

I welcome Mr. Frank Ryan, Mr. Barry O'Leary and their colleagues. There has been some very welcome news about Galway recently and 2010 was very positive for the west. Predominantly the announcements are of pharmaceutical firms coming to Galway city. This brings me to the issue of smaller towns, not only in Galway but throughout the country. While there are various business and industrial parks, who visits them and how are such visits arranged? Ballinasloe is caught between Athlone and Galway in respect of IDA personnel. That is a major issue for many chambers of commerce and business people throughout the country and they wonder if their town is looked at. Five years ago, in conjunction with other Deputies and Senators, I invited Mr. Frank Ryan to come to Galway where we had an excellent discussion. It is welcome that such visits take place to the various regions. At that time enterprise centres were beginning to start up and were described as the new advance factory because the advance factory was gone. Along with local communities and assistance from these agencies we have established a number of new enterprise units which are helpful to small industry and have created many business opportunities. There will always be a problem as the larger cities will get the development.

County enterprise boards are mentioned in conjunction with other external bodies in which €41 million was invested. Those enterprise boards should be supported as they do excellent work. This time last year, many parts of the country, including Galway, were flooded, and small industries were badly affected. Enterprise boards wanted to help but did not have the necessary funding to provide assistance to industry. Many small industries could not renew their insurance and their only hope was through the enterprise boards. The enterprise board concept is very good.

Both speakers referred to ICT. Ten to 15 years ago the points were very high for ICT courses but subsequently they fell. There was not the same level of opportunities for students to get jobs in that area. Are there increased opportunities for students in the ICT area. As my colleagues have said, this is about getting jobs. Whatever new information the delegates can give on ICT would be welcome. I hope when the agencies present and other agencies visit the regions they will let us know us of their visit. They should have a good look at the smaller towns - it is not all about the big cities.

Mr. Barry O’Leary

The concentration by and large, in line with national policy, is around the gateway locations. I think members will see that with the improvement in infrastructure in Ireland, particularly road and motorway access, one is looking at the catchment area and as I said earlier, a great many companies require to locate in an area that has a catchment area. The west has done particularly well, particularly Galway. There is a very strong flow of expansions from existing companies as well as brand new companies in Galway. The outlook for Galway continues to be very good in that respect, particularly in medical devices and ICT. There are definite opportunities in ICT, especially in the long term. There is significant demand globally for people in that industry. The prospects of finding employment are very good when one has studied subjects in technology related areas. Today many companies are recruiting personnel with IT skills.

In response to questions on how often I visit the regions, I am in Galway every six weeks visiting our many large multinational clients.

Mr. Frank Ryan

Deputy Michael Kitt is correct when he states that small industries are very important. Two initiatives are delivering at this point in time, the first was a decision to put incubation facilities in each of the institutes of technology and the universities. That gave a certain regional distribution. To date we have 21 campus incubation facilities, including six specialist bio-incubation facilities as part of them. There are now 264 companies, employing just over 1,000 people located in the incubation facilities. Second, a decision was taken to invest in the community enterprise centres, of which there are now more than 100 spread around the country which employ 4,850 people in 981 businesses. That is very good. Both of these initiatives have been important in developing employment on a local basis.

Deputy Kitt is correct in identifying that the points for ICT courses have been dropping and perhaps interest in such courses waning. Sometimes high points courses cause people to take an interest in the subject as opposed to trying to avoid it. The large numbers of people who apply for medicine each year indicates that they are fascinated by high points. One of the issues coming up is that because the economy is recovering, there will be a demand for people with ICT skills. Companies are beginning to report to us that it is not as easy as it was to get people with a software background, particularly with five to seven years experience in software. There are skillsets that will be in demand.

Deputy Richard Bruton

I thank the delegates for the presentation. This is the most vital area that needs to be addressed. I do not wish to introduce a discordant note, but I do not think the reports we are getting are good enough to allow us judge the success of our enterprise strategy. I read the targets that have been set by the Department for the various agencies. Export sales were set as the target for Enterprise Ireland and its performance is 48% off target. The numbers of companies supported by enterprise funds from Enterprise Ireland are 20% off target. That may well reflect the year that we have had, and I do not dispute that, but we need to be getting a report against targets.

It is remarkable that the annual reports of Enterprise Ireland and IDA Ireland are silent on performance against target, even though the Department in its annual report outlines what the agencies are to be judged against. If we are to judge the success of an organisation, we need more accurate information.

