Speech by Mr John McGuinness, T.D. Minister for Trade & Commerce at the CEO Forum

13 November 2008

Good afternoon Ladies and Gentlemen.

I am very pleased to be here today. I know you have heard much and discussed at length the many issues that currently confront the economy and your businesses in this period of economic uncertainty.

Indeed the title of your conference “Profitable Growth in a Changing Global Economy” is very timely. I congratulate the eminent business speakers who addressed you this morning: Paul Kerley of Norkom Technologies, Patrick Coveney of Greencore Group plc, and Brian Long of Atlantic Bridge Partners. And not forgetting Marguerite Larkin and Pat Cullen of Deloitte and Frank Ryan of Enterprise Ireland.

I want to avail of this opportunity to talk to you about some of my views.

Ireland is consistently seen as one of the world’s most desirable small economies in which to grow a business, develop a career and live a rewarding life in a stable yet progressive society.

Lisbon Council’s ‘European Jobs and Growth’ monitor ranks Ireland as the second most competitive economy in Europe after Finland, up from fourth place in 2007. While the IMD World competitiveness yearbook 2008 ranks Ireland as the 12^th most competitive economy in the world. We must strive to ensure we maintain and indeed surpass these significant achievements in the future.

The 21st century presents the country with considerable challenges. Globalisation and its attendant demographic, financial and environmental issues have confronted us, not just in terms of social and economic policies, but in the way people live their lives and earn a livelihood.

Our objective is to maintain Ireland’s attractiveness as a competitive and dynamic country. While we are facing more challenging times, for almost 20 years we have adapted to the inevitable forceful changes that small economies cannot avoid. We have done so in a world where economies are becoming increasingly interconnected and interdependent. However, the pace of change in social and economic terms is accelerating and becoming less predictable, just as competition in our global markets becomes more intense.

Economic transformation has fundamentally changed the competitive characteristics of the country. We are no longer a low cost EU economy. Our future has to be founded on building advantages based on the reservoir of skills, human capital and flexibility in serving markets. For Ireland in the 21^st century, competitiveness will depend on merging these attributes with a flair and commitment to innovation that is unmatched in the markets in which we compete. Technology, innovation and the application of knowledge will be the wellspring that will transfer to the next generation the benefits of wealth and prosperity we have built for today’s generation.

While the only constant in today’s business environment is change, Irish companies have shown themselves to be remarkably adaptable in managing change. This has been a crucial factor in the outstanding success of Irish enterprises. Over the last decade we have witnessed the emergence of Irish companies such as Fexco Group, Quinn Direct, and Kerry Group competing in global markets and forging ahead as market leaders and innovators in their sectors.

We have arrived at a point in our economic development when the future performance of indigenous industry will be of central importance to future economic growth. The challenge is to ensure Ireland’s internationally trading firms in manufacturing and services are key drivers of growth. To compete and grow in today’s global economy, Irish companies must be innovative, competitive and show the leadership capability to develop scale and sustain positions in international markets. Ireland’s economic success depends on it. The focus of the development agencies is to assist firms to innovate and internationalise in order to ensure long-term survival and growth.

Ireland is positioning itself as a knowledge-based, technologically-sophisticated economy with a cadre of ambitious companies driving export-led growth. The exploitation of technology innovation along with the skills and aspiration to grow are key drivers in the internationalisation of Irish business. Existing and new companies that invest in creating and applying innovation and technology to the development of new products, services and processes will be those that generate continued and sustained economic growth for Ireland.

Enterprise Ireland’s focus is on growing a cohort of Irish companies with the ambition, leadership and innovation necessary to achieve global scale. Their strategy 2008-2010 is driven by the overarching principle that growth in global markets through the internationalisation of Irish companies is the key to wealth and employment creation in Ireland. And, central to the attainment of this continuous growth in exports is innovation that impacts on every facet of a business.

On this point it is important to note that Enterprise Ireland is the first State Agency to set public targets for what it wants to achieve. Enterprise Ireland achieved all the targets set out in their 2005 to 2007 strategy and has set even more ambitious targets for the period 2008 to 2010.

