While the attraction of a city like Dublin for any international company is clear, there are many reasons to consider locating outside of the major urban centres.
“We have seen an increasing number of new investments being announced by US companies outside of Dublin,” says Nicola Quinn, PwC Cork tax leader. “These investments are across all sectors and geographies. Some examples of these investments are new data centres in Galway, Louth and Meath, medical device companies expanding in Galway, cybersecurity companies locating in Cork and healthcare companies expanding in Waterford. There continues to be expansion in the international financial services sector and one third of all international financial services jobs in Ireland are now located outside of Dublin.
One of the principal reasons more companies are opting to locate outside of Dublin is cost. “From a cost-competitiveness perspective, the regions are very attractive to potential investors,” explains Séamus Hughes, general manager of Zeus Industrial Products and chair of the American Chamber of Commerce northwest region.
“With a lower of cost of living and lower cost of property as a result, there can be considerable savings for employers. Average incomes in the northwest are approximately 17 per cent cheaper than the State average. The northwest has an average asking price for houses ranging by county from a high of €132,442 to a low of €114,102 for the region, compared to the average nationwide of €210,000.
“Commuting times are lower, resulting in a better standard of living for employees being able to spend time with families rather than in traffic. And this too can make it easier for companies to find and recruit the talent they need,” says Hughes.
“Development land and office space are cheaper away from Dublin and, with the relevant infrastructure and route to market in place, considerable savings can be made by investing regionally,” explains Julian Yarr, managing partner of A&L Goodbody. “Labour costs tend to be less costly too and with a good spread of third level colleges and universities around the country, investors are still tapping into a knowledgeable workforce but at less of a cost.”
This is not happening piecemeal. The Government and IDA have been actively pursuing a strategy of more balanced regional development for some time. “I am happy to report that IDA is making strong progress on its balanced regional development targets,” says IDA chief executive Martin Shanahan. “Last year, every single region in Ireland reported net gains in jobs from foreign direct investment. In 2015, 53 per cent of all jobs created by IDA clients were based outside of Dublin, compared to 49 per cent in the previous year.
“This year started strongly too in terms of regional wins, including Uber investing in a centre of excellence in Limerick; First Data setting up a data hub in Nenagh, Co Tipperary; Shire investing €400 million in a biologics campus at Piercetown, Co Meath; Opko Healthcare creating 200 new jobs in a product development centre in Waterford; Wayfair expanding its operations in Galway with a new operations centre, SurModics Inc creating 100 new jobs in Ballinasloe, Co Galway, investing €7 million in facility development and a further €9.5 million in two significant research and development projects there; and Eurofins Lancaster Laboratories in Dungarvan, Co Waterford, announcing an expansion of its facility with the creation of 165 new jobs on top of the 175 jobs added there in the past two years, to name just a few important regional wins. “In addition, Apple is committed to building an €850 million data centre in Athenry, Galway, and Facebook is pressing ahead with its plans for a data centre near Clonee, Co Meath.
“These kinds of investments are hard won against intense international competition.”
The benefits to local communities include increased job opportunities and spending, which most importantly gives local young graduates more opportunities to stay and build a life in their own towns or regions.
“The benefit of FDI to local communities, particularly outside of greater Dublin and Cork, is immense,” says Hughes. “They benefit in many ways, providing valuable employment and supporting dozens of local SMEs who offer essential services to companies such as office stationery and food provisions for employees. There is a multiplier effect: the result of job creation by American companies in Ireland.
“The expenditure on payroll is considerable and this too has a big spillover effect into local economies.”
“Spin offs from multinational investing companies can create indigenous enterprises and spawn new local industries,” says Yarr. “Significant FDI can also attract further investment in the regions in the form of transport and telecoms infrastructure from national and local government .”
So what’s needed to keep all this crucial FDI coming in the future?
“Access to reliable and fast broadband is probably the most important element needed to secure future rural development,” says PwC’s Nicola Quinn. “In addition, securing good transport links – for example transatlantic flights from Cork to the US – are key in terms of easy access for US companies to the south of Ireland. Continued and improved investment in our road infrastructure is also important.
“Our third-level institutions around the country must continue to work with industry to design courses that are relevant to employers so that we continue to have the skills and talent available to attract these investments into Ireland.”
