Despite serious lobbying, Derry loses out to Kerry…

Added Note: Interesting that the company seems to have made up its mind back in March. Despite that both FMand DFM were enlisted in what looks like a desparate rearguard action [after the battle was lost? – Ed]. See also this Derry Journal on SF hopes for a phase 2 switch.

Update 2: Thanks to Jthree for today’s report in the kerryman, which raises questions about the value of the proposition (the deal, it seems, involved the IDA lobbying potential investors on behalf of the private sector company). So, erm, it was not just the corpo tax after all.

Original article starts here….

I remember an old rhyme that must have been dated from before partition (when I imagine people were a lot less sensitised that we are today) that went “Londonderry, Cork and Kerry, how do you spell it?” The answer from the smug questioner is ‘I-T’.

That was also in the day when in a real sense the whole island was a single economic market place. It still meant that the north possessed the prime industry of the island, but there were none of the cunning little blocks that the Republic has erected in its own self interest to negotiate.

You cannot fault the Sinn Fein reps for working hard to try and bring the Global Pharmaceutical Centre of Excellence to the City of Culture, but in the end, according to the Centre’s CEO Rory Doyle “unfortunately at this stage, economics won out.”

Big Pharma is one of Ireland’s (north and south) big private sector successes. The 300 jobs in this case are to be transferred from their current base in Lyon in France. The reasons for the decision are disputed, but it’s probable that the Republic’s low corporation tax has played a role.

But it might also raise questions about the performance rate of Invest NI, particularly when set against that of IDA Ireland who have been assiduously courting the US market (where Global Research Services are based) for at least a generation.

When it comes down to it, the reality of political partition (and representative politics – Martina’s loss is Martin’s gain) it means that in some respects at least north and south are in fierce competition for the few investment opportunities available.

  • DT123

    It comes down to the Corporation tax rate and there is no way that HMG is going to allow Stormount to change it in NI.

    I am amazed that the “big players” in Euro land have not insisted on the Republic raising their rate into line with themselves in return for the bailout money.It seems wrong that one country has such an advantage in attracting inward investment ,whilst at the same time being bankrolled by their opponents for those jobs.

  • Dec

    Equally DT123, it seems wrong that a tiny sub-state which only survives on huge annual bailouts (as opposed to loans), is at the same time seeking an advantage over the rest of that very same state which keeps it afloat, in attracting inward investment.

    Anyway 300 jobs came to Ireland – where’s the bad news?

  • Mick Fealty

    I think you should direct that one at the elected reps for Foyle Dec… Derry has much greater major social and employment needs in comparison with those of greater Belfast for instance…

  • Local hack

    “It comes down to corporation tax”

    The EU is most likely going to force the Irish to change this and it probably will come into force by the end of the year – legislatively and then practically down the line – which has probably been factored into this deal, as a short term benefit

    The reality is why chose Derry when in Kerry they can be assured there will be no riots, bomb “plots” by dissidents and town centres brought to a standstill in a traditional police-lined parade by ‘loyal orders’.
    Plus they can rely – to an extent – on political leaders taking the steps necessary for the good of all – NOT on leaders who are more pre-occupied with bag packing or petty points scoring.

    In reality it probaby was a case that they didn’t want to be reaching for the Neurofen everytime there was an ‘issue’ in Derry/Londonderry – which was most likely the first conversation that settled it.

    “Chuck – your meeting Greg Campbell today – remember its Londonderry and God Save the Queen – Tomorrow with Martina Anderson and its Derry and Our Day Will Come!”

    Chuck – “Kerry it is “

  • jthree

    Global Pharmaceutical Centre of Excellence?

    The whole thing is a big stinky ball of smoke.

    A superficially impressive website, vague chat about Saudi money, a field on the outskirts of Tralee, a jobs announcement but as yet no actual jobs, a CEO from a distribution as opposed to a research background, a town without a university but with terrible road connections, obvious scepticism from IDA/ Enterprise Ireland etc.

