Irish companies perform well
New Competitive Business Model needed
The time for change is now - Frank Ryan

Enterprise Ireland has published its Annual Report and Accounts for 2004.  Frank Ryan, Chief Executive Officer, Enterprise Ireland, said: "In 2004, Irish companies performed well and exports rose 5.6%, despite increasing competitive pressures.  Sustainable business growth and economic development are driven by innovation and the creation of value added products and services.  This is a central tenet of Enterprise Ireland's strategy - Transforming Irish Industry.

"In response to client feedback and changing market demands, Enterprise Ireland undertook a wide ranging review of its strategy and objectives.  As a result, the organisation has committed to a new strategy with a heavy emphasis on research and innovation, internationalisation, competitiveness and entrepreneurship.

"What worked for Ireland in the last decade of unprecedented growth will not be the formula for the next 10 years.  What is required now is transformational change to a new business model focused on Irish companies having an indepth knowledge of customer requirements and the innovative competence to design, develop and manufacture the value added products and services now in demand in world markets.  The time to change is when things are going well and not when it is imposed on us by circumstances and events outside of our control.

"Growth strategies by Irish companies have shifted significantly from a proposition that marketing overseas will win sales to one where true internationalisation, embedding and partnering in the marketplace is the future.  More and more of our companies are establishing a market presence to better meet their customer needs.  This gives them direct and immediate access to customer intelligence - a major competitive advantage.  This year Enterprise Ireland assisted 154 companies to establish a market presence in major export markets worldwide.

"Achieving scale, that is driving more Irish companies beyond the €20 million sales threshold, is a priority for Enterprise Ireland and a key element of the new strategy.  It is important to recognise that for SMEs this is a complex transition that requires new skills and strong management.  Together with FÁS and other management development and training providers we are putting in place solutions that will transform the knowledge and management capabilities of those companies with the potential to achieve global scale."

Review 2004 - Highlights

• Export sales for 2004 - €10.167 billion, up 5.6% on 2003
• 107 first time exporters
• €150m in company R&D investment
• Enterprise Ireland supported 163 significant investment projects.  Of these, 51 investments were in projects located in the Border, Midlands and West. 
• Total Enterprise Ireland financial commitments to companies in 2004 were €75 million. 
• 154 companies established a new market presence in overseas locations
• 65 new start-up companies established
• Average Productivity Growth across all sectors at 7.4%
• New jobs created amounted to 11,898, net decline in employment of 1,317 which is a 60% reduction in net job losses on 2003.

Achieving export sales

In 2004 client companies achieved €10.167 billion in export sales, up 5.6% on 2003.

Northern Europe was the strongest export market with €6 billion in export sales, a net growth of 7.2%.  The UK, part of the Northern European territory, continued to be the strongest export market with €4.63 billion in exports. Exports to the Americas increased slightly by 1% to €1.1 billion.  A good performance was also seen in Southern Europe, the Middle East and Africa with exports reaching almost €1 billion, up 7.7%.  Asia showed the largest percentage growth in exports, 19.6%, bringing total exports to the region to €501.5 million.  The German, Central/Eastern European and Balkan markets had a difficult year with exports falling by 3.7% to €705.6 million.

The largest exports sector was food and consumer retail which totalled €6.78 billion, a growth of 4.1%.  The dairy and drinks sub-sector contributed the most with €3.56 billion in exports, up 2.0%.  The fastest growing sector was software, services and emerging sectors which increased 10.4% to €1.2 billion.

Industrial markets grew 3.8% to €1.9 billion with the construction and timber sub-sector performing particularly well, accounting for €713 million and growth of 11.1%.

Enterprise Ireland actively supported 177 companies entering new markets, 107 of which were first time exporters.  In addition, 154 client companies established an overseas market presence during the year.  A total of 9,528 client/buyer meetings took place across all sectors and markets.  Clients also participated in 77 trade fairs and trade missions.

As part of the recent restructuring within Enterprise Ireland global markets are now divided into five regions which report into one division - International Sales & Partnering. The regions are:

- Northern Europe
- Southern Europe, Middle East and Africa
- Germany, Central/Eastern Europe and the Balkans
- Asia
- The Americas

Investing in research and innovation

Enterprise Ireland re-structured its approach to intensify its support in the area of R&D and innovation.  Its activities under research and innovation fall under: In-company Research and Development; Applied Research; and International Science and Technology.

