Is Enterprise Ireland worth the money?

BUSINESS OPINION: Do we really need Enterprise Ireland any more? In an economy at near to full employment and with some 1.7 million people at work, was there really much point in the Government spending something in the region of €153 million (£120 million) last year to create a net 1,000 jobs?

This spending figure comes from the recent Government Estimates, and is the total of three grants that Enterprise Ireland drew down in 2001 from the Exchequer.

The largest grant of €84 million was for administration and general expenses. The balance was made up of €64 million in grants to industry and €5 million in capital expenditure. One way of looking at this is that every €1 the Government gives to Irish business via Enterprise Ireland costs €1.31 to deliver.

This includes the upkeep of offices in Amsterdam, Beijing, Berlin, Boston, Brussels, Budapest, Copenhagen, Dusseldorf, Glasgow, Hong Kong, Kuala Lumpur, London, Madrid, Manchester, Moscow, Munich, New York, Paris, Prague, Riyadh, Shanghai, Silicon Valley, Singapore, Stockholm, Sydney, Stockholm, Tokyo, Vienna and last but not least, Warsaw. The network of offices seems hard to justify on the basis of a 1,000 job gain to the Irish economy last year.

To be more precise, Enterprise Ireland-supported companies created some 14,000 jobs last year, but another 13,000 jobs were lost at other "client" firms. The net figure of 1,000 seems pretty trivial compared to the net gain to the economy of around 50,000 jobs last year.

Given that IDA Ireland takes the credit for a net job loss of 3,900 at its client companies last year, the vast bulk of the jobs created in Ireland in 2001 would appear to have been achieved without the help or hindrance of either State agency.

The first item in the end-of-year statement issued by Enterprise Ireland last week was the number of new jobs created. This approach was fine in the good times, such as in 2000, when the companies supported by Enterprise Ireland created some 16,500 jobs - which translated into a net gain of 6,300 jobs. But it is not a very complementary measure in the current circumstances.

Perhaps part of the problem is that it is quite difficult to get a handle on exactly what Enterprise Ireland does. What are we to make of an organisation saying that, in 2002, it will "deliver 3,000 planned meetings between companies and key buyers, an increase of 20 per cent over last year. In effect our overseas office network will be engaged in a significant group client market development action every two working days this year".

I DON'T really know what a "significant group client market development action" is, but I presume it is something more than a telephone call from the Prague office to a Czech company that might possibly buy some Irish products. It would be useful if Enterprise Ireland gave some sort of breakdown next January of how many of these "significant group client market development actions" actually produced export orders for Irish firms and helped either secure or create jobs here.

In fairness, the agency has set itself some other more measurable goals - such as finding 50 new high potential start-ups this year and investing significant amounts of money in 130 businesses that have the potential to grow exports.

It is easy - as demonstrated above - to produce a number of arguments, some serious and other facile, for why Enterprise Ireland could be shut down. Those who work in the organisation are not indifferent to the issue and when asked to justify its existence they point to two things: the increasing amount spent by Irish business on research and development, and export growth.

The firms supported by Enterprise Ireland in 2001 increased their exports by 5 per cent to €11.5 billion. Leaving aside the food industry, exports grew by 9 per cent. Quite how much of this increase is down to Enterprise Ireland's efforts is difficult, if not impossible to quantify. Perhaps the way to look at it is that the agency provides services to companies that account for roughly 20 per cent of Irish exports - and exports are the driver of the Irish economy.

The value of this sort of economic pump priming is beyond question and the State needs an organisation such as Enterprise Ireland to deliver this assistance. The question is, does Enterprise Ireland need so many overseas offices and such a large budget to deliver State aid to industry effectively?

Enterprise Ireland would argue that it keeps a very tight rein on costs and points out that there will be no increase in operating costs this year, despite the opening up of the new offices. Savings have been achieved in a number of ways, but primarily by reducing the workforce from 1,000 to 900.

Does this imply there are other people who are not convinced that spending €1.31 to deliver €1 was good value?