Confidence is key if Irish firms are to beat the recession

23 Dec 2008

Despite over 10,000 jobs being created in the past year by Enterprise Ireland-backed companies, some 8,000 jobs have been lost mainly in construction-focused firms, the state agency said in its annual results.

However, as Irish firms break into new markets, including Brazil, Russia, India and China (BRIC), chief executive of Enterprise Ireland Frank Ryan warns that keeping home-grown firms’ confidence up is at the utmost importance in these perilous times.

“It is important that we acknowledge the challenges ahead for our companies, but we remain determined in the implementation of our strategy and our pursuit of export sales,” Ryan said.

“The environment is challenging, but Irish companies are resilient and adaptable, and our international competitors face many of the same challenges.

“Those companies with ambitions to be world leaders continue to be steadfast in securing their future, and continue to invest in their growth, in their R&D and in their people, even in more straitened times.

In its End of Year Statement, Enterprise Ireland estimates that export gains of up to €1bn will be achieved by its client companies this year, despite the unprecedented global economic environment.

That this is being achieved in the face of contracting international markets, Ryan said, is a credit to the tenacity and resilience of those Irish companies that continue to compete for and win new business overseas.

While in 2008, Enterprise Ireland client companies gained 10,522 new jobs, there was an overall net decline of 8,003. These employment losses are being generated by companies that continue to trade but are reducing staff numbers.

The construction and construction-related sectors account for 65pc of the losses, while the software, medical devices and internationally traded services sectors contributed significantly to the job gains.

“In the coming year, international sales will be hard won, but it is innovation, quality and value that will set Irish companies apart from their international competitors, and continuing focus and investment in these three areas will be crucial,” Ryan said.

“Those companies that combine value-adding, innovative products and services with efficiency and productivity are the ones that will thrive in the face of the challenges of 2009,” he said.

Irish companies continued to invest in R&D in 2008. Strategic targets for the numbers of companies engaged in R&D projects involving investments of €100k and €2m annually will be met or exceeded.

2008 saw the biggest investments to date in R&D by large companies, and a greater number of small companies engaged in high level R&D.

Building competitiveness in existing industry has become a priority in the face of growing international competition. The newly established €60m Growth Fund is designed to assist Enterprise Ireland’s small- to medium-sized clients achieve greater competitiveness by improving their export potential.

This will be achieved by increasing gross output and productivity, while also providing new employment or maintaining existing employment levels in clients throughout all counties.

“Job losses precipitated by recent factors, such as the global credit crunch and economic downturn, are of course a significant concern,” Ryan said.

“Job retention and creation is always a priority for Enterprise Ireland. We work to retain and create jobs in existing companies by improving their competitiveness and access to overseas markets, and we are focused on the creation of new jobs through supporting entrepreneurs in setting up new high-potential start-up companies,” Ryan said.

High-potential start-ups (HPSUs) continued strongly in 2008, with 70 new high export growth potential companies established. These were in sectors as diverse as life sciences, medical devices, software, services and food.

The pipeline for 2009 is healthy, Ryan said. “Enterprise Ireland also partners with seed and venture capital funds to provide equity finance to clients. Under the 20072013 National Development Plan, Enterprise Ireland has committed €175m towards new seed and venture capital funds – being developed in partnership with the private sector.”

As a result, approximately €500m has now been raised for investment in high-tech Irish SMEs.

This includes a €30m fund established by AIB, a €70m fund established by Bank of Ireland Kernel Capital Partners based in Cork – the first to be established outside Dublin under this initiative – a €75m Ulster Bank Diageo investment fund and a €75m Fountain Healthcare Partners fund.

Ryan said a big focus of Enterprise Ireland’s strategy for 2009 will be on growing Ireland’s internationally traded services sector.

“Our plan for the growth of internationally traded services will involve further growing those companies that are already internationalising and actively targeting locally trading companies to assist them to internationalise.

“The intention is that in Ireland there will be a substantial and growing number of innovative, profitable indigenous international service companies, many achieving scale, with embedded high-value-added activities.

“These companies will be recognised as global players, delivering value to satisfied customers, in a range of international services sectors with substantial growth potential. We estimate that, over the next two years, internationally traded Irish services could generate new export sales in excess of €1bn.”

Ryan said opening up vital new markets such as the BRIC countries, as well as the Middle East and Japan, will be vital to the Irish economy, and very soon a trade mission to Japan involving 80 companies will be led by Taoiseach Brian Cowen TD and Tánaiste Mary Coughlan TD.

“What is vitally important now is that we do not allow our collective confidence to be dented. Enterprise Ireland and our client companies need to focus on those practical things that we do best. We cannot allow ourselves to be distracted by circumstances that we cannot influence.

“It is often in adverse times that great innovations are made and leading companies come to the fore. That will happen by dint of our entrepreneurs maintaining their confidence and forging ahead,” Ryan said.

By John Kennedy

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years