FRIDAY INTERVIEW: Joanne Richardson, chief executive, American Chamber of Commerce:WHEN JOANNE Richardson took up the mantle at the American Chamber of Commerce in 2001, she never imagined that, 10 years later, she would be speaking live to CNBC news from Dublin as Ireland's economic situation reached crisis point.
“It was extraordinary. All of a sudden the eyes of the world were on Ireland. There were cameras outside the door. We had to give reassurance to people, particularly to the corporate world in America, about what was happening here on the ground.”
The image of Richardson liaising with the world’s media as Ireland hit the economic maelstrom last November, illustrates how far the role and responsibilities of the American Chamber of Commerce have changed since its inception back in the early 1960s.
The organisation, which celebrates its 50th anniversary this year, grew out of the first wave of investment into Ireland, when companies such as Abbott, TWA and Squibb arrived in Ireland, lulled by the combination of tax incentives, loans and labour measures contained within TK Whittaker’s plan for economic expansion.
The association was something of a sleepy affair in its early years – “More parties in the park and links with the embassy” as Richardson puts it. It was only in the 1990s that it really started to become a force, as the scale and size of American foreign direct investment (FDI) in the country accelerated.
By the mid-1990s, as the scale of US FDI in the State increased, the organisation restructured and refocused itself. In 2001, Richardson, formerly head of Delta in Ireland, was brought on board to head up the organisation. Today, Amcham as it is known, represents 600 US companies operating in Ireland. Together they employ approximately 100,000 people here and export more than €90 billion of goods and services into world markets each year.
Nonetheless, it is somewhat ironic that the organisation is celebrating its 50th anniversary in Ireland at one of the most difficult junctures in Ireland’s economic history, a time when the country is trying to repair its bruised image abroad.
Next week Ireland will play host to US president Barack Obama, a visit that Richardson hopes will give a much needed boost to Ireland’s international reputation. She believes the visit “sends a strong signal of US confidence in, and support for Ireland”.
But despite talk that the visit will highlight the deep political and economic ties between Ireland and the US, significantly Obama is not scheduled to meet any business leaders during his time here. Obama ruffled the feathers of Ireland’s multinational community within months of his inauguration in 2009 by announcing plans for sweeping changes to US tax rules which would affect American companies operating in Ireland.
The laws, will have to be passed by Congress, and legislation has not yet been put on the agenda.
“We are aware of ongoing discussions on Capitol Hill and we’ll continue to monitor developments – especially as the next administration takes shape” says Richardson, though she adds that any major changes before then seem unlikely given the current make-up of the House of Representatives.
“Ultimately, US corporations are multinationals that need strategic locations around the world to compete properly. US taxation policy over the past five decades has supported US firms to become leading players in the worlds economy. We expect that any policy changes would keep that to the fore.”
While the possibility of US tax changes remains a lingering issue, the continuing debate about Ireland’s corporate tax rate is of more pressing concern. Richardson is refreshingly upfront about the primary role corporate tax plays in the multinational decision-making process. “It’s top of the list. The corporate tax rate is what enables us to go out and get investment. Yes, we have wonderful skills and an educated workforce but so does everywhere else – and they’re getting better at it.”
Asked for her response to an anecdote concerning the head of a major multinational who reportedly told staff recently that the company would leave Ireland within 18 months if Ireland’s corporate tax was changed, Richardson is nonplussed. “There is no doubt about it. If our corporate tax changed it would definitely impact.”
She cites a recent OECD multi-country study on tax which found that one of the most damaging things a country can do to its economy is to increase corporation tax. “The study found that even a 1 per cent increase in corporate tax can impact up to 4 per cent of foreign direct investment. This this would have a massive impact on the amount of jobs created by FDI.
“Look at Puerto Rico, a a big destination for pharmaceutical companies. It increased its corporate tax overnight about a year and a half ago without any discussion. It is now off the radar for companies looking to invest.”
Richardson is also critical of the Common Consolidated Corporate Tax Base (CCCTB) proposal which she says is “unworkable” in its current form. “It seems to be driven by civil servants and the EU rather than industry-led, and is heavily weighted towards the biggest countries.”
Also of concern is the nature of some of the discussion around the issue which she describes as “unhelpful”. “Investment decisions are being made two or three years in advance, so companies need certainty. The CCCTB discussion could take 10 years. They have been trying to harmonise VAT in the EU for 50 years and they haven’t managed to do it yet.”
Changes to Ireland’s income tax structure is also becoming an issue for US multinationals she says. “Income tax changes, as well as increased taxation on share incentives and pensions are beginning to have an impact. We are already seeing existing employees looking to move abroad with their companies, while it is becoming more difficult to attract high-end talent from abroad. It is also putting pressure back on companies to increase gross salaries.”
Despite concerns about taxation issues, Richardson is resolutely upbeat about Ireland’s prospects. She believes next week’s presidential visit is an important step in rebuilding Ireland’s international reputation.
“While the visit will be an opportunity for president Obama and members of his administration to see at first hand the resilience of the Irish economy, it will also crucially show American companies at home that we are working our way out of our current financial difficulties.”
Ultimately, Richardson is confident that Ireland can maintain the level of US investment it has built up over the last 50 years. “Yes, there are challenges, particularly from rapidly expanding emerging economies such as Malaysia, Indonesia, South Korea, but the transatlantic economy is still the largest economy in the world, and US companies will continue to look to Europe.
“Our job is to make sure that we are at the table when those investment decisions are being made.”
On The Record
Name: Joanne Richardson
Age: 49
Position: Chief executive, American Chamber of Commerce, Ireland
Hobbies: An avid golfer
Why she's in the news:The American Chamber is celebrating 50 years in Ireland this year
Something you might expect:She was one of the youngest general managers to be appointed by Delta Air Lines in Europe
Something that might surprise?Despite having spent the last 25 years working for American multinationals, she has never lived or worked in America