    Did Derry ‘lose out’ or dodge a bullet?

  • jthree

    From the UTV report:

    “The Global Pharmaceutical Centre of Excellence will be a campus…”

    Will it? Will it really?

    http://www.kerryman.ie/news/gpce-abandons-campus-plan-2820246.html

  • Mick Fealty

    Quote:

    “News that the campus plan has been scrapped follows confirmation last month that the backers of the GPCE project, citing difficulties in their dealings with the IDA and Shannon Development, are in negotiations to move the entire project north of the border to Derry.

    “That development provoked a furious reaction in Tralee and led to major political pressure on the two state agencies to fully engage with GPCE and secure the jobs for Kerry.

    To this end representatives of the IDA and Enterprise Ireland travelled to Washington DC late last month to meet with a number of potential GPCE investors at the 2011 BIO International Conference.

    “During the trip the group met with US multinationals GRS and Optivia — two of the firms who last March committed to creating 282 jobs based at the Centrepoint building in Tralee. These jobs were to represent Phase 1 of the GPCE project.

    “So far these jobs have yet to materialise and while the recruitment process has commenced it remains to be seen if Phase 1 will be up and running by the end of July 2011 as is stated on the GPCE website.”

  • jthree

    And what’s this?

    “The potential scale of this project will require detailed due diligence to be undertaken by Invest NI and, although requested on a number of occasions, a business plan is still to be presented with details of the proposal.”

    http://www.londonderrysentinel.co.uk/news/local/5000_new_jobs_1_2865339

  • Mick Fealty

    Fascinating. That’s dated July, so I guess they could have come up with something since. But there was already a dispute between Invest NI and the company (and Martina) about this very matter:

    http://www.kerryman.ie/incoming/gpce-backers-still-in-close-contact-with-ni-government-2832123.html

    “The GPCE has also stated that it provided a detailed business plan to Invest NI in May. This last claim has however been contradicted by Invest NI officials.

    An internal Invest NI briefing memo on the GPCE project, dated June 3, 2011 and obtained by The Kerryman through an FOI request, states that “although requested on a number of occasions, a business plan is yet to be presented [to Invest NI by GPCE] with details of the proposal.”

    There may or may not have been progress on this. According to Martina in the Journal article linked above:

    “We put forward an ambitious and far reaching business plan with the assistance and support of Invest NI and the Department of Enterprise, Trade and Investment.”

  • PaulT

    Kinda have to agree with Mark (H) Durken that the trip North was purely a scare tactic. The company I think are quite slick in doing business, someone got 20,000 to sign a petition calling on the govt to give the funding.

    The Irish gov is investing 51m which is roughly 170,000 for each initial job created, if it does get to 5000 jobs by 2013 its just 10k a job which is an excellent return.

    Probably worth noting that Mr Doyle lives in Cork, it would have been a fair old trip for him if it had gone to Derry.

    Corp Tax is a red herring, its only paid by little people, comps like Google, Vodafone, Tesco etc only pay a few percent.

    BTW, isn’t NI’s continued participation in the UK because of ‘social and economic reasons’ perhaps someone will finally explain them.

  • jthree

    More FoI stuff via the SBP:

    “The differences intensified after the IDA sought detailed information on the GPCE project, including a full business plan and financial details, and asked for permission to share it with independent consultants.

    In response, GPCE executives said they had been given the impression by former taoiseach Brian Cowen that any due diligence would be carried out by IDA staff and they were ‘‘quite taken aback’’ that non-IDA personnel would get their ‘‘sensitive information’’.

    AND

    “As part of its standard assessment process, the IDA also asked for more information on the finances of the project, which it described as ‘‘a major consideration’’. The GPCE promoters have said they are in talks with three sovereign wealth funds, including Saudi Arabian investors, but have given no further details, either publicly or in private to the IDA.”

    http://www.sbpost.ie/news/ireland/ida-and-pharma-promoters-suffer-major-breakdown-57664.html

  • The clue was in the title. The more impressive a title or signboard, the less there is behind it. It was true for tree nurseries in Kenya, and is probably the case for incoming investors and Dragons Den contestants.

