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Raising his profile

His stringent criticism of UK broadband provider Talk Talk's decision to close its Waterford call centre, having given just 30 days' notice, marks the first time that IDA boss Barry O'Leary has taken a multinational company to task in this way.

On Wednesday, Talk Talk announced that it was shutting its Waterford call centre with the loss of 575 jobs. It gave just 30 days' notice of the shutdown.

While Talk Talk wasn't the first and certainly won't be the last foreign-owned company to pull out of Ireland, by failing to keep the IDA and the Government informed in advance of its plans, it broke the unwritten rules on how these announcements are handled.

There is a certain etiquette to be observed in these matters with the company expected to ensure that the government and IDA are not caught by surprise when there is a closure announcement.

Following confirmation that Talk Talk was pulling out of Waterford after 13 years, neither the Government nor the IDA made the slightest attempt to conceal their fury at how the company had dealt with the matter.

Taoiseach Enda Kenny described the short notice period as "discourteous". Mr O'Leary went even further, stating that the manner in which Talk Talk had handled the closure announcement was "as bad as it gets in terms of corporate behaviour".


Translated into plain English, this means that Mr O'Leary wasn't just slightly annoyed -- hopping mad would better describe his feelings! That he felt the need to deliver such an unprecedented rebuke was an indication of just how strongly he felt about the matter.

Despite having been IDA boss since the end of 2007, Mr O'Leary has generally opted to keep a low profile. While previous IDA chief executives such as the late Michael Killeen, Padraic White and Kieran McGowan were major public figures in their time, Mr O'Leary has preferred to fly under the radar.

This low profile may have been a tactical decision on Mr O'Leary's part. One of Ireland's key incentives when seeking to attract multinational investment has been our very low 12.5pc company tax rate.

For most of Mr O'Leary's time as chief executive, our company tax rate has been under attack as never before from our European "partners", particularly France and Germany.

Defending the 12.5pc tax rate was very much a political task, with both the present Government and its predecessor having burned copious amounts of midnight oil in Brussels fending off attempts to tie the terms of our EU/IMF bailout to a pledge to raise our company tax rate.

Under such circumstances it made sound tactical sense for Mr O'Leary to yield centre stage to senior government ministers. In its efforts to keep the 12.5pc tax rate, Ireland needed to speak with just one voice.

To do otherwise would have run the risk of the Irish message that the 12.5pc company tax rate was vital to restoring our economic prosperity being drowned out in a cacophony of competing opinions.

Following last July's renegotiation of the bailout terms, the 12.5pc tax rate is now off the agenda for the foreseeable future. This has allowed Mr O'Leary to adopt a higher profile, more in keeping with that of some of his illustrious predecessors.

While Mr O'Leary has kept a low profile for most of his four years as IDA chief executive, he hasn't been idle -- far from it.

Celtic Tiger

He became chief executive just as the Celtic Tiger was breathing its last. Since then, more than 250,000 jobs have been lost in the domestic economy, with over two-thirds of these job losses having been in the construction sector.

The massive loss of jobs wasn't exclusively confined to the domestic economy. Even before this week's announcement from Talk Talk, a number of foreign-owned firms had announced major job losses, most notably Dell, which closed its Limerick plant with the loss of almost 2,000 jobs in 2009.

However, while there has been a steady loss of jobs from multinational companies already located in Ireland, the IDA has continued to attract new investment projects to this country.

Recent research conducted by NIB indicates that, adjusted for the size of our economy, Ireland remains the second most attractive location in the world after Singapore for foreign direct investment.

In 2010, IDA-supported companies created almost 11,000 new jobs in Ireland. While IDA-supported companies shed 9,500 jobs in the same year, the multinationals were virtually unique in the Irish economy in increasing net employment numbers last year.

In all, the IDA secured 126 new investment projects last year, of which 47 came from companies which were investing in Ireland for the first time.

And the good news has continued into 2011 with €2.5bn of fresh investment being announced in the first four months of the year, more than half of the total foreign direct investment recorded for the whole of 2010.

If this rate of investment is maintained, then the full-year 2011 investment figure could jump by up to 60pc on the 2010 level.

In the first half of 2011, 28 overseas companies announced plans to invest in Ireland for the first time. Among the newcomers were Quest Software and Amgen, the world's leading bio-pharmaceutical firm. The IDA also secured investment from multinational companies which already had established Irish operations including Analog, Allianz and Intel.

Even the call-centre sector, despite this week's announcement from Talk Talk, is generating some good news. This sector employs almost 30,000 people spread over 100 individual call centres and a recent survey found that over half of all companies in the sector grew their revenues in 2010, while almost three-quarters of all call centres in Ireland expected to grow their revenues over the next two or three years.

Talk Talk's demise seems to have been primarily due to industry-specific factors as the company, in common with most other broadband providers, has been successfully encouraging an ever-increasing proportion of its customers to go online with their queries rather than ring a call centre.

However, the Talk Talk closure does illustrate the dangers inherent in some of the investment projects which the IDA is now attracting to Ireland.

With the days of labour-intensive heavy industrial plants long gone, an ever-higher proportion of foreign direct investment coming to Ireland is in the services sector. Without any expensive plant or facilities to tie them down they are extremely mobile. Easy come, easy go as it were.

That danger will, if anything, become more acute in the years to come as the IDA concentrates its efforts on sectors such as cloud computing and financial analytics.

While the risks are obvious, Mr O'Leary and the IDA have earned themselves the benefit of the doubt. At the end of 2010 there were almost 140,000 people directly employed by IDA-supported companies, with a further 100,000 jobs in supplier companies and service providers. That's over one in eight of all jobs in the Irish economy.

IDA-supported companies generated two-thirds of all exports and between them they spent €19bn on Irish goods and services in 2010. Despite, or perhaps because of, the low company tax rate, these companies also contributed close to half of all revenue from corporation tax, getting on for €2bn.

The challenge facing the IDA over the coming years will be to ensure that the inevitable job losses are more than offset by new projects. If the organisation succeeds, then Mr O'Leary and his successors will have earned the right to criticise companies which behave in such a cavalier fashion as Talk Talk.

Irish Independent