Survey of MNCs in Ireland
Results of the Annual Competitiveness Survey
2013
Survey of MNCs in Ireland 2013Results of the Annual Competitiveness Survey
Conducted by
Irish Management Institute & Danske BankNovember 2013
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2
Acknowledgements
The authors would like to thank the following
for their support and assistance throughout
this project: in the Irish Management Institute
we would like to thank Dr. Jonathan Westrup,
Elaine McMahon, Frank Condon, Margaret
O’Neill, Gary Selby, Eva Maguire and Neasa
Athey; and in Danske Bank we would like to
thank Caroline Douglas. We would also like
to thank Fergal O’Connor and Conor
MacManus, OLAS, for their assistance
with and development of the survey website.
We would particularly like to thank all the
Chief Executives and senior managers who
responded to the IMI Danske Bank MNC
2013 survey. Their time and contributions
are greatly appreciated.
About the Authors
Dr. Déirdre CroweSustainability, Management and Research Consultant
Déirdre has considerable research and report
writing experience for a wide variety of clients
in the management, education, socio-economic
and sustainability sectors. She also currently
mentors at the Irish Management Institute
on the Business Research Programme and
conducts Management Practices Profiling.
In addition she teaches with Dublin City
University in the areas of Management and
Education for Sustainability. Déirdre studied
in University College Dublin and she was
awarded a Ph.D. from the School of Business,
Trinity College Dublin.
Owen CallanFixed Income Strategist, Danske Bank
Owen joined Danske Markets Ireland in 2003,
originally as an FX trader and later as a money
market trader, managing Danske’s liquidity and
interest rate risk in Ireland. He moved to the
Fixed Income and Derivatives team in 2010
which has taken on a fresh focus with Danske
becoming a Primary Dealer for Irish
government bonds. He is a regular contributor
to the eurozone debate in the media and holds
a Bachelor of Commerce degree from UCD.
Acknowledgements3 Contents 4
Table of contents
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Chapter 0: Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
0.1 Introduction & Structure of Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
0.2 Administration of the 2013 IMI MNC Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Chapter 1: Economic Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.2 Global Economic Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.3: Irish Economic Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.4: Future Prospects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Chapter 2: Profile of Respondent Firms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.2 Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.3 Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.4 Strategic Role . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Chapter 3: Issues of Importance for Competitiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.2 Cost Base of Operations in Ireland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.3 Skills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.4 Irish Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.5 Competitors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.6 Strategic Role of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Chapter 4: The Current Business Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.2 Growth and Expectations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.3 Competitive Strategies of Firms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.4 Recent Developments and Prospects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Chapter 5: Engagement in Local Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.2 Relationships with Irish SMEs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.3 Relationships with Irish Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.4 Engagement in Community, Social or CSR Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Appendix: 2013 Questionnaire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
The Chief Executives and senior managers of Irish and foreign owned multinational companies (MNCs) operating in Ireland were surveyed in late summer 2013. The results are presented in this report which represents the fifth collaboration between the Irish Management Institute and Danske Bank. The purpose of the survey is to gain insight into the attitudes and experiences of the leaders and senior management of MNCs based here. It presents their views on the strengths and weaknesses of doing business in Ireland and the impact, if any, of recent developments on their operations and on the general competitiveness of the Irish economy.
Economic Outlook
While it has been another tough year for most
of the major global economies, f leeting signs
of a sustainable recovery finally appear to be
coming together as we exit 2013. In addition, the
Eurozone sovereign debt crisis seems to have
stabilised. The global trading situation remains
positive, open and likely to see fresh opportunities
created rather than the closure of existing ones.
The Irish economy has continued to recover
modestly and with mixed results in 2013,
building on the stability the economy has been
experiencing since the start of 2011. With the
external environment picking up and expected
to rebound quite sharply in 2014, the outlook
for the Irish economy should also improve in
parallel. At Danske Bank, we would look for
growth of between 1.5-2.0% in 2014. 2013
marks the final year that the Irish government is
forced to conduct their fiscal planning under the
direct supervision of the EU and IMF. The 2014
Budget, though still tough in nature, was the first
budget since the crisis began to show signs of
a lessening of austerity by an Irish government,
when compared against previous pledges made
to the Troika. While this loosening of the purse
strings was relatively modest in nature, the
budget enacted by Minister for Finance Michael
Noonan did offer some encouraging pro-business
and pro-growth initiatives. It also managed to
avoid too many anti-growth taxation measures.
Minister Noonan also made some moves to
ensure that Ireland is not viewed as a tax haven
by either the US or EU. This closed off some of
the more controversial corporation tax loopholes
which had risked impacting negatively on Ireland’s
ability to compete for new FDI.
Profile of Respondent Firms
Respondents to the 2013 survey represent 121
firms employing almost 112,000 people. The
majority of firms are foreign owned and there is
a mix of manufacturing and services. The foreign
Execut ive Summar y5 Execut ive Summar y 6
Executive Summary
It is also encouraging to note that a significant
proportion of firms that experienced growth in
the past two years expect to continue to grow
next year. The majority of firms (70%) that
decreased employment last year have ceased
downsizing. Almost half of firms experiencing
a decrease in turnover in the past two years
expect a turnaround in fortunes and expect
to grow again next year.
Most firms have competitive strategies
including most Irish owned firms. Quality and
service, innovation and new products are the
most common strategies as well as cost
reduction and efficiencies. More Irish firms
are focusing on new markets than foreign
firms whereas more foreign owned firms
are focusing on operational excellence.
Ireland’s international reputation has improved
considerably with clients and overseas
operations of respondents in the past year,
resulting in a significant positive effect on
business. When asked to comment on the effect
of recent international discussions on taxation
and global transactions, respondents were
generally positive about the opportunities here
but cautious that changes could be adverse.
Increasing confidence in Ireland’s long-run
economic stability is evident in this year’s survey
with the majority (69%) of respondents viewing
it as moderate and 16% as strong. This more
positive outlook concurs with the expectations
for growth in employment (35%) and turnover
(43%) by firms in the next year.
Engagement in Local Economy
The level of engagement in the local Irish
economy is reflected in the business and social
inter-linkages and relationships a firm develops.
Over half of respondents purchase essential
product related supplies from local SMEs while
almost half engage professional and third party
vendor services from local SMEs. Nearly a
quarter of foreign owned firms are working
with the IDA for R&D and 14% for innovation
networks. The relationship with Enterprise
Ireland (EI) is the equivalent for Irish owned
firms and 28% of Irish respondents indicated
they work with EI for R&D and 17% are engaged
in EI innovation networks. All major universities,
research organisations and institutes of
technology were represented in the linkages
specified by respondents.
The majority of firms (66%) are engaged in an
impressive array of charity and community
activities. Education was the most popular
specified area of activity with 16 firms engaged
in education and an additional 6 involved with
the Junior Achievement programme.
Execut ive Summar y7 Execut ive Summar y 8
owned firms (excluding retail and wholesale
distribution) represent over half of aggregate
FDI employment in Ireland. In over half of the
foreign owned firms, including two thirds of all
US owned firms, the Irish operation is a strategic
centre for either a region, a product or a service.
Issues of Importance for Competitiveness
The operating cost base, skills and culture
are issues which affect the competitiveness
of firms. The pattern of a high operating cost
base continues in Ireland with the majority
saying that costs are higher here than in
equivalent operations elsewhere. Over half of
respondents stated that their cost base in
Ireland was rising this year and over one third
stated that it remained unchanged. The most
expensive operating costs are energy, labour,
transport and telecommunications.