  • Mick Fealty

    Not to be flippant though Paul, but there’s a further concern about what this package actually stacks up to (which, plainly, I was not aware of when I started blogging it this morning).

  • Greenflag

    ‘I am amazed that the “big players” in Euro land have not insisted on the Republic raising their rate into line with themselves in return for the bailout money.’

    I’m not. Some of them have the wit to know that if you want somebody to pay you back then you have a better chance of being paid if there is a growing economy than one in permanent recession . Although I might add that the German and French banksters will have to write off many of their ‘irresponsible ‘ loans despite the ‘moral hazard ‘ warnings people have come to believe -which is of course nothing more than bank generated self serving spin . I look forward to seeing how the Vince Cable v Cameron/Osborne fracas over how the ‘millionaires’ cabinet deals with reforms in British banking .

    Corp tax rate is a convenient red herring as anyone who knows how big corporations like Bank of America , GE , Vodaphone etc etc pay huge sums to corporate tax avoidance lawyers to make use of every and any loopholes to minimize taxes paid to the State which has to provide the education and health services and transport and housing needs of the populations which are needed to feed these multinationals the eh ‘human ‘ resources of a sufficient quality and quantity to meet their requirements .

    As for the thread lead Derry v Kerry and the various excuses made the one that was’nt made was the fact that the ROI is in the Eurozone and NI isn’t . Given current worldwide monetary instability and lack of confidence in ‘paper money ‘ the perception may be that although the Euro has it’s problems the UK has it’s ‘riots’ and the strong possibility that Mr Cameron’s ‘big society’ will turn into another wash out for whatever remains of a British economy that actually makes ‘products’ for sale instead of pieces of overvalued waste paper 🙁

    What commentators have completely passed over in this story is the fact that the multi national corporation concerned could pick and choose and whatever it’s reason for doing so is it’s own business . As a corporation it knows no allegiance to any State and like similar corporations worldwide they have the power to make local politicians British or Irish to ‘ hop ‘ to their demands . It’s the same all over the world and even within US States . So NI is not alone in being ‘outcompeted’ in the race to the bottom .

    Another view is that it’s just another example not that any more should be needed of how bereft of ‘power’ are all of our elected representatives in the matter of ‘job ‘ creation . Even Mr Obama’s much lauded ‘green energy ‘ jobs has been seen to be smoke and mirrors as American corporations who formerly manufactured solar panels in the USA now have them made for 7% of the USA cost in authoritarian capitalist China .

  • Old Mortality

    Paul
    “Google, Vodafone, Tesco etc only pay a few percent”
    That might be true in the Republic where everyone pays only ‘a few per cent’ but I’d be confident that Tesco is one of the biggest corporation taxpayers in NI and pays at an effective rate of much more than a few per cent.

    As for Martina Anderson, you have to snigger at a representative of an allegedly socialist party complaining about companies having to pay too much tax. Typically vacuous SF posturing on economic matters.

  • Mick Fealty

    Which multi national corporations would that be GF? For all the talk, there’s not much evidence of much other than a transfer of money (and perhaps some govt responsibilities) from semi state to a private players.

    What makes me somewhat nervous is the claim in some reports of 5000 jobs which turn out to be not jobs at all but a calculation of post graduate places in unspecified universities based on what it appears both Entreprise Ireland and Invest NI both rejected for a business plan.

  • Dec

    Mick

    When this company opens and the 300 jobs are filled, there’ll be plenty of northern representation in the workforce. Disappointing for Derry, a boost for Kerry but people from across the island will get jobs. Hence, great news.