I need to ask if the targets are meaningful. What the IDA is offering as a target is the number of companies that it approves. It said it would approve 125 companies and lo and behold it approved 125 companies. That sounds to me like the companies were already in the pipeline - that it was not a real target, but was simply the winding forward of the work. That is the only target cited for the IDA in the Department's statement. We need to take a firmer view of what it is we are trying to achieve with the enterprise strategy. I see a target of 700 was set for the number of companies with a research and development scale of over €100,000 and lo and behold it was 700, exactly on the button. The target for companies with significant research and development of €2 million or more was set at 45 companies and lo and behold it is exactly 45 on the button. They do not strike me as meaningful stretching targets against which we can judge the success of programmes. When one reads the comments furnished, they do not explain differences and do not comment on their significance. We are offered targets that do not tell us how successful the agencies are. We need to be honest with ourselves. The IDA annual report shows what is happening to employment. Those are really worrying figures. In one year the IDA lost 14.5% of its industrial base and in the previous year it lost 7%, giving a total of 21.5% of the existing company base that was lost in two years. That is significant attrition in employment levels. The question that springs to mind is whether this is a long slow death of manufacturing in Ireland or whether there are things we can do to redress it. Must we live with that level of attrition which is not dissimilar to what is happening in Enterprise Ireland? This leads us to the competitiveness agenda. I think both are represented in Forfás which in turn produces the National Competitiveness Council report. For years it has been crying out for a central government strategy on addressing competitiveness and there is no whole of government strategy and there is nobody driving a competitiveness agenda. It is all dissipated and it was only recently that the IMF started to pull the bits together and we start to see it all in one place.

We need programmes with realistic evaluations of what they are achieving, how they are achieving what was set out for them, whether they represent value for money and whether the programmes are performing well. I do not see that methodology in any of this. I must express my huge frustration with the recent report that the agencies would create 300,000 jobs. I am all for being optimistic but there was no mention that 35% of the job base was lost in the past five years. The roll out of 300,000 jobs was supposed to be based on the creation of 150,000 new jobs and 150,000 knock-on jobs, but if we are losing jobs at this rate, there are no knock-on jobs, because the other companies are closing. We must be honest with ourselves. Producing documents for the purposes of spin is not good enough. I want to see a more realistic debate in the committee about what we are doing with the resources and how we are performing. I appeal to both agencies to produce more meaningful indicators of what is going on in the programmes. We are supposed to be deciding on the allocation of money to Enterprise Ireland and IDA Ireland. When I look at the Vote for Enterprise Ireland and see that funding to industry is down 33% this year, I question the reason for this reduction as it is not adverted to anywhere in the report. Similarly in IDA Ireland, we see an increase of 191% in industrial property, an extraordinary figure, while employment grants are falling. Are we to take it that the day of employment grants is over and that we are investing in what is termed "industrial properties"? I do not know what that term means. Are they research and development laboratories? My background is in economics. This is not a meaningful report on what is happening in our enterprise agencies on which we as a committee could form a view as to whether we need to fire more money towards this or that area. We need to be on the Government's tail about different priorities that might get squeezed off the agenda. Rather than a marketing document, which has its place, the committee should get hard-nosed evaluation documents with reports. It might not suit us to say we should call time on a programme. We might think county enterprise boards are brilliant but the expert view might be that they are not hacking it anymore or that the same work could be done much better, more efficiently or in a more condensed way. We would like to hear such opinions so that we can make judgments. We all wish to back the work of Enterprise Ireland, especially the programmes that are working, but we need more realistic evaluations coming before the committee so that we can do that job of scrutiny on behalf of taxpayers that is our task. I am sorry to cast a shadow but it is such an important time, jobs will be so important and the choices we make will be so vital that we need more forensic material coming before us.

Mr. Barry O’Leary

I am not sure to which documents the Deputy referred in the context of spin. I presume he is not referring to an IDA document.

Deputy Richard Bruton

I just see pictures with lots of stuff in it. We are supposed to be-----

Mr. Barry O’Leary

On a point of clarification, what we understood is that we would make an assessment of the 2009 report. The committee has chosen 2009, which is the most difficult year perhaps-----

Deputy Richard Bruton

It is a year in which we have outturns from the Department available to us.

Mr. Barry O’Leary

The Deputy mentioned there was a 35% drop in employment. That is not mathematically correct.

Deputy Richard Bruton

No, I said that the IDA had lost 35% of its base over the four years. That information is in the annual report. I am simply adding the numbers.

Mr. Barry O’Leary

But the Deputy has ignored the job gains. There has not been a 35%-----

Deputy Richard Bruton

No, there has not. What I am saying is that 35% of the jobs in companies for which the IDA was responsible four years ago have gone. My question is whether that is an act of nature that we just have to live with or if there are strategies we could put in place to prevent such leaching of what I presume were manufacturing jobs?

Mr. Barry O’Leary

They were not just in that sector. In any developed economy in the world there is going to be a churn in jobs. In other words, companies come and go in certain areas. In the early 1990s the big employment creators were companies such as Fruit of the Loom and Unifi in Letterkenny. There is a cycle in every economy. In the United States they say that a job lasts, on average, for ten years, which automatically implies that one has a 10% churn in the portfolio. Now the churn is not that high if one leaves out 2009. What is important is that while Intel was only coming to this country in the early 1990s and the Irish Financial Services Centre was being built, one must recognise that there will be certain losses no matter what, but one might be able to do more by the transformation agenda to hold on to some of the jobs that one has. Five years ago this country did not have such companies as Google, eBay, PayPal, Yahoo or Amazon. They employ approximately 5,000 staff between them. We did not have Facebook or LinkedIn 18 months ago. It is part of policy always. One can never expect to attract a company such as Dell to make PCs and expect it to stay forever. The big challenge is how one makes sure a company such as that will transform its operations. Apple and IBM have been significant success stories in terms of transforming their operations.