In-Company R&D: In 2004, approximately €50 million was invested in companies to support in-company R&D activities.  €20 million was approved to support 54 projects in Enterprise Ireland client companies through the R&D Initiatives Scheme (formerly known as the R&D Capability Scheme).  In addition, the Research, Technology and Innovation (RTI) Scheme approved over €30 million in funding to 154 R&D projects within companies in Ireland.

A tns/MRBI survey of RTI recipients carried out in early 2004 of almost 100 companies showed that over 85% of these companies introduced new products and two-thirds recruited new R&D staff as a result of RTI investment. 

Applied Research: In support of applied research, we provided €14.6 million in funding through the Commercialisation Fund to commercialise the research output from Third Level Colleges.  We also established three dedicated teams, each led by a Programme Director, to give priority to technologies of crucial strategic importance to industry in Ireland.  These are: biotechnology, informatics and industrial technologies.  These teams work in partnership with all stakeholders and clients, including the research community, Science Foundation Ireland and IDA Ireland. 

Our aim in targeting support for applied research is to deliver maximum economic return on public investment in research to accelerate the development and commercialisation of technology in Irish companies.  This involves strong collaboration between industry, the research community and the State. In 2004, 52 company-college collaborative projects were supported through the Innovation Partnerships Initiative.

International Science and Technology:  Enterprise Ireland continues to support international networking, knowledge sharing and collaboration between the business community, academia and industry bodies around the world.  Work continues with the European Space Agency, the Sixth Framework Programme, the Eureka Network and the Fraunhofer Technology Development Group.

Competing through productivity

Improving productivity is directly linked with enhanced global competitiveness.  In 2004 Enterprise Ireland launched a number of initiatives to assist client companies with productivity issues and devised the Productivity Improvement Fund launched in May.  These initiatives included benchmarking, supply chain management and eBusiness iniatives, productivity improvement and the strengthening of management capabilities.  Enterprise Ireland also re-structured its Mentor Network to involve more mentors with specialist skills in specific business areas and sectors.

Starting up and scaling up

Enterprise Ireland assisted 65 new start-ups in 2004 across all sectors including information and communications technology, healthcare and lifesciences.  Support for start-ups continued to improve access to early stage funding, achieve first reference sales, build management teams and target potential entrepreneurs from the third level sector and Irish expatriates.

In 2004, Enterprise Ireland also conducted a review of all start-up companies supported since 1989.  This showed that of the 470 companies supported, 76% were still trading, 4% had been taken over, and 20% had been closed.  The surviving companies have sales of approximately  €1 billion and currently employ over 7,000 people. 

In addition, we embarked on an initiative to accelerate the growth and development of scaled companies and established a Scaling Division to work with an identified group of small to medium-sized enterprises (SMEs) to assist their growth into large, international companies.

Driving regional enterprise

Enterprise Ireland has a leadership role in driving balanced regional development, working closely with State and industry partners and innovative companies to foster corporate growth and regional prosperity.  For example, in 2004 a new working relationship with the Business Innovation Centres and Enterprise Ireland was established.

Of the 163 significant investment projects supported in 2004, 51 were located in the Border Midlands and West regions.  Four of the fifteen venture capital funds established under the Seed and Venture Capital Programme (National Development Plan 2000-2006), have specific regional commitments. 

In 2004, seven new Community Enterprise Centres (CECs) were completed and another expanded.  A total of 97 such centres, involving an investment of €23 million by Enterprise Ireland, are now operational throughout the regions.

Enterprise Ireland has continued its support for high-technology start-up companies.  Additional investment in 2004 of €750k brings total investment in bio-incubation space to just over €4 million.  In addition, two new incubators opened in the institutes of technology in Athlone and Tralee and work began on a further five centres.

2004 also saw the approval for new Webworks facilities in Galway and Cork which provide a network of state-of-the-art office facilities, mentoring and infrastructure.  Many other initiatives were supported that encourage local entrepreneurship, regional networking and the development of business clusters around the country.

Conclusion

To take advantage of a global recovery Irish businesses must become more productive, innovative and competitive.  Our established and emerging enterprises face significant challenges that require new and innovative solutions.

Frank Ryan said  "Achieving and sustaining competitiveness is crucial if Irish companies are to win new sales in highly competitive global markets.  I believe that the indigenous sector can be a significant driver of growth, wealth and jobs over the next decade, but only if we recognise that Ireland's position in the global economy is changing and that Irish business and associated support networks must keep pace with this change.  Future success will be determined by how effectively we transition to the new market driven business model.

Enterprise Ireland will be relentless in its efforts to meet and exceed client expectations in this new phase of industrial development."

Full details of Enterprise Ireland support and activities can be found on our website www.enterprise-ireland.com and in our financial products brochure.

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