A two-year downward spiral and economic uncertainty driven by the threat of war in the Gulf means that there will be no significant inward investment technology projects for the next six months, an IDA spokesman conceded to Siliconrepublic.com.
“Apart from a few small R&D [research and development] projects in the pipeline, the market will be flat for the first half of 2003 and there definitely will be no hardware projects. There is no movement in the sector and it seems that the people making the decisions on where to locate capital investment projects are holding off to see if there will be a war in Iraq,” the IDA spokesman says.
He adds that the IDA’s electronics department is working flat out to ensure that existing overseas technology firms can upgrade their existing investments here and consolidate. “We are focusing heavily on the Irish management in overseas tech subsidiaries here to push for consolidation as well as pushing their operations higher up the corporate food chain,” he says.
Last week, IDA chief executive Sean Dorgan expressed ‘cautious optimism’ at the release of the IDA’s 2002 end-of-year statement. While job loss trends have slowed to 14,700, unemployment and inward investment was up two thirds on 2001, Dorgan said that progress in the information and communications technology (ICT) sector was slow and difficult to predict. The key growth areas in the IDA’s eyes are in pharmaceuticals, healthcare and international financial services.
The spokesman cites the decision in December by APC to establish a European R&D centre in Galway in an investment valued at over €1m. “This is the most viable path forward at this point in time. For the first half of 2003, we don’t envisage any significant capital spending projects from the tech sector. But we are focusing on substantial ‘moving-up’ projects whereby local operations here will consolidate and push for more responsibilities from their parent companies,” he says. In the 2002 end-of-year statement, some 30 companies last year invested close to €120m in R&D activities in Ireland, supported by some €30m from the IDA.
“For tech investment, it is a very unstable environment to a huge extent. It’s not just the prospects of war, there are huge instabilities in the market and as long as they persist and stocks stay low, capital spend and investment is not possible. While there may be some signals coming from the computer and semiconductor segments of the market, telecoms and subcontract manufacturing don’t look like they will recover for at least another two years,” the spokesman tells Siliconrepublic.com.
In terms of infrastructure necessary to support the necessary R&D that the IDA is hoping local management in overseas firms can capture, the IDA spokesman says that the agency was ‘not happy’ with the present situation regarding broadband. “In certain places, particularly Dublin, the market is extremely competitive and connected. However, outside Dublin the service providers aren’t providing services. The lack of service is terrible and electronics manufacturers and computer companies find this a terrible strain on costs. The last mile problem is still not resolved. We are really depending on the national broadband plan to clear up this mess. It’s really down to the fact that telecoms companies have no money. Two years ago Ireland was top of the league in terms of data infrastructure for incoming firms. However, we’ve gone from the top to the bottom of the league since then. This is due to the collapse of the telecoms market. We really need service providers to come in and compete with price and quality in terms of broadband services,” the IDA Ireland spokesman concludes.
By John Kennedy