The respondent firms have highly skilled staff
with over 80% of respondents estimating that
more than a quarter of the employees have a
third level degree. In over one quarter of firms
it is estimated that more than 75% of employees
have a third level degree. However, the majority
of firms (57%) specified some difficulty in
acquiring the right skills to support their growth
plans. Particular skills shortages noted were:
engineering, combined language/technical
skills, IT, science and quality expertise.
Respondents had a mostly positive view of Irish
cultural factors which influence competitiveness
of operations here. Flexibility, work ethic, a
positive approach and friendliness were the
most noted cultural attributes mentioned.
The location of the greatest competitors was
dependent on the firm and the sector. The UK
(17%), US (17%) and China (14%) were among
the most mentioned countries. The competitors
in the UK and the US were split evenly between
manufacturing and services whereas in China
they were mostly manufacturing. Ireland was
named as the location of the main competitor for
over one tenth of firms. Half of these were Irish
and half foreign owned. Approximately half of
competing operations were from within the
same organisations as the Irish firm.
Approximately one third of foreign owned firms
had a change in mandate in the past two years.
Enabling this change were mentioned skills and
expertise (25%) and the Irish tax regime (13%).
The Current Business Environment
Respondents are quite optimistic about growth
prospects in the next year. More than one third
of firms (35%) expect employment numbers to
increase and 43% expect turnover to increase in
this year’s survey. Over half (52%) expect their
employee numbers to remain the same.
The Chief Executives and senior managers of
Irish and foreign owned multinational companies
(MNCs) operating in Ireland were surveyed in
late summer 2013. The results are presented
in this report which represents the fifth
collaboration between the Irish Management
Institute and Danske Bank. The survey was last
conducted in the summer of 2011.
The purpose of the survey is to gain insight into
the attitudes and experiences of the leaders
and senior management of MNCs based here.
It presents their views on the strengths and
weaknesses of doing business in Ireland and the
impact, if any, of recent developments on their
operations and on the general competitiveness of
the Irish economy. It seeks to understand current
priorities and the conditions which may assist in
improving business and mandate opportunities
for Irish based operations.
The report broadly follows the format of previous
years’ and offers some comparative analysis. It
opens with a description in Chapter One of the
general economic context and developments
which have influenced employment and MNC
activity over the past couple of years and the
outlook and prospects for the global and Irish
economies.
The following Chapters present the results of the
2013 IMI Danske Bank MNC Survey starting with
a brief profile of the respondent firms and their
Irish based operations in Chapter 2.
There follows, in Chapter 3, a look at issues
affecting the competitiveness of the Irish
economy such as the cost of various business
activities compared to other countries, the skills
needs affecting growth and productivity as well
as cultural factors which may influence
performance. The focus of the analysis then
shifts to the strategic role of the Irish based
foreign subsidiaries in the context of their
parent group and whether this role has changed
in recent years. It looks at the factors which have
helped operations to win new mandates as well
as possible factors impeding desired changes.
Introduction
Chapter 4 looks at the current business
environment. It describes the recent and
expected growth of firms and goes on to explore
current competitive strategies. Then it reports on
Ireland’s reputation among respondents’ clients
and overseas operations as well as the impact of
recent international debates on taxation or other
developments internationally which may affect
business or competitiveness of operations here.
Finally, the respondents view on the prospects
of the Irish economy is reported.
The level of engagement with the local economy
is examined in the final Chapter, 5. Business
relationships with Irish small and medium sized
enterprises (SMEs) are discussed as well other
relationships such as research and recruitment
with Irish third level institutions and other state
or semi-state bodies. The Chapter concludes with
an outline of social, community and corporate
responsibility activities.
Administration of the 2013 IMI Dankse Bank
MNC Survey
The survey was carried out using an on-line
questionnaire in late August and September
2013. A sample of Chief Executives and senior
managers in 393 Irish based multinational
operations was drawn from the IMI database.
They were contacted by email which provided
a secure hyperlink to the questionnaire website.
The questionnaire was in five sections: a. Basic
Profile of Irish Operation; b. Labour Force Activity;
c. Engagement in the Irish Economy; d. Business
Environment; and e. Perception of Ireland in
2013. A copy of the questionnaire is included
in the Appendix.
A total of 180 respondents completed 145
usable questionnaires from 121 firms
(representing a 31% response rate from firms).
Table 0.1 shows the job categories of
individual respondents.
Job Category of Individual Respondents % respondents
CEO / Managing Director / General Manager 31
Financial Controller / Finance Director 20
Director Production/Operations/Manufacturing 8
Director Human Resources 8
SVP/VP/Director/Partner/C-level 7
Head of Operations / Production/Supply Chain 5
Director Regional/Division 4
Director IT/Quality/Marketing/Supply Chain 4
Director Corporate/Global Affairs/Communications 3
Finance Manager 5
Manager/Manager Sales/Marketing/Manager HR 3
Manager Production/Operations 3
Foreword & Introduct ion9 Foreword & Introduct ion 10
Table 0.1
Economic Outlook11 Economic Outlook 12
Chapter 1: Economic Outlook1
1.1 Introduction
It has been another tough year for most of the
major global economies. However, f leeting
signs of a sustainable recovery finally appear
to be coming together as we exit 2013. In
addition, the Eurozone sovereign debt crisis
seems to have stabilised, with yields on
peripheral government debt receding, and
fears of a Euro-exit from Greece now much
reduced. 2014 looks set to open up on a much
more positive and stable footing than would
have been forecast at the start of 2013.
1.2 Global Economic Outlook
Although the moderate rebound in the US is
still heavily reliant on the large amounts of
quantitative easing still arising from the Federal
Reserve, unemployment continues to decline,
the housing market continues to recover, and the
stock market continues to push higher, despite
the occasional wobble. GDP in the first half of the
year has averaged 1.8% on an annualised basis.
Growth should accelerate in the second half of the
year and into 2014, provided the US government
shutdown in the latter part of the year doesn’t
throw the recovery off track.
Meanwhile, the Euro-area finally exited its longest
ever recession in the second quarter of the year,
after six consecutive quarters of contraction
previously. However, growth of just 0.3% is
indicative of just how modest the recovery has been
in the Euro-area so far. Furthermore, the chronic
mishandling of the Cypriot banking collapse
reminded the markets once more how dysfunctional
the Euro-area can be when a crisis hits.
However, in tandem with positive economic
signals from the UK and Japan, and with no signs
of a significant slowdown in economic activity in
China, the global economy appears to be finally
moving into recovery mode. It appears to be
gaining the momentum necessary to create
sustainable economic growth once more. This is
despite the drag that fiscal consolidation and
austerity is still having on many parts of the world.
Global trade is now expected to increase by 2.5%
this year, and by 4.5% next year, according to the
World Trade Organisation. Global GDP growth is
forecast to be 3.25% in 2013 and 4% in 2014,
according to the IMF.
1.3 Irish Economic Outlook
Closer to home, the Irish economy has continued
to recover modestly and with mixed results in
2013, building on the stability the economy has
been experiencing since the start of 2011.
