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for cultural, economic and social relations
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A Northerner in the South Denis Rooney, Irish Association Conference November 2007. What I hope to do in my presentation today is to examine at least superficially the operational issues facing any business working both sides of the border,compare them and draw some broad conclusions on the reality of running an all island business from a practical viewpoint.I will try to look at the constraints and opportunities in a realistic rather than an idealistic manner based on my personal experience over many years and in different organisations.I have had both fulfilling and frustrating experiences doing the “all Island” thing for many years.I first set up my surveying and project management firm DRA back in1984 on April Fools day.We were fortunate to grow steadily and soon began to consider expansion into other markets influenced perhaps by an ongoing concern that the Troubles could scale up at any time to render business unviable as opposed to just difficult. Ironically our first thoughts were not to the closest market across the border because we thought that there would be strong local resistance to a northern predator.Additionally the Celtic Tiger was still in the incubator and the construction sector where we plied our trade was not exactly booming but the bottom line was that we did not believe that we were likely to win Irish clients easily.The south east of England was booming in the late eighties and therefore we set up in London in 1988.I suppose that in a prophetic way we were following the rhyme of that famous Irish song about digging for gold in the streets but having started we continued and set up small offices in Liverpool and Bristol but our timing was not unlike the song as the property crash in the early nineties soon questioned our investment logic and threatened profitability.We did hang in there however and whilst it was never the cash cow we dreamed about it was a good lesson in how to run a tight ship remotely. The next step was to look at the ROI market.In the early nineties although the tiger was still arguably a precocious pup she was beginning to show formative signs of desire for global domination.I still had the same concerns about being able to establish in a different market but the difference was that this time there was a sense that there was real growth ,particularly in our sector and a good service will always find clients in a high demand market.We headhunted a local director and duly set up shop in Fitzwilliam Place. The business went quite well right from the start,There was very little north south work as such but we were able to win work quickly and used the Belfast resource to support the Dublin office.Over the next 10 years we built up the business steadily and we noticed in the latter years a small but increasing north south connection.To my surprise with a few notable exceptions northern clients showed limited interest in the ROI market.Here was one of the world's fastest growing economies right on its doorstep,logistically very easy to penetrate but little north south activity.The interest from south to north was limited although a few southern property developers did show some interest in the latter years probably motivated more by a sense that their own patch was overheating . Eventually we were approached by a major UK based engineering and environmental business,White Young Green who made me an offer I could not refuse and we sold the business in Jan 2003 with a condition being that I would take over as CEO in Ireland and join the Group Board.WYG's interest in us was particularly strong because we had developed DRA as a north south business.From the outset they viewed Ireland as a single market. Since 2003 WYG has had a spectacular growth globally as well as in Ireland.We have operated the business as an all island business in every respect except where constrained by legislation.We have a single all Ireland board, we spread resources around to meet the work demand with specialist units eg waste water collaborating tightly together to service Clients all over Ireland.We have grown both organically and by vigorous acquisition of several regional businesses.Our policies and procedures are uniform throughout the island.Our administrative function which we call support services serves the whole business and our financial management is a single process though it has to navigate the complexities of different fiscal regimes. This approach I believe has played a key part in our success and within the overall Group which is increasingly global.Ireland is perceived as one of the most dynamic and financially successful operations in the Group.The Irish business is playing an increasing and significant part in the overseas drive for growth with Irish staff,north and south active in winning work in eastern Europe, Asia and Africa.I was involved in acquiring the international business which launched WYG's drive to become global.This business which was based mainly in Eastern Europe had a high regard for Ireland and was particurly comfortable in dealing with the Irish business.I believe that this all island approach has had great benefits for both north and south more than would have been achieved by operating them as silos.There are the obvious benefits of scale ,efficiency and flexibility of use of resource but there is also an extra factor which is less easy to define ,an extra dimension of a shared experience at this point in time. The other all island organisation with which I am closely involved is the International Fund for Ireland.The IFI is not a business in the same sense as WYG.It was established in 1986 to promote contact and dialogue between unionists and nationalists and to promote economic growth in NI and the border counties.The IFI is a truly unique organisation having been set up by the Anglo Irish Agreement.being run by the British and Irish Governments and it's programmes financed by international State donations.It was the first North South body and it is hard to believe that not so long ago it was perceived with some suspicion by many in the unionist community with a resultant difficulty in getting them to engage in the early years.The Fund has quietly gained the trust of both communities by it's integrity and effectiveness and I believe that it has contributed enormously not just to reconciliation between the main communities in NI but also in stimulating positive and enduring relationships across the border through it's many creative and successful programmes.An additional and important benefit of the IFI is the international goodwill it has created which is of great benefit to both parts of the island.It is highly regarded at very senior level among the Donor countries who rightly regard