3rd County Company Branches Out to Ireland
Programming Network is a 5-year-old software design firm in Westminster with just 17 workers. In September this small business will become an international operation when it opens a software development center in Dublin with eight new employees.
“We thought Europe was ready for our software, and when we looked at Europe, Ireland was the only country that sat up and took notice of what we were doing,” said Donald Sutherland, Programming Network’s founder and president.
The Irish Republic’s government-sponsored Industrial Development Authority, the country’s manufacturing headhunter, is going to keep taking notice of county companies, IDA Vice President John O’Brien said.
“You’ve got here exactly the companies that we’re after . . . small now, but with tremendous growth potential worldwide,” he said.
Ireland’s IDA is considered one of the best industrial investment recruiters in the world, specializing in small companies like Programming Network. The IDA works on the theory that while a small firm will initially employ few workers, it will pay off for the Irish economy if a company is eventually successful and grows.
“Our initial attraction for small companies came because we started too late for the big growth of the Honeywells and IBMs,” said O’Brien, who works from IDA’s main U.S. office in New York. The agency has several other U.S. offices, including one in Los Angeles.
In the last 20 years, the IDA has helped attract 350 U.S. corporations to Ireland--companies that employ 40,000 workers in Irish plants. The roster is made up mostly of small companies but includes a few giant firms, such as Digital Equipment, Merck & Co. and Apple Computer.
Programming Network will be the third county company to place a facility in Ireland, joining Western Digital and Allergan Pharmaceuticals, which both have headquarters in Irvine.
The IDA targets computer, electronics and pharmaceutical companies. In addition, Gillette also makes hair dryers in Carlow County in southeast Ireland, halfway between Dublin and Waterford, and Union Underwear, America’s largest underwear manufacturer, produces Fruit of the Loom T-shirts in Donegal County on the northwest coast.
In all, about 800 multinational companies have Irish operations, accounting for about 40% of the country’s manufacturing employment. But Ireland’s economy is still depressed, which is why IDA is still hunting.
The nation’s unemployment rate tops 19%, one of the highest in the industrialized world, and Ireland’s gross national product--$27.2 billion last year--has increased only slightly during this decade.
And every year a large number of college-educated young people leave the country to find work, creating a destructive brain drain. With 55,000 of Ireland’s college-age residents enrolled in college, and half the population younger than 28, a creative young work force is the country’s biggest selling point.
Without Ireland’s efforts to attract foreign investment, the country’s economy would be crippled, said David Bruns, president of international operations at Allergan.
Bruns calls the IDA a role-model that should be followed by other countries’ development authorities and by state development offices in the United States.
“They spend a lot of time talking to people who have never thought of expanding in Europe, a lot of people who only export, and it’s phenomenal how many people listen,” said Susan Lentz, executive director of the World Trade Center Assn. in Santa Ana.
“Ireland’s recruiting of U.S. companies does wonders (for Ireland), partly because they are willing to take a risk on a company,” Lentz said.
Western Digital is an example of a risk that has paid off. The computer maker was one-sixth its current Fortune 500 size when it opened a production facility in Cork in 1983 and hired fewer than 20 Irish workers. Now it has 300 employees in the southern Irish city.
To attract companies like Western Digital, the IDA offers a package that O’Brien said can include a low, 10% tax rate and employee training grants that could be enough to pay workers’ first-year salaries.
In many cases, the IDA finds production facilities for U.S. companies--even builds them to order and leases them back to the companies if nothing suitable is available.
Still, Ireland is a tough sell, because the country’s technology lags behind that of Japan, and labor can be found cheaper in less-developed countries. And historically, England, France and West Germany have reputations as centers of European commerce.
But the three county companies that have branched into the Republic chose Ireland because of its attractive tax structure, a location that provides easy access to many countries in Europe and the abundance of college-educated young people ready to work.
“U.S. companies are accustomed to a market of 240 million people. We’ll give them 320 million more in all of Europe. And, we’ll hold your hand if you need us to,” said IDA Vice President Desmond Fahey, a chief West Coast recruiter.
Sutherland of Programming Network said: “Ireland gives us everything we need, a great location to serve all of Europe and a highly motivated labor force.”
His company, which designs microcomputer software programs for pizza parlors and other fast-food restaurants, will initially employ eight workers at its development center and plans to expand within three years to 18 employees.
While Programming Network is small potatoes in a country with more than 2 million workers, it will keep a few more of Ireland’s young college graduates from leaving the country, as John Coyne did when he graduated in the early 1970s.
Coyne said he had to move to England to land a job that would enable him to develop his skills as an engineer. “In those days, you had no choice but to leave to get a good job,” he said.
It was the IDA program that brought Coyne back to Ireland in the middle 1970s, when he took a position with Emerson Electric, a U.S. company that had established an Irish production facility. In 1983, he was hired by Western Digital to run its new Irish plant. Last year, the company transferred him to Orange County, where he is now vice president of submersible systems.
“You don’t need to go away anymore to learn your skill. You can do it in Ireland now,” Coyne said.
One county executive said: “The IDA wants jobs to keep those people. They want good jobs. They’re not trying to put them to work in yogurt stores.”
Bruns of Allergan said: “With the 300 workers we employ in Ireland, if we weren’t there, it’s not that the workers would be unemployed, it’s that they would have left the country.”
When Allergan’s Irish facility opened in Westport on the rugged southwest coast of County Mayo in 1979, it had 20,000 square feet and employed 20 workers. Now, a decade and several expansions later, the plant occupies 140,000 square feet.
Bruns said Allergan decided to expand to Ireland because the Republic offered great access to all of Western Europe, “and they were very receptive to us.”
“And we stay there because the country is still receptive and responds to our needs quickly. They don’t take us for granted.”
IRELAND AT A GLANCE Population: 3.6 million
Gross national product: $27.2 billion
Unemployment rate: 19.2%
Foreign trade surplus: $870.2 million.
Inflation rate: 3.2%
Average hourly wage plus benefits: $9.13
Percent of population under 28: 50%
Source: Industrial Development Authority of Ireland’s 1987 estimates