Although the Irish economy only exited yet
another recession in Q2 2013, with growth of
+0.4% on the quarter (after a negative end to
2012 and start to 2013), other indicators such
as unemployment, consumer spending, PMI
surveys and the housing market are all
indicative of improving economic conditions. With
the external environment picking up and expected
to rebound quite sharply in 2014, the outlook
for the Irish economy should also improve in
parallel. At Danske Bank, we would look for
growth of between 1.5-2.0% in 2014.
Key to that will be, as usual, the output of the
international export sector of the Irish economy.
This has been an anchor of stability throughout
the last five turbulent years. However, after three
years of sustained and significant growth,
industrial production has been much more
volatile this year. Output has been significantly
less in 2013 than over the same period last year,
declining by 6.7% in the year to the end of August.
The major reason for this is undoubtedly the
so-called “patent cliff” in the pharmaceutical
sector. This contraction in activity saw Irish
goods exports running at 5.8% less than at
the same point last year.
These volatile pharmaceutical trade flows are
also no doubt impacting on the negative GDP
figures seen at the end of last year and the
Table 1.1: Global Economic Forecasts – real GDP growth
2013 2014
Ireland 0.5 1.8
UK 1.4 1.9
US 1.6 2.6
Euro-area -0.4 1.0
Japan 2.0 1.2
China 7.6 7.3
Table 1.1
13 14Economic Outlook Economic Outlook
beginning of 2013. However, declines in activity in
this sector of the economy are difficult to analyse
in terms of their impact on the broader economy.
As yet, they do not appear to have had any
significant negative effect on employment or tax
revenue levels. Furthermore, activity in the
agriculture and services sectors continued to
expand sharply and offset much of the contraction
in the chemical and pharmaceutical sectors.
1.4 Future Prospects
While the “Great Recession” of 2011-2013, and
the global financial crisis dating back to 2007,
would now appear to be behind us at last, the
economic recovery in most advanced economies
will be slower than would have been experienced
after previous recessions. This slower recovery
will be due to the long process of consolidating
public sector finances in most major economies.
This is in addition to the task of deleveraging and
re-capitalising many parts of the global banking
system, and related private sector balance
sheets, which is still incomplete.
A key part of this will be the major challenge
of creating a proper banking union within the
Euro-area, together with the implementation of
new Basel III regulation and capital requirements
in most of the world’s major banking systems.
The financial crisis, while now in the past for the
most part, will have many serious consequences
for the financial sector and the broader
economy for the rest of this decade, at least.
In most advanced economies, reducing
unemployment and stabilising public sector
indebtedness will be the main challenges facing
government and central banks in the period
between now and 2020. Labour markets and
monetary policy are unlikely to normalise for
at least another five years.
However, more positively, despite the joint
stimulus of easing of monetary policy and large
government deficits, most major economies have
yet to experience any significant inflationary
pressures. Indeed they are unlikely to do so in the
near future, given the scale of excess capacity
still working its way through the system. This will
at least keep the pressure off these central banks
to withdraw monetary stimulus in the short term
while giving government’s time to get their fiscal
houses in order before we see interest rates
rise appreciably.
Furthermore, despite fears that increased trade
and investment protectionism would eventually
arise as a result of weak growth and high
unemployment in many parts of the world, such
policies have yet to gain any major traction. The
global trading situation remains positive, open
and likely to see fresh opportunities created
rather than the closure of existing ones.
Prof ile of Respondent Firms15 Prof ile of Respondent Firms 16
Chapter 2: Profile of Respondent Firms
Ownership % FirmsNo. of
Employees
Irish Owned 21 16,190
Foreign Owned 79 95,599
Country of Ownership
US 43
Germany 8
France 6
UK 5
Switzerland 3
Netherlands 2
Italy 2
Luxembourg 2
Sweden 2
Norway (Ireland) <1
Spain <1
Japan <1
Singapore <1
South Africa <1
Other unspecified 3
Total 100 111,789
Number of Employees in Irish Operation
% Firms
<=49 16
50-99 9
100-249 19
250-499 15
500-999 14
1,000-1,999 12
2,000-4,500 13
4,501-14,499 0
14,500-15,500 2
*IDA, 2013, Foreign Investment in Ireland (Infographic updated June 2013), Industrial Development Authority, Dublin. http://www.idaireland.com/invest-in-ireland/fdi-in-ireland-2013/index.xml
2.3 Sector
There is a mix of services and manufacturing
firms represented in the survey (Table: 2.3). Well
over a third of firms (38%) describe themselves
as being entirely service-based operations. Of the
manufacturing firms over half (55%) are engaged
in a significant amount of service-based activities.
A broad range of exporting sectors is straddled
with the highest representation from chemicals
& pharmaceuticals, medical devices and the
information & communication technology (ICT)
sectors (Table 2.4). Approximately two thirds of
firms in both the medical devices and ICT sectors
are from the US.
Mix of Manufacturing & Services%
Firms
All Manufacturing (90-100%) 28
75% Manufacturing / 25% Services 19
50% Manufacturing / 50% Services 11
25% Manufacturing / 75% Services 4
All Services (90-100%) 38
Primary Sector of Respondent Firms
% Firms
Chemicals and pharmaceuticals 16
Medical devices 15
Information & communication technology ICT – Software
8
Information & communication technology ICT – Hardware
7
Information & communication technology ICT – both
1
Other electrical & transport equipment
4
Financial, insurance or real estate services
8
Engineering & construction services
7
Retail and wholesale trade 3
Professional and support service activities
3
Transport services 1
Food, drink and tobacco 6
Agribusiness 2
Oil & gas industries 3
Packaging 3
Other 13
Source: IMI Danske Bank MNC Survey 2013
22.1 Introduction
The survey represents 121 firms operating in
Ireland. Of these, 96 (79%) are foreign owned
firms & 25 (21%) are Irish owned firms
operating on a multinational basis (Table 2.1).
More than half of the foreign owned firms are from
the United States (US). Thirty-seven firms (39%)
are from Europe, mostly Germany, France, United
Kingdom (UK) and Switzerland. These proportions
are roughly similar to the IDA’s figures of FDI
in Ireland.*
2.2 Employment
Total employment in respondent firms is 111,789
with over 95,599 of these in foreign owned
enterprises. Of these, retail and wholesale
distribution account for 18, 700. The remainder,
76,899, is spread across manufacturing and
other service industries. This represents more
than half of the aggregate FDI employment in
the state which is approximately 153,000 (IDA,
2013). Total employment in Ireland in the Irish
owned respondent firms is 16,190.
There is a large spread of firm sizes represented
in the survey (Table 2.2) with 16% employing less
than 50 people, over 60% employing less than
500 and 98% employing less than 4,500. The
two very large employers (14-15,500) are foreign
owned firms.
Table 2.1 Table 2.2
Table 2.3
Table 2.4
Source: IMI Danske Bank MNC Survey 2013
Source: IMI Danske Bank MNC Survey 2013
Source: IMI Danske Bank MNC Survey 2013
2.4 Strategic Role
The more strategic a role an operation can play
within the parent organisation the more likely it is
to embed in a local economy, retain employment
and support local suppliers. The nature of the
employment it provides is more likely to relate to
higher value activities and services, for example
Research and Development, and to be of a higher
quality with better pay and conditions. The
prospects and sustainability of a strategically
important operation are greater as the parent
organisation becomes increasingly dependent on
the expertise and activity conducted there when
compared to basic operations with lower value
mandates which are vulnerable to competitive
pressures.
