JOINT COMMITTEE ON ENTERPRISE, TRADE AND EMPLOYMENT díospóireacht -
Wednesday, 29 Apr 2009

Role and Functions: Discussion with InterTradeIreland.

Chairman

I welcome Mr. Aidan Gough, strategy and policy director, and Dr. Eoin Magennis, policy research director of InterTradeIreland to the committee and thank them for coming.

Before we begin, I draw attention to the fact that members of the committee have absolute privilege but this privilege does not apply to witnesses appearing before the committee. 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 by name or in such a way as to make him or her identifiable.

I invite Mr. Gough to make his opening statement. Generally what happens is that witnesses give a summary of their presentation and then we ask questions, which I am sure will extract other useful information. Perhaps Mr. Gough might provide some background also.

Mr. Aidan Gough

I thank the Chairman and members of the committee. We welcome the opportunity to make a presentation to the committee. I hope the content of our briefing provides information that will be of value to the committee's work. The topics I will cover are outlined in the presentation. First I will outline the work of InterTradeIreland in the identification and realisation of North-South trade and business development opportunities. I will also deal with the development of North-South trade and further developments in business co-operation.

It could be useful to start with some background information. Members will be aware that InterTradeIreland is one of the six cross-Border implementation bodies created by the Good Friday Agreement. Tourism Ireland was created subsequent to that. Our purpose is to exchange information, co-ordinate work and trade, business development and related matters. Nine specific areas were outlined in the legislation and there is a fairly broad trade and business development agenda.

In our corporate plan we focused on two key priority areas. The first one is to generate business value by enhancing company competitiveness. Our main priority is small and medium-sized enterprises, especially in the manufacturing and tradeable services sector.

As a secondary objective, through our research and the North-South networks that we develop we aim to improve the competitive environment for doing business on this island for the mutual benefit of companies in the North and in the South. We work closely with the key economic development agencies on the island, notably Enterprise Ireland and Invest Northern Ireland and we work in close partnership with various business representative bodies, especially the IBEC-CBI Joint Business Council, chambers of commerce and universities across the island.

Our portfolio of business support is delivered in two key areas; science, technology and innovation and sales and marketing. We have a host of programmes within both those areas that are aimed primarily at small and medium-sized enterprises. Within the science, technology and innovation programme we have a FUSION initiative that links companies in one jurisdiction with research institutes in the other jurisdiction. The link involves a graduate being placed within a company. We also have the INNOVA programme which helps to encourage innovation through co-operative partnerships on a cross-Border basis between businesses. Examples are provided in the presentation of where the programmes have been successfully availed of by businesses.

InterTradeIreland is a small organisation involving 42 people. We operate from a single base in Newry although we have outreach across the entire island. That outreach is demonstrated by the fact that we have participants on our programmes in every city and county on the island. We have created more than 40 new North-South business networks in areas such as ICT, polymers and plastics and biotechnology. In the short time we have been in operation we have engaged with more than 15,000 companies. More than 1,500 companies have participated on the sales, technology and innovation programmes. Of those 1,500 companies more than 200 have exported for the first time. In addition, more than 200 companies have embarked on an innovation process for the first time. We estimate that the total value to businesses of participation with InterTradeIreland's programmes is in the region of €400 million. That is a good return on their investment.

In terms of cross-Border trade statistics, cross-Border trade has more than doubled in the past 15 years. The 2007 annual figures, the latest figures, show that cross-Border trade is still increasing by 5.5%. In the past year, however, quarterly figures since then show a decline in such trade. The decline is especially marked in South to North trade. Based on the latest statistics North to South trade continues to grow. That is primarily driven by exchange rate movements. The sector that accounts for the greatest proportion of trade is the food and drink sector, which accounts for close to 40% of trade. In terms of South to North trade there has been a substantial decline in that sector in the past year. Again, that is probably driven by exchange rate movements.

We have just launched a first-stop-shop for businesses to use as their primary information resource to develop North-South business links. Any business that wants to operate in the other jurisdiction can come to us first for information on tax, employment law and other regulatory barriers that may exist to doing business in the other jurisdiction.

We are also launching trade acceleration vouchers of up to €2,000 for companies. We are targeting in particular the public procurement market in both jurisdictions because we have found that it is difficult for companies in one jurisdiction to access the public procurement market in the other jurisdiction. We have a successful programme in that regard, which we are extending called the Go-2-Tender public procurement programme.

We will continue our work in the area of science, technology and innovation because the common challenge for both economies on this island is to move from being investment-driven to being innovation-led. It is a critical area for the future development of both economies. We are extending the provision of our FUSION technology transfer and INNOVA programmes. We have also just launched a research connections programme and an all-island innovation programme. Substantial interest has already been expressed in both of those programmes. As members have copies of the presentation I will stop there and take questions.

