The secret board of Ireland

31 Jul 2003

The movement of investment capital around the world and the factors that underpin foreign direct investment (FDI) decisions are often expressed in cold economic terms. The most recent example of this was the release of Central Statistics Office figures that reveal almost all of Ireland’s economic growth (6.9pc) in 2002 can be attributed to profits generated by Irish-based US multinationals.

Undoubtedly issues such as cost and flexibility of labour, physical infrastructure, tax regime and skills are all crucial determinants of which countries are successful in attracting sought after inward investment.

However, these factors alone cannot explain why Ireland has only 1pc of the population of the EU but receives nearly a quarter of the investment into Europe from the US every year. There is another factor at work — the people factor. When a country is judged to have met the basic above-listed criteria and is in the running for an investment decision, personal influence — wheeling and dealing, the human dimension, networking, call it what you will — can often decide which country gets the nod when the final decision is made.

Senior executives in the Irish information and communications technology (ICT) industry have been particularly proficient at this. There are numerous cases of US multinationals closing or scaling back operations in other European countries and centralising them in Ireland. Often the decision is made after hard lobbying by a single Irish executive or small team of them. An insider at a US multinational recently revealed to Digital Ireland how the head of its Irish arm was loathed by his European counterparts whose operations had suffered as a result of his ‘choose Ireland’ campaign. This experience is probably not uncommon.

So effective have these lobbyists been, it is as though they are members of a secret board waging a co-ordinating campaign to fly the flag of Ireland Inc in the boardrooms of US multinationals. Of course, it is not an actual board that meets regularly, sets an agenda and then executes it; but rather more a coalition of like-minded individuals who understand the game and share a single goal: continued prosperity built on FDI in the ICT area.

This article identifies the core members of this secret board. While most of them are from private industry, central government and agencies such as the IDA also play a key role. For her unrivalled track record in wooing foreign investors, we nominate the Tánaiste as chairperson of the secret board of Ireland.

Name: Mary Harney TD
Position: Tánaiste and Minister for Enterprise, Trade and Employment

Every movement needs a figurehead, someone with the vision and clout to get things moving. For Ireland Inc Mary Harney is clearly that person.

With US multinationals employing 90,000 people in Ireland, many of them in high-skill roles, Harney knows their vital contribution to the Irish economy and goes out of her way to court new investment from the US. When Google, the company behind the phenomenally successful internet search engine, announced in March that it was to establish its European operations in Dublin, Harney was at its San Jose headquarters to shake hands on the deal.

If anyone has a special relationship with the CEOs of US multinationals it is Harney. American business leaders are flattered and impressed that Ireland’s second-in-command takes the trouble to visit them and take an active interest in them and their industries. While these relationships are mostly cultivated behind closed doors during her many trips to the US they are apparent at the many ribbon-cutting events Harney performs every year. For example, when Xilinx, the US computer chip developer, opened a new US$52m extension to its research and development (R&D) centre in west Dublin earlier this year, CEO Wim Roelandts heaped praise on Harney and made it clear that her unwavering support and hands-on approach had reassured him about the wisdom of reinvesting in Ireland.

The Tánaiste has sent out a signal that her door is always open and not just when she is looking for investment and jobs for Ireland. Bill Harris, a US scientist who was appointed director general of Science Foundation Ireland in 2001, recently described how Harney had cleared her diary with just a few hours’ notice in order to hear his pitch for why the Irish Government should invest in science and how she subsequently paved the way for the cabinet decision to invest €646m in science.

Name: Paul McCambridge
Position: Corporate vice-president of Xilinx and managing director of Xilinx Europe headquarters in Citywest, Dublin

Xilinx designs and makes semiconductor chips capable of being programmed individually for use in a wide range of electronic systems. Its European headquarters at Citywest in Dublin employs 350 people at a highly advanced R&D, design and operations centre.

Belfast-born McCambridge returned with his family from the US to Ireland nearly eight years ago to set up Xilinx Ireland, at that time the company’s first facility outside Silicon Valley.