Looking at the strategic role of respondent firms,
7% of foreign owned ones and, as expected, 70%
of Irish ones, embody the global strategic centre
for their organisation. Significantly, in over half of
the foreign owned firms, including two thirds of all
US owned firms, the Irish operation is a strategic
centre for either a region, a product or a service.
The activities of half of these strategic centres
are predominantly manufacturing and one third
are entirely services. The strategic role of foreign
owned subsidiaries is further examined in the
next Chapter.
Strategic Role of Irish operation%
Firms
The global strategic centre of company 19
A strategic centre for a region, product or service
46
Higher value support function 17
Basic product or service 17
Table 2.5
Prof ile of Respondent Firms17 Prof ile of Respondent Firms 18
Source: IMI Danske Bank MNC Survey 2013
*Industrial competitiveness of EU member states, European Commission - MEMO/13/816 25/09/2013http://ec.europa.eu/enterprise/policies/industrial-competitiveness/monitoring- member-states/files/ie_country-chapter_en.pdf
Chapter 3: Issues of Importance for Competitiveness
Comparison of Costs to Irish operation compared other countries% Foreign Firms (% Irish Firms)
Less expensive Same More expensive
Energy 2 (16) 24 (24) 73 (76)
Labour 8 (4) 21 (28) 69 (68)
Transport 3 (12) 38 (40) 59 (48)
Telecommunications 31 (4) 39 (56) 57 (40)
Legal Services 9 (1) 48 (64) 42 (28)
Rents 19 (20) 43 (48) 38 (32)
Construction 15 (8) 50 (68) 35 (24)
Other Professional Services
6 (1) 61 (56) 33 (36)
Water 23 (36) 54 (44) 22 (20)
3
Source: IMI Danske Bank MNC Survey 2013
3.1 Introduction
The competitiveness of doing business in Ireland,
or anywhere, depends on many factors. However,
it is also relative to conditions and developments
in other places, the combined effect of which may
continuously change in emphasis. The European
Commission recently gave a positive review of
Irish competitiveness. *
Competitiveness is the key theme of the IMI
Danske Bank MNC survey. As usual, the focus
this year is on the cost base as well as on the
skills and cultural factors which may influence
the attraction and retention of FDI, in particular
higher value mandates, as well as the productivity
and competitiveness of Irish owned operations.
3.2 Cost Base of Operations in Ireland
Over half of respondents stated that their cost
base in Ireland was rising this year and over one
third stated that it remained unchanged. This is
comparable to the previous survey of 2011.
Previously, respondents have also viewed the
cost base of operations here as being significantly
higher than in comparable locations. In this year’s
survey the costs regarded as more expensive by
the majority of respondents are energy, labour,
transport and telecommunications (Table 3.1 ) -
all similar to the 2011 survey.
Labour is considered to be more expensive
here by 69% of respondents, similar to 2011,
having being as high as 81% in 2009. Fewer
respondents this year also regarded the cost
Table 3.1
of construction as being more expensive (35%).
None of the cost items were regarded by a
majority as being less expensive compared
to other locations although more than one third
said water was less expensive compared to one
fifth last year.
Issues of Importance for Compet it iveness19 Issues of Importance for Compet it iveness 20
Other high costs of operating in Ireland specified
by respondents included commercial rates, legal
fees and the cost of recruitment.
As noted by several respondents, the answer
to whether it is more expensive in Ireland than
elsewhere depends on which country is being
compared:
“Labour rates in Ireland are much higher
than India but on a par with Singapore
in recent times. Ireland is a good bit cheaper
than U.S. (Silicon Valley) especially
in relation to graduate recruits.”
Also, the specific nature of the jobs may influence
costs. One respondent commented that technical
and professional staff are less expensive in
Ireland whereas plant and craft labour are
more expensive.
3.3 Skills
A highly skilled workforce is essential to attract
and retain higher value added activities. The
respondent firms have highly skilled staff with
over 80% of respondents estimating that more
than a quarter of the employees have a third
level degree. In over one quarter of firms it is
estimated that more than 75% of employees
have a third level degree. (Table 3.2)
From a short list of priorities (Table 3.3) for
improving competitiveness of their Irish
operations, openness to change is regarded
as critical by a large majority of respondents.
This is up from 75% in the 2011 survey.
Less than half of respondents agreed that
up-skilling of existing employees, work
readiness of new employees and broadening
of management experience were critical. All of
these options were regarded as either critical
or advantageous by everyone and hardly any
respondents regarded them as ‘not important’.
It may be argued that openness to change is
more of a cultural factor and this is highlighted
later where the flexibility of the Irish workforce
is commended and seen as a positive cultural
trait by employers (page 23).
3.3.1 Skills Shortages
When asked whether any skills shortages were
impinging on growth plans or productivity 43%
currently had no particular need or difficulty
finding the right skills. However, 57% specified
some difficulty (Table 3.4).
Almost one third (31%) of all firms had
difficulties finding suitable engineering skills,
particularly noted were software, industrial,
injection moulding, chemical and process
engineering skills. Several respondents
mentioned a combination of language and
technical skills (e.g. engineers, technicians,
scientists or accountants with languages).
13% of firms specified IT skills as being difficult
to acquire with some specific skills noted
(advanced skills, JAVA/SQL, ERP systems/SAP,
software for medical devices). Science and
quality expertise were each mentioned by
4% of firms.
Proportion of employees in Ireland with a 3rd level degree
% Firms
>75% 27
50-75% 25
25-50% 28
<25% 20
Source: IMI Danske Bank MNC Survey 2013
Table 3.2
Issues of Importance for Compet it iveness21 Issues of Importance for Compet it iveness 22
Importance for improving the competitiveness of Irish operation (%)
Critical Advantageous Not Important
Openness to Change 85 14 <1
Up-skilling Existing Employees 41 58 <2
Work Readiness of New Employees 39 56 5
Broadening Management Experience 37 60 3
Source: IMI Danske Bank MNC Survey 2013
Table 3.3
Skills shortages impinging on plans%
Firms
Experiencing some skills shortages 53
Engineering Skills 31
IT Skills 13
Science 4
Quality 4
Source: IMI Danske Bank MNC Survey 2013
Table 3.4
3.4 Irish Culture
The role of culture in an organisation’s
competitiveness is harder to quantify but is
considered to be a crucial determinant in the
success of any workplace. Respondents were
asked if any particular cultural factors influenced
the productivity of their Irish operations either
positively or negatively. This was an open question.
One third of respondents didn’t specify any
particular factors affecting their organisation’s
performance. Of those who identified an influence
of cultural factors, a majority (57%) of respondents
noted positive factors and 30% noted some
negative factors. Flexibility, work ethic, a positive
approach and friendliness were the most noted
positive cultural attributes mentioned.
Interestingly the flexibility of the work force was
mentioned by almost one third of foreign owned
firms but only by 10% of Irish ones. One could
speculate that this is due to the nature of the
firms themselves and the type of employees
they attract. In the section in the survey on
skills important for improving competitiveness
of the Irish operations, openness to change
was regarded as a critical skill by 85% of
respondents (Table 3.5).
Both Irish and foreign firms almost equally
mentioned the ‘can do’ attitude and work ethic
(30%) as well as the sociability of the Irish and
ease of getting on with many different clients
and cultures (14%).
