Denis Curran, Divisional Head of Regional Development and Property, IDA Ireland, tells Irish building magazine about their new strategy for post-pandemic recovery and sustainable growth and what this will mean for the Irish construction industry.
In January IDA Ireland, the semi-state body charged with attracting and retaining Foreign Direct Investment (FDI) in Ireland, announced its results for 2020. At the same time, the Tánaiste, Leo Varadkar TD, launched IDA Ireland’s new strategy for the next four years, ‘Driving Recovery and Sustainable Growth 2021-24’. Of particular interest to the construction industry are the needs of FDI companies in terms of office buildings and large factory construction and fit-out projects. The work IDA Ireland does to attract multinational companies has a trickledown impact on the construction sector, boosting demand and in some cases, leading to fruitful relationships and overseas contracts for Irish companies.
Denis Curran, Divisional Head of Regional Development and Property, IDA Ireland, says 2020 was “a good year for IDA Ireland.” He continues, “The performance was really strong; we had over 246 investments during the year, of which 52% of those investments were secured for regional locations. We also had net employment growth of just under 9,000 jobs; against the very challenging economic backdrop this is a very strong and resilient performance.
“Currently 257,000 people are employed in IDA Ireland portfolio companies, which is an all time high for the agency. Of those 257,000 people, 56% are employed in companies outside of Dublin, across all of our regions. A key enabler for the distribution of regional employment is our strategic property portfolio. Within our property portfolio, we have 36 Business and Technology Parks and 12 strategic sites located across 1,200 hectares of land.”
The national context for IDA Ireland’s approach to winning investment for the regions is informed by the Government’s Project Ireland 2040 and the associated National Planning Framework (NPF), National Development Plan and Regional Spatial and Economic Strategies. “IDA Ireland’s commitment to the regions also aligns with the objectives of the Programme for Government in relation to regional development. The overarching ambition of national policy on regions is to promote balanced, compact and sustainable growth outside of Dublin”. According to IDA Ireland’s new strategy, “The realisation of the strategic outcomes of the NPF, through the growth and development of regional cities and towns, would significantly enhance Ireland’s value proposition to FDI and support emerging urban locations of scale to become future FDI growth drivers. The managed growth of Dublin, as Ireland’s leading global city and a key attractor of investment and talent, will remain vitally important. Dublin is an engine of both national and regional growth, as evidenced by IDA’s success in partnering with existing clients based in Dublin to expand into second sites in regional locations.”
“Regional development is at the centre of our new strategy,” explains Curran. “It’s one of five key pillars. Over the lifetime of the strategy we are aiming to win 800 investments, of which 50% will be targeted for regional locations, reflecting our strong ambition of balanced regional development across the country. Our regional property programme will be a significant enabler for us to compete for investments in order to drive regional growth.”
The regional property programme focuses on four key areas: Advanced Building Solutions (ABS), land banks and strategic sites, upgrading existing Business & Technology Parks and partnering with local authorities to secure advance planning permissions.
Curran explains: “The first is to complete the construction of 19 Advanced Building Solutions (ABS) in 15 different regional locations over the lifetime of the strategy. The planned building solutions have a geographical spread in line with the National Planning Framework reflecting our strategic focus on regional development.
We also continue to maintain a focus on our land banks on utility-intensive strategic sites across all the regions to future proof the ability of our property portfolio to support the project pipeline, most notably large-scale capital-intensive projects which can have significant regional and national economic impact.
A lot of our client companies in the medical devices and pharmaceutical sectors require strategic sites on utility-intensive land banks that have the adequate infrastructure—power, water, telecoms—to meet their needs.
We will be undertaking a major regeneration and upgrade of our Business and Technology Parks to ensure that these key assets continue to meet the needs of our existing clients, while also putting us in a strong position to compete for and attract new name investments into the regions.
From a regional development perspective, we must continually work with regional and national policymakers and stakeholders in order to create the conditions that make Ireland and our regions competitive and an attractive location for existing investors to expand and scale operations and to attract new investors. We are constantly working and engaged with regional stakeholders in the areas of placemaking and the provision of competitive infrastructure in order to try and make the regions as attractive as possible, not just to companies to invest in, but for people to locate in as well. We see the role of local authorities as critical to building up the attractiveness and the capability of regions in order to compete for investment and to attract talent and skills into the regions.
We will also be partnering with local authorities and regional locations to secure advanced planning permissions in order to promote and market sites to potential investors. Across those four key areas, you will see significant investment and focus on our property portfolio over the lifetime of our new strategy.”
Meeting Investor Needs
IDA Ireland client companies have specific needs depending on the sector they operate in—from Life Sciences and Pharma, to Big Tech and where IDA Ireland identify a deficit in local markets, across the regions, it steps in, where appropriate, to provide property solutions to market to potential client companies.
“Our product offering from the IDA Ireland property portfolio includes a combination of turnkey Advanced Building Solutions, manufacturing facilities and offices located in city regions and growth centres across the country. These buildings are built to LEED certification. In terms of size, they’re anywhere between 20-50,000 sq.ft. This assists us in a number of ways to compete for and to win investments. For example, a lot of the office building and advanced manufacturing building currently takes place in large urban centres. In regional locations there’s a deficit of supply that meets the needs of our clients, so we step in and de-risk that supply by constructing our own buildings and partnering with local authorities on advance planning on our business parks. From the clients perspective, when they’re carrying out their analysis and due diligence on Ireland as a potential location to invest, property is a high priority and key consideration. Having turnkey solutions that meets their needs is a key ask from our client companies.”