it as a successful and effective .intervention by them. Certainly from my work with the Fund I have seen very little difference between the communities in NI and the border counties of ROI.A socially deprived area in Dundalk has exactly the same problems as a socially deprived area in Belfast. As well as its main work in funding economic and reconciliation programmes the Fund also operates two venture capital companies Enterprise Equity in the north and Enterprise Equity Ireland in the south and here you can see differences north and south. My final all Ireland business experience is in the field of management leadership training.I am a director of To Be Training and Development which is run by my daughter Adrienne O'Hare.To Be operates out of Dublin but has an all Ireland remit.I joined it recently to among other things increase the market share in the north.Operating in this field which is one of increasing the capacity of organisations gives an interesting insight into important differences between the markets north and south.The business need for management training is the same in both juristictions but the attitude, particularly of business organisations differs considerably.NI generally has a lower appreciation of the need to to build capacity such as management leadership and the fact that it is SME dominated means that there is a greater reluctance to invest in capacity building for growth.There is an additional legacy factor in that organisations are often unwilling to spend on an important aspect like this unless there is a govt. grant on offer.This grant dependency although changing still persists in the north.Whilst I believe that grants are an important state mechanism to stimulate business activity if they become routine or expected their value diminishes pro rata.In ROI by contrast there is a greater appreciation of the need to invest in capacity building.Perhaps there is a greater financial scope to invest given the business growth but on balance I think that this issue is a deeper rooted challenge of conditioning for NI. Having covered my personal experiences superficially let us drill down deeper into the differences operating businesses north and south and examine their impact.Obviously the key differences are fiscal with a much more advantageous corporation tax regime in ROI. This has been the subject of much debate recently and we eagerly the outcome of the Varney investigation which will soon determine if we will have a level playing field on this contentious issue.The arguments for and against have been aired a lot recently and quite frankly if Varney does not do something to help NI compete fairly through lower corporation tax or the net equivalent in other fiscal incentives the NI economy will continue to compete on the island with one hand tied behind its back and will be unlikely to make the transition to even basic viability never mind genuine sustainable growth. This slide courtesy of FMP shows the complex structure of support for business north and south.Looking first at NI the principal govt dept providing support for business is DETI.Limited support is also provided by DARD,DOE,DSD,and DEL.One important point worth noting is that NI agencies recognise ROI and UK mainland as export markets. DETI has responsibility for inward investment,local economic development &enterprise and its main agency is INI which operates 4 directorates as per this slide. INI has 3 primary criteria----------Additionality,viability and efficiency and its corporate plan concentrates on 3 behaviours It offers financial intervention in terms of Equity,loans,revenue grants,and development grants togrther with non financial programmes to improve the capacity and capability of businesses. Support for expanding businesses into overseas markets and for developing R&D capability figure high in the nature of INI support and there is an increasing emphasis on company development and management training.Tourism development,formerly managed by Tourist Board is now managed by INI and attracting FDI remains a high but difficult priority. The NITB continues to play a supportive role for local tourism but now Tourism Ireland a n/s collaboration promotes the all island tourism offer. local Enterprise Agencies are another support for business thro Enterprise NI which has 31 active agencies.It operates a loan fund which can be accessed in local council areas. DARD aims to promote economic growth through assisting the development of agriculture,horticulture ,forestery,fisheries and food sectors thro grant assistance in various forms. DOE is mainly associated with environmental issues but does administer some business grants. DSD assists ecomomic development in deprived areas. DEL assists economic development by helping people find work through training and development schemes. There are several smaller players offering assistance to business through business development loan schemes eg small firms loan guarantee, the Princes Trust, Seed capital loans etc The EU offers a number of programmes through Structural Funds Community Initiatives,Peace and Rec. funds programmes administered from Brussels etc Finally there is of course the IFI which has been responsible for creating over 55000 jobs supporting almost 6000 projects . In ROI, DETE is the principal Govt. agency supporting business but other sources of finance include Dept. of Agriculture and Food;Bord Bia;Bord Iascaigh Mhara and again European Funding. The key framework is the National Development Plan covering the period 2007 to 2013 which seeks to address the investment now necessary to maintain the national competitiveness within a sustainable economic and budgetary framework.”Keeping the Tiger lit”.Worth noting is the fact that NI is not viewed as an export market by the ROI grant agencies. DETE is responsible for the key economic delivery agencies such as Forfas,IDA,Enterprise Ireland, FAS,Shannon Development,Uduras na Gaeltachta and City @ Council Enterprise Boards. Forfas provides the strategic planning input into the industrial development process but does not provide financial incentives.It deals with policy and delegates powers to Enterprise Ireland. IDA has national responsibility for securing new investment from overseas in manufacturing and and internationally traded services and for encouraging foreign enterprises to expand.It's instruments include employment grants, R@D grants training grants and capital loans. Enterprise Ireland supports growth orientated companies to meet the challenges of international markets and allocates a development advisor to each client company to provide a customised range of support.It focuses on 3 core areas and it seeks to develop companies capability in FAS is the Country's Training and Employment Authority supporting business and community based organisations with various programmes. Uduras's mission