The impact of US foreign direct investment is being felt countrywide, with companies now located all over Ireland.
However with rents continuing to rise in Dublin and the cost of living at an all-time high, more investment is needed outside of Dublin.
Significant foreign direct investment, by its nature, tends to gravitate towards major urban centres where skills and resources are found at the levels required by major enterprises, according to Shaun Murphy, managing partner at KPMG.
So what can be done to make regions around Ireland more attractive and how can Ireland secure future rural development, especially now, in light of recent changes in administration in the United States?
“With the right investment in digital and other infrastructure, combined with a concerted effort to build linkages between the domestic economy and inward investment, the benefits of FDI can be more widespread,” Murphy says.
He names Ludgate Hub in Skibbereen, west Cork, which provides high-speed internet access for local enterprises as an example of an infrastructure development that should be more commonplace in Ireland.
In terms of the benefits to locating outside of the major urban centres, David Carty, head of FDI at law firm William Fry, says one of the more obvious ones is cost-competitiveness. “People complain about every aspect of costs in Dublin. So whether it is locating an office space or securing a talent pool to work for you and keeping the loyalty of that talent pool, these things have the potential to be a lot easier in the regions.
“Obviously people do move around in jobs but they might do so less in a region,” he says.
Capacity is an issue
In terms of the ICT industry, he says capacity is an issue – therefore digital Dublin needs to grow beyond the city. “It needs to go to the regions, otherwise the costs will just keep on rising and the difficulties of retaining talent will grow.”
He says it is not possible to repeat each cluster over and over, but instead every region needs to work with what it has. “You need access to a sufficient talent pool and you need connectivity, be it access to airports, roads or ports.”
He adds the rollout of broadband and access to third-level institutions that provide the right courses are also vital.
In terms of how communities themselves might benefit from a big employer setting up in an area, there is one very obvious one – jobs as well as indirect jobs.
Carty adds that close collaboration between local companies and educational institutes in the regions is important. Graduates need to come out of college well-suited to the jobs that are available locally. He says a collaborative approach from all stakeholders is required.
“I know this is the approach the IDA is taking – different stakeholders in different regions working together.”
He says key players should ask the question, where does our region have an advantage and what do we need to succeed?
"Yes they may need central support from government but it's about people knowing what they're good at and what they're not good at and then targeting certain types of investment. We can't expect Microsoft to build in every small town in Ireland – it's not practical and it's not going to happen but some things are practical and some things could happen. There's a huge amount that's in the control of the regions that can be worked on and there are infrastructural things that will take a bit longer and that's all part of the mix.
“Nowhere is too far from anywhere else and we should get that in context. A huge amount of it is in our control to build on.”
He adds that quality of life for employees is important, something with which Mariano Mamertino, economist EMEA at online recruitment firm Indeed agrees. He says having a skilled workforce in an area is a top priority for companies looking to set up there.
This is something that might allay the fears of many, who worry that any changes in America’s own corporate tax rate, following Donald Trump’s election as US president, could see a loss of FDI to Ireland in general.
Mamertino says it’s the available talent more than incentives that bring technology-savvy employers and jobs into a country.
“Dublin already attracts workers from across the world with its rich cultural heritage and quality of life. This success must be replicated elsewhere in the country.”
Mamertino says 50 per cent of the most chronically unfilled positions in Ireland are technology-related. “With strong global competition to hire these skilled workers, talented technologists are optimising around their own happiness by choosing where they want to live, by seeking out employers that inspire, and by demanding increased workplace flexibility.
“The smartest employers are following these technology workers to the places they want to live, setting up software engineering offices and remote innovation centres in the locations around the world with thriving communities of technical talent.”
Leader in workplace flexibility
He says Ireland could have an advantage as a leader in workplace flexibility.
“Employers are underestimating the interest from highly-skilled workers in flexible options. New technologies have given rise to new ways of working, and work no longer needs to be centralised in clusters.”
He says that over the coming decades, Ireland has the potential to grow to become a major global technology centre.
“With the right policies and the right investment to secure Ireland’s place as one of the world’s most attractive places to live, while keeping an eye on rising property prices, the best and brightest tech talent will continue to migrate in their droves and build their lives creating economic potential for all of Ireland.”
But there are two sides to the story and while Dublin is an appealing prospect, high housing costs and the increasing cost of living threaten the future waves of talent to relocate to the country’s capital.
“This is where Ireland must learn from the warning signals emanating from Silicon Valley and the Bay Area. While the valley is still the hottest market for tech talent globally, there is an increasing exodus among 30-41-year-olds who have cut their teeth in the tech industry and are looking to take their talents elsewhere.
“The outward talent migration comes down to the fact that people are leaving to find better opportunities elsewhere or to settle down in more affordable areas where they can improve their quality of life. Cost of living and quality of life are inextricably linked.
“When housing prices get too high, the talented and the mobile look elsewhere. Similar trends can be seen with migration of tech talent out of London, not to other UK cities, but to Berlin and other tech hubs,” he says.
FDI around the country
With US foreign direct investment in Ireland as strong as ever, general manager of Johnson & Johnson and mid-west regional chair of the American Chamber of Commerce Ireland, Barry O’Sullivan, talks about FDI in the regions.
“The regional spread of US investment in Ireland is as strong as it has ever been. In September alone, US companies announced 1,300 jobs and over €260 million worth of investment. What was particularly substantial about September’s announcements was the locational spread, with Limerick, Cork, Galway, Waterford, Ballina and Drogheda, along with Dublin, benefiting from inward US investment.
“The scale of the investment should not be overlooked either. Announcements such as GE Healthcare’s €150 million investment in a biopharmaceutical manufacturing campus in Ringaskiddy or Fazzi Healthcare’s establishment of a healthcare services and coding centre in Limerick demonstrate the commitment and value placed by US companies to invest throughout Ireland.
“Excellent collaborations between US companies and their immediate eco-systems can be witnessed from Donegal to Limerick. A good example of this is US firm Pramerca, which has developed a close affiliation with Letterkenny IT to create a pipeline of suitable talent. In the south-west, Limerick for Engineering, an industry-led initiative by American Chamber members and other companies, supports the education and training providers locally to increase the quality and quantity of engineering talent available in the region.
“The chamber itself is also reaching out and holding roundtables with members, public representatives and key stakeholders in members’ localities around the country. A strong sense of local know-how feeds into the chamber’s engagement with government. In January, president of the American Chamber, Bob Savage, was one of a number of chamber members to be appointed to lead a regional task force advising the Government on regional job creation. Mr Savage chairs the south-west region and is joined by two former chamber presidents, Eamonn Sinnott (mid-east) and Gerry Kilcommons (west) as well as 2018 president Barry O’Sullivan (mid-west).
“The chamber is also hosting a ‘Future Leaders’ Forum’, which is aimed at inspiring the next generation of leaders among the management teams of our member companies. It launched in 2016 with regional events in Cork, Galway, Limerick and Donegal and will roll out next year across the country. Likewise, the chamber’s HR Leadership Group, a focal chamber voice on the talent pipeline, retention and skills, will also host a number of regional events as part of its 2017 programme.”