Good news in local job creation

For Dan Flinter, chief executive of Forbairt, 1997 has turned out to be a remarkable year, even better than forecast, and on present evidence, 1998 seems likely to turn in a repeat performance. All of this is good news for job creation in the indigenous employment sector. He expects that between 12,000 and 13,000 extra jobs will be created next year in Forbairt-supported companies.

It's all been a big change from the dreary years of the 1980s when growth in Irish-owned companies was dismal, around 2 per cent. Now, the growth rate is 8 or 9 per cent and in some cases, higher. The pain and suffering, like the corrections to the public finances in the 1980s, have paid off.

"All the conditions for sustained growth are right. I hope that we will be able to maintain them," he says.

In the first half of 1997, sales by Irish companies rose by 8.5 per cent, compared to the same half of last year. That sales pattern seems to have been replicated in the second half of the year. And Dan Flinter points out that a recent survey showed that 75 per cent of Irish businesses expect employment in their companies to rise next year.

Dan Flinter says that the indigenous sector has undergone a remarkable transformation. From 1980 until 1993 it was in decline, but during the past four years, all those job losses have been wiped out.

He explains that five sectors are showing the most rapid growth - prepared foods, sub-supply, software, electronics and, finally, the newest of them all, the Irish-owned healthcare/biotechnology sector.

In food, the traditional moan was that we always exported our raw materials. During the past five years, that's all changed, as highly innovative prepared food companies have developed. Their numbers include Rye Valley Foods in Co Monaghan, Nature's Best in Duleek, Co Meath, and Potato Cuisine in Drogheda.

There's lots of confidence now in the sector and good job openings for people in general management, product development, logistics and distribution, and the all-important customer support services.

In the sub-supply sector, Irish companies that are supplying to the big multinationals - the likes of Dell, IBM and Intel - are expanding fast. "They are supplying a greater proportion of these manufacturing companies' needs here in Ireland, but the multinationals' demands have changed quite dramatically. Many multinationals here increasingly want their Irish suppliers to supply them on a global basis."

More of these multinationals, like Intel, are running programmes designed to hook up Irish sub-suppliers with their global purchasing networks.

The national linkage programme run by Forbairt is helping multinationals bridge the supply gap here in Ireland. "We work very closely with IDA Ireland to ensure that new multinationals coming in understand the Irish market. It's a classic case of thinking globally and acting locally."

Software is expanding at a tremendous pace. Around 10 years ago, the indigenous software industry was virtually non-existent. Today, it supports 7,000 jobs and has had total revenues this year of over £500 million. Shortly after the start of the new century, comments Dan Flinter, Irish software companies are likely to be supporting over 12,000 jobs. At that stage, this new sector will account for 10 per cent of employment in the Forbairt base of companies.

In software, there's huge demand for engineers of all kinds, people with a technological background and also personnel who combine technical and marketing skills.

A sure sign of growth in this sector is that it's now attracting significant amounts of outside equity. A growing proportion of companies are going for a stock exchange listing, including the Developing Companies Market, in order to finance their long-term development and reward the people who have contributed to that growth.

People with high skill levels are coming together to form new companies in the expectation that they will take the rewards for their risk from the stock exchange.

Says Flinter: "This phenomenon has only happened in the last 18 months, with companies like CBT and Iona Technologies. More will follow."

He adds that people going into the software sector expect not just to do a job of work but to seriously influence the growth of that company, then realise significant value for that input. "Increasingly, stock options are being offered as an alternative."

However, Dan Flinter does point out that some sub-sectors in software are at much earlier stages of development.

In addition to software, the whole electronics sector is expanding fast, in a variety of modes, from companies making telecoms products, like Lake Communications and MDS Telephone Systems, to chip designers.

"We now have six indigenous companies doing chip design in Ireland. They didn't exist four years ago, but now employ in total 350 people." The engineering design opportunities at a very high level of sophistication are considerable, since this new sub-sector is showing the same growth levels as software. Companies like Silicon Software Design are already setting the headlines.

In communications, continues Mr Flinter, companies that are linked to the Internet should do well, although not many have cracked its commerciality. Companies in multimedia development should also do well.

The newest of these fast growth sectors is the indigenous healthcare and biotechnology industry. Companies like MedNova in Galway, which does medical devices, Biotrin Holdings in Dublin, which does medical diagnostics, Megazyme International, Bray, making diagnostic kits and Medtech, which has its offices in Sandyford and production in Clara, Co Offaly, which is involved in products for minimally invasive surgery, are all quoted as examples.

According to Dan Flinter, we are now at the stage that Irish software companies were at in 1990, although there are not quite as many companies up and running as was the case in software seven years ago. "But the new companies that are there are more sophisticated and are getting outside equity at an earlier stage."

The above five sectors are showing quite high underlying growth. In some cases, like food processing, growth is tracking GNP, while in other sectors, it's faster.

Many factors have helped this rapid expansion, including the determined efforts of Forbairt and ICC Bank to provide venture capital. Since 1995, says Dan Flinter, a total of eight venture capital funds have been put in place, with a total amount available of £60 million. The European Commission has been a great help and so too have additional funds from companies like Delta.

For a long time, adds Dan Flinter, industry talked about the equity gap. Now, it's easier for new companies to get seed capital; venture capital and then development capital, culminating in either a trade sale or a Stock Exchange flotation.

Other funding, like the Government's new £250 million Education Technology Investment Fund, should help. It's designed to help meet short, medium and longer-term skills needs of technology-based and other high growth firms.

Dan Flinter says that this economic growth is creating job opportunities at all levels, from graduates with three to five years experience, to people who have recently graduated, to people seeking semi-skilled production work on the factory floor. He also sees much change in the calibre of entrepreneur. "There's a different breed of men and women in business now, highly qualified, highly ambitious and very driven".