The Friday Interview: Ireland The IDA's CEO designate surveys a terrain of increased competitiveness and finds reason for Ireland to remain very confident.
Barry O'Leary reckoned he'd stay in the IDA for "two or three years" when he took a job with the investment agency in the 1970s, but he never left. Thirty years later, he's now poised to take over as chief executive.
O'Leary moves up to the top seat at a crucial moment. With slower growth forecast for the next three years, Minister for Finance Brian Cowen says the economy has passed a "turning point". Thus it will be all the more important in the immediate future for IDA Ireland to raise new investment - and lots of it - from the multinational world.
If a spate of job losses at illustrious employers such as Intel and Pfizer and the suspension of Amgen's supersized project in Co Cork gives the impression that hard times are already upon us, O'Leary disagrees. Jobs were created too, he says, citing new investments by Johnson & Johnson, Wyeth, Eli Lilly and others.
As befits a salesman, O'Leary is a tankard-half-full kind of fellow. He sees opportunities in the slowdown and maintains there's nothing exceptional in employment performance this year.
"I would be surprised if it was any way different than the norm . . . No matter what year you look at in our history, we always have churn."
Neither is there any diminution in the number of "significant" projects on the blocks - those with 100 jobs or an investment outlay of €100 million.
"Overall, if you look at our average of the last five years, it's about 108 projects that we back. They're split usually between new companies coming in, expansion for existing [ companies] and R&D projects. We would expect this year's out-turn - and we're still in play for a fair number of them - to be broadly speaking in line with other years."
O'Leary takes over in January from Seán Dorgan, who has tirelessly stressed the need to bring investment projects "up the value chain" and campaigned to improve competitiveness generally.
While some say the very lack of competitiveness in many areas means the downward forces now at work in the economy could extract a very heavy toll, the new man is not perturbed by the change in Ireland's economic prospects. Au contraire.
"The type of economic growth we're going to have will probably lead to an improvement in overall national competitiveness," he says. "The lower growth is probably going to put some pressure on pricing and costs and therefore lead to competitiveness."
O'Leary saw just that when he worked for 15 years in Germany during the 1980s, 1990s and 2000s.
But if Ireland is to get back into line, does that mean more pain here in the near term? "To put it into context, Ireland is not out of line in the businesses that we go after," O'Leary says.
Be it in the core strategic sectors of information technology, financial services or globally traded services, he says Ireland is not competing on costs. Neither are Switzerland, Singapore and the eastern states of the US, the locations that most often compete with Ireland for investment.
The other core sector is life sciences, which includes pharmaceuticals, biopharmaceuticals and medical devices. With nine of the top 10 global pharmaceutical companies and 15 of the top 25 medical device groups in Ireland, O'Leary makes the point that cost is not the determinant in their investments here.
"One of the common themes going through those is that they're nearly all a model called 'development and manufacturing'. They integrated the development and the manufacturing. And typically these investments could be around €1 million per employee, so it would be wrong to say that Ireland isn't competitive in that.
"That's definitely not the case because we're the largest centre in the globe outside of the US for that type of model. We will continue to grow that, although Amgen is on hold. We will shortly have further investments in that space. I think that's important, that wide strategy that's never just for one company."
For IDA Ireland generally, he says, a key strategic task is to encourage investor companies to deepen their involvement here. For example, he cites a new software project at IBM, whose previous concentration was on manufacturing. "Regardless of what sector, the message is you have to continually evolve. You'll find Apple in Cork have more people today than they ever had when they were just manufacturing but the mix is completely different."
Another strategy is to identify new business models and mobilise quickly to take advantage of them. Here, he cites the arrival en masse of the internet titans to Ireland and development of European headquarter operations here by groups such as Kelloggs.
"Four years ago, we didn't have Google, we didn't have Amazon, didn't have eBay Paypal and didn't have Yahoo. They probably have 3,000 to 3,500 people between them."
On tax, he says "misguided" is but a mild term he would use to describe the debate on a common corporation tax rate in the EU.
"The danger is that Brussels is very, very inward-looking in terms of the global nature of competition for foreign direct investment . . . It's unhelpful in the global race for FDI."
O'Leary does not approve of international groups with little or no staff here using Ireland as a tax haven but says the phenomenon is not widespread.
"The big question is, did they have very little substance and huge profit in Ireland? I doubt that very much because you don't get away with it from a tax planning point of view if you don't have substance," he says.
"If they're using tax, they put substance beside it. You could quote Wyeth, you could quote Abbott, you could quote Johnson & Johnson, Intel, Hewlett-Packard. Just look at the sheer physical presence that they have - and they're taking advantage naturally of tax, but they've huge substance.
"I don't think we would ever ever be in favour of people having one or two people and running hundreds of millions of profits of no substance."
On the quality of the electricity system, a bugbear of his predecessor, O'Leary says IDA Ireland doesn't lose projects because power is not available. "Time will tell as to whether electricity costs are going to be more competitive but they do need to be more competitive," he says.
Within IDA Ireland, he says, any incoming chief executive will have his "own particular approach" but he won't reveal anything about that before telling his staff. He wants to maintain the IDA's "pre-eminent position" in the FDI market, enter strategic areas such as convergence technology and services innovation, and ensure the "continuous transformation" of the body's portfolio.
After a lifetime in the IDA, did he ever think he'd one day become chief executive? "I don't think I'll answer that," he says.
ON THE RECORD
Name:Barry O'Leary
Age:56
Job:IDA Ireland chief executive from January.
Background:He grew up in Donnycarney, Dublin. He studied industrial engineering at the College of Commerce, Rathmines, and worked for the Smurfit group before joining the IDA in the late 1970s. He worked for the agency in Munich, Cologne, Dusseldorf and Frankfurt.
Family:Married with two grown children.
Something that might surprise:He loves cooking - Italian style. If in Dublin, he'll cook two or three times a week.
Something you might expect:In his three decades with agency, he has seen quite a few a changes in the investment world. "The change that happens means that constantly you have to be coming up with new ways of doing things."