On the negative side comments were very
varied and nothing particular emerged. Some
respondents commented on the lack of foreign
languages, vagueness and lack of attention to
detail. Four respondents in foreign owned firms
and one in an Irish owned firm mentioned the
influence of unions in resisting change and
maintaining a high cost base. One respondent
each noted the Irish drink culture and
absenteeism.
“The Irish ability to ‘get on’ with various
different cultures in the context of large
multi-national group is very important.”
“Irish people’s ability to navigate most cultures
- in that Irish people can work with
Asian people as easily as people from the US.
They also have a can do attitude and
usually deliver on their commitments.”
“Irish employees seen as having
a can do attitude with an excellence
in delivery and quality.”
“We have a great reputation within
our industry and within our global company.”
“Well educated and English speaking
workforce is huge advantage.”
“The sense of we are all in this together,
sense of achievement, f lexibility
and humour certainly help.”
3.5 Competitors
As noted previously in relation to labour costs,
the competitiveness of an economy or a firm
is relative and depends not only on its own
qualities and performance but also on those
of its competitors and market conditions which
also change continuously.
When asked which country was the greatest
competitor to the Irish operation based,
respondent firms named a broad range of
countries indicating that it is quite firm and
industry specific. As in previous years, the UK
(17%), US (17%) and China (14%) were among
the most mentioned countries. Although the
number of firms citing the US as the location
of a main competitor was only 13% in 2011, it
was the same in 2009 as this year (17%). The
competitors in the UK and the US were split
evenly between manufacturing and services
whereas in China they were mostly manufacturing.
Ireland was named as the location of the main
competitor for over one tenth of firms. Half of
these were Irish and half foreign owned.
Fewer firms mentioned India as the location of
their main competitor compared to the last
survey (5% this year - 11% in 2011) and these
were all manufacturing operations. Of note,
competitors located in eastern Europe (8%) and
Ireland (11%) were a threat to more services
based enterprises whereas competing
operations in western Europe were mostly
manufacturing. Approximately half of
competing operations were from within the
same organisations as the Irish firm.
Issues of Importance for Compet it iveness23 Issues of Importance for Compet it iveness 24
Positive Cultural Factors
Foreign Firms% respondents
Irish Firms% respondents
Flexibility 31 10
Work ethic/positive/can do attitude 29 31
Friendliness/sociability/ability to get on with clients and different cultures
14 14
English language 6
Education 7
Source: IMI Danske Bank MNC Survey 2013
Table 3.5
Location of Greatest Competitors % Firms% of these which
are Manufacturing
UK 17 50
US 17 50
China 14 80
Germany/Netherlands 13 81
Ireland 11 46
France/Italy/Portugal 10 75
Countries in Eastern Europe 8 40
Costa Rica/ Puerto Rico 6 100
India 5 100
Singapore 5 66
Japan/Thailand/Taiwan/Asia 3 100
Source: IMI Danske Bank MNC Survey 2013
Table 3.6
Issues of Importance for Compet it iveness25 Issues of Importance for Compet it iveness 26
Based on the nature of the operation and the
split between manufacturing and services, there
is not much difference between firms. Slightly
more manufacturing firms consider themselves
as a strategic centre for a product or service
(52%) compared to services based firms (47%).
Sixty percent of firms with a basic mandate are
entirely service based.
Approximately one third of firms had a change
in mandate in the past two years. A variety of key
factors enabling this change were mentioned
including skills and expertise (25%) and the Irish
tax regime (13%). Mostly there were no issues
relating to firms who have not changed their
mandate.
About half of respondents tried to win new
mandates for their operation in the past two
years or are currently trying. Many of these
relate to new product development, increased
responsibility and management of a European
region or function. Success broadly depends on
the performance of their own operations. A few
respondents mentioned support of the IDA and
financial support or skills.
When asked what critical structural
improvements or policies would assist firms in
winning the desired mandate a broad variety of
suggestions were put forward by the respondents
(Table 3.9). The greatest number of suggestions
related to a reduction in operating costs in general,
in particular energy, and the costs of employment,
as well as certainty and maintenance of the
current corporate tax rate.3.6 Strategic Role of Subsidiaries
The strategic importance of a subsidiary within
the global organisation reflects the dependency
of the parent on a subsidiary for expertise in a
particular product area, service or region and
will be a key factor in the security and
sustainability of the subsidiary.
The importance of higher value added activities
is that they bring greater income to the country
and to the employees as well as greater returns
on investment. They help to embed foreign owned
firms so they are not competing primarily on cost
and they depend on linkages developed within
Ireland for their success and development.
“Relationship with Ireland would be
stronger than going to a new site.”
As expected, 70% of Irish firms characterise their
operation as the strategic centre for their global
organisation. While this is the case in only 7% of
foreign owned firms, it is noteworthy that the Irish
operation is a strategic centre in over half of all
foreign owned firms including two thirds of the US
owned firms. It may be the regional centre for the
parent organisation or it may function as a centre
for the production of a particular product or
service either globally or regionally.
Role of Irish Subsidiary% Foreign
Firms
The strategic centre of global company
7
A strategic centre for a region, product or service
54
Higher value support function 19
Basic product or service 19
Source: IMI Danske Bank MNC Survey 2013
Table 3.7
Extent of authority the Irish operation has in developing
a new product or service % Firms
4- Complete Authority 13
3 28
2 36
1 - No Authority 24
Source: IMI Danske Bank MNC Survey 2013
Table 3.8
Critical Structural Improvements or Policies to assist in achieving desired growth or mandate
% Firms
Reduction in operating costs 12
Reduce cost of employment 9
Maintain corporate tax/certainty on rate 9
Reduction in energy costs 7
R&D grant/tax credit/Patent box 5
Improved broadband, ecommerce, mobile 4
Reduction/no increase in personal tax/remove pensions levy 5
More high skills & technology graduates & STEM 4
Better air-links (e.g. to US/out of Cork/Waterford) 3
More government capital spend 3
R&D/NPD focus & skills development 3
General education (languages, problem solving) 3
Capital & expense grants R&D grant aid 2
Reduce regulation e.g. no. of board meetings 2
Continue collective bargaining 2
Ability to attract talent from round the world 2
Roads infrastructure especially rural 2
International sales & marketing 2
Others 8
Source: IMI Danske Bank MNC Survey 2013
Table 3.9
4
4.1 Introduction
This Chapter looks at the growth of firms in the
past two years and their expectations for the
coming year as well as the nature of their
competitive strategies. Finally, it reports on
Ireland’s international reputation and whether
it has changed or had an effect on business in the
past year. It also reports any, or potential, impact
the recent international debates on taxation
may have had on operations here as well as the
effect of any developments in other countries.
The views of respondents on the position of
MNCs in the country in the next two years are
presented as well as their views on the prospects
for Ireland’s long-run economic stability.
4.2 Growth and Expectations
Respondents this year are quite optimistic about
growth prospects in the next year and they reflect
similar findings from recent global studies.*
Since the last IMI Danske Bank MNC Survey was
conducted in 2011, employment has increased in
significantly more firms (43%) than it has fallen
(16%). This positive outcome had been expected
in the survey of that year when 48% of firms had
expected employment to increase and 13% had
expected it to decrease. This survey shows
turnover had increased in considerably more
firms (45%) than it had decreased (12%) in
the past two years. This is not as good as the
expectations of the 2011 survey when 60%
expected a higher turnover.
The optimism of the 2011 survey regarding
employment was reflected in the survey this year.
