The importance of research and development in attracting US investment

According to IDA Ireland, the State’s inward investment agency, Ireland’s research, development and innovation (RD&I) landscape has transformed over the past two decades.

In 2000, total annual government investment in research and development (R&D) was less than €250 million. Today it is approaching €1 billion.

Ireland’s research and innovation strategy Impact 2030, which was launched last year, aims to intensify the Government’s commitment to building a knowledge-based economy.

IDA Ireland, one of the stakeholders feeding into this strategy, is helping foreign subsidiaries in Ireland to increase their productivity and innovative capacity through investment in training and upskilling their employees. It also engages with its FDI client companies on the addition or extension of RD&I to their mandates in Ireland.

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Ireland’s RD&I expenditure tipped €3.8 billion in 2021, up 19 per cent on 2019.

Irish-owned enterprises, which account for 30 per cent of total RD&I expenditure, saw a 22 per cent increase from 2019, up from €963 million to €1.2 billion. The remaining 70 per cent of RD&I spend comes from FDI.

According to IDA Ireland, the bulk of RD&I expenditure in Ireland is undertaken in-house, totalling €4.8 billion in 2021. Spend by US-owned operations represents the lion’s share of this, at 87 per cent.

Outsourced expenditure has also increased year on year, reaching €2.6 billion in 2021, with 90 per cent of outsourced RD&I spend being made by US-owned operations in 2020 and 2021.

Indeed there has been substantial growth in the total expenditure on RD&I by US-owned operations here, which reached €6.5 billion in 2021, a 72 per cent increase on 2019.

Banking on innovation

Multinational companies headquartered in the United States here span a range of sectors, from ICT and pharma to financial services. They include BNY Mellon, which has spent almost three decades in Ireland, with offices in Dublin, Cork and Wexford delivering a broad range of services to traditional and alternative asset managers, banks, pension funds, insurance companies and corporates.

“BNY Mellon is proud of its leading role within Ireland’s unique financial services ecosystem, which has been built up from 30 years of growth and effective collaboration across industry stakeholders. This all amounts to a substantial contribution for regional development, national economic growth and global innovation,” says Paul Kilcullen, chief executive of Funds Services Ireland and Ireland country manager, BNY Mellon.

The “track record of collaboration between industry, university and research institutions in Ireland is also critical for our collective success and dependent on sourcing and developing talent to generate the diverse and inclusive workforce that’s needed for the future,” he adds.

BNY Mellon recently announced the establishment of a new digital R&D hub in Dublin that will drive innovation in artificial intelligence (AI), machine learning and data analytics.

The development includes an initial €8 million investment, with support from IDA Ireland, which will strengthen BNY Mellon’s role as a leader in developing AI technologies and expand on existing technology capabilities located in Ireland.

As a result of the announcement BNY Mellon is seeking to recruit a range of AI and technology specialists in Ireland, including experienced data scientists, and product and design thinking specialists.

“Based in Ireland, the team will help deliver on the bank’s European and global R&D ambitions. These ambitions are to build on already established achievements with increased investment in leading edge innovation, development and delivery resulting in the filing of the highest number of patent applications in the bank’s history last year,” says Kilcullen.

RD&I taking flight

RD&I is a core activity for Collins Aerospace too. The company is part of Raytheon Technologies, the world’s largest aerospace and defence company by revenue. It employs more than 73,000 people across some 300 sites globally.

Collins has had a presence in Ireland for more than 35 years, employing 170 people at its Cork and Shannon operations. It designs, develops, manufactures and supports a comprehensive range of solutions for the aviation sector.

The Collins Aerospace site in Cork has capabilities in applied research and technology (ART) and is part of a global technology and open innovation resource team spanning Europe, the US and Asia within Collins Aerospace.

“ART leverages combined engineering expertise across Collins Aerospace and Raytheon Technologies to create differentiated systems-level solutions across a range of disciplines,” says Ray Foley, director, advanced systems and demonstrators for ART at Collins Aerospace.

Globally Collins Aerospace saw $18.4 billion (€16.95 billion) net sales in 2021 and invested $3.1 billion in R&D, about three-quarters of which is in technologies that drive improved sustainability.

It has about 30,000 patents in-force or pending, “enabling limitless integration possibilities and nearly $1 billion planned investment over the next five years”, says Foley.

The Cork site is one of the largest Ireland-based industrial participants in EU Framework programmes such as Horizon Europe and its joint undertakings including Clean Aviation, Clean Hydrogen and the Single European Sky Air Traffic Management Research (SESAR) programme, which aims to modernise European air traffic control infrastructure.

“We engage with universities and research centres as part of these programmes on a direct basis to access the excellent technical capabilities and talent. Collins Aerospace has been very active in collaborating with Irish universities and research centres,” he explains.

Its most significant investment was at the Insight SFI Research Centre for Data Analytics at University College Cork, which is focused on artificial intelligence, data analytics and machine learning.

“Collins Aerospace has also partnered with most Irish universities in EU Framework programmes, in addition to many research-active Irish based companies, from SMEs to multinationals,” says Foley.