Policies that restrict international trade to help domestic industries could hamper Irish exporters' efforts to create jobs locally in the years to come, the new chief executive of Enterprise Ireland has warned.
In his first full interview since replacing Julie Sinnamon as head of the State agency earlier this year, Leo Clancy said while a global shift towards trade protectionism isn't an immediate threat, it is something companies here need to be aware of.
“What is happening in terms of geopolitics right now is interesting and is something we are watching carefully. It could have a negative impact on exporters in terms of job creation here. Protectionism might lead to more localisation of supply chains,” he said. If pressures build on exporters to act on this in some markets they operate in, he says it will clearly affect their ability to create jobs locally.
Clancy joined the State agency from IDA Ireland where he led its technology, consumer and business services team. He faces a tough task in the coming years. As the man charged with encouraging more Irish businesses to look overseas for continued growth, he is aware of huge shifts happening on the trade front globally, most of which we have little control over.
Covid challenge
Given a decline in foreign direct investment flows, there is also pressure on him and his team to deliver strong results to make up for a possible shortfall in investments by multinationals locally. With Enterprise Ireland’s wide remit, Clancy also needs to ensure that early stage companies are given the support to help them get going and scale.
Such a task would seem pretty daunting at the best of times. It has obviously been made that much harder due to the impact of the Covid crisis and Brexit, both of which have wreaked havoc on some sectors.
It isn’t all bad, according to Clancy. Some companies, such as those operating in the tech or pharma space, have thrived during these difficult times. And while we’re certainly not out of the woods yet in terms of the coronavirus pandemic, he says, he talks of client companies being “cautiously optimistic” about the future.
“Quite a few of our overseas offices have reopened and we’re looking at a gradual return to work for our team here, but there is obviously some way to go both for us and our clients,” he says of Covid.
“Helping our clients get physically back in the market is very important in terms of winning new customers and supporting existing business. We have already re-opened 29 offices in key markets in the first half of 2021, [and] our clients recorded an increased level of sales activity in these, particularly in sectors such as construction, manufacturing and life sciences.”
Exports
Overall exports by indigenous Irish companies rose 0.3 per cent last year to just under €25.5 billion, the State body recently announced. Exports to the State’s largest market, the UK, fell 3.8 per cent to €7.5 billion. Euro zone exports, which account for 23 per cent of the total, rose by 1.6 per cent to €5.85 billion.
Clancy says the State agency’s research shows that Irish exporters are forecasting “a boost of up to 8 per cent” in sales this year which, given the circumstances, is admirable.
As befits the head of Enterprise Ireland, he voices concern about the State’s competitiveness and the need for companies to continue to innovate.
EI has provided a range of Covid-19 funding supports over the last year or so, including approving €181 million in sustaining enterprise funding to 671 companies to help protect more than 27,500 jobs. It has also flashed the cash in terms of bolstering businesses impacted by Brexit.
If he is daunted by what lies ahead, Clancy isn’t showing it. Talking to The Irish Times via videoconference, he is friendly but guarded. Having spent over a decade working at IDA Ireland, he knows the value in not giving the game plan away too early. So in terms of revealing EI’s strategy for the coming years, there is little outside of talk of work being done on these fronts currently.
Confronted with the thorny issue of whether Enterprise Ireland and IDA Ireland should be merged, as has been mooted on numerous occasions over the years, he simply laughs and makes it clear he “isn’t going there”.
Clancy is filling big boots in replacing Sinnamon, who won plaudits all round for her stewardship of Enterprise Ireland. But his appointment was warmly welcomed by industry.
Despite his years in the public sector, his previous background working in private sector for companies such as Ericsson and Enet has helped him be less guarded on some issues. He is surprisingly frank when pointing out how client companies must look beyond the obvious threats for example.
Falling short
“There are lots of challenges ahead, even outside of Brexit and Covid. Take the move towards digitisation and sustainability, issues that haven’t really registered with enough businesses here,” he says.
Clancy is right. Recent surveys indicate that Irish companies aren’t taking either of these issues seriously. Enterprise Ireland’s own research found that more than 70 per cent of client companies it asked did not have a climate action plan in place, while 56 per cent had no digitalisation strategy.
“In fairness, so many companies have been focused on staying alive and keeping their businesses liquid and the employees paid that these are seen as luxuries, but they really aren’t any more,” he says.
“We need to be very cognisant, though, that if someone isn’t doing digital or sustainability, it isn’t because they are ignorant of the requirements to do it. It’s a space and time thing. I do think, though, that we are going to have to plan around this very carefully in the next few years to help people get their heads around it and react.”
One thing Clancy believes Irish exporters can learn from multinationals is in becoming more service-orientated.
“A lot of services-related companies come to Ireland in order to serve the European market and there is no harm taking a leaf out of that playbook because currently things are a bit more skewed towards manufacturing still. Services are quite portable and less amenable to barriers. So as a source of growth for companies, it is worth looking at,” he says.
“We’ve already got some great business in that space,” Clancy adds, namechecking AMCS, the Limerick-based waste and recycling management software group, as an example.
Proactive
Fintech is another area cited by Clancy in terms of growth opportunities for exporters, along with the green economy, food and more obvious ones such as life sciences.
The public sector may have a reputation for being reactive but Clancy says the Covid crisis has shown this isn’t true. He says one of the biggest surprises when he made the leap from private enterprise was how quickly things can move at times.
“The last year is a brilliant example of how proactive it can be,” he says.
Asked if there is one thing the Government could do to make his life easier, Clancy doesn’t hesitate in his response.
“All I ask is that it remains as enterprise-focused as it currently is. The difference in Ireland versus anywhere else in the world is huge in terms of ministerial attention to business. You see it day in day out with even the most senior ministers happy to attend relatively small events for Irish companies.
“They recognise the importance of business and that is critical and will continue to be so in the years ahead,” he says.
