"Ireland now is one of the top 10 investors in the United States’ economy," President Biden said at the 2024 St Patrick's Celebration. In 2022 the amount was almost $300bn and $431bn for Germany. This Irish yarn is about redomiciled US firms for tax purposes, not the small number of Irish multinationals.
Irish multinationals with market cap €10bn+: CRH plc (1970) from merger Cement Ltd (1936) & Roadstone Ltd (1949) market cap €54bn; Ryanair (1985) €24bn; Kingspan (1965) €15bn; Kerry Group (1972) €14bn; Smurfit Kappa (1934) €11bn.
The average reported turnover for the 12 months up to and including September 2022 was €4.03mn. This was €792,000 for Micro companies and €4.05mn for small-sized enterprises, while medium-sized companies reported an average turnover of €9.99mn.
Gross Value Added (GVA- see below) per person employed for large Irish-owned enterprises (250+ persons employed) was €68,993 but rose to €369,918 when foreign-owned large enterprises were included.
According to the CSO, a third of employment in Foreign-owned firms in Ireland is in SMEs.
Foreign-owned firms accounted for €332.1bn - an increase of 9.0% over 2020. This represents 86.6% of total sales related to government agency's clients in 2021.
Sales for Irish-owned firms increased by 13.1% between 2020 and 2021, amounting to €51.4bn or 13.4% of total sales.
(See below that other Foreign-owned firms import and sell in the Irish market.)
Value Added - Employees and Self-Employed - Number of enterprises
Ireland is an outlier in its reliance on foreign-owned firms. It made sense in 1956 when John A Costello, then taoiseach (prime minister) made it a priority to attract foreign firms, at a time of high emigration and despair. Costello ignored opposition from his finance minister and TK Whitaker, the head of the civil service.
In 2021, non-member European Union countries controlled more than three-quarters of the foreign-controlled enterprises in Ireland.
In 2022 direct expenditure in the Irish economy (payroll, Irish materials, Irish services) increased over 2021 by 16.6% (partly related to inflation) to €73.9bn.
The level of direct expenditure in the Irish economy by Foreign-owned client companies was €38.1bn and €35.9bn for Irish-owned client companies.
This was spending linked to firms supported by state agencies: Enterprise Ireland, IDA Ireland and Údarás na Gaeltachta.
Payroll per person employed increased to €75,000 (€57,000 for Irish firms, €86,000 for foreign firms); while the average industrial wage was €53,000.
In 2023 the number employed in state-supported firms was about 534,000 (including part-time and casual jobs).
Other Foreign-owned firms added 390,000, resulting in total employment in Foreign-owned firms of 926,000.
The total of 926,000 as a ratio of 2,706,000 in employment in December 2023, was 34%.
Larry McCarthy, Strategy, Evaluation & Reporting Branch of the Irish Revenue, said in 2023, "Foreign-owned multinationals had over 850,000 employments in 2021 on Revenue records. Revenue data show 490,600 employments in the Manufacturing, Administrative & Support, Information & Communication and Financial Services sectors, which are likely to be the traditional FDI sector (with export-oriented activities and IDA support).
The remaining 360,400, of which the largest share was 174,800 in Wholesale & Retail Trade, are most likely foreign-owned multinationals operating in Ireland to serve the domestic market."
Innovation
The EU 1000 R&D Scorecard published in 2023 has Ireland with 4.1%.
The minimum spend is €3mn.
There are 32 redomiciled firms (about 40+ overall) with the US firm Medtronic in the lead at €2.528bn followed by Accenture at €1.053bn.
There are 30 more that are Irish for tax avoidance purposes.
There are 10 Irish-born firms: Kerry Group at 116 with a spend of €307mn; Bank of Ireland 131 at €264mn; AIB Bank 187 at €163mn; Kingspan 322 at €60mn; Fineos 394 at €47mn; Glanbia 411 at €43mn; Trinity Biotech 777 at €8mn; Smurfit Kappa 781 at €8mn; Mincon 923 at €4; Oneview Healthcare at €3.6mn.