As regards metrics, it is true that up until March 2010, IDA Ireland did not publish its annual targets. In March this year we published explicit targets in terms of numbers of jobs over the five year period, number of investments and scale of investment. The criteria on which we will be judged is a matter of public record.

Deputy Richard Bruton

Is that in the documentation? I did not see it.

Mr. Barry O’Leary

It is in Horizon 2020, the IDA strategy. It is contained in that document at a high level.

Deputy Richard Bruton

Is the IDA reporting what happened this year against target?

Mr. Barry O’Leary

As I mentioned earlier, we will be publishing the 2010 results in detail on 4 January.

Deputy Richard Bruton

This is the Oireachtas committee.

Mr. Barry O’Leary

We do not have the final employment survey details yet.

Deputy Richard Bruton

We ought to be getting some indication of how we are performing against target. That is what we are here to review. Mr. O'Leary has said targets were produced and published for the first time this year but he is still not telling us how the IDA is performing against a set of targets, published or unpublished. We are entitled to that. We ought to be getting a realistic assessment, not a promise of something in the future. Can we not get that sort of analysis which would lead naturally to looking at the programmes the IDA runs and we could then say, for example, that the research and development programme is vital and that it is inevitable that companies will lose jobs? We might agree, for example, that we do not need to have programmes for retention. I am not satisfied with the understanding of what is going on.

Mr. Barry O’Leary

If we were having this meeting in four weeks, we would have all of the figures for 2010.

Deputy Richard Bruton

Mr. O'Leary could give us the results for the first three quarters.

Mr. Barry O’Leary

In my presentation I indicated that the results would be significantly up, that they would probably be more than double what they were last year.

Deputy Richard Bruton

Probably? Mr. O'Leary is referring to jobs but is there not a set of targets?

Mr. Barry O’Leary

Yes, and on 4 January we will be going public with those figures.

Deputy Richard Bruton

I do not wish to hold up proceedings but we are the committee that is supposed to decide the allocation of resources to the IDA in the Estimates. The Estimates for 2011 are before us. We are in the course of debating the budget and whether our allocation of money to the IDA and Enterprise Ireland is appropriate. We are entitled to see how those agencies are performing against target so that we can make decisions. Unfortunately, it is treated as a pretence, as if the Oireachtas is not making such decisions but that is what we are supposed to be doing. We are supposed to be making decisions about next year's allocations for the enterprise agencies. This is the vital time when we are forming budgets and we are entitled to that information. This is not something that is between the enterprise agencies and the public or PR agencies. We are the funders of the enterprise programmes. We represent taxpayers. We should get more hard information which we can use in forming views. Perhaps the tradition has not been to come before committees with such an agenda. I apologise if I am asking for something that has not been sought previously but we need to have such information in the future because we are up against it and we need to make the right decisions.

Chairman

We invited the delegation to discuss the 2009 report.

Mr. Barry O’Leary

That was the terms of reference we got.

Chairman

Perhaps we should invite the agencies back before the end of January to facilitate them. We must be fair to them in the context of the agenda before the committee. Some of the questions asked by Deputy Bruton are interesting and important in the context of the points he has made but perhaps it would be preferable if they were asked after the 2010 report is published on 4 January. One of the problems we have as a committee is that very often we investigate matters long after the event has concluded. Perhaps we should be more proactive and pre-emptive in our discussions. That may be a failing of the wider Oireachtas service allocations. The milk is well spilt and gone when we try to retrace the steps taken. Perhaps we should have a greater input into the formulation of policy. Perhaps that is part of the proposed reform of the Houses of the Oireachtas. We cannot lay the blame at anyone else's door. Deputy Bruton is probably expressing a frustration that is held by many Members on all sides of the House. In that context we might invite Mr. O'Leary back before the committee earlier than normal.

Mr. Barry O’Leary

Sure. By all means.

Mr. Frank Ryan

I would like to comment on that. I will try to be as brief as I can. It is important to go back a bit in time. Until 2003 there was no meaningful increase in exports by Irish companies for ten years in a row; that was the starting point. In 2003, it was questionable if we could get growth in indigenous industry. It was more fashionable to talk about foreign direct investment than to talk about indigenous industry. In 2004, Enterprise Ireland set out a three year plan with public targets and a strategy to achieve them. We would be delighted to come back on another occasion and tell the committee how we did with that. In doing so, we became the first State agency in the history of the State to state publicly what we were trying to achieve in a three year period. In 2007, we produced another three year plan, again with numerical targets. If there are no numerical targets it is hard to assess what is going on. Early next year we will announce the new three strategy for 2011 to 2013, again with numerical targets for exports, jobs, research and development and high potential start-ups. The new strategy will focus on jobs, exports and innovation. At all times, we have measured what we are doing. We have views on some issues and we have explained clearly to our parent Department our views on issues such as CEBs. This is under consideration by the Minister.

In overall terms of job numbers, our target under the most recently published trade, tourism and investment document is for 60,000 jobs by the end of 2015. It is a stretch but it is a realistic figure to have in mind for indigenous industry at this time. In 2009, we created 7,500 new jobs and it will be a similar figure for 2010. In 2011, the figure will be a little better and, as the world recovery continues, we should get a better two years at the end of that period. Doing the maths, it comes in at about 60,000. It is important to achieve that to get behind the companies that must earn this because EI does not create any jobs, our client companies create the jobs. We must get behind them.

