Irish business may benefit from jitters over Swiss EU migration

When Taoiseach Enda Kenny vowed to make Ireland the best small country in the world to do business, we don't know if he had Switzerland on his radar.

The land-locked alpine country is home to dozens of multinationals at the top of their game: the world's largest food conglomerate Nestlé, pharmaceutical giants Novartis and Roche, as well as the banking and insurance behemoths UBS, Credit Suisse and Zurich.

But after writing the book on how a small country can punch above its weight in the business big leagues, Switzerland’s next chapter is less certain.

As one of the world's best places to do business, Switzerland this week attracted 70 Irish companies on an Enterprise Ireland (EI) trade mission. The visit comes amid ongoing uncertainty after February's referendum backing a cap on inward EU migration.

The shock result, forcing a renegotiation of Swiss bilateral ties with the EU, has left international companies wondering whether further investment here is wise, or whether their money might be better spent in an EU state. One name often mentioned: Ireland.

Expertise overlap

That was the setting for this this week’s EI visit headed by Minister of State for Research and Innovation, Seán Sherlock.

Even a cursory glance reveals ample Swiss-Irish overlap of expertise and potential for knowledge exchange: both countries offer business-friendly (fiscal) environments, have world- class expertise in pharmaceuticals, medical devices and information communications technology (ICT), not to mention strong food and drink sectors. On Wednesday, Sherlock held high-level meetings with executives from two big Swiss players in Ireland, Novartis and Nestlé.

With the latter the Minister underlined the parallels between Swiss conglomerate's growing food-for-health sector and Ireland's own Food Harvest 2020 plan to increase milk production by the decade's end.

“The meeting showed there is a complementarity between their vision globally and where Ireland is pitching itself,” he said. “Aside from Ireland’s current relationship with Nestlé, producing baby formula, there may be new opportunities in the manufacturing process.”

Among the 70 EI clients in Switzerland to learn about doing business there were companies already reaping the harvests.

Like Irish construction company Mercury, which announced a multi-million deal with US company Equinix to extend a Mercury-built data centre in Zürich, following other projects for the company in Dubai, Frankfurt and Geneva.

For Mercury executive director Frank Matthews the project, to begin next month and be completed in December, is another vote of confidence in his company and in Ireland Inc.

Matthews says the key to business success in Switzerland is a targeted approach, flexibility in execution and lots of prior homework on everything from the tax system to labour law.

Steep learning curve

“If you go in thinking you can transpose your Irish model you’ll find yourself on a steep learning curve on everything from certification to sign-off,” he said. “You also need to build relationships with smaller local companies. We would tend not to bring tradespeople out with us but look at the local market. Our Swiss sales pitch was that we can do everything, but we learned quickly that we needed the support of local partners to deliver on that.”

Having local knowledge is an advantage enjoyed by Cork- based cloud storage company MPStor. The firm's chief executive William Oppermann was born in Ireland to a Swiss family and, after earning experience and key clients in the US, he is now targeting Switzerland and its European neighbours.

Oppermann is optimistic Swiss clients will be as interested in his company’s scalable cloud storage as Bank of Ireland’s Kernel Capital, which recently granted it additional funding of €1.5 million.

“You need to be very technically capable and able to succeed here; you need to go in with credible references and establish a good relationship – something [the] Irish are good at doing,” he said.

Enterprise Ireland has launched a targeted campaign for Irish exporters interested in doing business with Swiss companies. The campaign focuses on tapping overlapping expertise in pharmaceuticals, medical devices and financial services. With Bord Bia, it has also pushed ties in the food sector.

It's still far from clear whether Irish business can benefit from the uncertainty over February's Swiss vote to cap inward EU migration. European Commission president José Manuel Barroso said the February 9th vote was "a very serious matter" and that Bern could not cherry pick access to EU markets, while simultaneously closing its labour market.

Cloud of uncertainty

Swiss negotiations with Brussels are likely to last two years, creating a cloud of uncertainty over whether international companies operating here will have guaranteed access to EU markets, not to mention the staff they need for their Swiss operations.

"There are several firms that say they're leaving – around half-a-dozen – and many others who aren't investing," said Mr Jan Atteslander, head of international affairs at Economie Suisse, the local industry federation. He says the full cost of the uncertainty will only be clear when 2014 investment figures become available.

Until then, he says Ireland is increasingly mentioned by international managers in Switzerland looking for a safer European alternative.

“Ireland has no need to advertise,” he said. “Every international manager who knows his business knows how good Ireland is.”

Mr Sherlock is diplomatic about Ireland’s prospects in poaching investment into Switzerland.

“Ireland always puts its best foot forward and sells on its own terms and the political arrangements that exist in other countries are a matter for them,” he said.

“The difference between Ireland and Switzerland is we are members of the EU and an English-speaking country, which allows us act as a bridge and entry-point into the EU.”

Regardless of how the Swiss- EU talks progress, EI manager Eddie Goodwin is confident the Alpine republic offers rewards for Irish firms ready to put in the time and effort to establish long-term relationships.

Existing EI client companies here have recorded 47 per cent export growth over the previous three years, with six per cent growth last year to over €250 million.

Among the top EI exporting clients are medical packaging company Steripack, Irish Country Meats and Anglo Irish Beef.

"We have almost 200 Irish companies doing business here versus 450 in Germany despite the vast differences in population and market size," said Goodwin, EI manager for Germany, Austria and Switzerland. "I think that speaks for itself."