Under McCambridge’s stewardship in Ireland, Xilinx has built what is widely acknowledged as one of the State’s leading centres of technological innovation. Following his appointment, McCambridge quickly brought together a cohesive team of highly skilled managers and staff who became key drivers of the company’s growth in Ireland.

His personal style is modest and low key. Underlying this is a very strong intellect and he is widely acknowledged by his industry peers as shrewd, strategic and decisive. One onlooker comments: “From the start, Paul placed a personal priority on securing further corporate investments in R&D, sophisticated new processes and highly skilled personnel in Ireland.”

Xilinx became the first semiconductor company in Ireland and among the first in the world to pioneer the use of 300mm (0.13 micron) silicon wafer technology.

Xilinx is also now establishing an international technical support centre in Dublin. The move follows a decision to locate strategic marketing operations in Dublin, which will employ senior management executives in priority functions. Key European global account managers responsible for the complete customer relationship are also being based in Ireland. Dublin’s important role as the company’s European data hub, servicing the information processing requirements of all major Xilinx operations in Europe, will also be further expanded.

To accommodate these and further developments, Xilinx recently opened a €52m expansion to its Irish site and established Xilinx’s European headquarters here.

Name: Jim O’Hara
Position: Vice-president, technology manufacturing group, Intel Corporation and Intel Ireland general manager

As head of the Republic’s flagship IT investment, O’Hara is arguably the most influential ICT boss in the country. O’Hara became Intel Ireland’s general manager in April 2002 and is responsible for Intel’s manufacturing operations in Ireland and for the site’s strategic direction, management leadership and development, and government and community relations.

He has been instrumental in securing several landmark investments for Ireland. The Republic beat off competition from several other countries when it was selected as the location for the US$2bn Fab 24 plant. Although work on the facility was suspended due to market uncertainties, it was re-started last year and is due to start production in early 2004. Both the initial investment and the subsequent decision to proceed were seen as personal victories for O’Hara.

A €18.3m R&D investment to develop mobile network processors in Shannon and a new €12m Global IT Innovation Centre in Leixlip, described by the IDA as a “foundation stone for a new era in inward investment”, were two other recent announcements believed to have been strongly influenced by O’Hara.

O’Hara is a member of the IBEC governing board and chairman of ICT Ireland. He is also a director of the American Chamber of Commerce in Ireland.

Name: Joe Gantly
Position: Senior director, European operations, Apple

Gantly has played a pivotal role in re-inventing Apple Ireland. Apple is 25 years in Ireland this year but in the late Nineties the computer maker’s future here looked very shaky.

Having established its European manufacturing operation in Cork in 1978, Apple expanded the facility to include full printed circuit board (PCB) manufacture as well as computer assembly. Between 1998 and 1999 the company switched PCB manufacture to Indonesia, laptop production to Taiwan and low-end desktops to the Czech Republic. The number of people employed in Cork dropped from 1,500 to 500.

Seeing the writing on the wall, the Cork management team led by Joe Gantly drew up what was billed as a ‘strategic assessment’ but in reality was a long-term survival plan for the company. “The management team in Cork re-marketed the Ireland advantage to corporate Apple, this time within the context of engaging in higher value activities,” wrote Gantly in a recent issue of Business Ireland, an IDA publication.

The pitch worked. Over the past five years, a stream of European functions have been centralised in Cork, including financial accounting and treasury, technical and customer support and direct sales activities. Apple still has a production plant in Cork but 85pc of the 1,200 employees there are now engaged in roles other than manufacturing.

Name: David Hanna
Position: Head of ICT division, IDA

The IDA is one of the slickest and most successful industrial development agencies in the world. As head of its ICT division, David Hanna leads the team that persuades technology firms from around the world to invest in Ireland.

Hanna follows in illustrious footsteps. His predecessor in the role was Frank Ryan, now IDA executive director, who is credited with landing the landmark Intel investment in 1990, which is generally recognised as the cornerstone of Ireland’s ICT manufacturing sector.