We would welcome a debate on what more we can do to get behind those companies for them to be successful; that is where our energies should be directed. We would like to come back to show the committee all of the figures and targets and to take on board any constructive comments that could make us more effective.

Deputy Richard Bruton

This is the sort of debate we need. I would welcome a presentation that details each programme being run to support companies and their development, and the targets set and how they are performing. There was a time when the IDA and EI were one body and if the IDA said to jump, politicians asked how high. We must get back to that situation where we have that level of confidence in the agencies' programmes. We should see them as the first priority when money is being sought. That is not to denigrate the work of either agency but it is vital we get this right.

Senator Brendan Ryan

The Lean Agenda programme is talked about in manufacturing circles as having great potential. How is it going? Have there been any success stories? Are the principles underpinning the programme applied within Enterprise Ireland? What success has the agency enjoyed as a result?

According to the presentations, large food sector companies that are achieving economies of scale could be key drivers of growth. What is really going on? Are we close to something big? There is a great deal of talk about the BRIC regions and possible development of the middle classes in those countries. Are we close to a significant breakthrough in the food sector?

The organisation's structure is set out in terms of global business development, scaling, international sales and partnering, and research and development. If the food sector is seen as potentially a high growth area, where is the focus within the organisation on that or is it spread across a range of areas?

I have a question about location selection. My areas of Swords and Balbriggan have been hit particularly hard by unemployment but they are close to Dublin. Balbriggan was once the industrial heartland of Fingal but has been neglected to a degree. What criteria do the agencies use and what influence do Ministers have? I would like to think places like Balbriggan and Swords would get a fair crack of the whip.

I was disappointed to see a lower level of manufacturing industries being attracted to Ireland. What is happening there? What sort of company could locate here? Is that a complete write-off or is IDA focusing on the area sufficiently?

Kellogg's is an example of a manufacturing company coming to Ireland.

Mr. Barry O’Leary

Kellogg's would fall under the services or IT investments by manufacturing companies heading. This is the European headquarters.

Senator Brendan Ryan

It is bucking the trend. Kellogg's had a serious manufacturing operation here many years ago but then went offshore. I hoped something had happened that I was not aware of but evidently not.

Ms Julie Sinnamon

On the Lean Agenda programme, 2009 was a difficult year, particularly for traditional manufacturing companies. We carried out a pilot in Lean Agenda where we put the transformation programme in place in three large food companies. It was critical to removing costs for those companies and some of them have managed to lower costs by 18%. It has looked not just at the manufacturing side but right across the value chain at every element. In 2009, there were three such programmes, with 20 programmes being done in smaller companies.

In 2010 we continued with that and used some of the successes that have been gained to encourage companies that otherwise would not have been interested in doing it to see the programme's potential. There is a great deal of sharing of information and this year we hope to spread it out to 20 of the larger companies. That is an ongoing programme and it is essential to the future.

Senator Brendan Ryan

What sort of results have been seen in the pilot programmes? What level of cost reduction has happened?

Ms Julie Sinnamon

The higher end would be around 18% but the norm would be between 10% and 20%. That is continuing this year in both larger and smaller companies. Those results were for companies that are considered to be stars in the food industry.

There are two extremes in the food sector, where there is a large number of artisan food companies that continues to grow, while at the larger end there are companies like Danone manufacturing infant milk formula in Macroom. At present, one in seven babies worldwide is eating baby food produced in Ireland. When this project is implemented, the figure will increase to one in five. That is done using the expertise in the companies, the standards in the Irish food sector and the available scale. It is testimony to the quality standards and skills within Ireland. Scale is and will continue to be a major feature. Within the Danone group, it was no secret there would be winners and losers in that type of operation. This is a trend we will continue to see. On the food side, with the removal of the dairy quota, we will see a 50% increase in the projected milk output and this must be produced on a scale of operation that can compete internationally. Scale is critical.

Senator Ryan asked about the structure of the organisation, given the importance of food. There is a specific division within the global business development directorate that deals with food. Within that dedicated unit, there are dairy, beef and consumer food sectors. People in the research arena are working with Food for Health Ireland to ensure we have leading expertise, which is critical for working with the likes of Danone and bringing big operations to Ireland.

Mr. Barry O’Leary

Senator Ryan referred to Swords and Balbriggan. The IDA has backed at least three investments in that area this year. Hertz recruited 100 people to its shared services centre, which will increase the number of people to 1,000. The US corporation StreamServe is recruiting 420 people within a nine-month period and 50 jobs are due to the expansion of Kellogg's. Some manufacturers have been there for some period of time, including Bristol-Myers Squibb, BMS, and Siemens Healthcare. We have been winning far more services and research and development investment than manufacturing. The manufacturing we have been winning nationally has been at the high end and is relatively capital intensive and skills intensive. Returning to an earlier point, with Ireland's improving competitiveness, we will return to mid-range manufacturing. There are some signs of it, with the likes of Kostal in the automotive area diversifying into clean tech and investing €40 million in Ireland. Another example is Valeo in Tuam. The more competitive we are, the more it brings us back into the mid-range manufacturing arena.

