WHAT ARE WE GOOD AT?:( Relatively) young and hard-working island state seeks work after falling on hard times. Talents include self-belief, a GSOH, partial third-level education and a friendly demeanour. Skilled in construction, IT, manufacturing, making and taking phone calls, and farming. Growing competency in science and technology, chemistry and pharmacy, financial services. Enjoys home improvements, shopping and socialising, travel and legal affairs (particularly fond of tribunals). All reasonable offers accepted.
WE THOUGHT we had it sussed, but then it all fell apart. Like a high-flying executive who suddenly faces the prospect of unemployment, Ireland is suffering from a crisis of confidence. As a nation we're middle-aged, we're not as sure as we once were, we're saddled with debt and we're doubtful that our skill-set is appropriate for the world in which we now find ourselves.
Our self-belief has been shaken. Were we ever as good as we thought? How did it all go so wrong? And more to the point, where do we go from here? When we prepare our CV, knowing that there are many others competing for the same prize, what is it that's going to land Ireland Inc the top position?
Ireland's story has changed over the course of its career. Once we were happy to labour in assembly jobs. That's before we went to college and became young Europeans. Then we got really smart - or so we thought.
Perhaps the most telling part of this analogy is the bit that all the experts agree on. We don't need a brand new career, at least not in the traditional sense. Our capacity for innovation lies at the heart of the solution. We've known that for some time now - we just need to redouble our efforts.
"The story for Ireland is not a question of sectors - it's about being at the leading edge of sectors," says Prof Patricia Flynn from Bentley University, Massachusetts, who has carried out extensive academic research on Ireland over the past 10 years. Flynn says that Ireland needs to avoid the mistake of becoming too narrowly focused on one or two sectoral areas as it risks becoming attacked in these areas by fast developing economies.
She feels the current strategy being adopted by Science Foundation Ireland, for example, is a good one, and is more diversified than people credit them for. "If you look at what they are doing in the life sciences area, for example, you will see they are spread across diverse areas such as biotechnology, pharmaceuticals and medical devices - all separate industries. They have a similar spread in the ICT sectors. The focus is on being ahead of the game in these areas."
Ireland can draw on past experience of not being ahead of the game. Ann Ledwith from the University of Limerick cites the example of Seagate, once a stalwart of Ireland's ICT industry.
The firm made disk drives in Clonmel in the 1980s, at a time when there were around 130 major firms in a thriving sector. But like others, Seagate was slow to react to the development of the new format 3.5-inch disk drives that transformed that industry. Today, there are just eight major firms in this sector.
Ledwith conducted a major research report recently, in conjunction with the Irish Management Institute, on "discontinuous innovation" in Irish firms - in other words, innovation that goes beyond incrementalism.
The results show that Irish firms understand the need for radical innovation, but are relatively poor adopters of such strategies. The researchers identified the top four strategies for radical innovation as sending out scouts, probing and learning, "deep diving" - in other words, actively observing how customers used products - and "working with active users" to enhance product and service features.
Lack of money was not the reason for the poor level of innovation found, especially in the SME sector. "These strategies are relatively cheap to implement and the fact that organisations are not utilising these strategies indicates that they are not using their existing resources to their full potential," Ledwith says.
Prof Eleanor O'Higgins of UCD's Smurfit School is more optimistic. A former board member of IDA Ireland, she says our industrial policy in recent decades demonstrates a good track record of being ahead of the game.
In the 1980s, for example, the successful attraction of international call centres, a relatively labour-intensive sector, was important at a time of high unemployment and a fall-off in traditional manufacturing. Moreover, the decision to develop a base of key players in the ICT and pharmaceutical industries attracted further investment over a couple of decades and laid the seeds of longer-term success.
The legacy of this policy is that Ireland now hosts seven of the world's top 10 information and communications technology companies, 15 of the world's top 25 medical device companies and nine of the world's top 10 pharmaceutical companies.
"There's a flexibility in this country, born out of necessity. When it comes to industrial development, we're good at getting things done quickly," O'Higgins says.
The IDA, she feels, still has a key role to play in the next chapter of our industrial development. "We shouldn't underestimate the continuing importance of attracting new foreign direct investment. Right now, we need to find things that suit our scale and capabilities."