Chairman

I thank Mr. Gough for that very good summary. He hit all the salient points.

Deputy Arthur Morgan

I thank Mr. Gough and Mr. Magennis for the presentation. The succinct summary has been useful. As Mr. Gough said we have a copy of the presentation in full, which I appreciate.

I should declare an interest because our own business at home availed of one of the services several years ago when we brought in a food technician to work with Loughry College in Craigavon on food technology development. That was most helpful and long after the scheme expired that person still works for us. He is a key employee within the enterprise. That goes to show what can happen. We were dealing with regulation in our private session. I will not revert to that, other than to say we find this man to be very good in terms of keeping us up to speed with that area.

Is it the case that the Department of Finance in Dublin insists on signing off on any letters of offer made by InterTradeIreland to an enterprise? That has shades of Big Brother. Is it the case also that no letter of offer is made without going through all of the scrutiny required by InterTradeIreland? Is it further the case that the Department's requirement is slowing down significantly those offers being made and funding being made available to an enterprise? That may well result in InterTradeIreland not even spending its whole budget within the financial year. We know what happens in that case; one simply loses the money, as it is taken back.

Public procurement and help with regulatory advice is priceless, not just in terms of cross-Border trade, but I will restrict my comments to that area in this instance. It is critical in terms of helping indigenous enterprise to get into the export market. I have long advocated that Irish embassies could be of assistance to business, not by opening up a branch of the embassy, as I accept that they are diplomatic entities in the first instance and that is their purpose, but I do not know why in our current stringent economic times they could not be utilised to some degree for the provision of regulatory advice in some capacity. Is there much of a take-up on that provision? It is priceless. What are the public procurement opportunities available on either side of the Border?

Mr. Aidan Gough

In terms of the Department of Finance approval process, there was a circular to all agencies that any new letter of offer had to be approved by the Department. We are part of that process.

Deputy Arthur Morgan

What does the witness mean by agencies? Everyone across the board?

Mr. Aidan Gough

It applies to all the agencies of the State. I can only speak about our case but there is no doubt that it has slowed down the rate at which we can get the money out to businesses that have come through the process. We hope the process will be further clarified within the next week for so.

The public procurement market is substantial, probably one of the biggest on the island with up to €16 billion involved. Our research shows that companies in one jurisdiction are finding it hard to access the market in the other jurisdiction, particularly small and medium sized enterprises. We have initiated a programme called Go-2-Tender, which brings companies together and brings them through the tendering for a public procurement contract process in the other jurisdiction. The programme is oversubscribed and we have had to ramp it up substantially. There is immense interest in it, with a rise in interest in the past six months, particularly from southern small businesses. The success rate for the programme is high, with more than €16 million of new orders being achieved by companies that went through the pilot phase.

We offer an advisory service to small and medium size companies, we publish cross-Border trade guidelines looking at areas of difference in tax and employment law and we are expanding the service through the use of a trade accelerator voucher which will help companies access more specialised advice in those areas.

There are substantial differences in the regulatory environments in the two jurisdictions in these islands. These can be subtle so many companies are unaware of them and problems can then arise when something goes wrong.

Chairman

On that point, do you perceive the regulatory environment here to be more onerous than that in Northern Ireland?

Mr. Aidan Gough

We did not measure the differences, we did not compare and contrast.

Deputy Arthur Morgan

The witness should be sitting on this side of the table.

Mr. Aidan Gough

We try to assist companies to get around the barriers.

Chairman

These are the types of questions we ask. Deputies here have the view that we are very rigid in our application of some of our regulations. Is there over-emphasis on bureaucracy here?

Mr. Aidan Gough

The British and Irish Governments are undertaking a strategy to reduce bureaucracy. Most of the regulation at the moment is driven by Europe. There can be different applications and interpretations of the same regulation. It might be useful if there was closer co-operation when interpreting new legislation from the EU so there is a consistent environment within the island.

Chairman

Have you noticed a difference in interpretation between the Department of Enterprise, Trade and Employment and its British counterpart for the same regulation? We often feel there is an excess of zeal in the application of regulations here, which might act as a hindrance to SME participation. It is hard to measure regulation; it is almost insidious in the way it creeps up. A person could be good at everything but then find he is deficient according to the interpretation of a certain regulation.

Dr. Eoin Magennis

Perhaps I can answer that. Much of the material comes from Europe. The feedback from our research showed that at start-up stage the regulatory environment south of the Border was open to start-up businesses. There were some differences of emphasis in terms of trade regulation. Forfás recently did a good study into this area in terms of trading with other countries which tested what companies perceive to be barriers, as opposed to the enforcement of the regulations. There may be something there but for a start-up environment, the South was seen as more business friendly, a difference that might surprise the committee but which came across in the feedback.

