Multinationals target Cork for job creation

Sunday Business Post - Cork 2007 - May 27 2007

Cork is reaping the rewards of inward investment, with hundreds of new jobs being created, including higher skilled positions.

The first four months of 2007 have seen significant foreign direct investment announcements for the Cork region.

Headline announcements have included 100 new jobs by DeCare Systems Ireland in a strategic expansion of its software business in Cork, GlaxoSmithKline’s €250 million investment to add 150 jobs in its production site at Currabinny and VMware, another US software firm, announcing 369 new jobs for Ballincollig.

This follows on from announcements in the last months of 2006, which included €400m over 5 years to create 200 jobs at the Eli Lilly biopharma operation in Kinsale, the establishment of an R&D centre-of-excellence at Pepsi’s Little Island facility and Trend Micro’s plans to expand its Operations Centre in Cork for Europe, the Middle East and Africa.

In April, Amazon opened their new customer service centre in the Cork Airport Business Park, which will eventually employ 450 personnel.

Brian Conroy, area director for the south with IDA Ireland, said that he did not expect the good news to end here.

"We would hope to be making similar announcements as 2007 progresses," said Conroy. "Cork is a popular location for inward investment, so we would hope that we will continue to see further companies decide to set up there over the course of the year."

Conroy said that a trend within the inward investment announcements was towards higher skilled, higher value jobs.

"There is a move towards higher skilled jobs, but that does not necessarily mean there is a move from manufacturing jobs to R&D jobs," he said. "We are still getting manufacturing companies coming in, for example the Pepsi and GSK are very strong manufacturing companies, but it is higher value manufacturing where the skill level is very high and consequently it pays relatively well from a salary point of view.”

These higher skilled jobs are typically linked to a commitment to locating R & D facilities within the company’s Irish operations, said Matt Moran, director of Pharmachemical Ireland.

"GlaxoSmithKline have made a number of R&D announcements over the last 12 to 18 months," he said. "We see them now investing now in cutting edge biotechnology which in many ways will be the future of the industry. The newer investments we see coming in normally have an R&D piece built into the investment. This helps secure the long term future of the industry."

A further example of the research and development initiatives which are being undertaken by international organisations in Cork is the announcement in March 2007 by Allen Vanguard to carry out a significant R&D initiative at its Irish operation at Kilbrittain. Allen-Vanguard is a Canadian manufacturer of robots which are used by security forces to perform dangerous tasks.

Conroy said Ireland’s low rate of corporation tax and high skills base was a major attraction to international businesses, but there were other specific advantages that the Cork region had built up over the years which were vital in securing ongoing investment within particular sectors.

"Reputation is important and it takes many years to develop a reputation," he said. "Cork has a good reputation in a number of fields, particularly what we call life sciences, that includes pharmaceuticals, biotechnology and medical technologies. The success of existing companies here means that other companies hear about it and they feel a comfort level in terms of operating here and the risks are reduced."

The existence of local businesses who are experienced in assisting multinational partners is also very useful, said Conroy.

"If you are in the pharmaceutical sector you have the ability to build your plant, construct, design and then build your plant," he said Conroy. "Support services in terms of things like accounting and legal that multinationals need to operate are also available in Cork.”

Joe Gantly, president of Cork Chamber, said it would be wrong to assume that Cork was only attracting investment in the life sciences areas.

"You also have to look at the ICT space," he said. "Apple has over 2,000 people here; EMC has 1,300. You have companies like Amazon in the supply chain, and RCI in the travel reservations space, so there is a range of sophistication beyond pharma and biotech. Then you have international financial services companies like Citco based here."

Conroy said that the local infrastructure in Cork was helping to attract investment into the region.

"I think the infrastructure in Cork is pretty good, with good roads, the new airport which is just being built, big investment in the Cork docklands project and the opening of the Cork-Middleton railway line," he said.

"They are looking at the design at the moment of a northern ring road. They are the sort of things that investors like to see that a city or region is planning for the future, because if you are investing you want to be sure that what looks good now will still be good in five or ten years time."

Cork’s third level education sector has also been a key attracting factor for inward investment, said Dr Richard Moloney, lecturer in economics at University College Cork.

"Both University College Cork and Cork Institute of Technology have strong links to industrial sectors," said Moloney. "Also there is the National Microelectronic Centre which gives strong support to the computer and IT industry. It is also a world leader in nanotechnology."

Moloney said that colleges are also designing third level courses with the requirements of industry in mind.

"There are close contacts with many of the graduates needed by these industries being trained locally," he said. “Many of the business courses in both institutions have work placement.”

Linkages between the international life sciences businesses located in Cork, and the education sector, were also important, said Gantly.

"There are developing links between those industry players and UCC and CIT, and with FAS as well,” he said. “GSK recently signed a very significant research collaboration with UCC. This would be around product development processes, and also manufacturing process improvement.”

Conroy said Cork faces the same challenges as the rest of Ireland, if it is to ensure that the high levels of inward investment continue into the future.

"We are trading not so much on the quantity of people, but the quality of the people,” he said. “That is always a challenge to ensure we are leading edge in a wide range of areas. You are playing at a very high level, and you are playing against the best competitors in terms of what they can offer - the likes of Switzerland, Singapore, the US and other countries in Europe which have been investing in their infrastructure for much longer than we have. To continue to be attractive you have to offer quite a sophisticated product in terms of infrastructure, skills base, support services have all to be at a very high level."

Gantly said that competitiveness was a major issue.

"You are looking at wage inflation in Ireland over a number of years and indirect costs such as energy have increased substantially, and clearly they subtract from the competitiveness of industry here," said Gantly.

Cork especially needs to keep energy costs down, given the particular multinational organisations that are located there.

"The energy situation in the country does need some attention," said Gantly. "Pharma and other industries that use a lot of energy as part of their manufacturing processes will see that as a differentiating factor moving forward."

Gantly said that further government input was required if Cork was to continue to attract the high level research jobs that it needs.

"The incentives which the government have put into effect regarding R & D are going to have to be expanded over time and become probably more complex and sophisticated to get more and more companies to locate R & D facilities here," he said.