Greencore which was born in 1991 in Ireland but now has only a head office in Dublin, and is effectively a British operation, has been put with the redomiciles. I also put Flutter Entertainment with the redomiciles as the company is an Anglo-Irish firm.
Gross Value Added (GVA)
The CSO said Gross Value Added (GVA) is the value that producers have added to the goods and services they have bought. When they sell their wares, producers’ income should be more than their costs, and the difference between the two is the value they have added.
Industry was dominated by Foreign-owned enterprises in 2021, producing 89.9% of GVA and 89.0% of turnover, the bulk of which came from enterprises that were owned outside the EU. There were 1,135 Foreign-owned multinationals, which represented 5.5% of all Industrial enterprises and accounted for almost half (49.0%) of persons employed.
Foreign-owned Construction enterprises represented just 1.1% of enterprises, 8.1% of persons employed, 18.6% of turnover, and 19.5% of GVA in the sector.
In the Distribution sector, which includes Retail & Wholesale Trade, 1,924 (3.7%) of enterprises were Foreign-owned in 2021. These enterprises employed 29.7% of all persons employed and contributed 57.6% of turnover and 47.2% of GVA in the sector.
Just 3.7% of all Service sector enterprises in Ireland in 2021 were Foreign-owned but they employed 25.8% of persons employed in the sector. These Foreign-owned enterprises in the Services sector accounted for 68.6% of turnover and 62.4% of GVA.
Irish multinational abroad (a fantasy?)
Ireland's low number of multinational firms and poor exporting record since 1932
It's 39 years since the birth of a significant multinational in Ireland: Ryanair is the largest airline in Europe both in terms of fleet size (527 aircraft) and routes served (1,831).
The Central Statistics Office (CSO) shouldn't call Foreign firms that become Irish for tax avoidance, "Irish" (at least make it clear that these firms [mainly American]. Their main operations are not in Ireland.
The National Accounts have enough confusion than the nonsense of more than 1.2mn employees in Irish multinationals abroad.
Be warned!
"In 2021 Irish multinationals abroad generated a turnover of €263bn. Affiliates in the United States (€96.9bn) and the United Kingdom (€38.5bn) combined, accounted for 51.5% of total turnover in Irish multinationals abroad. Germany, France, and the Netherlands accounted for 10.9% (€28.7bn) of total turnover.
There were more than 1.24mn persons employed in Irish multinationals abroad in 2021, with almost a third (31.5%) employed in the United States and the United Kingdom combined. There were more than 38,300 people employed in Irish affiliates in China, followed by 37,900 in Germany, 32,700 in Brazil, and 28,400 in Italy."
Disparities are evident for firms and social groups
European Union: 2022 Country Report - Ireland
Ireland’s dual economy is marked by divergent economic performance. Over the past 20 years, labour productivity among foreign companies jumped fourfold, whereas domestic labour productivity grew by 30%. More recently, in 2021, while SMEs in Ireland grew by 5% in value added and 1.2% in employment, large enterprises grew by 20.2% and 3.3% respectively. Irish SMEs also export less than their European counterparts.
Survey data shows the percentage of SMEs that do not export fluctuated between 58% and 65% over the past 5 years – well above the euroarea average.
A significant share of public support for R&D in firms is through a tax credit – which reaches only a small proportion of all SMEs – rather than direct support to SMEs. This divergent economic performance has an impact on regional development; those regions less able to attract foreign firms fall behind in terms of productivity, innovation and growth.
The continued strong performance of the labour market highlights labour shortages. The unemployment rate fell to near historic lows of 4.3% in March 2023. Employment in the multinational sector increased by 9% in 2022, with no significant negative impact from the worldwide staff reductions by big tech companies.