Deputy Arthur Morgan

I am a little biased. What has been done on a budget of about €10 million has lifted huge barriers and encouraged businesses to go both ways. That puts us on a pathway to achieving significant economic efficiency in terms of the island economy, which is where the future lies. Does the witness get that sense? The client base is growing.

Mr. Aidan Gough

We had a controlled period of growth over the past eight years, which was done on purpose. We have found now that the demand for our programmes is higher than ever. Yesterday in Cork we had 180 companies at our roadshow that were interested in doing business with the North.

Chairman

That answers Deputy Morgan's question.

Deputy Mary Alexandra White

I welcome the witnesses. The succinct nature of the report and the presentation was helpful.

To move away from the regulatory burden we feel we are suffering, the witness talks about the introduction of a one-stop shop for businesses. What does that comprise and where is it? Is there a North-South link?

The witness talks about new work and the areas where they wish to become involved, with a new programme to support emerging sectors, such as environmental goods and services and design services. In green technology and the smart economy, there are opportunities with the indigenous manufacture of solar voltaic, solar panels or wind turbines so we do not have to import them. In Ireland only 6% of such products used here are manufactured here, whereas Germany and Scandinavia manufacture up to 52% of their own. In recessionary times, this is a key area where we could have small indigenous manufacturing. There would be opportunities in light engineering to create thousands of new, green jobs that would not be susceptible to the fluctuations of moves to lower-cost economies such as the Far East, India or China. We need to copperfasten that. Ireland is very good, both North and South, in terms of manufacturing, but we have lost a lot of that base, especially in the part of the constituency I represent, namely, Carlow. We have lost our sugar factory and many good, indigenous, small engineering works. We could tap into this new, green economy, the smart green new deal that President Obama is talking about. As a Green Party Deputy I have been talking about that for a long time. We need to create sustainable manufacturing jobs that will give hope to local towns and communities. Such jobs will be there for the long term, and not subject to the prevailing ill winds of global recession. Those are the two points I would like Mr. Gough to address.

Mr. Aidan Gough

The first-stop-shop has just been launched. It provides trade, advisory and market research for SMEs that wish to explore market and technology-related opportunities in the other sector. How it works is that the company contacts us via e-mail, our website or by telephone. The information is web-based but it is a person-to-person service. People ring up and talk to us. We have staff who are experts in various areas and if more in-depth advice in a particular area is required we can direct people to whoever can provide that help and make a contribution towards the cost of the advice.

We have identified the environmental goods and services sector and the green technology area as one where having the island work together has real opportunities. In the North and the South we have identified a cadre of companies already working in many of those areas. There are real opportunities if we can bring a cross-Border or all-island approach to the sector.

Deputy Mary Alexandra White

Mr. Gough said an all-island study has recently been completed. Is it possible for the committee to look at that study or is it strictly for in-house information?

Dr. Eoin Magennis

That study is available on the website. We can distribute copies to the committee.

Deputy Mary Alexandra White

It would be interesting for us to see it.

Senator Brendan Ryan

The delegates are very welcome. Will Mr. Gough provide a brief outline of the management structure and the role played by the 42 staff?

One of the two core goals is to generate business value by enhancing company competitiveness and capability through co-operative North-South initiatives. In the Republic of Ireland, Enterprise Ireland and other such bodies work on improving competitiveness. I presume a similar organisation works in that area in the North of Ireland. What does InterTradeIreland bring to the table in terms of enhancing that, and how is co-operation increasing that competitiveness? I wish to ascertain whether there is a level of duplication.

Reference was made in the summary of outcomes to the creation of 40 new North-South business networks. It is useful to create a network but some achievement must result from that. To what degree does InterTradeIreland measure those successes?

There are new challenges facing some towns, such as Newry and Dundalk, in terms of the potential for North-South co-operation in the current climate. Businesses in Dundalk see all the cross-Border trade going in the wrong direction. How has that affected the current level of co-operation?

Mr. Gough outlined the success achieved by 1,500 companies, 200 of which have become first-time exporters and 200 of which have embarked on their first formal innovation project with a third level institute. To what extent can Mr. Gough say those developments would not have happened without the input of InterTradeIreland?

Chairman

That was a plethora of questions.

Mr. Aidan Gough

There were five questions.

Chairman

One always starts with two and a half times two.

Mr. Aidan Gough

I will try to cover all the questions but if I do not the Chairman can remind me. The organisation consists of 42 staff who report to a board. The board is drawn from across the island. We have a chief executive and a senior management team of three directors. The three directorates are in the area of corporate services, strategy and policy, and the more operational end of the organisation's work. That is the broad structure of the organisation.