  • Old Mortality

    Greenflag
    ‘What commentators have completely passed over in this story is the fact that the multi national corporation concerned could pick and choose and whatever it’s reason for doing so is it’s own business . As a corporation it knows no allegiance to any State and like similar corporations worldwide they have the power to make local politicians British or Irish to ‘ hop ‘ to their demands. ‘

    We’re not talking about Pfizer or GSK here. This appears to be just a man from Cork with a big idea. According to a report on BBC Newsline last night, the IDA was not involved because it was considered an ‘indigenous’ project and was passed on to Enterprise Ireland.

  • Greenflag

    @mick & old mortality ,

    I was referring in general terms to the ‘options ‘ available for multinationals and was unaware (yep did’nt read the detail time ye see) of the just a man from Cork and a big idea .

    I share Mick’s scepticism re the 5,000 post grad ‘jobs’ and I’m aware it’s still August and good news hype is eh ‘confidence ‘ building in some quarters .

    I stand over my general comments re the relative weakness of all our politicians in the matter of job creation be it in ROI , NI , UK or anywhere else . I do however don’t doubt their ‘ability ‘ to perform well in job destruction -be it during Thatcher’s carving out of the remnants of British manufacturing in the 1980’s or the similar American gouging out of it’s manufacturing base in the 1990’s and naughts . At the same time I note the German success in achieving 98% of it’s exports from ‘indigenous ‘ Mittelstand ‘ employers i.e small and medium size private companies employing less than 350 people .

    But then we all know in retro that the USA and the UK put all their eggs into the ‘make believe ‘ world of CDO’s and triple A investment tranches rated by Standard and Poors and Moody’s as ‘great buys ‘ a week or so before they were outed as ‘scams’ .

    As for Martina Anderson’s comment -shes not the only one on the left accused of vaccous posturing . Listening to Eamonn Gilmore ‘defending ‘ the banks and the international bond investors who have junk statused Ireland’s economy one wonders if he Gilmore was ever much more than a self serving opportunist in the manner of his former governmental predecessors ?

    And to cap it all there’s Noonan on the right making a brave fist of ‘leaning ‘ on the banks ??

    The financial wurrrld is in a state of chassis and Joxer Daly and the entire world knows it and NONE of the politicians have any answers bar what might get them elected come the next election 🙁

    It’s ‘save yourself’ and the devil take the rest . Laissez faire and the invisible hand and as always nothing learned from past economic or political history:(

  • PaulT

    “As for Martina Anderson, you have to snigger at a representative of an allegedly socialist party complaining about companies having to pay too much tax. Typically vacuous SF posturing on economic matters.”

    You must have rolled about howling with laughter for the past 13 years of socialist Labour government in the UK.

    In fact I don’t know why I’m replying to someone who finds it funny that a socialist party in Ireland or anywhere else would be concerned by tax, isn’t that what political parties worry about?

    Whoops sorry, just realised you saw the words Sinn and Fein and your natural reaction is to smash out any old bollix on your keyboard.

    (Mick any chance of Slugger including an ‘ignore button’ )

  • PaulT

    “Not to be flippant though Paul, but there’s a further concern about what this package actually stacks up to (which, plainly, I was not aware of when I started blogging it this morning).”

    bit cloak and dagger Mick, surely it’s just a canny businessman doing a spot of fishing about.

    I think Tralee is a weird place, but, there is a healthy Pharma industry in the SW, what is there in Derry.

    TBH, if they were considering the UK I would have thought Sandwich would have been ideal as there will soon be loads of unemployed scientists there.

    Also in hindsight, re Corp Tax, if its an R+D site, I can’t see how it makes money, it costs money instead, so tax is not an issue apart from where the profit centre is for the organisation who brings the R+D to market.

  • Mick Fealty

    Ignoring, you have to manage yourself. As for my cloak and dagger point, I think you’ve stumbled upon the answer yourself. It won’t make money unless large corporates can be persuaded to stump up the cash. If they won’t the Irish taxpayer picks up the tab.