More than one third of firms (35%) expect
employment numbers to increase and 43%
expect turnover to increase in this year’s survey.
Over half (52%) expect their employee numbers
to remain the same. This is a much more
positive outlook than in previous surveys
when only 11% in 2009, and 27% in 2010
expected their workforces to grow. It is also more
positive than the 2011 survey expectation for
workforce stability (40%). In the current survey,
employment and turnover is expected to decrease
in only 13% and 10% of firms respectfully in
the coming year.
Chapter 4: The Current Business Environment
* McKinsey 2013, Global Survey Results, Economic Conditions Snapshot, September 2013. http://www.mckinsey.com/insights/economic_studies/economic_conditions_snapshot_september_2013_mckinsey_global_survey_results
Change in Employment
Expectations in 2011 survey
Actual change in past 2 years -2013 survey
Expectations for next year -
2013 survey
% Firms % Firms % Firms
Increase 26 43 35
Broadly Unchanged 51 41 52
Decrease 23 16 13
Source: IMI Danske Bank MNC Survey 2013
Table 4.1
The Current Business Env ironment27 The Current Business Env ironment 28
It is also encouraging to note that a significant
proportion of firms that experienced growth in the
past two years expect to continue to grow next
year. Of the firms where employment increased,
59% expect employment to expand and in firms
where turnover increased in the past two years,
64% expect a continuance of growth.
Firms that experienced a contraction in
employment numbers tend to be more cautiously
optimistic in outlook. While only 11% expect
some growth in numbers in the coming year,
58% expect numbers to remain the same
indicating that almost 70% of these firms have
ceased downsizing. In the case of turnover,
almost half (47%) of firms experiencing a
decrease in the past two years expect a
turnaround in fortunes and expect to grow again
next year. Firms where turnover has remained
broadly the same (69%) tend to be quite stable
and expect to continue as is.
4.3 Competitive Strategies of Firms
The development and implementation of a
competitive strategy is widely regarded as
essential to the success of firms particularly in the
export market. The majority of firms (84%) stated
they have a competitive strategy including all but
one of the Irish firms, which is very positive, and
81% of foreign owned firms. The general nature of
these strategies is outlined in Table 4.5.
The emphasis on innovation and new product
development by Irish owned firms (28%) is very
positive. And, while another 28% of Irish firms had
a strategic approach to cost reduction, only 3%
mentioned operational excellence or productivity
improvements as a strategy compared to a fifth of
foreign owned firms. The converse applies regarding
new market strategies which feature in the plans of a
quarter of Irish owned firms but were mentioned by
only 3% of foreign owned firms. A focus on service
and quality was the most common strategy amongst
foreign owned firms (24%) and also featured in a
significant number of Irish firms (21%).
4.4 Recent Developments and Prospects
4.4.1 International Reputation
Ireland’s reputation is improving considerably with
overseas clients and operations over the past year.
According to 41% of respondents the country’s
reputation had improved, an increase of 10% from
2011 (31%). Only 13% of respondents felt that our
reputation had disimproved compared to 30% in
2011 which was the year after the IMF/EU bailout.
There was no significant difference between foreign
and Irish owned firms.
There has been a significant positive impact on
firms’ ability to do business with 27% of respondents
stating that the improved reputation has had a
positive effect on business while only 7% stated that
the effect was negative. The majority stated that
there had been no effect of the country’s
reputation on ability to do business (Table 4.6).
4.4.2 International Debates
When asked to comment on the effect of recent
international discussions on taxation and global
transactions, respondents were generally positive
about the opportunities here but cautious that
changes could be adverse. In some cases the
discussions have prompted reviews and an
increase in transparency and have actually served
to highlight opportunities for international firms.
However, any changes in taxation law in other
countries or here, and the treatment of transfer
pricing, could have an impact on their operations here.
Change in Turnover
Expectations in 2011 survey
Actual change in past 2 years -2013 survey
Expectations for next year -
2013 survey
% Firms % Firms % Firms
Increase 60 45 43
Broadly Unchanged 27 43 47
Decrease 13 12 10
Source: IMI Danske Bank MNC Survey 2013
Table 4.2
Focus of Competitive StrategiesForeign Firms
% respondentsIrish Firms
% respondents
Service & Quality 24 21
Innovation/New Products/IP 19 28
Operational excellence/productivity/lean 19 3
Cost reduction/efficiencies 18 28
Skills/talent/expertise 10 14
Market positioning 12
Performance within global group 10
New markets 3 24
Focussing on core business/unique selling point 5 3
Brand 3
Growth through outsourcing or diversification 2
Leveraging Ireland's tax structure 2
Corporate Social Responsibility 1
Source: IMI Danske Bank MNC Survey 2013
Table 4.5
Effect of recent international discussions on taxation, global transactions etc.
on Irish operation
% Respondents
Yes 43
No 57
Source: IMI Danske Bank MNC Survey 2013
Table 4.6
Impact of any recent developments in other countries to affect the competitiveness or mandate of your Irish operations
% Respondents
Yes 20
No 80
Source: IMI Danske Bank MNC Survey 2013
Table 4.7
Change in Ireland’s reputation with overseas clients/operations
over the past year
% Respondents
Improved 41
No Change 46
Disimproved 13
Source: IMI Danske Bank MNC Survey 2013
Table 4.3
Any material impact on business
% Respondents
Positive 27
No Effect 66
Negative 7
Source: IMI Danske Bank MNC Survey 2013
Table 4.4
The Current Business Env ironment29 The Current Business Env ironment 30
4.4.3 Impact of Developments in other Countries
Given the relativity of competitiveness, it is
important to keep abreast of significant
developments in other countries which may have
an impact on firms operating here. A minority of
respondents (20%) felt that recent developments
in other countries had affected the Irish
operations with about half of these referring
to the UK Patent Box which was introduced
earlier this year. This treats profits from patented
inventions and other innovations favourably.
“If Ireland is viewed as a tax haven it will impact negatively on Irish sites’ ability
to compete for new business.”
“Ireland remains a global hub for our business and the home of key brands. Therefore any change to Irish taxation policy has
the potential to impact on this.”
“Positively highlighted opportunity.”
“Perception of country - think we are losing the PR battle.”
“Decision makers are less convinced now that tax system changes imposed by
the European Commission will not increase their tax bill in Ireland in the future.
Any speculation or fear about tax system changes in Ireland causes delay and doubt
in investment decisions.”
“Seen as a ‘Red Herring’.”
“Changes in American tax law that may be introduced could have an adverse impact.”
“Countries like the UK are building a better tax proposition than in the past and the emergence
of capable low tax economies in Eastern Europe.”
“1) Most of our Irish located clients are international companies. Any perceived threat
to the tax position of Ireland could impact future investment decisions by them.
2) Our own operations have become internationalised. Any improvement or
simplification would be positive.”
“Patent Box has had a very significant impact.”
“If the tax rate changed it would cause many services to be outsourced to Poland.”
4.4.4 Single Euro Payments Area
The introduction of the Single Euro Payments Area
(SEPA) will not affect a small majority (55%) of
firms but is expected to have a positive impact on
operations for about 45% of firms. Generally, the
impact expected is not viewed as significant but
as a welcome improvement and standardisation
which will ease international payments and the
ability of firms to more effectively use enterprise
and accounting systems.