Senator Mary M. White

I welcome the IDA and Enterprise Ireland. As a Senator since 2002, I find it very satisfying that the contribution of the IDA and Enterprise Ireland is being recognised politically. Between 2002 and 2008, I found it frustrating that the panacea to the economy seemed to be property and there was a lack of interest in job creation via industry, whether manufacturing or other types. It was a tragedy that, during that period, we lost sight of competitiveness, which has made it more difficult for the IDA and Enterprise Ireland to get back on track. Now, these organisations are flavour of the month whereas it used to sicken me when I was sitting in the Seanad that we were losing competitiveness. This applied to all parties, there were no dissenting voices. We were losing our competitiveness and people did not invest in this country, whether multinationals or indigenous companies, because of how uncompetitive we became. I am delighted this subject is back on the radar. It would be good to have regular, short meetings with the IDA and Enterprise Ireland to let committee members know how we are getting on. I am not a member of the committee but I came along to hear the two organisations. Like a company, the two organisations could indicate how much progress we have made each month. If members are not from the job creation sector, it is hard for them to grasp what is happening out there.

I am board member of Lir Chocolates but I am not involved as an executive. I was there this morning, where some 250 people are employed, mainly dealing with exports. It is very difficult for indigenous companies that do not export because the market is flat. It is difficult for them to create employment. Only for the export sector, Lir Chocolates would not be growing the way it is. I thank Enterprise Ireland for supporting us from day one.

I was speaking on a Dublin radio station on Sunday, trying to dispel the idea that the country is a failure. People are talking as if we are in famine times and I was trying to get the point across that people in Ireland are dynamic by their nature. The people will propel this country forward. Companies making goods or providing services that will sell abroad will create employment. By its nature, business is dynamic. It does my heart good every time I see the advertisement for the Innovation Ireland document on Bloomberg. They have the self-confidence to do that when, tragically, the media are driving this image and frightening people by making them feel the country is finished. It is a tragedy but it does my heart good to see this advertisement. The people of Ireland have these skills. I apologise for making this statement but so much of my personal life has been involved in this that I am compelled.

Regarding the superb Food Harvest 2020 document, we must be specific where the jobs will come in the agrifood sector. We can look at the ICT and pharmaceutical areas but we must know where leadership will come from if we are to get people to stay in farming. We must get a new type of leadership. We must make it worthwhile for young farmers, whether men or women. Can they make a living out of it? Some 150,000 people are employed in the food sector. It is an indigenous sector and we have a strong responsibility to develop the agrifood sector. We have so much going for us. We do not have intensive farming; we have an organic way of rearing cattle and sheep but the message has not come out that Ireland is an ideal place to produce food. Bord Bia has done a good job but there is much more we can do.

The secret of Lir Chocolates surviving, which included surviving the terrible exchange rate with sterling, is that it innovates 30 new products every year. There is constant innovation. I worked at Lir Chocolates 24/7 for 16 years with Ms Connie Doodie and I spent seven years trying to convince Baileys to allow us to make a Baileys chocolate. It seems simple and easy but Baileys did not party with anyone except Diageo. Business is very demanding and difficult but everyone would be doing it if it was easy. We have the ability to be creative people and Lir Chocolates kept going by having 30 new products every year.

Ms Julie Sinnamon

With regard to the Food Harvest 2020 report, there is significant growth forecast in several sectors. I referred to the dairy sector, which is expected to increase output by 50%. Sectors such as that will grow. I refer to the Danone project, which is increasing from €70 million to €200 million. However, the number of direct jobs within the plant is only 40. This has a significant knock-on effect, given the €65 million in purchases in the local economy in terms of raw materials from other food plants, packaging, energy, etc. The jobs have a strong service element, but the direct jobs in the plants associated with that growth will not be significant. I am being realistic. At farm level, the trend is toward larger scale farming entities as well as the plants in order to be competitive internationally.

Where new, innovative, artisan-type products, for example, are concerned, there can be a considerable number of small companies as opposed to larger companies. The consumer food side is largely dependent on the UK market, so currency is a significant issue. Under the lean initiative, companies are removing their costs, but this is actually taking the form of reductions in employment levels to secure those companies' long-term survival. It is not all about the companies' direct jobs. Rather, it is also about a significant growth in output. Jobs are not pro rata with growth.

Senator Mary M. White

I thank Ms Sinnamon.

Chairman

I call Deputy O'Keeffe, a man who knows something about agri-industry.

Deputy Edward O’Keeffe

I thank the Chairman and welcome the delegation. It is never easy to work in job procurement. As a former Minister of State, I know of the difficulties that can arise abroad and I have been to America, Brazil and elsewhere to see what is happening. I appreciate what our guests are trying to do for our country and economy at a difficult time, particularly when we are getting such bad publicity abroad in terms of banking. In the Oireachtas Library, one could look at four international newspapers which have been carrying bad news about Ireland everyday for the past four months. Were I an industrialist living in Chicago or somewhere, I would be asking questions.

