It was perhaps fitting that on one of his last public outings before handing over the baton as minister for finance, Michael Noonan got to announce 400 new jobs in his home city of Limerick on June 12th. Backed by the IDA, they are to be provided over the next five years by US financial services group Northern Trust and will bring its headcount here to more than 1,500.
This represents the third biggest jobs announcement by a US company in Ireland so far this year and highlights the continued strong flow of investment post the election of Donald Trump as president. In his campaign for the White House, Trump made a big play of bringing jobs home and of slashing corporate tax rates.
We’ve yet to get the fine details behind his plans and, thankfully, foreign direct investment (FDI) continues to flow into Ireland from the US, as evidenced by the Limerick announcement.
Clive Bellows, country head for Northern Trust in Ireland, said the new jobs signalled its “commitment to Ireland”.
Maintaining a strong flow of investment from the US is crucial to the Irish economy. US client companies of the IDA employ more than 144,000 people in Ireland and account for 7 per cent of people at work employed here.
According to statistics from the CSO, that’s more than the numbers employed in agriculture, forestry and fishing (107,700) in the first quarter of this year, and was on a par with construction (142,500). This is big business for Ireland.
Data from the IDA also shows there were 176 new US FDI projects here in 2016, with 13,500 jobs created in Ireland last year by American multinationals.
“The US still remains the key market,” says Martin Shanahan, chief executive of the IDA. “It accounts for about 70 per cent a year of the FDI investment that we get in.”
Shanahan describes 2016 as a “really strong year” for the IDA and says FDI from the US so far in 2017 has been encouraging.
However, there are caveats. Shanahan acknowledges that Trump’s potential policy measures on tax and jobs have created some uncertainty for US companies but says there is little evidence yet of them impacting on investment decisions here.
“The expectation was that there may have been some softening [in FDI by US companies] until they saw policy details from the new administration. But the signs now are that companies are simply moving on with their decisions. We’re cautiously optimistic about this,” he says.
In addition to Northern Trust’s jobs announcement, Microsoft has announced 600 roles for its EMEA sales centre in Dublin, recruiter Indeed is planning 500 jobs as it expands its EMEA headquarters here, while pharma group MSD has announced 320 additional posts for Carlow and Cork as it expands its production facilities.
In May, JP Morgan, the world’s biggest investment bank, confirmed it would be expanding its Irish operation, which already employs about 400 staff.
Shanahan says the IDA’s focus in terms of US investment would continue to be on the core sectors of IT and social media, pharma, financial services, and medical devices, albeit with twists to reflect new innovations and technologies, such as artificial intelligence, virtual reality, and fintech.
Positives
Our attractive corporate tax rate and the fact that Ireland is an English-speaking member of the eurozone are both long-standing positives driving US investment here. But there are others.
Like our strong transatlantic air connectivity, and the availability of skills and languages in the market.
Internet data storage company Dropbox announced its intention to set up in Ireland in late 2012 with encouragement from U2’s Bono and The Edge, who were investors in the company.
According to Adrienne Gormley, global head of customer experience for Dropbox here, it started with a “landing party” of 10 but the business has built to the point where it now has a couple of hundred staff, with offices in other parts of the region reporting into Dublin.
Some global functions are also now operated by Dropbox out of Dublin, as her title suggests.
Gormley says it was the availability of talent rather than low taxes that attracted the company to Dublin. “There are lots of [LOW]tax destinations across the globe but for us it was all about talent,” she explains. “It was about being able to ensure that we could get executive-level talent across a number of disciplines.”
Gormley says it’s no longer the case that foreign nationals come here to work simply because it’s “cool to come to Dublin for a couple of years after graduation to learn English”.
“There are other things,” she says. “Ireland is an easy place to do business. The IDA and others are also helpful when you’re starting up and building a network. And there’s a collegiate business community here, which is great for networking.”
She says Ireland offers an excellent bridge between the US and Europe and neighbouring regions. Some 40 per cent of Dropbox’s customers are based in EMEA, which is served by Dublin. “This adds enormous value to Dropbox globally.”
Ireland’s corporate tax regime was put under the spotlight last year when the European Commission decided Ireland should collect €13 billion from Apple in back taxes on activities that were routed through business entities registered here. It’s still not clear how much of that tax Ireland would receive and how much would be distributed to other countries.
Both Ireland and Apple have lodged appeals to the Commission’s findings and the case is likely to run for a number of years. Setting aside the respective arguments of the case, has the negative publicity associated with the issue damaged Ireland in the eyes of overseas investors?
“The global headlines are not helpful . . . but there’s no evidence that it has at all,” Shanahan says, while stressing the Government has been “resolute” in reiterating its support for our 12.5 per cent headline rate of corporate tax.
“Ireland has one of the most transparent tax systems in the world,” he adds.
Brexit is another major challenge for Ireland, although there could be a positive spin-off effect in terms of financial services, with a number of banks expected to relocate some services from London to Dublin to maintain their EU passporting rights.
Feargal O’Rourke, managing partner with the Irish professional services firm PwC, described Brexit as a “mission critical issue” for US companies and said Ireland was well-positioned to win investment. “Our standing is very high at the moment,” he says. “I think we will get a fair share of Brexit relocations.”
The IDA’s success in keeping investment flowing into Ireland post the Irish economic crash in late 2008, particularly from the US, was praised by O’Rourke. “Ireland is up there with Singapore in terms of being the leading location in the world for attracting FDI,” he says.
“The UK probably has five or six times the resources that the IDA has yet if you go to the west coast of America you see how close the Irish guys are to their clients. There’s no question but the IDA is in the top two or three national development agencies in the world.”
Michael Noonan wasn’t the only senior political figure to step off the stage in June. Former taoiseach Enda Kenny made way for a new leader after six years in the role.
O’Rourke praised Kenny’s contribution in selling Ireland to US investors, particularly during the troika bailout years of 2011 to the end of 2013. “There’s no doubt that he portrayed an Ireland that was open for business and welcoming of US investment. He projected a very positive image of Ireland and that went down really well with American investors.”
In spite of the positivity towards Ireland, O’Rourke says there is no room for complacency when it comes to attracting FDI from the US. “We have a good track record over the past 15 years in terms of the Government’s development policies but you can never be complacent.
“We probably have a higher share of the FDI market than the size of our economy relative to the EU and elsewhere but the day that we say it’s mission accomplished, we’re in real trouble.
“You have to go at it again and win the next investment and the next expansion. It’s an unrelenting struggle.”
Five biggest US FDI announcements in Ireland over the past 12 months
Northern Trust: 400 jobs in Limerick (operations expansion 2017)
Microsoft: 600 jobs in Dublin (EMEA inside sales centre 2017)
Indeed: 500 jobs Dublin (EMEA HQ expansion 2017)
MSD: 320 jobs in Carlow and Cork (expansion of production facilities on back of demand for medicines and vaccines produced in Ireland 2017)
Fazzi: 300 jobs in Limerick (established a new coding and healthcare services company here, creating 300 jobs over five years.)
