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In 2010, Ireland was in the middle of a Great Recession-induced meltdown that required an emergency rescue by the European Union and International Monetary Fund to the tune of about $70 billion, or 40% of Ireland's total economy.
Since then, the country's low corporate tax rate has lured large multinational tech and pharmaceutical firms to its shores, and their payments to the government have bolstered revenue substantially.
Ireland is forecast to have a $70 billion budget surplus by 2027. How's that for a comeback?
Now the Irish government wants to expand the country's own businesses abroad, especially in the United States.
Just last week Ireland's ClonBio group, an agribusiness company, said that it plans to invest half a billion dollars to reopen a mothballed factory in Jefferson, Wisconsin, supporting 1,000 local jobs.
Ireland is the ninth largest source of foreign direct investment in the US, with $295 billion spent in 2022. About 700 Irish firms employ more than 100,000 people in America.
Much of that investment was aided by Enterprise Ireland, an Irish government agency that is also the most active national venture capital fund in Europe.
Before the Bell spoke with Leo Clancy, the CEO of Enterprise Ireland, who was in New York to meet with business leaders and politicians last week before he left for Washington to meet with President Joe Biden for Saint Patrick's Day.
This interview has been edited for length and clarity.
Before the Bell: Why has Ireland been so successful at creating and exporting business enterprises?
Leo Clancy: I think it's because there's a global awareness of business in Ireland. We're a small island but we've been the beneficiary of huge amounts of foreign direct investment over the last number of decades. Most of that (was) from United States multinationals. And that's actually given us confidence and a business culture that was global from the outset. Irish companies have to think about being in an Irish domestic market which is frankly, really small, or just going global straightaway.
What do you think about growth going forward?
Growth has been good for us. We've seen exports grow the last couple of years, and we see pretty positive tailwinds in most jurisdictions. The US is particularly strong for Irish companies; the US economy has held up well. You can see that in the job statistics. So notwithstanding inflation and the interest rate headwinds over the last two years, companies are still doing business.
We see the euro zone and the US as our top growth destinations. The opportunity there is the green revolution in the US, the Inflation Reduction Act, and the chance to be part of that green story. I think Irish companies are very adept at pivoting into what other other countries need and being part of the story.
It seems like Irish companies are increasingly becoming job creators in the US.
I think it's really important for the US audience to remember that. A lot of that has been through mergers and acquisition over the years and through organic growth as well. Glanbia Foods, an Irish company that manufactures American-style cheese, now produces one in four slices of cheese consumed in the US. That's not imported from Ireland, it's made from US dairy products processed in factories that they own in the US, and two thirds of their workforce is in the US as well.
I buy Kerrygold butter, that's an Irish brand.
About 80% of the butter imported into the US is now Irish.
That's a surprising statistic – why do you think the connection is so strong in the US in particular?
As we think about our US connections around Saint Patrick's Day, we reflect on the diaspora that we've had and the number of people who have had to leave Ireland to find good work. When I started college in the early 1990s, I fully expected to emigrate. I got a job in what was an increasingly positive economy. And I think the same is true for lots of people. Entrepreneurship has grown over the last 30 years and people have learned from US business culture, in particular, because we have such a strong connection with the US.
We have lots of people who emigrated to the US, picked up the US entrepreneurial spirit and brought it back. People that worked at multinationals and are used to scaling businesses. I think there is a stronger connection to US business culture in Ireland than almost anywhere else in the world.
How do you prepare for geopolitical headwinds?
We have offices around the world so we're embedded in most jurisdictions, and we get early warnings of things that are changing. We're always concerned about things that affect our clients, and sometimes we get deeply involved straightaway. So with Brexit in 2016, within six months we had trained most of our companies about what to expect with customs regulations, for instance. So Ireland had a very smooth transition through Brexit because the Irish companies were ready.
As a small country we're always hitting trade barriers. Understanding them early and using our diplomats as well as our own staff to anticipate what the consequences will be and then helping companies work with them is the important piece for us. It would be ridiculous for small countries like Ireland to think we can substantially change the trade regulations and the winds of change. But what we can control is what we do ourselves, how we react and respond. The most important thing we can do is promote the value of our business abroad. For Ireland to be a trusted trading partner, it can't just send stuff to the US. It's got to be invested in communities and add value to the US economy. It's got to be aligned with US objectives. That's true in the US and it's true everywhere.
The Federal Reserve meets in the US this week. How are you thinking about inflation and inflation on a global level?
It's been a very challenging 18 months. We've seen funding for companies get incredibly difficult, whether that's venture capital or private equity. Companies are still raising funds, but it's not easy. Going forward the consensus seems to be that rates will come down. Those reductions will be a good thing because our companies are taking on both debt and equity to grow their businesses. For instance, in tax software, one of our companies announced 150 new jobs into the US based on $70 million that they're raising just to complete US expansion. We want to see more of that, and my worry is that if interest rates don't come down some of those ambitions will be stymied.
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