4.4.5 Position of MNCs in Ireland
A good proportion (22%) of respondents saw
an improvement or a shift to higher value
activities (11%) when asked their views on the
position of MNCs in Ireland changing over the
next two years. Slightly fewer saw little or no
change (17%). Pressure from low cost economies
or operations were seen as the greatest threat
(16%) with some respondents also referring to
competitive pressure from the UK (4%). Tax
was mentioned by one tenth of respondents
as a critical issue. Retention of talent was
also mentioned (4%) as becoming challenging
as the economy improves.
“They must move up the value change, it is unlikely they can compete at the low
end production & manufacturing.”
“Emphasis on higher value add activities.”
“Increased drive to locate closer to emerging markets India/China.”
“Become more service based as manufacturing is sourced to lower cost
economies such as China/India etc.”
“In financial services - regulation is going to be challenging, however low corporation tax is an important USP.”
“Deepen roots or die.”
“As cost of manufacturing becomes cheaper in the US, the Irish tax and
R&D credit scheme will be more important in retaining existing and attracting new
companies to invest in Ireland.”
“Retention of key talent/skills will be critical; competitiveness will remain challenging.”
“ Irish MNCs will have to move further up the value chain.”
4.4.6 Ireland’s Long-run Economic Stability
Increasing confidence in Ireland’s long-run
economic stability is evident in this year’s survey
with the majority (69%) of respondents viewing it
as moderate and 16% as strong. Only 14% view
the prospects as weak, significantly fewer than
in the two previous surveys of 2010 and 2011
when both equally recorded more pessimistic
views (29%). This more positive outlook concurs
with the expectations for growth in employment
(35%) and turnover (43%) by firms in the next
year (see page 28/29).
“Overall Ireland is good place to do business. The attitude of the workforce is generally very positive. It is a pity that we are losing
so much of our talented young people to immigration.”
“As a country we need to learn some lessons from the past 5-6 years.”
“Greatest current opportunity is local in energy transmission.”
“I believe the greatest opportunity is in the manufacturing and supply of emerging
technologies such as those in the Energy renewables area, medical instruments,
and robotics. These are all global growth markets with investment being made
at the very highest level.”
Impact of Single Euro Payments Area (SEPA)
% Firms
Positive 45
No Impact 55
Source: IMI Danske Bank MNC Survey 2013
Table 4.8
The Current Business Env ironment31 The Current Business Env ironment 32
Change in MNC Position%
respondents
Improving 22
No change 17
Pressure from lower cost operations/economies
16
Shift to higher value roles 11
Tax issues critical 10
More Services 7
Pressure from UK 4
Retention of talent critical 4
Consolidation 4
Source: IMI Danske Bank MNC Survey 2013
Table 4.9
Ireland’s Long-run Economic Stability
% Respondents 2013 2011 2010
Strong 16 13 8
Moderate 69 59 63
Weak 14 29 29
Source: IMI Danske Bank MNC Survey 2013
Table 4.10
55.1 Introduction
The level of engagement in the local Irish
economy is reflected in the business and social
inter-linkages and relationships a firm develops.
Apart from the benefits of employment and
business generation, the spill-over effect through
the transfer of skills, best practices and learning
to indigenous SMEs in a firm’s supply chain is
viewed as a significant benefit of the presence of
MNCs. Other benefits include relationships with
third level institutions for promoting research
and development as well as graduate recruitment
or as purchasers of training. Such higher level
relationships are viewed as important elements
in embedding firms in a given location. Other local
community benefits may fall under the corporate
responsibility banner such as volunteer work,
skills development and sponsorship.
5.2 Relationships with Irish SMEs
Over half of respondents purchase essential
product related supplies from local SMEs while
almost half engage professional services and
third party vendors from local SMEs (Table 5.1).
Dealing with local SMEs was not generally
viewed as difficult. Approximately one third
of respondents specified some challenges
(among others, cost was mentioned by 14% of
respondents, scale or capacity by 8%, quality
and continuous improvement by 3%).
Chapter 5: Engagement in Local Economy
5.3 Relationships with Irish Institutions
Table 5.2 shows the nature of institutional
relationships developed by firms such as
research and development (R&D) and
training programmes. In most cases the level
of engagement is higher among Irish owned
firms. Nearly, a quarter of foreign owned firms
are working with the IDA for R&D and 14% for
innovation networks. The relationship with
Enterprise Ireland (EI) is the equivalent for Irish
owned firms and 28% of Irish respondents
indicated they work with EI for R&D and 17%
are engaged in EI innovation networks. All
major universities, research organisations
and institutes of technology were represented
in the linkages specified by respondents.
Other institutes specified: DCU (4), UL (6), Waterford IT (3), Tyndall, Queens, Athlone IT, Cork IT, NIBRT (2), NUIG, Irish Dairy Board, Teagasc, ACCA/CIMA, American Chamber of Commerce
Level of engagement with Irish-based SMEs - % Foreign (% Irish)
EssentialSome
Non-CriticalNone
Suppliers - inventory or product related parts or services
58 (54) 30 (39) 13 (7)
Suppliers - non-product related parts or services (e.g. office)
38 (18) 52 (68) 10 (14)
3rd party vendors 44 (21) 34 (61) 20 (18)
Customers 38 (54) 30 (25) 33 (21)
Professional services 49 (39) 44 (54) 7 (7)
Source: IMI Danske Bank MNC Survey 2013
Table 5.1
Engagement with Irish 3rd level institutes, other institutions, state or semi-state bodies
% Foreign (% Irish)
Institution R&D TrainingInnovation Network
Campus Company
Graduate Programmes
RecruitmentSpecify Other Activities
IMI/UCC 10 (14) 22 (42) 4 (3) 0 (0) 18 (21) 13 (14) 1-client
UCD 7 (14) 3 (7) 5 (0) 0 (0) 12 (17) 14 (14) 1-sponsor
TCD 9 (3) 3 (0) 3 (0) 0 (0) 9 (10) 11 (7)1-client, 1-alumni, 1-sponsor
IT 4 (3) 3 (3) 3 (3) 0 (0) 10 (7) 11 (10) 1-client
IDA 23 (3) 7 (3) 14 (7) 1 (0) 0 (0) 0 (0)
3-grants, 1-networking, 1-capital, 1-collaboration
FÁS/Solas/VEC 1 (0) 11 (7) 0 (3) 1 (0) 1 (0) 8 (14)
Jobridge 1 (0) 3 (10) - - 3 (7) 14 (7) 1-Work experience
Enterprise Ireland
9 (28) 3 (10) 10 (17) 0 (0) 0 (0) 1 (0)Marketing, business, lean, collaboration
Bord Bia 1 (0) 2 (3) 3 (3) 1 (0) 1 (0) 0 (0)1-Farm agr. 1-Support
Specify Other Institute/Body
5 (3) 2 (3) 1 (3) 1 (0) 12 (3) 10 (7)
Source: IMI Danske Bank MNC Survey 2013
Table 5.2
Engagement in Local Economy33 Engagement in Local Economy 34*IDA, 2013, Foreign Investment in Ireland (Infographic updated June 2013), Industrial Development Authority, Dublin. http://www.idaireland.com/invest-in-ireland/fdi-in-ireland-2013/index.xml
5.4 Engagement in Community, Social or CSR Activities
Responses to the question on community, social or Corporate
Social Responsibility (CSR) engagement related mainly to the
charitable activities of firms and their employees. The majority
of firms (66%) are engaged in an impressive array of charity
and community activities (70% foreign & 53% Irish). Eight firms
specifically mentioned that they have a CSR strategy and three
firms mentioned that they were members of Business in the
Community Ireland (BiTCI).
