Manufacturing & Supply Chain

IDA Ireland, the Government agency responsible for attracting foreign direct investment, announced the highest level of employment in its client companies in its history on Tuesday. Total employment at overseas companies stands at 199,877 people, the highest level on record.

IDA client companies created just under 19,000 (18,627) jobs on the ground during the year across a range of sectors, with every region of Ireland posting net gains in jobs.

IDA Ireland has completed two years of its five year strategy, Winning: Foreign Direct Investment 2015-2019 – with the latest results indicating a strong performance by the organisation towards delivering its 2019 target of 80,000 new jobs and 900 investments.

The number of investments secured during the year rose to 244 from 213 in 2015. The number of new name investments went to 99 from 94 in the previous year. The strong net job creation performance of 11,842 additional jobs in Ireland is a result of a very strong pipeline of new investments and lower job losses within the employment portfolio. Losses as a percentage of the overall employment portfolio were at their lowest level since 1997.

“IDA Ireland continues to win record number of jobs of Ireland despite what has been a very unpredictable year for international investors,” Minister for Jobs, Enterprise & Innovation Mary Mitchell O’Connor said. “IDA’s success in 2016 is a reminder that policy-stability is an absolutely key part of our investment offering here in Ireland. Companies like stability and consistency and I will work with Government to ensure that Ireland is in a position to compete for a large share of foreign direct investment in 2017.”

IDA Ireland has seen jobs growth across all of its regional locations in 2016. This result reflects an intensive focus by IDA Ireland via its five year strategy, Winning: Foreign Direct Investment 2015-2019 in relation to regional dispersal of FDI investments. 59% of all employment remains outside of Dublin.

In 2016, 52% of all jobs (gross) created by IDA clients were based outside of Dublin.

Chief Executive Officer of IDA Ireland, Martin Shanahan said: “That companies have continued to invest in Ireland is testament to the quality of the offering we have here. That being said – we absolutely cannot be complacent about this success – we have to keep an eye on our competitiveness including costs. The contribution of the FDI sector has always been important to Ireland, but the 2016 results show that the contribution has never been greater. It is particularly welcome to see such a broad-based performance and all regions growing. International Services, Pharmaceuticals & Medical Devices and Financial Services all showed significant employment increases in 2016.”

Brexit

The planned exit of Britain from the European Union has led to a significant volume of specific queries to IDA offices from across the world. These queries have originated in the UK, the US and Asia. Companies are seeking to mitigate risk and ensure that the have access to the European market post Brexit. Feedback from investors would suggest that companies are currently undertaking detailed due diligence of a small number of location within Europe. Ireland is among those locations.

In addition to the opportunity that Brexit brings to compete for newly mobile investment, there are also likely to be some adverse impacts. FDI companies that depend heavily on the UK market have already been impacted by exchange rates and they may also need to consider their future access to the UK market in a post-Brexit environment.

IDA Ireland’s primary channel in winning investment is through engaging directly with clients wherever they are in the world. The level of engagement has intensified in the second six months of 2016 as both existing and potential investors consider their options in a post-Brexit world.

IDA Ireland has launched a communications campaign to support the efforts of IDA staff worldwide. This campaign will be led by a new on-line film which uses the theme of numbers as a way of reminding our target audience of some of our most relevant and compelling features as an FDI location, while emphasising our corporate tax rate and our unwavering commitment to remain at the heart of Europe. The campaign also refers to the skills and talent available here, as well as the continued access to the European market.

The film is supported with a suite of print and online display ads which use quirky statistics about Ireland to draw attention to the most important statistics of all – our 100% commitment to the EU our talent demographics and the 12.5% corporation tax rate.

The campaign is being rolled out on media platforms across the UK, Europe and the US.

Economic Impact

IDA estimates that for every 10 jobs generated by Foreign Direct Investment (FDI) directly, another 7 are generated in the wider economy. This translates into 339,790 jobs that are supported by FDI at the end of 2016. Secondary economic benefits impacts positively on the construction industry, the retail sector and the hospitality industry.

Overseas companies continue to be significant exporters from Ireland, with IDA clients exporting, based on preliminary estimates, approximately €149bn in 2015, almost 64% of all national exports.

In addition, IDA client companies spend €18.7bn in the Irish economy annual; €10bn on payroll and €8.7bn on Irish sourced materials and services.

IDA is working closely with its sister agency Enterprise Ireland on ensuring that links between overseas companies and indigenous firms are further enhanced, in order to deliver an overall macroeconomic benefit for Ireland.

Share of FDI within the EU

Ireland wins a much larger market share of European FDI than might be expected with 4.3% of all FDI projects coming into the EU in 2015. This is significant in light of the fact that Ireland constitutes just 1.7% of EU GDP i.e. Ireland is winning approximately 2.5 times the amount of investment that might be expected given its relative size.

Outlook

Martin Shanahan added: “Foreign investment in Ireland has clearly had a very strong performance in 2016. However, ongoing global political and economic uncertainty will continue to affect investor confidence in 2017. Competition from other jurisdictions for foreign investment has never been as strong – IDA Ireland has competed globally for business for decades and will continue to compete relentlessly to win investment and jobs for Ireland. A continuation of pro-enterprise policies is a pre-requisite to continue to win investments.”

“Ireland must concentrate on maintaining its competitiveness (including cost competitiveness) as well as continuing to invest in education and skills, infrastructure and enterprise supports. The National Competitiveness Council in its recent report Ireland’s Competitiveness Challenge 2016 highlights those areas which require urgent attention.

“Our membership of the European Union has become an even more important selling point since European referendum in the UK. Our membership gives us all important access to the European market, but it also gives us access to a European labour pool which allows talented people to come and work in Ireland. Given that it is access to talent that will dictate which jurisdictions win investment in the future, access to the European labour market is a significant positive for Ireland.

“While there is significant uncertainty, the jobs pipeline for the first quarter of 2017 looks promising. In 2016, job losses within IDA client companies were at their lowest level since 1997. Given market turmoil, Brexit impacts and cost competitiveness pressure, IDA does not expect this trend to continue.

“Many of the projects won in 2016 were capital intensive (€5.5bn in cap ex in 2015i), and provided strong additional benefits to Ireland. It would be a mistake to only think of FDI investments in terms of the number of jobs that they create directly in the company. Capital Expenditure associated with FDI investments has a huge knock-on effect for the Irish economy. This capital investment is spread throughout Ireland, with 63% of capital investment happening outside of Dublin. This has a significant construction employment impact through all regions of Ireland. Sectors like pharmaceuticals, engineering and manufacturing are particularly capital intensive, often investing tens of million in developing their sites. For every ten jobs created by an IDA client company, there are seven knock-on jobs created in the wider economy.”