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FDI sector looking ahead with measured optimism

This year has turned out to be a stellar one for inward investment despite headwinds, with IDA Ireland investment approvals hitting new records

At the announcement of a €60 million expansion of AbbVie's plant in Carrigtwohill, Co Cork were Malcolm Garde, AbbVie site director; Azita Saleki-Gerhardt, AbbVie executive vice-president of operations; and Michael Lohan, head of life science, engineering and industrial technology with IDA Ireland. Photograph: Daragh McSweeney/Provision

Wed Dec 21 2022 - 00:01

Ireland’s base of foreign direct investment is a critically important economic contributor. At present, well over 280,000 people are employed in FDI companies, which account for 72 per cent of export sales, 70 per cent of corporation tax, and direct expenditure on pay, materials and services totalling €27.9 billion.

The good news is that despite the headwinds caused by the war in Ukraine, spiralling energy prices, rising inflation and interest rates, 2022 is turning out to be a stellar year for inward investment. IDA Ireland investment approvals hit new records during the first half of the year, showing an increase of 9 per cent on the same period in 2021 and 10 per cent on 2019 pre-pandemic levels. In total, 155 investments were won, 73 of them new to the country. Jobs approvals at 18,000 were up 44 per cent on 2021 figures and 33 per cent above 2019 pre-pandemic levels.

Investment highlights during the year included an expansion for Apple in Cork to provide extra capacity to accommodate 1,300 employees; Workday announcing an expansion to create 1,000 new jobs over the next two years at its European headquarters in Dublin; an investment of €414 million by Merck to increase membrane manufacturing capacity in Carrigtwohill, Co Cork and plans to build a new manufacturing facility at Blarney Business Park in Cork; Citi plans to create 300 new jobs in addition to the 2,500 people it already employs here; a €100 million investment by Johnson & Johnson Vision Care in expansion of its existing facility in Plassey, Limerick; and a €60 million investment by AbbVie in its manufacturing site in Cork.

The future looks bright as well, according to a survey of US companies in Ireland carried out last month by the American Chamber of Commerce. The research found that 61 per cent of American Chamber members expect the number of employees in their Irish operations to increase over the next 12 months with 83 per cent saying the number had increased over the last 12 months. In addition, 61 per cent said they expected their number of employees in Ireland to increase over the next 12 months. Very encouragingly, 94 per cent of respondents said their corporate headquarters had a positive view of Ireland as an investment or growth location based on the experience of their Irish operations this year.

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To build on this success, EY Ireland partner and head of FDI Feargal de Freine believes Ireland needs to “innovate, to move up the value chain and to stay relevant for global investors.”

“In the case of life sciences, for example, that means the new wave of personalised medicine known as cell and gene therapy – there are opportunities for Ireland in manufacturing, operations and services associated with advanced therapeutics,” he adds. “Continued investment in research and development and higher education is essential to support all sectors. Competition is fierce, and we know that large investors in Ireland also make significant investments in other countries also. With the experience of the last few years, that competitive environment can become an advantage, however, as global corporates look to de-risk their supply chains and move away from single-source models.”

He believes Ireland remains an attractive location for investment. “It’s difficult to predict the future at a time of such volatility, with war in Europe, an energy crisis, higher interest rates and a recessionary global economic outlook,” he says. “So, while overall levels of FDI might well be impacted by this, the Ireland proposition remains strong and our competitive position healthy. It will be key to enhance the areas front of mind for investors – an improved planning system, investment in housing stock and broader infrastructure such as energy and water. With continued progress in these areas, the investment case remains compelling and there is cause for measured optimism.”

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