As a matter of policy, the IDA refuses to credit any single individual with securing a particular piece of investment, emphasising instead the team input. It points out that the local IDA office makes the initial contact with a prospective investor and that Dublin only gets involved once the initial relationship has been established. Nevertheless, the success rate of the ICT team under Hanna’s leadership has been phenomenal. Under his watch, Intel has committed itself to investing US$2bn in a new semiconductor plant (Fab 24) that places Ireland at the leading edge of high-tech manufacturing. Hanna has also spearheaded a campaign to attract more R&D activities to Ireland as part of the much-publicised strategy of moving the ICT industry ‘up the value chain’.

The new policy has already achieved notable successes. Several companies have invested in R&D centres in the past two years, including Intel in Shannon and Leixlip, American Power Conversion in Galway and RF Integration in Cork.

Name: Austin McCabe
Position: CEO, Symantec Ireland

Symantec is one of the world’s largest computer security software firms. In 1990, McCabe set up Symantec’s manufacturing and distribution operations in Blanchardstown, serving Europe, Middle East and Africa (EMEA). This operated successfully throughout the Nineties but as Ireland became more affluent and more costly with it, the unit struggled to compete with lower-cost regions.

McCabe set about the task of refocusing the operation on higher skill activities and away from basic manufacturing. As he told the Strategic Competitiveness Conference in Dublin in May, presenting the case for Ireland is not an easy day’s work. “It involved getting out to corporates, challenging the status quo, pushing back on decisions, putting forward the case for Ireland in a professional manner and understanding and working the politics within the company,” he said.

It was worth the effort. Today Symantec’s European Operations Centre employs over 500 people in R&D, shared services and supply chain management. Dublin was also recently selected as the location for one of three global Security Response Centres that track the appearance and development of new computer viruses.

McCabe is seen as an astute businessman who pushes the case for Ireland as an investment location. At the same time, as president of the American Chamber of Commerce in Ireland, he acts as a sounding board for the Irish Government on potential concerns US multinationals might have about Ireland such as poor infrastructure and high costs.

Name: Nicky Hartery, Dell
Position: Vice-president, manufacturing and business operations, Dell EMEA

The most senior Dell person in the Irish operation, Hartery was responsible for introducing lean and business process improvements to Dell Ireland. The result: Dell’s Limerick manufacturing site is best of class in terms of productivity within the Dell world. The initiatives introduced by Hartery have yielded direct savings worth between €40 and €50m to date in Limerick alone.

He has also brought higher value jobs to Dell Ireland through the creation of EMEA Applications Solution Centre in Limerick — a laboratory where corporate customers from across Europe can simulate complex networked applications on Dell server and storage equipment in advance of purchase — and the EMEA Expert Centre in Bray, which comprises a group of multi-lingual system consultants providing high-level technical support to large corporate customers.

Hartery has also succeeded in putting supply chain issues on the national agenda as he believes that excellence in supply chain management is critical to Ireland’s future competitive advantage. He is a member of the American Chamber-led expert industry group on supply chain management. He believes that R&D investment — traditionally confined to pure product development — should now be re-defined to encompass intelligence-based activities such as supply chain management. According to Hartery, these changes are imperative if Ireland is to develop as a skill-based economy and gain competitive advantage over international lower-cost locations.

Hartery also believes Ireland-based organisations should redefine their position within their international corporations through a clear demonstration of local innovation and performance capabilities.

The dazzling decade

Foreign direct investment is the engine that has driven the Irish economy for a decade or more. In 2000, overseas companies exported goods and services to the value of €47bn, an increase of 23pc over the previous year. These companies also spend approximately €14.2bn in the Irish economy each year.

The US remains the single largest source of inward investment in Ireland and is the country of origin of almost half of the IDA-assisted firms that have located here. Although Ireland accounts for just 1pc of the EU population it attracts a quarter of all new greenfield investment into Europe from the US.

Of the total of 133,246 people employed in IDA-supported companies, almost 90,000 of them work in US multinationals. Many of these companies fall within the ICT bracket. Seven out of the 10 largest US technology multinationals have operations here: Apple, Dell, Intel, Microsoft, Sun Microsystems, Symantec and Xerox.

By Brian Skelly