is to develop the economies of the Gaeltacht areas and it offers grants or subsidies based on the number of jobs created. There are 35 local County Enterprise Boards providing support for SME,s Bord Bia is the link between the Food and Drinks industry and its customers working to support export drive for Irish companies and Bord Iascaigh Mhara of course supports the seafood industry. The picture in ROI is completed by again the range of EU programmes and by IFI. When you examine the business support scene north and south as we have just done although there are great similarities in the nature and spread of State interventions there is a subtle but distinct difference in emphasis which is a useful comment of the important difference between the two economies.The northern support is much more focussed helping indigenous businesses grow and is more geared towards an SME dominated culture.The south is targeted towards stimulating FDI and supporting export growth. So having examined very briefly what is on offer to business on each side of the border let us look at the extent of cross border cooperation and in particular the various initiatives to encourage it. I can remember back to even before the recent Troubles.There was quite frankly very little meaningful cross border co-op back then and of course as the Troubles began to unfold what little there was soon virtually disappeared as a north south connection could be dangerous and even fatal to individuals.Prior to 1972 there was the beginning of some activity,particularly in the construction sector with a few companies operating in both markets. In recent years of course the atmosphere has changed and the only constraints now on cross border business is that provided by normal business issues.The main organisation to encourage mutual trade is Intertrade Ireland which was established under the Good Friday Agreement.The other implementation bodies are shown on this slide. The fundamental aim of Intertrade is to assist the development of capability and competitiveness in both economies and in the businesses that drive them.It's mission is to enhance the global competitiveness of the all island economy to the mutual benefit. Intertrade has worked very hard to achieve greater cross border business connection and has established several initiatives and set up sectoral bodies to help achieve that objective. The Equity Network is its major initiative to provide the use of private Equity to accerorate business growth.It runs the All Island Seedcorn Competition as well as the Halo business angel network. Fusion forges cross border relationships between businesses and third level education Focus is an all island sales and marketing initiative. Acumen is a cross border business development programme for SME's Innova is a pilot aimed at stimulating ,promoting and supporting R@D cooperation between firms north and south. SEUPB Special Euro Programming body also established under the Good Friday agreement is the Managing authority for the Peace and Interreg programmes.which have a strong cross border element.The new Peace 111 programme interestingly reaches out to western Scotland as well as north south. Tourism Ireland was set up to promote the island of Ireland overseas The IFI was of course the mother of all north south bodies and has promoted a tremendous amount of cross border trade.The IFI emphasis has of course moved away substantially from economic activity but its legacy is assured.It still is strongly active in cross border relations and at the Board two days ago approved for a cross border digital learning network between Omagh and 5 community centres in Donegal. SUMMARY To summarise I am going to pick on what I believe are among the key issues to do with North –South business Fiscal Incentives There is no doubt in my mind that not just Northern Ireland but the whole island is constrained by the major difference in fiscal incentives north and south.It hurts the competitiveness of Northern Ireland but it does not necessarily benefit the competitiveness of ROI as normal convention and economic logic would suggest. Legal Constraints We are dealing with two distinct legal entities and developing a north south business has exactly the same administrative complications as any international cross border venture will have.These difficulties are not major barriers ,rather at times costly irritants.One suggestion I would make is that more thought should be given,and here perhaps the greater onus is on the ROI ,to avoid making legislative changes affecting business without a compelling reason.I would urge as much parity as possible,particularly on employment issues which could avoid unnecessary nuisance for no real purpose. H R Issues This is an important issue for both economies.Mobility,particularly of skilled labour is something which benefits everyone and any barriers to it should be tackled by both Government Education This is another area where each part of the Island could learn from each other.Most commentators now agree that the rationalisation of education ,particularly at technical college level in ROI played a key part in the economic miracle and NI could learn. Also N I has an education system that produces a high proportion of young people with a good ethic which suits business[though it wastes too many who fall out totally demotivated]. A blend of the flair and the attitude would be ideal. International Connections The bottom line is that N I is a regional economy and an underperforming one at that whilst the ROI is a confident state with serious and ever increasing international connections and there is a compelling logic for N I to collaborate economically to increase its connectivity. Scale The reality of business is that when you achieve a critical mass in any sector further growth becomes easier and N I is struggling at present to do so whilst the ROI is beginning to do so in the high value sectors. The scaling up of the economy in N I is difficult given the SME dominated nature but it is not impossible.Closer links with ROI,Cross border collaberations and more all island companies will make the task easier. Political Will I am personally delighted with the soundings from the current devolved administration in N I especially with regard to the economy.I can remember only five years ago when I was chairman of the Institute of Directors,meeting with the political parties and urging them to prioritise the economy.I had the privilege of subsequently chairing a series of meetings with the political representatives and I believe that there is now a real understanding of the importance of the economy to the future wellbeing of N I and a real commitment to drive it forward including greater cross border economic cooperation for the benefit of all. I close my presentation as an optimist.
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