Many activities were non-specific such as ‘supporting local
charities’ or ‘community events’. Others were area-focussed such
as sports and education. Only a handful of charities or activities
were specifically named. Of all the activities the one which was
most named was the Junior Achievement* programme which
helps to keep students in education – six firms are involved in
this programme. Education was a popular area of activity with
16 other firms engaged in this area such as working with local
schools. Other charities or activities named were Unicef, DCU
Access Programme, Galway Arts Festival, Tidy Towns, Smurfit
Kappa Foundation, Jobcare and Focus Ireland.
Execut ive Summar y 7*Junior Achievement Ireland http://www.juniorachievement.ie/
Type of Social/ Community Activity
n
Local Charity/Community 50
Other Education 16
Sponsorship 12
CSR strategy 8
Junior Achievement 6
Sports 6
Volunteer staff hours 4
Other Youth 2
Fundraising 4
Health 3
Business in the Community Ireland 3
Tidy Towns 2
Jobcare 1
Employ staff with special needs 1
Arts 1
Recycling 1
Source: IMI Danske Bank MNC Survey 2013
Table 5.3
Engagement in Local Economy35 Engagement in Local Economy 36
Q1: Is your operation Irish owned or foreign owned?
Irish Owned
Foreign Owned
If foreign owned please specify the country:
Q2: How would you characterise your Irish operation:
The strategic centre of global company
A strategic centre for a region, product or service
Higher value support function
Basic product or service
Q3: In what sector is your Group/Company primarily engaged?
Food, drink and tobacco
Agribusiness
Chemicals and pharmaceuticals
ICT - Hardware
ICT - Software
Other electrical & transport equipment
Medical Devices
Financial, insurance or real estate services
Retail and wholesale trade
Professional and support service activities
Engineering & construction services
Logistics and SCM services
Transport services
Other
Specify Other
Q4: Approximately, what proportion of your Irish operations is manufacturing based, and what proportion is services based?
Entirely Manufacturing
75% Manufacturing / 25% Services
50% Manufacturing / 50% Services
25% Manufacturing / 75% Services
Entirely Services
Other
Specify Other
Q5: What are the principal products of your Irish operations?
Appendix: IMI Danske Bank MNC 2013 Online Questionnaire
Section A: Basic Profile of Irish Operation
Q6: How many people do you employ in Ireland?
How many people do you employ overseas?
Q7: Approximately, what proportion of employees in Ireland have a 3rd level degree?
>75% 50-75%
25-50% <25%
Q8: In terms of improving your Irish operation’s competitiveness, how important are the following:
Up-skilling Existing Employees
Broadening Management Experience
Openness to Change
Work Readiness of New Employees
Q9: Identif y any specific skills shortages in Ireland which are impinging on your growth plans or productivity:
Q10: What Irish cultural factors af fect your organisation’s performance (either positively or negatively)?
Q11: Did employment numbers or turnover of your Irish operations change in the past 2 years?
Employment in Past 2 Years
Increased
Remained Broadly Unchanged
Decreased
Approximate % change
Turnover in Past 2 Years
Increased
Remained Broadly Unchanged
Decreased
Approximate % change
Section B: Labour Force Activity
Critical Advantageous Not Important
Critical Advantageous Not Important
Critical Advantageous Not Important
Critical Advantageous Not Important
Appendix37 Appendix 38
Q12: How do you expect the employment numbers turnover of your Irish operations to change in the coming year?
Employment in Coming Year
Increased
Remained Broadly Unchanged
Decreased
Approximate % change
Turnover in Coming Year
Increased
Remained Broadly Unchanged
Decreased
Approximate % change
Q13: Do you have a competitive strategy?
Yes
No
If yes, please describe the key elements
Q14: What are your current actions plans and priorities?
Q15: How much authority does your Irish operation have in developing a new product or service?
No Authority Complete Authority
1 2 3 4
Q16: Has there been any change in the mandate of your Irish operations in the past two years?
Yes
No
If yes, please explain the nature of this change?
What were the key factors inf luencing this change?
1.
2.
3.
If no, please explain if there is/are any particular reason/s?
What were the key factors inf luencing this change?
Yes
No
Section B: Labour Force Activity
Q17: Are you currently trying to win any new mandates for your Irish operations?
Yes
No
If yes, what is the nature of the desired mandate?
What would assist in achieving this mandate?
Q18: What is your level of engagement with Irish-based SMEs:
Suppliers of inventory or product related parts or services
Supplier on non-product related parts or services (eg of fice supplies)
3rd party vendors
Customers
Professional services
Q19: What are the challenges / opportunities you encounter when dealing with Irish SME suppliers?
Section B: Labour Force Activity
Section C: Engagement in the Irish Economy
None Some Non-Critical Essential
None Some Non-Critical Essential
None Some Non-Critical Essential
None Some Non-Critical Essential
None Some Non-Critical Essential
Appendix39 Appendix 40
Q20: Are you engaged with Irish 3rd level institutes, other institutions or state/semi-state bodies?
Please place x in box
If Other Institute/Body was selected please state the Institute/Body here
Q21: Is your business operation engaged in community, social or CSR activities?
Yes
No
If Yes Please Describe
Section C: Engagement in the Irish Economy
Q22: Cost: How do the following elements of cost to your Irish operation compare with those of your sister plants overseas?
Please place x in box
If Other was Selected Please Specify:
Q23: Is your cost base in Ireland rising in 2013, unchanged or falling?
Rising
Unchanged
Falling
Q24: In what country is the greatest competitor to your Irish operation located?
Q25: Is your greatest competitor from within your own global company or from an external one?
Internal
External
Q26: What critical structural improvements or policies would assist in achieving the desired growth or mandate for your Irish operations?
Q27: How do you see the position of MNCs in Ireland changing over the next two years?
Section D: Business Environment
Institution R&D Training Innovation Network
Campus Company
Graduate Programmes Recruitment
Specify Other
Activities
IMI/UCC
UCD
TCD
IT
IDA
FÁS/Solas/VEC
Jobridge
Enterprise Ireland
Bord Bia
Specify Other Institute/Body
Less expensive Same More
expensive
Labour
Transport
Telecommunications
Energy
Legal Services
Other Professional Services
Appendix41 Appendix 42
Q28 Has Ireland’s reputation with your overseas clients/operations changed over the past year?
No Change
Improved
DisImproved
And if so, has it materially af fected your ability to do business?
No Effect
Positive
Negative
Q29: Have your Irish operations been, or will they possibly be, af fected by the recent international discussions on taxation, global transactions etc?
Yes
No
Please Explain:
Q30: Do you expect any recent developments in other countries to af fect the competitiveness or mandate of your Irish operations (eg recent intellectual property changes in UK)?
Yes
No
Please Explain:
Q31: Will the forthcoming Single European Payments Area (SEPA) positively af fect your operations in Ireland?
Yes
No
Please Explain:
Q32: What is the greatest opportunity for your Irish operation, as the global economic climate improves?
Q33 How do you rate Ireland’s long run economic stability?
Strong
Moderate
Weak
Q32: Finally, would you like to make any further comments or observations?
Section E: Perception of Ireland in 2013 Notes
Appendix43 Appendix 44
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