What will happen to the unskilled people in our rural towns? We will always have people who are unskilled, do not make the grade in third level education or have a problem, but no unskilled jobs are being created. This is where the issues arise. Those jobs were mainly in the food sector. Rural towns have good infrastructure, in that they have good roads or have been bypassed and railways or rail extensions are close by. Our country is also well served by airports. Claiming that rural towns are not serviced is not a great excuse. Mr. O'Leary referred to the requirement for 1 million people, but Ireland only has 4 million, so 1 million is a lot.

I congratulate the IDA and Enterprise Ireland on successfully bringing the Danone plant to Macroom. I am aware of the difficulties and negotiations involved. Some 15% of the world's powdered infant formula is produced in Ireland. Macroom will account for 100,000 tonnes of that. Wyeth, Danone and Abbott are in the baby food and other food sectors.

We are commodity-based, as we are not doing the downstream processing which is where all of the jobs are. Ireland has lost all of the added value work. Milk has been mentioned. The milk, poultry and pig sectors can provide significant employment in delivering added value. Some 44% or 45% of our products go to the UK, the market on our doorstep. We should model ourselves on Denmark. It has targeted the Manchester area, which has 4 million or 5 million people. Everyday, ferries cross the North Sea from Denmark to service that area. I cannot understand why we are so commodity-based. Are our costs wrong or is there no interest? If one wants to set up an added value business now, there will be capital costs, but it would be well worth it were jobs involved. We have lost this sector. Our cheeses and bacon are gone. Nothing is left but commodities, which is not good enough. This is the reason so many rural towns are suffering. Much of the existing plant is lying idle around the country. Could placements be found for that plant when we attract industry?

We hear much about the world's four tiger cities, namely, Singapore, Hong Kong, Taipei and Seoul. How competitive are they and why have they developed in a part of the world that is often uncertain? Take Korea, for example. Those four cities are worthwhile targets. I am not boasting, but I spent a month in Brazil and Argentina this summer and I heard what was being done there. I met many people who were interested in industrial development. Why have the four tiger cities progressed so well in the past five years?

Competitiveness is an issue for Ireland. Whether it has to do with wage, energy or other costs, the base has not been corrected. How can we go about putting our competitiveness right? We are often told that our competitiveness costs are off by 14% to 15%. It is all about margins. Without margins, one cannot have success. I do not want to be overly critical. I would like to be helpful, as I realise what our guests are trying to do and the successes they have achieved, but we expect more and more success. I wish them well.

Ms Julie Sinnamon

I will make two comments regarding food. Competitiveness has been an issue, in that our competitiveness declined over a number of years. The lean initiative is critical in addressing this issue, but it will not be sufficient. The innovation agenda and investment in Food for Health Ireland, FHI, will be critical in getting the industry to pool its resources. The entire output of the Irish dairy industry is small relative to the scale of our international competitors. We need to ensure we climb the value chain as high as possible. The infant formula business provides a much higher level of value-added work than many of the standard commodities in which we are involved. Some progress has been made by a number of larger players. We will work closely with the key players where the focus on innovation and competitiveness is concerned. We have lost share in some sectors because we have not been putting sufficient emphasis on the innovation agenda.

Senator Mary M. White

What about the lower skilled people to whom Deputy O'Keeffe referred? We will always have such people, so how will we employ them?

Mr. Frank Ryan

It depends on the sector. The manufacturing and processing side of the food sector will resemble the pharmaceutical sector more. This will bring with it a certain way to structure the cost base and so on. It will also bring automation, world class manufacturing and high levels of competitiveness together.

We expect and would welcome further expansions in the infant formula area. Ireland has a strong and competitive position in this regard, given the quality of the milk and grass-fed nature of our production system. Other locations do not have our position. Be it through Wyeth, Abbott or another group, we would welcome further expansion.

Jobs are created in Enterprise Ireland companies. In the software sector, for example, 90% of jobs are for third level graduates and 10% are for non-third level educated people. However, the ratio in the engineering sector might be 50:50 and comprise many skilled workers. The figures change per sector. Enterprise Ireland looks after 23 industry sectors, everything from timber to software, so we are well used to their different profiles.

Our competitiveness is improving, so we need to tell people about it. We are doing too much explaining on the world's television screens about bank bailouts and our other financial situations. We must get back to telling the story about the real economy in Ireland. The World Competitiveness Yearbook 2010 says that Ireland remains an attractive place to do business: first for corporate taxes; fourth for the availability of skilled labour; fourth for being open to new ideas; sixth for labour productivity; seventh for availability of financial skills; and seventh for the flexibility and adaptability of the people. Some 50% of all enterprises in Ireland are engaged in innovative activity which places it seventh across the EU, considerably above the EU average. In 2010 Ireland ranked seventh of 171 countries for ease of doing business and ninth for ease of starting a business. That is what we need in Bloomberg. We must all get on to the same page on how we need to move forward.

In regard to the cities of the world - Mr. O'Leary will want to comment because he comes across this all the time - there was a time when countries competed against each other but now it is very much a case of developed cities competing against each other. Mr. O'Leary and colleagues have much experience of countries and cities competing against each other for major projects.

