The U.S. / Ireland trade and investment relationship has been one of the great success stories of Ireland’s economic development.
With significant Irish investment in the U.S., it is also very much a story of mutual benefit. The evolution of these relationships is taking place against a backdrop of significant change - ranging from Brexit and Ireland’s appeal as a gateway to an EU market of almost 500 million consumers, to the growth of global trading blocs. These and other topics featured in a recent Irish Times feature on U.S. / Ireland trade - read more below for the KPMG view on some of the issues raised.
A For small open economies such as Ireland, being part of an international trading bloc makes common sense. The idea that any economy other than perhaps the US or China can now ‘go it alone’ is outdated. It’s for this reason that the EU is looking at completing trade deals for example with South America’s Mercosur and Japan whilst starting new negotiations with countries such as Australia and New Zealand. These bring multiple benefits to Ireland both as location for FDI and in terms of market access for Irish goods and services.
A Much of Ireland’s economic health is determined by external events and by market conditions elsewhere. The cost of energy, the outcome of Brexit and the tax policies of the US administration, for example, all have a major impact on Ireland. New factors such as the growth of robotics and AI and the increased risk of cyber attacks add complexity. However, we have control over many critical policy matters from promoting entrepreneurship and management/technical skills and innovation to how we develop our education system. It’s essential we get these controllables right as they are a major factor in Ireland’s appeal as a place to do business for both inward investment and for domestic companies.
Shaun Murphy, Managing Partner, KPMG in Ireland
A Decision makers in the US and elsewhere looking at inward investment locations have a range of considerations. Many of these revolve around certainty and stability - these have been brought into sharp focus as a result of Brexit and Ireland scores very well in this area. Key selling points include political stability and long term certainty on tax rates and of course - guaranteed access to an EU market of over 445 million people.
Brian Daly, Head of Brexit, KPMG in Ireland
A Doing business internationally still requires an ability to meet with people face to face. Building relationships, scoping out a market or an investment location or closing out on a deal all benefit from doing so in person. Thus for a small, open island economy like Ireland, connectivity to the rest of the world is essential. The good news is that for time poor business people, access in and out of Ireland has never been easier. For example, as a frequent transatlantic traveller I have found the growth of Dublin as a gateway to the EU from North America and vice versa fascinating to watch. Dublin is now Europe’s 5th busiest transatlantic hub and the growing range of North American destinations from Ireland is an important selling point to those looking at European FDI locations. For the return journey, the fact that US customs and immigration can be pre-cleared both in Dublin and Shannon adds to the appeal. It means that you avoid immigration queues on arrival and you can quite literally pick up your bags and go once you land. If you have an onward connection in the US, this also adds to the convenience as you are effectively treated as a domestic arrival - saving valuable time. All of these factors are important considerations for anyone looking at European business locations.
Meanwhile business destinations and air travel hubs, such as those in the Middle East, are also well developed from Ireland and provide access to a host of destinations worldwide. Furthermore the wide range of other European cities accessible from Irish airports is also attractive to those looking at Ireland for FDI purposes.
The other area where there have been notable developments relate to domestic infrastructure. For example, our continually improving motorway network means much greater connectivity within Ireland. A good illustration of this is the recent announcement that the M20 Cork – Limerick motorway will be included in the government’s 10-year capital plan. This news has been widely welcomed and helps promote the Atlantic Corridor as a business location stretching from Cork to Galway and further north. All told Ireland is very well connected and this is a key selling point to business decision makers in addition to a range of other positive factors in our favour.
A US businesses who choose Ireland look for a broad range of skills. Not surprisingly many are technology driven but other attributes play a part. For example Ireland scores highly on flexibility, adaptability and problem solving capabilities and these are in high demand given the nature of the inward investment we attract.
By definition we have had to have a global outlook in terms of how we have developed our inward investment strategies. This is reflected in the attitudes of the people at every level. My experience working with a range of multinational and entrepreneurial investors is that when they choose Ireland they gain access to a highly educated, innovative, well-travelled and outward looking workforce.
A The good news is that Ireland has a large pool of talented, experienced MNC executives already here. They generally have a strong experience of the set up phase of FDI and that’s an important selling point.
Attitudinally Ireland is very receptive to helping landing teams – from the support of IDA Ireland to the wide range of professional and technical services readily available, the experience is that you can hit the ground running very quickly and that’s essential.
There’s a ‘can do’ approach in Ireland which isn’t necessarily replicated elsewhere. When you consider that for example 16 of the top 20 global software companies have chosen to invest in Ireland it gives you a sense of what has been achieved. It also shows how vital it is to avoid complacency.
Anna Scally, Head of Technology & Media and FinTech Lead, KPMG in Ireland
A The impact of artificial intelligence is already being felt - sometimes without the end user even realising it according to KPMG Partner Owen Lewis. “People take for granted some of the things that artificial intelligence is already doing,” says Lewis, citing the technology that allows companies such as Netflix and Amazon to provide personalised recommendations based on their viewing or purchase habits. Lewis believes that “more and more tasks” will be automated with significant implications for business and employees as technology reduces costs, improves accuracy and increases speed.
One sector where Lewis sees vast potential for digital labour is in medicine. “A machine can make a decision in a complex environment, based on rules and vast amounts of data,” he says. “That precision and speed of making decisions in a medical environment is a good example.” Meanwhile according to KPMG’s most recent CEO survey, three in ten Irish businesses have made a significant investment in robotic process automation in the past 12 months whilst almost 60 percent have launched a new investment programme related to cognitive technology, including areas such as artificial intelligence and machine learning.
However, almost 40 per cent of CEOs believe their organisation is not ready to adopt artificial intelligence technology. “It’s hard for someone making decisions on the future to understand what hype is, and what is worthwhile,” says Lewis. He advises companies to explore what’s right for their agenda. “Dip a toe in the water, get an awareness of the technology, understand what it means for your business,” he says. “Embrace new technology but think of your customer and your business first.”
According to Lewis, companies should consider “what you want your business to be in five years and what you need to get there”. It can be difficult to navigate change, and integrate emerging technologies with existing processes. “You are drinking through a fire hydrant in some respects, because there’s just so much stuff coming at you,” says Lewis. However, before companies can successfully introduce new technologies or consider automating any existing processes, they need to understand the end-to-end journey of each process, and the potential risks involved. “Which costs the most? Which takes the longest?”
The problem is that many companies don’t know the answer, making it difficult to assess the potential gains from new technologies. According to Lewis; “Companies need to have clearly defined goals and a proper strategic plan to maximise the value of any new technology.” However, Lewis also believes that increased automation will have “Some winners and losers”, with potential for job losses in certain industries. That said, he believes that new jobs will be created too, that rely on “the incredible nature of the human brain” to take on tasks that a robot cannot.
Owen Lewis, Partner, Management Consulting, KPMG in Ireland