How to woo a multinational

Sat, Jan 12, 2013, 00:00

Dundalk attracted four major job investments by foreign companies in two years, according to new figures. What was it doing right?

Every town wants a PayPal. Last year Dundalk won the equivalent of an employment lottery when PayPal, the ecommerce payment system, announced it was bringing 1,000 jobs to the Co Louth town. Last year the inward-investment agency IDA Ireland generated 6,570 jobs in the State, with the help of foreign direct investment (FDI). Of those FDI jobs, Dundalk got 1,326, spread across four companies.

Dublin, Cork and Galway cities also did very well. By comparison, rural Ireland did not. So how does an Irish town attract foreign investment? What does a successful bid mean to a town? And what role does the IDA play in helping to focus international attention on various parts of the State?

Paddy Malone, president of Dundalk Chamber of Commerce, says: “For the previous 30 years, Dundalk had nothing.” He adds that during the Troubles, the town was controversially known as “El Paso”.

“We haven’t seen the impact of the job creation yet, because we lost a lot of jobs when Vodafone pulled out, but we will,” he says. Malone says the chamber is sometimes aware when potential foreign investors are coming on a visit, and help the IDA with local information, such as availability of housing.

“There is a huge benefit to a cluster effect,” he says. “PayPal coming here is a prime example of that.”

In the cases of towns or communities that don’t yet have many businesses of significant size, Malone suggests that “if 100 people set up companies of 10 people each, then they’d have a cluster effect. You have to sell the advantages you have.

“Not every town can get a PayPal. The company will make the decisions about where they want to go, and no amount of wishing they’ll go to Monaghan or Leitrim will bring the jobs there.”

For months there were rumours that PayPal would locate in Limerick or Dundalk. Can the IDA nudge a company towards a location where unemployment is particularly high?

“The most important thing is for Ireland to win the jobs,” says Barry O’Leary, chief executive of IDA Ireland. “We try and get a spread around the country, but that has proved to be a very, very difficult challenge. We’re not just competing within Ireland; we’re often up against other big cities – say Manchester, Barcelona, Prague.”

The IDA focuses on attracting investors in specific sectors: information and communications, digital media, technology, pharmaceutical and medical devices, and financial services, among others. They work with potential investors in advance of any visit to Ireland, usually meeting them in their home country first.

“From the minute they land to the minute they depart, we’re with them,” he says. “We put together a programme, bring them to locations, view potential buildings, visit competing companies, meet with legal firms, tax firms, recruitment companies.”

He says that our level of corporation tax is “an important part of decision-making, but we would never win business just on that”. Top of the list of the qualities companies are looking for is “a talent pool. And what sort of track record the area has. Are there research institutions nearby? Have they invested in other businesses?”

There are also a number of practical issues, especially for those who may be thinking of investing in a pharmaceutical plant. “Those people would need a site of at least 100 acres, two million gallons of water a day, and plenty of power. Not every location can deliver that.”

Small-town Ireland

O’Leary acknowledges it is difficult to get foreign investors to consider rural or small-town Ireland. “These people are often coming from Los Angeles or San Francisco, and by the time they land in Dublin they’ve already had two flights. Are they happy to take another two hours to get to the location?” The answer is usually no.

Of PayPal’s choice of Dundalk over Limerick, he says, “It’s always the company’s choice at the end of the day. It’s a very fine call at times.”

Apart from PayPal, in 2012 Dundalk also received FDI for three other companies. The pet-product company Radio Systems got 56 jobs; Diaceutics, a medical software company, got 20; and National Pen got 250. Pamela Harkness is the European recruitment and development manager at National Pen, which produces millions of branded and customised pens. The company is in a business park outside the town, opposite PayPal.

National Pen has 275 permanent staff and was approved for 250 additional seasonal jobs last year. It has been in Dundalk for 25 years. As an established company, does it really still need the IDA’s help?

“Yes,” Harkness says. “We’re the European HQ for the company, and we talk to the IDA about RD, product development, machinery development and expansion.”

What does Harkness believe helps towards a successful pitch for foreign direct investment? “We are halfway between Dublin and Belfast on the motorway, but it isn’t all about infrastructure. It’s also about the atmosphere of a place and the welcome people receive. There is a quality-of-life element. We’re a big town with a small-town feel. And we have a car park big enough to facilitate everyone. People have a five- or 10-minute commute.”

Harkness suggests other towns should be proactive in their attempts to secure investment. “Every town has a chamber of commerce. They should be banging on every door they can. If small towns can come together and work on winning Tidy Towns, then why can’t they come together as a group and see what else they can achieve?”

Diaceutics, which received investment for 20 jobs, is based in the business-incubation centre at Dundalk IT, which has 5,000 full-time and 1,500 part-time students.

“We work very closely with the IDA,” says Denis Cummins, the IT’s president. “A key part of decision-making, to invest, is the availability of graduates.”

The IT benefits in a number of ways from FDI. “We have work placements and internships, so the presence of these companies gives students an opportunity.”

Both PayPal and National Pen require staff to take calls from around the world. “That’s particularly good for our international students, who can offer their language skills,” Cummins says.

The IT has 500 international students, 300 of them Chinese. Dundalk already has two Chinese companies. “We have more students from Shanghai than Newry in this institution,” Cummins says.

“Chinese students can work up to 20 hours a week on their student visas, so the fact there is employment nearby is very helpful to them. Their fees are €10,000 a year, so being able to work is very important.”

The key benefit to Dundalk from the 1,326 jobs created last year is, says Cummins, “the spend that’s created locally. They all need accommodation, they use restaurants and bars. The benefits are not just economics, though: they are also social and recreational.”