Mr. Barry O’Leary

It is very difficult to get internationally mobile investment into Ireland for unskilled jobs but, of course, it depends on the precise definition. We are focused on bringing in as many high-value jobs as possible to get the spend into the economy. For example, Wyeth Medical Ireland in Grange Castle may have 1,200 or 1,300 people working in the facility but a couple of hundred people provide security, catering and so on. It is very important to get the competitiveness message out there. A couple of months ago we started a new e-zine for circulation around the world. It has a key feature every month on Ireland's improving competitiveness. The danger is that location advisers around the globe are looking at 2008 data and may not have up-to-date data, so it is important to get that out there.

As regards cities, the Deputy mentioned Singapore in particular. Singapore is a city which, because of its compactness but also its style of organisation, is able to put together offerings that once something is decided upon, all barriers are done away with. That is the type of city with which Ireland is competing.

Chairman

I acknowledge that Ireland has punched well above its weight in terms of securing foreign direct investment. With Enterprise Ireland I visited a facility where I got an illuminating and comprehensive report from the executives involved in the various sectors. Obviously more can be done and our job is try to advance the position. Mr. O'Leary knows well what I have to say to him.

Mr. Barry O’Leary

We agreed prior to the meeting that any questions relating to Mullingar would go to Enterprise Ireland.

Chairman

Now is my chance. Will IDA Ireland hand the park over to Enterprise Ireland and it might get something after waiting five years-----

Deputy Kieran O’Donnell

Chairman, you might change that in-----

Chairman

It is a 70 acre park about 25 acres of which are awaiting development. The only positive we have is Niall Horan who is a good young friend of mine from One Direction who were on the X Factor. There is no direction to Mullingar from anybody. Athlone is a very important part of Westmeath and has Athlone Institute of Technology and the incubator units, to which Mr. Frank Ryan referred, and we have certainly punched above our weight in that respect. However, that is no excuse for a location 27 miles north of Athlone which is the finest place in the country in that it is geographically centrally located. It has never got a whiff of industry in recent years. If Deputy Ruairí Quinn was Minister for Enterprise, Trade and Innovation I would be speaking to him about this with some intensity. I have to make the case. Is there any commitment to the people of Mullingar? The chamber of commerce, the trade union movement, Westmeath County Council and Mullingar Town Council bent over backwards in a united effort to direct industry to Mullingar but there is only the deepest level of frustration. I have said this before.

I recall Mr. O'Leary appearing before the committee and telling us IDA Ireland would prepare a report on the satellite towns. We spent our time out on the road and produced a report and recommended that the IDA should be in a position to give the outlying lands it had secured in the 1970s that were not used to various bodies to get the show on the road, whether small units or whatever. He told us it could not be done and because of the current situation lands had to be valued at today's prices and all that nonsense. It is legally correct but it is nonsense. We are now well used to getting around legalities - the past 24 hours has shown that - if we have a will we have a way.

Senator Mary M. White

Hear, hear.

Chairman

Let us get down to brass tacks. I spent two hours one night reading the four-year report which circumscribes our activities for the next four years. That is the nice thing I can say about it but it contained a commitment that IDA lands would be made available - as I understood it. That was a recommendation we made in our report after we went around the country. We were a few years ahead of our time. I do not wish to be discordant because IDA Ireland has done tremendous work, but I saw its advertisement for the Horizon 2020 plan on RTE television, which it had presented at the committee in April or May, and it looked good. I said it is exactly what we want. We must stop downplaying our country, we have much to offer and I have no doubt we can turn things around. It will take a while and, unfortunately, people will suffer while we are getting to that point. I am really disappointed that no industry is directed to Mullingar which is the centre of the country. The turnaround time from Dublin Airport is 50 minutes and the N4, N6 and N52 go through Mullingar. I heard Deputy Kieran O'Donnell refer to three visits to Limerick and three more visits coming. That is good news for Limerick because I have cousins out in Curraghchase and they deserve whatever they get. If I had three visits-----

Deputy Kieran O’Donnell

I am waiting for further-----

Chairman

-----I would be celebrating. I am a pioneer but I would almost go on the champagne trail. I am absolutely frustrated.

Deputy Kieran O’Donnell

If the Chairman lived in Cork or Galway he would be delirious.

Chairman

I would be delirious and would almost become an alcoholic with excitement. It is frustrating, I do not know what is wrong, but I am aware people have been taken on visits. I had executives from IDA Ireland visit the area and I am aware the midlands regional director is eager to get something going. I do not doubt the commitment of Mr. O'Leary who has always responded to me. I wrote to him recently and he responded in terms that it would be better if he did not write to me. I am too long in the tooth for being satisfied by a nice civil letter. It would be better if he told me the show is over or it is not. I spoke to a business group this morning and I am sure they are still thinking of my frankness. I am a straight person. I would prefer if all the cards were put on the table. What is wrong with Mullingar? Why is it being bypassed in industrial policy? It has everything going for it, a good educated workforce, it is near AIT, many young people go to Dundalk Institute of Technology, and we are beside Maynooth College. Mother of divine institutions, do not tell me about the educated workforce. We have the best in the business, we are adaptable and flexible. The local authority, the chambers of commerce and everybody is on board. Next to the industrial park we have a grade 4 hotel, Mullingar Park Hotel. If somebody wants to stay overnight this is the best in the business - that may be an advertisement for the hotel. After 18 years and three months as a Member I am getting frustrated and cannot see any light at the end of the tunnel. I am sorry for expressing myself in this way but it is the way I feel.

