Monday 18 June 2018

Learning lessons on education, housing and infrastructure vital to our FDI future

Chamber chief and Microsoft MD in Dublin believes the country needs an ambitious, clear vision and urgent action to stop reputational damage from high taxes and lack of innovation in education hitting investment, writes Donal O'Donovan

James O’Connor, president of the American Ireland Chamber of Commerce. Photo: Naoise Culhane
James O’Connor, president of the American Ireland Chamber of Commerce. Photo: Naoise Culhane
Donal O'Donovan

Donal O'Donovan

Right through the crash and the bailout foreign direct investment (FDI), the bulk of it from the US, flowed into Ireland, a largely hidden stimulus package that ensured this country was never in danger of becoming another Greece.

But the environment is changing, especially internationally. As president of the American Ireland Chamber of Commerce, James O'Connor represents most of those big employers. His day jobs is as managing director of Microsoft's EMEA Operations Centre in Dublin, which happens to be the country's biggest exporter.

There might be little anyone here can do about US President Donald Trump, or Brexit, or even the European Commission's increasingly unwelcoming attitude to US investment, but O'Connor reckons some of the factors within Ireland's control need to be tackled just as urgently.

"The reputation of Ireland right now is very, very strong, but competitiveness factors whether its accommodation and residential availability, the risk of increasing wages because of rent increases etc, they're not going to help us - no question. Right now its not a factor but its starting to come up more, particularly on the residential side."

If staff recruited at home or abroad can't find places to live, it's inevitably going to hurt investment, he says.

"We (Ireland) own that, we control that locally and we have to work really hard collectively so that it doesn't become a reputational issue."

And it's not just housing.

O'Connor - a 20-year Microsoft veteran - admits he took the Chamber job at an unusual time.

He's keen to emphasis that things are good right now, fluently rattling off the impressive statistics in terms of the scale of jobs, investment and businesses supported by US firms here.

But has Ireland reclaimed its status as the poster child for globalisation, in an era where globalisation is fast falling out of favour, not least in the White House?

"There's clearly more uncertainty on the global stage, obviously with the new administration in the US, with Brexit, with obviously the continuing changes that are happening within the EU (on tax)," O'Connor agrees.

"We really have to focus on Ireland, and this is a collective partnership with Government, with the education sector and with indigenous businesses as well - we have to focus on what we can control."

"We need to be ambitious. We need to be aspirational, in terms of where we can take the amazing assets that we already have here in Ireland and the amazing talent that we already have here. At the same time, we can't be complacent."

It's not only housing where current provision is in danger of coming up short, he reckons, citing schools and emerging gaps in physical and digital infrastructure as well as high personal taxes.

Most of us have become used to executives in multinationals singing the praises of Ireland's young, educated workforce.

O'Connor's views are a lot less sanguine. Ireland isn't ready for the scale of industrial change under way, he reckons.

"We have to shift the education model to the fact it's no longer about primary, secondary and university or third level. It is also about apprenticeships and how do we continue to reskill people who are working for the future?

"We're behind when we look at some of our competitors in the EU in terms of continuous learning," he says.

It's not all bad news. On the so-called science, technology, engineering and maths (Stem) agenda, he's "excited" - you can tell he spends a lot of time in the US - by the Government's stated ambition to have the best education and skills capability by 2026, but would like to see those policies accelerated.

A major shift in policy will determine the future educational provision of tomorrow's kids on today's best guess - isn't there a danger it goes horribly wrong, leaving a future generation to bear the cost?

O'Connor thinks the greater danger is people getting left behind. "Having the right level of technical and engineering skills across the workforce, regardless of what sector you work in, is going to be really, really critical for us in future," he says.

Too many people in Ireland, including policymakers and individuals have a fixed view of education as a stage in life, rather than a part of life, he reckons.

"Coming out of college or university and saying, I've done my education now I'm going into this career - those days are gone."

"A lot of change is being driven by digital. The term that came out of Davos (the World Economic Forum conference) last year - we're in the midst of the fourth industrial revolution, the digital revolution - and this is not a tech sector thing, everything is affected."

People already heavily rely on digital in everyday life and that's accelerating at huge pace, he points out.

Artificial intelligence, augmented reality and quantum computing are transforming work, he says. "There is an opportunity collectively in Ireland to stand back and ask what are our core assets, our core strengths - and there are many - and then, how do we think about the type of jobs, the type of capabilities we're going to need in the future and how do we start working towards that?"

Ireland has historically been weak on long-term planning - whether its physical infrastructure or social policy - but O'Connor thinks things are getting better.

"I think something like the Stem agenda and the recommendations from that is clearly a component of that, no question."

"But we have some more work to do, collectively, to really iron out and get a clear view on what that vision can be."

If education is a long-term issue, Brexit is something that is already confronting US firms operating from Ireland.

"There are four areas of focus, in terms of our members, when we think about Brexit," he says.

That includes freedom of movement for staff, the danger of trade barriers being thrown up for physical or digital trade as well as any scenario where there's a different regulatory regime in UK post-Brexit.

Interestingly, the fourth priority is essentially diplomatic - pushing Ireland to nurture ties with other pro-business EU member states.

"We're certainly urging Government to build new alliances within the EU, because there's a lot of like mindedness between the UK and Ireland and the fact is they'll no longer be in the EU. We've had ongoing discussion and engagement on that as well."

Perhaps understandably, as an Irish executive in a major US firm, O'Connor is more circumspect on the other great issue of the day. The erratic, often anti-trade presidency of Trump, who continues to grumble about US companies that have large operations abroad, including in Ireland, and who makes frequent calls for jobs to "come home" to America.

"Its super early still, we have to see where that goes. There is a wide recognition that there is a tax reform required in the US, no one is going to deny that, and tax reform should benefit Irish companies in the US too.

"We just have to wait and see where that goes. Honestly, its not a big factor for our members - we just have to continue to innovate and add value and stay competitive," he tells me.

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