Bob Kennedy, another seasoned observer of Ireland, thinks he may have some answers. Kennedy, who is executive director of the William Davidson Institute in the US and author of The Services Shift: Seizing the Ultimate Offshore Opportunity, says Ireland is well positioned to take advantage of several "megatrends" in the world economy over the next decade.
Most important among these is the fact that globalisation has come to the services sector, he says. India has seen services exports rise more than ten-fold in the past decade, and countries as diverse as The Philippines, China, Russia, and Romania are also experiencing rapid growth in services exports, he notes.
"Most firms will move to consolidate their administrative functions within the EU. Ireland is extremely well-positioned to capture a disproportionate amount of this work, as it has a highly skilled labour force, a flexible labour market in contrast to core EU countries, and an attractive business environment," he says.
Unlike the 1980s, this won't be low-end work either, like call centre or basic accounting services, he predicts. "Multinational firms will be looking for a corporate headquarters inside the EU at which it will do product management, marketing, product customisation, co-ordinated service, etc. Compared with other locations inside the EU, Ireland is an outstanding location," he observes.
Kennedy adds that Ireland should also take some comfort from Dell's decision to keep part of its activities in Ireland, including logistics, despite the loss of the manufacturing operations. "It would have been cheaper to do this work in Poland as well. But Ireland has the combination of talent, business environment, and cost to retain this work and win more of it," he says.
Given developments in Ireland's banking sector in recent months and the damage to our international reputation, any suggestion that financial services might provide a key plank to our future economic development strategy might appear, at best, fanciful to many.
Financial services have been a key part of our economy in recent years. Ireland managed to double its share of world services exports from 2000-2006 to hold around 2.5 per cent of the global market, and financial services accounts for over one third of this figure.
Brendan Kelly of Financial Services Ireland says that while the reputation of Ireland has been damaged by recent revelations, reputations can be repaired, and he anticipates better enforcement of financial regulation as a consequence of recent developments. "Contrary to perception, we are not in favour and have never sought light touch regulation. It is vital to the credibility of our financial services industry to have proper regulation."
Kelly says that while many sectors of the financial services sector are undergoing consolidation, there are still growth opportunities for Dublin in areas such as insurance, reinsurance and fund management. He points to the recent announcement of the creation of 100 jobs here by insurance firm Aon as an example.
But the world is watching. In the 2008 City of London Global Financial Centres Index report, Ireland climbed nine places to 13th on the rating list of financial centres, leapfrogging Paris. This index is considered to be a key tool in tracking the fortunes and perceptions of financial services centres. The 2009 report will be published later this month and will be read with interest.
Jonathan Westrup of the Irish Management Institute also sees cause for optimism amidst the current gloom. He says we should take inspiration from companies such as CRH and Kerry that have shown capability in competing in international marketplaces over a long period of time. "As a country we have a lot of capabilities, including high levels of education and good demographics. We need to show ambition rather than just rolling up in our shells."
The knowledge and innovation-led economy can take many forms, he agrees, citing the example of The Royal College of Surgeons having opened an advanced medical training facility in Bahrain recently as evidence that we can still compete well in the global economy.
John Power of Engineers Ireland agrees that adaptability is key to Ireland getting through this difficult phase. He also feels that there is a danger in becoming too reliant on a small number of sectors, citing the recent over-reliance on construction.
Apart from the industries where we already have a good base, such as ICT, pharmaceuticals and even financial services, there are a number of opportunities in areas such as energy, environmental management and water, he says. "We have to move back to an economy based on making money from things that add real value or are society-enhancing," he says.
Engineering has a vital role to play in this. While the civil engineering sector is experiencing a deep recession, this was just one part of the profession, he says. Engineers Ireland has been amongst the first of the professional body to make innovation a part of their professional education with new modules introduced in tandem with the Government's Smart Economy Blueprint, he notes, covering areas such as biomedical engineering, computer and software engineering and environmental engineering.
"If you think about it, an engineer's training is about identifying problems and then devising solutions. That lies at the heart of the innovation process."
