Future Growth City

On his first official engagement with Chamber members as CEO of IDA Ireland, Michael Lohan discusses key areas of focus for the future.

In April of this year, Michael Lohan stepped into the role of CEO at the helm of IDA Ireland, taking on the reins of leadership. He is tasked with leading on the execution and delivery of IDA Ireland’s organisational strategy. He takes on the role at a time of great transition with climate change coming to the fore and in the context of challenges such as inflationary pressures, interest rate hikes, the ongoing impact of the war in the Ukraine and legacy issues associated with Brexit.

However, Mr Lohan says despite these challenges Ireland continues to perform well and the outlook for foreign direct investment (FDI) is positive, “Ireland ranks 5th in Europe in terms of its ability to attract FDI investment in its contestable markets, we are consistently 5th in that table”. Meanwhile the UK is on a downward trend in this regard as it continues to feel the effects of Brexit, “This points to the importance of policy and clear policy,” said Mr Lohan who also highlights that for the first time Germany has fallen out of the top five in terms of FDI inward flows. “Ireland is winning the largest percentage of capital-intensive projects than anywhere else in Europe,” he adds.

Looking to the future Mr Lohan acknowledges that in order to maintain this momentum there are challenges that must be addressed. From the outset he outlines the need for a clear plan to effectively manage the twin green and digital transition, “It requires not just capital deployment but human deployment, it requires innovation to understand how we are going to make that transition digitally and sustainably and that means we are going to have to look at our own skillsets and the delivery of those skillsets both from an academic perspective and an industrial perspective as well”.

There are specific obstacles that must be overcome, and that Mr Lohan sees as immediate priorities, “We have an infrastructure deficit, we have a planning system that isn’t fit for purpose in terms of delivering the response in a timely manner, we have a housing availability issue”.

On planning, Mr Lohan says an overhaul is needed. “Our planning system just takes too long, full stop, so there is no point trying to explain that away when the fact of the matter is, it takes too long. There is a response happening there but let’s make sure that response is adequate and gives us a solution.”

A major priority for the IDA under Mr Lohan’s leadership is housing and he says enhancing capacity to deliver is where focus needs to be now, “We need to increase our housing output, we are starting to make progress albeit that we need more. I have had recent engagements with the Department on this and with a number of stakeholders…the feeling is we have a large number of interventions brought forward. What we need to do now is make sure we can implement all of those in a succinct and clear manner because a number of those interventions are unique, and they will actually make a difference. Then we need to support that in terms of the capacity to deliver.”

As Mr Lohan assumes his new role, another pressing concern that looms large is the state of energy supply and infrastructure. These existing vulnerabilities threaten not only inward investment but also pose a substantial risk to the overall economic well-being of the country. He compares Ireland’s current position in terms of energy supply to that of Denmark, which boasts a diverse energy supply portfolio, has renowned offshore wind capabilities, and robust local and regional networks, “What is the scale of Denmark’s energy capacity versus Ireland? The answer to that is, it is three times the scale of Ireland. We have failed to grow our infrastructure in terms of energy supply and that is our core issue. It is not about demand, it is an energy supply issue. We need to scale that, and I think that is where our offshore wind potential gives us that [opportunity] to grow in the future.”

With this in mind, support for the digital economy is another area of focus for Mr Lohan, and he says to do this data centres are needed and are a key asset and a key piece of infrastructure, “I know there’s a debate about data centres and the value of them [but] we’re starting the conversation from the wrong position.” He also says that data centres will be needed to embrace the likes of A.I, machine learning and the countless opportunities that technology will bring.

On other fronts Mr Lohan says Ireland continues to perform well, especially when it comes to talent attraction which has played a pivotal role to date in the success of FDI, “From an industry perspective we’re actually doing quite well, engagement with industry is really positive and really strong. From a talent perspective and a training and retraining perspective there’s any amount of support from a state perspective to do that.” While talent attraction is an attractive part of Ireland’s portfolio, Mr Lohan says the onus is on the Government to make sure it remains that way, “At a national level in terms of our investment in our education system I think we need to do more”.

Ireland’s existing base of FDI is a core national asset, and one that we must nurture and indeed deepen and develop

Reflecting on IDA Ireland, Mr Lohan commends his team for the strong position it is now with over a decade of consistent year on year growth. From a regional perspective he outlines the success of the Southwest region where over 100 investments have been secured in a broad range of sectors including technology, pharmaceuticals, medical devices and international financial services. Mr Lohan says the IDA remains fully committed to the pursuit of balanced regional development and compact regional development, but he says as part of that development industrial zones must be established to support city centre locations.

The IDA’s current strategy also has a clear focus on sustainability and Mr Lohan says this is already proving fruitful, “last year we supported 21 investments directly in sustainability, most of them in respect to energy efficiency and energy reduction but also in terms of building competency and capability in the skills base”. Mr Lohan explains that the IDA will continue to make strategic long-term investments in terms of digitalisation and sustainability. He says those who do not progress on this path will simply be left behind, “there is no standing still, the last few years have taught us the values of resilience, of agility and continued innovation”.

Cork is home to over 200 IDA clients and Mr Lohan says the future looks bright, “I’m leaving Cork after two days with a renewed confidence that Cork is going to be the future growth city, a position that can support FDI and an industrial base in the future”.

He also says there is an abundance of opportunity for Ireland’s second city across every sector, “There is now a chance to accelerate the city’s vision and ambition, growing the targets set out in the National Planning Framework and in Ireland 2040, while also leading a sustainable and climate action response. No one doubts Cork’s credibility, you are ranked number one for economic potential in the Financial Times European Cities and Regions of the Future, you are ranked 24 in the world in terms of quality of life index ahead of Dublin, Berlin, and Paris so Cork has all of those ingredients in order to capitalise for the future.”

Employment growth at IDA client companies in Cork has grown substantially in the last five years however while this brings opportunities it also brings challenges. Mr Lohan says to maintain this success, sustain the anticipated future population growth, achieve climate neutral status by 2030, and to complement the ongoing redevelopment and rejuvenation of key areas in the city such as the Docklands, it is crucial that enabling infrastructure is in place as envisioned under the Cork Metropolitan Area Strategy.

Michael Lohan, CEO, IDA Ireland with Conor Healy, CEO Cork Chamber. Picture: Darragh Kane

“That growth cannot happen unless we ensure that we have sustainable modes of transport and sustainable living that can happen within those centres. We need to get that enabling infrastructure in place at the outset, as opposed to it becoming secondary after the commercial elements or the business elements.”

This year, as Mr Lohan celebrates his twentieth year in IDA Ireland, he says in the next phase of growth Ireland has to do more to maintain its attractiveness in an extremely competitive global environment, “Our success will depend on progressing towards enhancing the carrying capacity of the economy both in the immediate and longer term. The key areas requiring attention remain planning, housing, energy security and diversity, water and wastewater and some wider infrastructure.”

These are the essential elements Mr Lohan says must be correctly managed to safeguard FDI, “Ireland’s existing base of FDI is a core national asset, and one that we must nurture and indeed deepen and develop”.