Entrepreneurship is something that is very close to my heart.

Ireland is a highly entrepreneurial society we our ranked 4^th across the OECD and 2^nd in Europe for the number of early stage entrepreneurs. In fact, Ireland, with 9.0% of established entrepreneurs among its adult population has a higher proportion of established entrepreneurs than the US (5.0%) and the UK (5.1%) about the same level as Finland; (7.6%) Iceland; (8.8%) and Japan (8.6%).

Ireland’s Global Entrepreneurship Monitor (GEM) found that over 4 in every 100 adults in Ireland were involved in starting a new business between January 2003 and June 2007. This is equivalent to over 2,700 individuals setting up a new business in the country every month. In 2007 alone, over 8 in every 100 adults in Ireland were actively attempting to start a new business.

Today, over 60% of Irish adults see entrepreneurship as a good career choice with 50% believing they have the necessary skills to successfully establish and run a new business. 

Women’s entrepreneurial activity rose to 5.9% in 2007 from 4.2% in 2006 which is significantly higher than both the EU and OECD averages (4.3% and 3.6% respectively). This has worked to significantly narrow the gender gap in entrepreneurial activity in Ireland. (10.6% of Male population compared to 5.9% of female population)

The quality and ambition of our entrepreneurs is paramount in achieving high growth in both existing and emerging sectors, and in traditional and new geographical markets. Despite economic slowdown, Ireland ranked 8^th in the OECD countries in terms of the level of ‘high expectation’ early stage entrepreneurship who anticipate significant growth in their companies, albeit down from 3^rd place in 2006.

Enterprise Ireland supported 221 new high potential start-up companies between 2005 and 2007.  The majority of these companies are high technology; they are spread across Ireland and across a range of existing and emerging sectors. From 2009, new start-up companies will be exempted from corporation tax and capital gains tax for the first 3 years to the extent their tax liability in the year is not in excess of €40,000.

Ireland now has a whole range of Irish-owned or Irish-led companies quoted on the Nasdaq and other international exchanges. Companies such as Norkom, who supply software and professional services to global financial services organizations, Zamano, who develop SMS applications, and Thirdforce, who provide e-learning services have definite strategies for growth both organic and through strategic acquisitions. What these companies, and others like them, have in common is the fact that they were all founded by Irish entrepreneurs whose ambitions and sights were set far beyond the horizons of the domestic market.

I am fully aware that all of you here today are leaders of your companies.

Achieving sustainable success requires competitive, innovative companies with the ambition and potential to achieve significant scale in their chosen markets. Underpinning this is the most fundamental requirement of all – leadership capability. World-class Irish companies require world-class leaders.

Every day around the world our competitors are building their management capabilities and seeking to win business in competition with Irish companies.

It is imperative that Ireland is at the vanguard in relation to its leadership and management capabilities, and its ability to develop and grow innovative companies that achieve international scale.

This imperative applies to all companies in Ireland - both large companies competing and succeeding in world markets, as well as the great number of smaller companies that make up the backbone of the economy.

The success of our leading international companies is proof of the quality of Irish leadership. It is equally evident in companies who are achieving fast growth such as Norkom Technologies and I take this opportunity to congratulate Paul on the half yearly results announced this week.

Other examples like Globoforce, a worldwide provider of strategic, on-demand employee recognition solutions and recently won “Best Multinational Company in Europe” in the International Business Awards; the only global, all-encompassing business awards program honouring great performances in business. Another example is Nowcasting International Ltd, an Ennis-based weather forecasting specialist, who recently signed a €300k contract with Canadian global energy giant NEXEN to support their North Sea operations.

There is a strong commitment nationally to ensure that the leaders of Irish business have the resources and opportunities to compete internationally, and to win. The IMI along with a range of academic, semi-state, professional and trade bodies work to enhance the leadership and management capability of Irish business.

The future now is one of facilitating those companies and individuals who will be responsible for the development and creation of the next wave of internationally successful Irish-owned and Irish-led companies – a wave that we are already seeing emerge.

We are the architects of our own future.

Thank you very much for your kind attention and I wish you all every success in your endeavours.