The five inward investment projects announced yesterday by IDA Ireland have a much greater significance than the 54 jobs involved would imply. They are among the first tangible results of the agency's change in focus in recent years from pure job creation to targeting sectors and activities in which Ireland can have a long term competitive advantage.
The need to move Irish industry "up the value chain" from pure manufacturing to higher value activities has come to the fore since the emergence of China and other low-cost manufacturing locations during the late 1990s.
The vulnerability of Irish manufacturing jobs to competition from lower cost locations has been highlighted time and again. Only this week the computer giant Hewlett-Packard announced that it will seek to shed 10 per cent of its workforce as part of a move to cut costs by $1.9 billion. It is too much to hope that the company's 4,000 strong Irish workforce - most of whom are involved in manufacturing - will emerge unscathed.
A significant part of the Government's response to this trend has been to refine the mandate of the IDA, with an emphasis on encouraging jobs and investment that will have more staying power in the face of such global forces. Their response was to target companies that came here because of low costs, including the benign tax regime and encourage them to look at basing value added activities such as research and development here.
It was part of a wider strategy of which there have been several versions, the most recent being the action plan of the Enterprise Strategy Group announced earlier this year. Various other agents must play their part, not least the universities and other institutions that have to produce the scientists and engineers who will deliver the innovation and world-class research activities that the IDA claims can happen here. As of yesterday the IDA can say that it has started to deliver on its part of the plan. The IDA was at pains to point out that the number of jobs was not the issue, as much as the type of activity involved and the companies making the investment.
The agency no doubt takes particular pride that the companies include two of their oldest clients, Bristol-Myers Squibb and Citigroup who came here in 1964 and 1965 respectively. They in turn helped the IDA attract others multinationals like Pfizer - one of the IDA's largest clients and another company involved yesterday. They all came for the low tax rates and labour costs. Hopefully they will now stay for the human capital and once again prove an incentive for their peers to do likewise.