SCOTLAND - GATEWAY FOR IRISH INVESTORS

Scotland continues to grow in its allure for Irish inward investors. What type of Irish companies are expanding into the Scottish business environment?

From Ireland alone, a range of companies from diverse sectors, such as renewable energy company, Airtricity, to the prolific recruitment agency, IrishJobs.ie, have set up camp in Scotland in recent years. Right now Scottish Development International (SDI), the international arm of Scottish Enterprise and managed by the Scottish Executive, the devolved government of Scotland, has been very proactive in looking for and assisting inward investors to progress the country's already affluent sectors and to create high value inward investment jobs. With a strong economic environment of our own, why are Irish companies so interested in investing in Scotland? Between mergers and acquisitions, expansion and the creation of Scottish subsidiaries, the trends for Irish companies expanding into Scotland continue to grow.

HIGH GROWTH POTENTIAL

While inward investment into all UK regions has been experiencing prolific growth with the Scottish local economy, a strong push has been on its life science sector, financial sector, digital media and on renewable energy. In addition, Scotland's emphasis on technology and on research and development, coupled with a continuing level of highly skilled graduates emerging from its universities, makes it an alluring location for companies right now.

GOOD COST STRUCTURE

In relation to the types of Irish companies investing in the Scottish region, Pat Desmond, senior investment advisor at the British Embassy, Dublin, asserts how, at present, it has mainly been larger companies looking at Scotland. "For a small company, unless they get a fairly large entity operating in Scotland, it's difficult to manage because of accessibility," affirms Desmond. In relation to accessibility, Scotland's market is similar to Ireland and Desmond indicates that this is the reason why more Irish companies head to other parts of the UK which offers a greater market potential and ease of accessibility. Says Desmond, "this is probably one of the reasons why we don't see too many of the small firms heading in the Scottish direction." However, Desmond clarifies how Scotland's cost structure, which is better than the UK, will enhance future prospects for Irish companies branching into Scotland.

ON THE MOVE

It's not just the larger Irish companies that are diving into the Scottish marketplace. Smaller domestic companies are also beginning to play a role in Scotland's business potential. However, one of the most noteworthy Irish owned companies, Airtricity, is investing heavily in Scotland right now. With one windfarm already in operation, Airtricity currently has a further five projects at the planning stages. In late 2005, Airtricity's founder, Eddie O'Connor, alluded to how Airtricity plans to spend around £800 million on windfarm projects in the next five years in addition to spending the same amount in the rest of the UK during that same timeframe.

Increased employment opportunities come in tandem with extension into new markets. According to Pat Desmond, the general trend for Irish companies is to look for people already based in the Scottish environment to manage expansion. Says Desmond," there might be a short term transfer of skills or otherwise across but, ultimately, they would need to maintain their Irish workforce."

IN CONTEXT

According to UK Trade & Investment, a Government entity that provides support for foreign businesses targeting the UK as an inward investment location, Ireland was involved in 34 projects in the UK between 2004 and 2005, creating 1,681 new jobs during that time. Currently, Ireland is the fourth largest investor in the UK in terms of the creation of new jobs and ninth largest in terms of projects.

WHY SCOTLAND?

We know that the region is flourishing in high knowledge growth sectors but what is Scotland offering Irish companies, both domestic and larger corporations, to either set up subsidiaries, merge with or acquire existing Scottish businesses?