Silicon Docks Post author By Philip Lane Post date January 24, 2012 Jamie Smyth profiles the high-tech cluster in this FT article. Categories In Uncategorized 11 Comments on Silicon Docks ← Review of the Universal Social Charge → Interest Rates on Promissory Notes Not the Key Issue 11 replies on “Silicon Docks” The sexy high tech sector is an irrestible lure for politicians and journalists. I was driving down from a place called Ipoh on Monday morning and I saw a number of billboards off the highway promoting Karcher industrial cleaners. I had first heard of the brand courtesy of Nicolas Sarkozy when he was France’s Interior minister. It’s a typical product of German Mittelstand SME firms – – unknown to the public at large but exported across the world. The IDA will be very happy with the FT article. It’s striking that a similar article with no reference to local firms, could have been published two decades ago but with one key difference – – now many of the jobs go to foreign workers with particular language skills. I asked the IDA if data on the number of foreign nationals working in supported companies was available. The answer was negative. There are reasons for the agency not to know but given that the actual grant aid per firm is not published, the answer suggests that an FDI firm could hire most staff from overseas. Id say most people who wander into woodies or Atlantic or b&q or any homeward shop are well aware of karcher for the last decade or more. Great for cleaning decks and patios and windows and cars and drives (not so much dogs..) I think the most shocking Irish statistic over the last 10 years or so is the depreciation of assets to pay off malinvested credit expressed by machinery & transport equipment imports. Y2001 : 30.177 Billion Euros. (Peak) Y2010 : 12.273 Billion Euros. Of this the most shocking segment is office & data processing machines. Y2001 : 12.196 Billion Euros (Peak) Y2010 : 2.682 Billion Euros Computers have come down a lot over the years but not by this much !! – it reflects a massive collapse of Irish Industry & consumer demand me thinks. I think something very fundamental happened here – especially with growing wage competition and subsequent wage export , the banks responded to the demand vacuum by flooding the economy with housing credit – creating one of the greatest malinvestments the world has ever seen on a per capita basis. It looks like the Euro was the biggest calamity to hit the Irish economy since the act of Union. With the Housing inflation serving the same role as the Napoleonic wars inflation – covering up the gaping holes withen the fabric of the physical economy , until collapse made them self evident. The higher echelons of Irish society did not register this but the depression was hiding underneath this economy for a long long time. With more & more got out of less & less capital via agency & Ryanair type operations flooding the entire private economy. Its funny really – we undercut some economies in the west and then economies further east took the scraps. Maybe we deserved this as we started it back in 57. http://www.youtube.com/watch?v=EAHM9rXjdUo The destruction of both Human capital & the misallocation of Physical capital during these Boom Bust periods has been on a epic global scale. And yet there is very little debate about how the market states flowering was such a disastrous failure for the commons. With even technological capital development now absurdly heralded by Apple I thingies – as if this would improve ones basic life support. @Micheal What proportion of the data processing machine imports was computer parts coming into Ireland to be finally manufactured & reexported ? Do we simply look at the export of these machines to get a feel for the scale of this although the add on cost must have been very significant. Typical boosterism article. The corporate tax rate Is THE reason most of these companies are in Ireland. I say this with some inside knowledge of the decision making process of at least two companies that opened up their international headquarters in Dublin. Add the Dutch sandwich and the Double Irish and the lure was irresistible. Also most of the tech jobs in these big companies in Dublin are the relatively menial ones. Software localisation? Meh! I can’t look at the word ‘silicon’ these days without thinking of those French breast implants that went tit5 up. But back to the subject….. what we have here is a pretty pale imitation of anything that looks like SV, where a lot of real innovation etc. takes place. Aren’t we just in the business of assembling some components, nicely packing and ‘localising’ stuff here with some European ‘marketing’ thrown in? @PR The assembling components business is mostly gone – see the decline in import / export figures of data processing machines since 2001….GIGANTIC Its now mainly “intellectual capital” and this can’t do the heavy lifting of basic manufacturing lost from the industrial ether as almost everything traveled east. We should have entered a very big recession because of this 10 years ago but the credit hyperinflation kept a artifical demand in the economy. @ The Dork of Cork Its now mainly “intellectual capital”… Maybe but my guess is taht a lot is dressed-up donkey work. Exports of pharmaceuticals and medical devices rose by 40% in 2004-2010 without any increase in employment – – good material for spoofers for bragging about falling unit labour costs. I would guess that some of the pharmacutical material gets a quick pass-through for tax purposes. Information on the enterprise area in Ireland is poor – – despite the large commitment of public funds — and a recent report on startups in Europe, Ireland along with the tiny economies – – Malta, Cyprus and Luxembourg – – had no credible data to provide. Statements from enetrprise agencies are usually spin-laden and claims for example on the level of R&D done in FDI firms cannot be relied on. What is also striking is that it’s rare for an enterprise head to say anything of real substance. Thy’re not the type one would expect to tell Bruton when he’s out of his depth. There’s certainly no silicon in Silicon Docks. Looking at the job openings there’s also very little software engineering/core R&D. There are many technical/customer support and sales/advertising positions, some operations and system engineers, and some program management. A more accurate label would be Software Services Support & Operations Docks. It’s certainly a positive development in itself and I doubt that the companies themselves would be bothered misrepresent the scope of the functions being carried on – that’s the preserve of politicians trying to build or sustain some myths. More broadly though, based on proposals related to hi-tech in the various National Recovery Plans I’ve read in the past, from both this and the last government, I think the authors of those plans are basically technologically illiterate. For example they appear to have no clue as to the business models that underpin the provision of internet/broadband infrastructure and services, as they ramble on about their various investment proposals. I cannot imagine such nonsense being produced by the Finnish, or Dutch governments, for example. One of the many problems of being clueless is that you are then open to being bamboozled by all sorts of vested interests, and you also have a strong incentive to avoid being exposed as clueless. What are the chances, for example, of a “Nyberg” Report on a cost/benefit analysis of government money spent on supporting the hi-tech sector, written by a team of outsiders? It goes without saying that primarily employing Irish nationals in the Silicon Docks companies would benefit our country most. However you also have to appreciate that these foreign nationals with their ‘particular language skills’ (what’s stopping us learning more languages?) still have to eat, sleep and play in Ireland which gives a huge boost to the local economy. So they too ‘wander into woodies or Atlantic or b&q’ looking for karcher! Don’t forget the tax on their wages, employees & employers PAYE/PRSI/USC. The majority of our tax take comes from VAT and income tax, not corporation tax. Don’t look a gift horse in the mouth. @G… “what’s stopping us learning more languages?”…possible… I agree obviously that employing Irish would benefit but we have to actually want to work. All too often we’re seeing that Irish nationals these days aren’t interested in working for the new lower minimum wage. I know I’m being wildly generalistic here but I see it every day. Comments are closed.