I will outline what we bring to the table compared with other agencies. First, we work closely with Enterprise Ireland and Invest Northern Ireland to ensure that what we do does not duplicate any of their programme offerings to business. We invite their representatives to sit on the steering committees of any of the programmes we take forward. That ensures that companies are appropriate for the programmes and will benefit from them.

The benefits of North-South co-operation are widespread. This is a small island and it makes sense that we co-operate to make best use of the economic resources that are available to us. There are immense benefits to be had for businesses in terms of access to technology through co-operation on an all-island basis. That is what programmes such as FUSION and INNOVA are opening up. They offer access to companies in the South to Queen's University Belfast, the University of Ulster and the institutes of further and higher education. Companies in the North have been able to get access to the universities and institutes of technology in the South. On the supply side there are also advantages in co-operating on training and development. Much co-operation has taken place on the identification of the skills needs of the two economies.

On the demand side it is quite basic. One is opening up a new market. Our early research showed that the two economies had developed back-to-back for much of the previous century and there were real barriers to doing business between the two jurisdictions. In addition, there were barriers of perception. In essence, the business communities in the North and South had grown apart and grown separately. What we have done is brought those two business communities together and facilitated a level of engagement. When one gets business people together they tend to identify opportunities. One is improving the critical mass of the economy by co-operation.

The third question related to our network programmes. I indicated there are 40 new North-South business networks. The best way to explain the system is to use an example. There are various types of business networks. We always want the network to be business-led and to focus on a business opportunity. For example, we brought together companies on a North-South basis on a network called the mobile software platform. That involved six or seven small technology companies that on their own could offer a point solution to major multinational companies in the area of telephony but by coming together they could use their complementary technologies to offer a strategic solution to the big multinational companies.

There was a short window of opportunity because of the nature of the business. They had to get to a big international conference. We assisted the technology facilitator to develop their product offering. Enterprise Ireland and Invest Northern Ireland then supported them to attend this major international symposium where they generated more than €1 million of business right away, with substantial follow up orders, and gained access to senior people in major corporate organisations. That was the benefit for individual businesses of working within a network on a cross-Border basis.

On a wider basis, in the ICT sector we have brought the two representative bodies together. Just last week these bodies got together and offered programmes for iPhone applications. We had more than 200 companies at symposia in Belfast and Dublin which were interested in learning about the opportunities in iPhone applications. Within that network we have had more than 40 applications through our INNOVA programme where Northern companies link with a Southern company for research and technology projects. These are the practical manifestations of the benefits of networking on a cross-Border basis.

I chair a group which has just launched a twin city region report on Newry and Dundalk. It outlines areas where the three councils have agreed to work together to develop the Newry and Dundalk region. It has pinpointed the natural infrastructure, the Cooley Mountains, the Mourne Mountains and the Ring of Gullion, as presenting an opportunity for development. It also looks at financial services because of the indigenous strengths of both areas and sustainable energy and the environment as areas for co-operation. The councils have agreed to co-operate on urban regeneration initiatives, particularly in older areas. The report was published a month ago by the two relevant Minsters from the North and South; therefore, there is a huge amount of co-operation and a real willingness to develop the region and its identity.

Senator Brendan Ryan

To what degree did exporters do this because of the presence of InterTrade Ireland?

Mr. Aidan Gough

It is a criterion of all our programmes to ask if they would be done without public assistance. They would not be assisted otherwise.

Deputy Arthur Morgan

For most of my life there was significant competition between Newry and Dundalk and we all know that there still is in the retail sector. It is amazing that civic leaders and local authority members in each town recognise the absolute need for closer co-operation to create an extended industrial base. The area between the towns, south Armagh, was an industrial wasteland for decades. We would wait a long time for the British Government to enhance commercial activity in the area but given that it is in this North-South corridor, it offers opportunities. The report to which Mr. Gough alluded captures and stimulates the interest of people in the area's potential. We visited DkIT and it was way ahead of everyone in terms of renewable energy. Interesting challenges lie ahead.

Chairman

We thank the delegates. Every question we asked was answered, some of which were quite detailed. I apologise for the delay in starting; we took longer than anticipated at the start of the meeting. We acknowledge the delegates' co-operation in that regard.

Co-operation throughout the island, economic and otherwise, is of primary importance in the fight to get out of the recession and assist in the ongoing development of our economies and societies. In working together we can strengthen our competitiveness, increase investment, deliver more effective public services and open up new markets for companies throughout Ireland. Long may that work continue. I was glad to hear representatives of InterTradeIreland was in Cork yesterday where 180 companies turned up. That says it all.

I thank Mr. Gough and Dr. Magennis for taking time out to assist us.

The joint committee adjourned at 11.35 a.m. until 10 a.m. on Wednesday, 13 May 2009.