  • son of sam

    Apart from the comparative merits of Derry and Tralee,and the rates of corporation tax North and South,the interesting aspect in the North West is the degree to which Martina Anderson has been allowed to dominate the story.One would normally assume that with such a potentially large investment in Derry,it would be an all party strategy.Instead either by accident or design,it has been portrayed in the media as a one woman production by M/s Anderson.To readers of the Derry Journal ,such adulation of that particular M L A will come as no surprise.This weeks Tuesday edition featured no less than 4 photos of the good lady!The paper at times seems no more than a willing conduit for the Sinn Fein press office.Perhaps the next time Ms Anderson might learn not to count the chickens before they are hatched and adopt a more inclusive approach to inward investment.

  • Greenflag

    ‘Perhaps the next time Ms Anderson might learn not to count the chickens before they are hatched and adopt a more inclusive approach to inward investment.’

    Or as the French Revolutionary was heard to say on Guillotine Square before some French Aristocratic Count ( that o is important ) was to lose his head –

    ‘Don’t hatchet the count until he chickens ‘

    As for the bould Martina hogging the limelight I suggest that NI politics is not a place for shrinking violets and the more ‘weemen ‘ who push themselves forward in both traditions the better for everybody 😉

  • FuturePhysicist

    Big question … how does hundreds of jobs in Derry prove to be a less economical financial investment than thousands of jobs in Tralee?

    Tax is a factor, but surely infrastructure and our desperately bad record in graduate employment are key factors.

    And you have to question if the lobbying group led by Sinn Fein did anything to promote the talents and work efforts of the local workforce.

  • Nunoftheabove

    So conceivably SF either took a deliberate decision to support Derry but not Kerry or were their respective local reps at each other’s throats both competing for it ? If the former, on what basis do they explain to the Kerry population that they didn’t bother trying on, like, account of being, y’know, a sorta 32 county outfit ? If the latter, on what basis do they concede to the losers in Derry that their Kerry reps are actually a bit more influential than they are ? Perhaps they’ll just blame the Brits for Derry’s loss but take the credit for the result for Kerry anyway.

  • Reader

    Dec: Equally DT123, it seems wrong that a tiny sub-state which only survives on huge annual bailouts (as opposed to loans), is at the same time seeking an advantage over the rest of that very same state which keeps it afloat, in attracting inward investment.
    Not really. There’s only a certain amount of inward investment floating around looking for a good deal. Better for the UK government to get that slice of the action without cutting Corporation tax across the whole economy, which may cut the tax take from indigenous companies.
    And if corporation tax is cut in a small slice of the economy (NI), then the Govt can watch carefully to see if it also stimulates good growth in indigenous companies.
    *IF* it does stimulate growth, then it may be worth the UK Govt cutting corporation tax across the whole economy.
    Neat experiment – eh?

  • FuturePhysicist

    I don’t know what lobbying was done in Kerry, I’d imagine in the eyes of SF this would be no different with Derry competing with Belfast, Lisburn, Newry for instance. For all the stand up for Derry remarks there was more than taxation brought to the table.

  • FuturePhysicist

    Also in hindsight, re Corp Tax, if its an R+D site, I can’t see how it makes money, it costs money instead, so tax is not an issue apart from where the profit centre is for the organisation who brings the R+D to market.

    This attitude in the private sector here to R&D contributes to the region’s status as a borderline second world nation. When a good patent could be the difference between a million pound buisness and the first footsteps of a billion pound buisness, or products that save manufacturing costs rather than leave the costs of production to be shaved off bit by bit by rising oil and commody prices. Indeed sometimes the “market” for R&D is actually internal, so they bring themselves to the market from within.

    Simply put R&D makes money through a) Intellectual property b) industrial savings c) industrial products.

    Which is all well and well, but as you say not being the so called profit centre, can it be taxed under corporation tax specifically rather than just the running taxes of income, VAT and environmental … and the answer is yes and it is paid for by its parent company. It’s eligible for some tax relief (if it is an SME) but still can get taxed.

    http://www.hmrc.gov.uk/ct/forms-rates/claims/randd.htm

    Every business practice costs the practice money, except those well greased insured banks of course.