The news last week that hundreds more jobs are to be created in foreign-owned firms based around the State again focused attention on our visiting multinationals. These have been integral to the unprecedented economic growth experienced over the past decade.
There are about 1,100 such companies operating in Ireland, employing some 115,000 staff between them. According to the Industrial Development Authority, the agency charged with promoting direct foreign investment in Ireland, they spend an estimated £2 billion (€2.54 billion) on wages and £14 billion on raw materials locally. The growth has been spread across all industry sectors, particularly electronics, but others such as healthcare, with companies such as Smithkline Beecham, and many leading corporates, such as Coca Cola, are among those attracted to (and thriving on) these shores.
In its Market Review last October, NCB stockbrokers concluded that the Intels, the Hewlett Packards and the Dells, which now have extensive operations here, had accounted for most of the strengthening national export performance over the past five years.
According to the review, in the first six months of last year exports of chemicals and machinery and equipment coming from the mainly multinational-dominated sector of manufacturing accounted for 27 per cent of the 31 per cent rise in export values.
The question of why so many high quality firms have been tempted here is the subject of much debate at home and in countries that have not been as successful in attracting foreign investment.
Mr Simon Scroope, a senior manager with AIB's International Corporate Banking service, cites "generous tax incentives, the availability of a skilled, well-educated, workforce, low inflation and moderate wage demands" as the main reasons for the welcome foreign invasion.
Although some maintain that the State's economic strategy relies too heavily on the presence of multinationals, others point to the way in which many of these companies have become deeply rooted in the business environment here.
A spokesman for the IDA said that many of the companies have reinvested in the State, establishing R&D facilities or call centres - in moves which make it more likely that Ireland will remain a base for them.
"In addition, they use many Irish suppliers which, in turn, have become international players as a result," he said. Last week Hewlett Packard announced the creation of a technology campus which will add 200 to the 1,350 it already employs.
The IDA's policy is "to continue to attract quality, innovative international manufacturing and service companies here and to develop an industrial infrastructure which will keep them in the State", said the spokesman.
There are those commentators, however, who would argue that the State has become far too reliant on these multinationals. In the past, the good news stories announcing the creation of hundreds more jobs have often been tainted by the more headline grabbing instances when plants such as Seagate or Fruit of the Loom experience difficulties and jobs are lost.
Dr Sara Dillon, a lecturer in International Trade Law at UCD, is one such commentator. She likens the State "to a clever woman who has married a rich man but has never really done anything worthwhile in her own right".
"I believe that, despite what anybody says, the Irish economy is a branch of the American economy. It is not Irish industry that creates these jobs," she said.
She believes that the multinationals will have no interest in remaining here if the tax breaks (including a 10 per cent Corporation Tax rate) situation changes. "What will happen if the EU insists that the tax rate is forced to a European average?" she asked. "And what happens without this outside investment in Ireland?" According to Dr Dillon, "the country would have been better served by modest growth based on indigenous industry".
"Instead, it has lived on handouts and international investment," she said.
Mr Kevin Hannigan, of the Irish Management Institute, said the lower rate of corporation tax was "the key factor attracting firms and is also important in retaining firms in the face of competition from other locations". The quality workforce was also crucial, he said, and it was developments that impacted adversely on these two factors that multinationals would see as the greatest threats to the State's competitiveness.
Mr Dermot O'Brien, head of economic research with NCB, said that economic growth here would be affected if the multinational presence were reduced. "However, there is a view that the whole Celtic Tiger thing has been down to the multinationals, but they are by no means the whole story," he said.
A scenario where all the multinationals pulled out, a spectre often raised whenever job losses in the sector occur, was "highly unlikely", he said, given the level of past and planned investment in their operations in the State.
Closures and job losses are inevitable whether business is good or bad - "that's business", said one commentator. Nevertheless, Mr Hannigan said: "The aim must be to ensure that we continue to attract firms in growth sectors to replace those that are leaving."
"While it may be disruptive, this evolution should not be seen as a bad thing for the economy overall as the alternative is stagnation," Mr Hannigan added. He said that tax breaks for multinationals would remain an important issue but that "the skills, flexibility and overall quality of the workforce is an essential ingredient in order that the economy remains a competitive and attractive location for production".