Deputy Kieran O’Donnell

Do the delegates see a role for the green economy? There is export growth but it is not being translated into the number of jobs one would expect. How can we push that agenda?

Will Mr. Ryan outline the link between multinational export growth and the anecdotal evidence that this was not the case for the indigenous sector? Mr. Ryan referred to industries locating in the greater Limerick area, how many of the three industries will locate in Limerick city, the county or outside Limerick? I wish him to address the precise dates that the announcement will be made and the sectors in which the investments will be made.

Mr. Barry O’Leary

For reasons of confidentiality it would be dangerous to do that. The more one gets - certainly precise dates----

Deputy Kieran O’Donnell

When are they likely to take place?

Mr. Barry O’Leary

In the first quarter

Deputy Kieran O’Donnell

Are they based in Limerick?

Mr. Barry O’Leary

I did say three industries will locate in Limerick and the surrounding areas. One has to look at the commute. One could live in the south of Limerick and it would take one longer to get to the north of Limerick than to go 20 miles in a different direction.

Deputy Kieran O’Donnell

Are they within the confines of the county of Limerick?

Mr. Barry O’Leary

Yes.

Deputy Kieran O’Donnell

Have the companies existing investment in the county?

Mr. Barry O’Leary

As I said before, the three were a combination of ---

Deputy Kieran O’Donnell

They are in Limerick and County Limerick.

Mr. Barry O’Leary

The three will be in County Limerick or are already or partly in it.

Chairman

I am the most tolerant Chairman. I remember being here at committees when the Chairman was always first out of the traps to promulgate his or her own view. I am the direct opposite. I waited patiently and allowed everybody to ask questions. I am probably the most tolerant and accommodating Chairman who ever held the post.

I am frustrated. If IDA Ireland cannot do anything it should hand it over to Enterprise Ireland.

Mr. Barry O’Leary

I think the Chairman realises that it is not for the want of trying to get an industry into Mullingar. We bring people to look at Mullingar, it is not as if we do not do it. Often what will happen is that we bring the companies and show them the best of the offerings. They meet the companies that are already there. We also know that companies come back by themselves and at the end of the day it is the client that will chose. We often differentiate the financial package, in other words we will give more for attracting an industry to Mullingar than another location, but the companies are not just biting on it.

Chairman

Has Mr. O'Leary any sliver of hope that something might happen in 2011?

Mr. Barry O’Leary

There is one project at which we are at a reasonably advanced stage, but I will not go any further than that.

Chairman

I appreciate that and I will not press it any further.

Deputy Edward O’Keeffe

I asked a question about the image of Ireland in the international press. It must be having a significant effect on North America. If one goes to the Oireachtas Library and looks at the national press, there is something about Ireland's financial problems. Most countries have sorted out their banks and systems, for example Lehman Brothers in America and in the UK. It must be having a terrible effect on the agencies. People coming to this country do not want to deal with State-owned banks, but will deal with privately-owned banks. In the near future we will not have a privately-owned bank in the high street. That is another impediment to foreign investment in Ireland. I would like to hear an opinion on that.

Mr. Barry O’Leary

There is no doubt that Ireland's reputation has suffered in the international marketplace. A country's reputation is right up there at the top of the agenda when investment decisions are being made around the globe. However, over a long period, Ireland has had an excellent reputation, the last six to 12 months have been problematic and Ireland needs to do a lot to repair its standing in the international business community.

Deputy Edward O’Keeffe

I have a friend who was abroad on business at a conference in the company of some Dutch people and he told me that Ireland's image was of a country back in the days of spuds and skim milk - that we even had to take the fat off the milk. That is a very serious situation for us.

Mr. Barry O’Leary

I have been around the world a lot in recent months and I would not put the image at that level. It is about the financial situation, but our image must be worked on to restore Ireland's standing in the business community.

Chairman

Enterprise Ireland and IDA Ireland are vital pillars of the Irish economic infrastructure and now more than ever, the agencies have an extremely difficult task ahead. I thank the delegates, Mr. Frank Ryan, Mr. Feargal Ó Mórain, Ms Julie Sinnamon, Mr. Barry O'Leary and Mr. Billy Burry for coming before the committee to discuss the issues and assist us in our deliberations. Obviously the issue is jobs, jobs and more jobs and we realise that the only way to recovery is to get people working in meaningful and sustainable employment. If we can do that, we will be able to deal with all the other problems that follow. When people work they feel they are contributing to the economy and that the economy is working for them and not for the vested interests of big companies. We would be well on the road to recovery. The agencies have an onerous responsibility and I hope that the politicians can assist in every possible way in the coming years.

I take this opportunity to wish all the members and the witnesses a very happy Christmas and new year.

Nollaig faoi shona agus athbhliain faoi mhaise daoibh go léir agus tá súil agam go bhfeicfidh mé sibh go léir slán san athbliain sa Dáil nó ar na sráideanna ag stocaireacht go dian.

The joint committee adjourned at 3.10 p.m. until Tuesday, 18 January 2011.