President's Message
Newly appointed President of the American Chamber of Commerce in Ireland, Mr. Lionel Alexander, Vice President and Managing Director, Hewlett Packard (Manufacturing) Ltd, has said that the Government must lead Ireland in a process of reinvention and transformation in order to secure economic recovery.
Mr Alexander said; "It is not just the Irish economy which has undergone profound change; the global picture has altered dramatically. The world will not change to suit us, we must make compelling business reasons for investing in Ireland to meet the new challenges, stimulate economic recovery and ensure that Ireland remains an attractive location for inward investment."
"We must learn from the mistakes of other countries. While it is absolutely true that we must seek to become a Smart economy and support knowledge based businesses, it must be acknowledged that core manufacturing is the foundation stone on which many additional investments are built. The focus must be to protect and grow the 100,000 plus direct jobs created by the 600 US companies in Ireland
"66% of investments announced by IDA Ireland in 2009 were made by the current base of US multinationals in Ireland, which included over €350m in R&D investments. This reinforces the need to protect the existing investment base. Everything we do as individual businesses, and as a country, must be focused on maintaining a level of competitiveness which allows us to hold the investment we have and to continue to build from that base".
Mr. Alexander said that Ireland needs to develop a model which leverages our core skills and competencies across the entire supply chain. "From Research and Development to core manufacturing, distribution and marketing - building a reputation of excellence in each of these key functional areas transforms the competitive offering of Ireland Inc and becomes very compelling to investors".
"For example, one of Ireland's key strengths and biggest opportunities is Europe. Global corporations based in Ireland can effectively reach Europe's 600 million consumers with excellent goods and services developed and built in Ireland by Irish workers. That is a very significant competitive advantage which we need to strongly capitalise on when attracting foreign direct investment", he said.
In this regard the maintenance of the 12.5% Corporation Tax rate is vitally important. "As a new commission is formed in Europe we must continue to guard against any moves towards tax harmonisation or the introduction of a common consolidated corporate tax base. Being a competitive tax jurisdiction has helped to mitigate the fact that Ireland has been uncompetitive from a cost perspective", he said. "However, we cannot use our lower corporate tax as a ‘silver bullet' in relation to higher costs and we must address our overall cost competitiveness".
"Over the last decade Ireland has experienced a loss of 30% in our national price competitiveness. We need to ensure that all of those costs that are within our control are managed competitively. Insofar as it is possible, for example, we need to align our salary structures to the EU norms. Wage costs for manufacturing workers in Ireland exceed that of the OECD average and the US by approximately 20% and this is not sustainable".
"But, we are never going to beat our lowest cost competitors and we should never try. We have to focus on the core value that we deliver - by building on that we can win. The focus must be on end-to-end value, not on one particular element of our competitiveness offering - we need to enhance our capability and competency right across the system".
Mr. Alexander said that Ireland must capitalise on the presence of many of the world's leading corporations in Ireland. "With global leaders ranging from IBM and HP, Pfizer and Abbott to Google and PayPal amongst others, we have a very real opportunity to leverage the competencies and skill sets within these organisations to create clusters of innovation excellence in ICT, in life sciences, in New Media and so on. There is a need for government agencies and industry to facilitate the sharing of knowledge and excellence through these clusters which could better anchor FDI investments, possible creation of new Irish companies emerging from these clusters and increased business opportunities for the indigenous sector.
"Today's true hallmark of competitive advantage is not scale, it is the willingness and ability to change which is a continuous cycle. The factors which attracted industry here in the past will not attract investment now. What the Government and its agencies needs to do now, is to examine the needs of global industry and set about making sure they can be fulfilled here in Ireland."
Mr. Alexander concluded by welcoming the recent exchequer figures and the progress which has been made in stabilising the public finances. "It is clear that the country has begun to move in the right direction once again and that is being recognised internationally. Hard decisions have been made and there can be no shirking from these. While there is still a long road ahead, this is an important development which can only improve our attractiveness to inward investment."