While wage pressures are strong given the tight labour market, nominal compensation per employee grew by 4.2% in 2022, which is well below inflation. As a result, real wages declined by 3.6% in 2022. Many sectors (particularly construction, ICT and hospitality) experience labour shortages in both high and low-skilled employees.[ ]Delays in payments to Irish business hamper their ability to operate and invest in the future. In 2022, it took businesses an average of 54 days to receive payment from other businesses (B2B), and 74 days from the public sector. The payment gap between the terms offered to businesses and the actual payment is one of the widest in the EU. On average, there is a gap of 14 days for B2B payments, and 19 days for payments from the public sector. This is in comparison to figures in 2019 of a 1-day and 3-day payment gap respectively. Despite decreasing since 2021, more than half of Irish businesses are more concerned than ever about debtor’s ability to pay on time and 75% of firms stated that faster payments would enable their company to pay their suppliers on time.Access to competitively priced finance remains a high barrier for Irish SMEs, slowing their growth. Despite increasing its score on the EIF Access to Finance Index over the past four years, Ireland’s performance is hampered by its expensive credit costs. Interest rates in Ireland remain among the highest in the euro area and second only to Greece for the costliest borrowing conditions for SMEs.This perception is increasing, with the percentage of SMEs feeling that there are no financing obstacles having decreased by 5.5 percentage points in 2022. Costly financing conditions can be partly explained by the lack of competition in domestic banks."
Tax avoidance by the MNEs is likely a factor in some disparities.
Discussion
Employment data from the Department of Business, Enterprise, and Innovation in respect of Foreign-owned and Irish-owned enterprises in 2023 was 314,688 and 220,916 (including part-time/ temporary workers: 20,217 and 23,067).
The CSO said in January 2024 that in 2021 Foreign MNEs had employment of 571,642 and "Irish MNEs 1,241,046" abroad, while Irish-owned firms in Ireland employed 1,456,706.
Above I noted that "Foreign-owned multinationals in Ireland had over 850,000 employees in 2021 on Revenue records."
"In 2021, there were 12,436 Foreign-owned multinational enterprises in Ireland, which represented just 3.4% of total enterprises in the Irish Business Economy, but they generated 72% of both total turnover (€798.8bn) and total GVA (€266.7bn).
They employed 28.2% of the total number of persons employed in the Business Economy. These Foreign-owned multinationals were 26.1% EU owned and 73.9% non-EU owned."
Exports of Chemicals & Related Products accounted for 64% of total Irish goods exports;
There were over €80bn Irish-based exports to the European Union (EU) in 2022, and over €42bn imports;
The United Kingdom (UK) was our biggest import partner in 2022, accounting for 21% of our imports;
In 2022, a quarter of our exports to the UK were Food & Live Animals;
Just five enterprises accounted for 43% of our total exports;
Small & Medium Enterprises exported €38bn of goods in 2022 and imported €72bn. In 2020 about a third of employment in Foreign-owned firms was in SMEs (<250 persons).
Exports and Imports 2022 (custom-tracked goods)
Micro €10bn —— (€23bn)
Small €9bn —— (€20bn)
Medium €19bn —— (€29bn)
Large €161bn —— (€63bn)
The Department of Enterprise, Trade and Employment's Annual Business Survey of Economic Impact (ABSEI) for 2022 shows that direct expenditure in the Irish economy (payroll, Irish materials, Irish services) that the level of direct expenditure in the Irish economy by foreign-owned client companies was €38.1bn and €35.9bn for Irish-owned client companies.
Where has the Large company surplus come from?
The Central Statistics Office (CSO) last December released Ireland’s Trade in Goods 2022.
Commenting on the release, Ciarán Counihan, Statistician, International Trade in Goods Division said: “In 2022, Ireland exported more than €208bn of goods and imported €141bn, which were the highest levels ever recorded."
Small and Midsize Enterprises (SMEs) have an import deficit of €34bn.
Is it possible that there is no real goods surplus?
