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Back on the Map

Ireland's domestic economy may be in shambles, but expansion-minded U.S. firms see plenty of opportunity.

As an example, he cites two of the world’s largest pharmaceutical firms, Merck and Eli Lilly, both of which recently chose to locate SSCs in Ireland. Merck now has a team of 150 in Dublin, while Eli Lilly is hiring 100 staffers in Cork, O’Leary says. Meanwhile, last January, semiconductor giant Intel announced a $500 million investment plan at its technology campus in Leixlip, County Kildare. O’Leary also cites PayPal, Google, LinkedIn, and Amgen as other foreign firms ramping up hiring at their facilities in Ireland.

At the height of the economic turmoil last year, California software firm McAfee expanded its presence in Ireland, where it has had a location since 2004, says Tim Daly, director of operations for Europe, the Middle East, and Africa (EMEA) and Asia-Pacific. McAfee, whose acquisition by Intel was completed this past February, opened a new facility in Cork, which now has nearly 300 employees responsible for much of the company’s international operations, including global localization; and finance, procurement, operations, and logistics for EMEA and Asia-Pacific.

Wasn’t McAfee tempted to decrease, rather than increase, its exposure to Ireland given the country’s woes? That would be shortsighted, says Daly. “There’s almost a two-track economy. While it’s obviously tough in other parts of the economy, the multinationals and IT firms have pretty much come out of the recession unscathed,” he says.

As for Quest’s Davidson, he acknowledges that geopolitical and economic risks are now a larger part of the equation when sizing up any European country. But he is mindful that while prospects look rosier at the moment for many of the EU’s newer member countries, such as Poland, “the history of the current political regime is not as long-standing as in Ireland,” he says. “I can’t know what will happen in 20 years in Poland or Ireland. I do know that Ireland has had issues. The question is, how are they confronting those issues, and are we comfortable with how they are confronting them? So it’s a decision about not only where it’s going to be in 20 years, but also where it has been in the previous 20 years.”

Stressed Out

It’s hard to know whether the worst is over in Ireland or whether the environment for multinationals will continue to be a positive one. The latest banking stress test, conducted in March, found that Ireland’s ailing banks need another €24 billion in cash, requiring them to remain under state control for the near term. The worst-case scenario painted by New York–based investment managers BlackRock Solutions, which Ireland’s government hired to conduct the stress test, presumes that the country’s real estate market will continue to sink for the next two years, resulting in thousands of home foreclosures.

Employment, too, is something CFOs — local and foreign — are watching closely. The hardest-hit sectors are financial services and real estate, which fueled Ireland’s so-called casino-capitalism years under the government that was ousted in March. Among the most spectacular casualties is Allied Irish Bank, which in April announced plans to reduce head count by 2,000 from the current 14,000 over the next two years, after reporting a record €10.4 billion net loss on continuing operations in 2010.

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