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Ireland needs to plan in wake of Obama’s Election
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Our economic boom was built on 2 pilars. Foreign Direct Investment and property. Now that we are down too one pillar that pillar has to take even more weight. 80% of Irelands exports are from multinationals. 20% of Irish GDP comes from just 3 American companies Dell, Microsoft and Intel. This has been possibly our greatest success and greatest weakness.
We can keep giving tax breaks to companies that ship jobs overseas, or we can give tax benefits to companies that invest right here in New Hampshire,” Senator Obama said at a joint appearance with Senator Hillary Clinton in Unity, New Hampshire.
Now seemingly there is no tax break that actually rewards the outsourcing of jobs. But what this probably does means is that companies that declare their profits in other countries with lower taxation. (Such as Ireland) might be targeted. This could be disasterous for Ireland. Because we have shuned innovation and relied on foreign Investment. When one company leaves a town in Ireland, the local TD pressurises the IDA to find another foreign company to take over.
With the strong euro and no longer so low waged economy we are not the prettiest girl at the dance. We have an educated English Speaking workforce which is a bonus, but that only works for certain fields. We need to have a plan in action to deal with any moves that Obama makes in attacking US companies oversea’s status. We have no more pilars. Obama may pull the US economy out of the mire but we need to position ourselves to gain not lose from this lifting.
Part of the way the Irish corporate tax system works, is by allowing all EU sales be declared in Ireland and we get the tax benefit accordingly.
If they were to pull all their sales back to the US and operate it from there the duties and tariffs imposed by selling from outside the EU trading bloc may prove prohibitive for their products. I don’t expect Microsoft or Intel to move their Sales back to the US. What they might do is move their R and D divisions back to the US. This is a much smaller proportion of their total Eurpoean sales. Whats produced in Ireland does not equal whats sold by their Irish divisions. Them pulling their R and D will mean a lesser impact on our total GDP as they will still be selling through here but it’ll mean job cuts.
We need to seperate the artificial GDP numbers that exist because of money being funelled through ireland (this will continue) and the actual benifit in terms of Jobs that these companies bring with their Research divisions. This is whats under threat.
I’m not that worried about the US pulling High Tech jobs back to the US as they don’t have engineers or Scientists to fill these rolls anymore than we have Engineers and Scientists to fill any new jobs that might be created. The “knowledge Economy” idea is dead. With nobody doing Engineering or Science there’s no where for Foreign Direct investment to go. Financial services ws the last big FDI and we can all see that thats fucked. For the US to pull high tech jobs home they will need to import immigrants to do the jobs and I can’t see that happening on too large a scale.
A new era of US protectionism? Possible; yes. Likely; not really. Election rhetoric aimed at the voters of Ohio is one thing; realpolitik in international trading relations quite another.
The president-elect has distinguished himself in the past by surrounding himself with excellent advisors and then, unusually for a politician, acting on their advice. Probably why against all the odds he finds himself in the position of being the President elect today.
I don’t think there is any realistic prospect that any existing investment abroad by US companies will be placed under threat or that any future investments will be threatened either by an Obama administration, not the kinds of investment we are seeking anyway. Having a global market presence is not the same thing as outsourcing jobs for tax or cheap wage reasons. I think any further surge in US protectionism (and they’re pretty hot on protectionism even as it is) will be targeted nearer their own borders (like manufacturing relocations to Mexico and South American countries) and may not affect countries like Ireland at all. The new adminsitration may also re-open the Doha round, which would be good for all markets inthe long run, especially those in developing countries.
Interesting question, though. I happen to think there are probably greater opportunities for Ireland under an Obama administration that say, for example, is keen on development of ‘green energy technologies’ than any immediate losses of traditional style overseas investment.
One aspect on the Obama win which does not appear to have drawn much attention is how much it is a victory against negative political campaigning. Now, if a bit of that brushed off on us here, it might do our own politics no end of good.
Veronica, we have little of what the Americans term negative campaigning. No negatives ads on tv or radio, or even in the papers. The closest we’ve come was the RyanAir ads against Bertie and Mary O’Rourke.
There are some back office operations, booking services, insurance claims handling that could be affected by the measures Obama has talked about. They tend to be in places like Kerry and Donegal.
With nobody doing Engineering or Science
I am. Am I alone
:(
I think Dan is and Enginner not sure what in though.
But point taken. I have talked about that topic before. At least I think I have. All the days in the Dark lab are making me forgetful.:)
Simon,
I was referring to the tiny numbers doing Engineering and Science at Undergraduate level. There are a large number of qualified people doing Science but there is no one to fill any new jobs. You are not alone!
I’m an engineer (electronics) and I know the company i work for finds it very dificult to fill vacancies. They take on 20 to 30 graduates a year and more than half of them are foreign, recruited directly out of universities in Spain, France Poland and beyond.
Let us hope the change that has happened in the USA will bring peace to the world.
Get the troops home from an unjust war in Iraq.
Remember Vietnam and why the US invaded and then left the poor people to their own devices and tens of thousands being slaughtered all in the name of freedom !
Closer to home we will see the American multinationals pulling out of Ireland and circle the wagons at home.
That is why we recently launched a new jobs board in Ireland so that hard, cash stapped, employers may advertise at low cost. That is, if their HR departments wake up to the fact that their budgets will be trimmed or they might actually lose their own job because they are not making savings where they should.
Try http://www.jobs2ireland.com and see where those savings can be made, now, not 6 months down the road.
Democrats always bring out vaguely protectionist rhetoric on the campaign trail, but the fact is that any protectionist moves they made would only end up being matched by other countries.
OK Dan, point taken. We may not have overt negative campaigning in terms of broadcast political ads - only because they are not allowed anyway - but the underlying impulse of our politics has become increasingly negative in recent years, and at election times the main parties adopt US style campaign methods to market their wares. What I was really trying to get at was the increasingly negative tone and style of our political campaigns; what’s happened in various referendum campaigns is a good example.