Imports for Chemicals & Related Products were valued at €38.1bn while spending in the Irish economy was €5.6bn (page 49) in 2022. "This represents 14.9% of total direct expenditure by Foreign firms in the economy in 2022."
Total Chemicals €134.1bn Exports (-€43.7bn) Imports + Spending in the Irish economy:
This means that the surplus is €90.4bn. Check Table 1.1 Exports and Imports 2022.
€5.6bn was spent in Ireland in 2022: Payroll; €3.20bn; Irish materials €749mn and Irish services €1.7bn.
A large company surplus has pre-dated 2022 but it was smaller.
Tax avoidance is likely the issue here.
In 2014 Chemicals were at €50.4 in Exports and €10.9bn in Imports (local Payroll, Irish materials and Irish services are not available for 2014).
According to the OECD (Organisation for Economic Co-operation and Development), there were about 150,000 Irish enterprises that were sole traders in 2020.
Individual proprietorship (sole traders) were 195,792 in 2021 and 182,907 in 2020 (revised in 2023) according to the CSO.
Of the Active Enterprises with 250 employees and above, County Dublin had 511 enterprises in 2021 from a total of 868 (or 863) and County Cork had 70.
About 3% of enterprises export while more than half of the 250+ employee firms export.
In 2017 the OECD said Ireland has the second highest services content in its exports at 69%, over half of which is foreign value-added or import content in exports.
Enterprise Ireland, the state agency of the Department of Enterprise Trade and Employment in 2023 announced its more than 4,2000 supported firms increase exports in 2022 by 19% to a record €32.1bn.
Inflation was a factor and exports to the other 19 members of the Eurozone rose by 28% to €7.9bn.
In 2023 the total population of the 20 members was 345.4mn and minus Ireland, the Eurozone was at 340mn.
The Euro was launched in 1999 and after a quarter century with the convenience of the single currency, exports of about €8bn are underwhelming.
While the agency is an aid in particular for young companies, it sugarcoats other issues.
There are no data on related imports nor is there information on the breakdown of enterprise size.
In 2009 the French Treasury published a paper that said "Generally, French SMEs are restricted in their international development by their small size and limited innovative capacity. When they export, they export to just one or two countries, generally to neighbouring countries, and 30% fail to hold onto their market for more than a year. German SMEs, which are larger and more innovative, are also bigger exporters, with exports accounting for a larger share of their total revenue, and they also export more regularly."
In 2019 the French Treasury published a paper "The significant decline in France's market share of intra-EU exports of goods should be seen in light of the robust performance of exports of services in high value-added sectors (R&D, business and financial services) which are amongst France's largest revealed comparative advantages."
Presentation of the 2023 France's foreign trade results (7 February 2024)
The Currency last month reported on the Scale Ireland group at a meeting at the University of Limerick. Scale Ireland released the results of its latest survey of 340 founders and CEOs of tech start-up and scaling companies.
Tech start-ups include many different professions here.
On Enterprise Ireland's position as the largest VC fund in Ireland, Minister Simon Coveney said: “In a sense, that's a sign of market failure.” While he acknowledged that some companies cannot raise private funds and Enterprise Ireland needs to pick up that tab, he added: “I think that market can improve.”
According to the 2023 headcount of Computer Programming, Foreign-owned firms had 40,800 employed while Irish-owned firms had just 2,520!!
The Foreign-owned number was 26,670 in 2014.
Dublin gets a reasonable rank for being a tech hub. After all, Ireland is one of the wealthiest countries on earth!!
Ireland's GDP per capita in 2023 at €30,000 - Denmark at €69,000
In GDP per capita, Ireland is under the EU average and is in a group with Italy; Cyprus; Czechia; the Baltic countries and Spain.
FT 1000 in 2024 tracks Europe’s fastest-growing companies -Ireland had one entry
40+ mainly US firms, are Irish for tax purposes, led by Medtronic and Accenture
Leprechaun Economics - Paul Krugman of the New York Times (2016)