IDA Ireland’s previous strategy has just been completed and was the most successful in the agency’s lifetime in terms of investment and employment created. Construction of the right offering to bring to market was key to this. “We completed the construction of seven ABS from Waterford to Castlebar and have secured companies for all those buildings,” says Curran.
Strategic Sites for Capital Investment
In parallel with the ABS offering, IDA Ireland also has a portfolio of utility-intensive strategic sites to market to potential investors that are looking at locations for capital investments. “These are really transformative investments in terms of their scale and the number of jobs that they create directly and indirectly,” notes Curran. “For example, if you look at the WuXi investment in Dundalk—the company is investing over €500m across two projects which will create over 600 jobs. Another example would be is Regeneron, which has invested $1bn in their facility in Limerick and created over 1,000 jobs on the campus. These large-scale capital investments have significant and substantial spillover impacts; they also create additional construction jobs. We estimate that for every ten jobs in FDI companies, another eight jobs are created in the wider economy.” This translates as roughly one in five private sector jobs, with secondary economic benefits impacting positively not just on the construction industry, but also the retail sector and hospitality industry.
“When we’re talking to clients and potential investors, we make them aware of the world-class sub supply and services base that’s available in the construction industry here. The construction sector is a key part of our value proposition that we present to potential investors; it makes a significant contribution to the work that we do across the country. Our client companies, given the global nature of their business, are constantly seeking competitive outcomes in terms of costs, quality and completion times and we have seen the construction sector play a crucial role in securing investments, in the data centre space as well as biopharmaceuticals and medical devices.
“In 2019, our client companies spent €25bn in the national economy and of that, €7.4bn was spent on capital expenditure, which is one of the significant spillover effects that happened as a result of FDI.
Many of our indigenous Irish companies within the construction sector, as a result of securing contracts for projects and investments happening here in Ireland, have also gone on to secure further contracts globally, with our FDI client companies.”
“In our new strategy, transformation is one of our key areas of focus. As part of the manufacturing transformation agenda, we have commenced building a new Advanced Manufacturing Centre (AMC) in our business park in Limerick. This will be a national industry-led manufacturing centre that will work with both indigenous and FDI manufacturing clients to enable them to onboard industry 4.0 technologies and processes in the areas of artificial intelligence, robotics, automation, so they can future-proof their manufacturing operations here in Ireland.”
According to the latest strategy document, the purpose of the AMC is to foster increased levels of collaboration on training, technology and testing across MNCs, Irish enterprises and the interlinking of the research and education systems. It will provide a space for MNCs and SMEs to trial, adopt, deploy and scale new technologies at a time of accelerating digitisation, to ensure that Ireland develops leadership capability in this arena, as a point of national strategic priority. It is aligned with the Irish Government’s Industry 4.0 Strategy 2020-2025.
Offering a world-class physical and digital factory, the centre will bring together technology, expertise, training and business supports to help manufacturing companies enhance, transform and position their operations for the future. The AMC will be located on the National Technology Park, Limerick. The building is being constructed by Conack Construction.
Looking to the Future
The ambitious regional targets set out by IDA Ireland under their new strategy rely on collective effort and collaboration of all stakeholders with responsibility for regional development to harness the strengths and address the weakness of Ireland’s regions and the construction industry will be key to delivering the necessary infrastructure and property solutions. With this in place and the availability of a skilled and future-ready workforce and an emphasis on quality of life and placemaking in each region, IDA Ireland is confident that it can continue to win investment from MNCs.
“During the lifetime of our previous strategy, which was our most successful strategy on record, each region saw an increase in investments of between 30 and 40%. That led to the creation of over 54,000 jobs. Our property assets and portfolio were key enablers in ensuring and contributing to the success across the regions. For example, our Advanced Building Solutions that we completed on the previous strategy enabled us to win investments from Eirgen in Waterford, J&J and Vistakon in Limerick, Meissner in Castlebar and Abbott in Sligo.”
As part of the new strategy, IDA Ireland estimates a budget of €344m will be required to deliver on its regional property strategy.
Recovery from the effects of the global pandemic is expected to be slow and uneven—UNCTAD, the UN’s Trade and Development Agency, forecast declines in global FDI flows of up to 40% for 2020 and by a further 5%-10% in 2021, followed by a gradual and moderate recovery in FDI from late 2021 and early 2022. Ireland will therefore be competing for a smaller number of FDI projects coming into Europe, in an atmosphere of heightened competitiveness, for the benefits of FDI to economic recovery. IDA Ireland’s strategy is focused on targeting high-value sectors which have the most positive post-crisis outlook: “We will aim to realise opportunities from digital transformation and the green transition, along with those arising from new business models, an enhanced focus on operational resilience, supply chain reconfiguration and the future of work. Specific areas of opportunity include cloud computing, artificial intelligence (AI), 5G, big data, disruptive service platforms, advanced manufacturing, cell and gene therapy, connected health, industrial automation and renewable energy.”
With a clearly defined path and laser-focus on its mission, IDA Ireland’s new strategy is intrinsically linked with the construction sector and through its proposed ABS locations, building programme partnerships and strategic land acquisition, the property programme will be central to the delivery of regional growth.