Relocation special: Giant steps forward

Northern Ireland might not be top of your list of attractive business locations, but Elliott Davis discovers that its troubled past hasn’t discouraged growing companies from setting up shop on its shores...

Northern Ireland might not be top of your list of attractive business locations, but Elliott Davis discovers that its troubled past hasn’t discouraged growing companies from setting up shop on its shores…

You don’t need to be an historian to know that Northern Ireland has a troubled past. On the political front, the region has recently been marred by bitter disputes between
the republican and loyalist sections of the population. The business misadventures, meanwhile, have gleaned a far higher profile than the successes – with not only the Titanic, but also the ill-fated DeLorean DMC-12 springing into being on the shores of the river Lagan.

But the past ten years have represented a period of immense change for Northern Ireland, politically and economically. The worst of the sectarian troubles are gradually fading to distant memory, while some of the additional issues posed by the period are steadily being resolved.

‘We are emerging from 30 years of violence, the result of which is an economy two-thirds dominated by the public sector,’ Brendan Mullan, chief executive of Investment Belfast confirms.

Increased stability has triggered a rush of inward investment – up 45 per cent in recent years – to address this sector imbalance. At the same time, the region, like the remainder of the UK’s traditionally industrial heartlands, is also being forced to adapt to the realities of the 21st century.

‘At the turn of the century our economy was very much based on industries like shipbuilding and textiles, but with globalisation we can no longer compete in terms of cost in those areas,’ says Mullan, ‘and the reality is that we now have to focus on things like our knowledge base instead.’ That’s a challenge currently being embraced
by Northern Ireland’s 1.69 million inhabitants – 700,000 of whom live in or around Belfast.

Sector focus
‘There are five main sectors we’re focusing on these days,’ states John Thompson from regional economic development agency Invest Northern Ireland, ‘namely, aerospace, food, information and communication technologies (ICT), biotech and life sciences.’
Success, in terms of attracting inward investment, has been particularly prevalent in the ICT sector, with a legion of household names establishing offices in the region.
Late 2004, for instance, saw US financial services giant Citigroup establish a £65 million technology centre of excellence at Belfast’s Northern Ireland Science Park, a site overlooking the Titanic’s old dry dock. SAP and Halifax have also built significant local software development centres in recent times.

This success in luring high-profile names to the area owes much to the efforts of Invest Northern Ireland in targeting specific sectors. John Anderson, a professor at the University of Ulster and the serial entrepreneur who helped develop the world’s first genuinely portable heart defibrillator, says there’s more to this trend than mere marketing. ‘In terms of skill sets and research there are three or four areas we really are world class at, principally nanotech, ICT and software development.’

Youthful appeal
To those to have set up in Northern Ireland, the quality of the labour pool seems to be especially significant. The community is youthful, with some 40 per cent of the population 30 years old or younger. Allied to this, Northern Ireland has two universities that churn out around 2,000 IT graduates every year. This provides a skilled workforce in the very sectors the local regional development agencies are attempting to build.
‘We have some good people here,’ believes Thompson. ‘The workforce is highly skilled and young, and GCSE and A level results are above the UK average. Employers also benefit from the fact that salaries are around 70-80 per cent of what you’d expect to pay on the mainland.’

Network technology business Intelliden was attracted to Northern Ireland for precisely these reasons. With headquarters in Colorado, the company recently opened its own
£3.2 million research and development centre in the territory, creating 35 jobs, and vice-president of engineering Alan McKee says the quality of the education system played a vital role in this decision.

‘We had an existing relationship with the Southeast of England,’ McKee explains, ‘but we decided not to concentrate on developing too much there and chose to come to Northern Ireland instead because our chief executive Alan Black had spent some time here with a previous venture. He was hugely impressed with the quality of the people and the associated costs. Northern Ireland isn’t as cheap as India but it’s much cheaper than the US.’

Bro McFerren, managing director of Northbrook Technology (an offshore IT development centre for US insurer Allstate Corporation), identifies similar factors affecting his firm’s expansion. ‘Allstate were initially looking at just opening a data centre site in Northern Ireland,’ he recalls, ‘but they realised there are a lot of good software people here and decided to open an entire development base. We started in 1999 with around 250 people. Now we have around 1,500 employees. I’d say 1,200 of these are graduates and 60-70 per cent come from local universities.’

Help on hand
Realising how much of a draw a strong and skilled workforce can be, the local government, through Invest Northern Ireland, have put in place a series of steps to reward foreign firms recruiting in the area.

Intelliden is one firm to have taken advantage of this assistance, receiving £680,000 towards the opening of its £3.2 million centre. Colorado-based Fighting Bull Broadcast Technologies, meanwhile, received £250,000 to help it create 15 jobs at its European software centre.

The incentives extend beyond mere recruitment. As a general rule Invest Northern Ireland can provide pre-employment training grants covering up to 50 per cent of appropriate training costs, as well as the general employment grants it can offer as new workers are brought on board.

Recruitment giant Reed, for example, secured more than £1.9 million towards the costs of taking on 220 new employees in April. ‘In addition to the help we received for hiring we were also offered very generous packages for the training and development of new staff,’ McFerren confirms. In addition to staff-related assistance, the historic under-investment in Northern Ireland has also enabled Invest Northern Ireland to offer additional help to those looking to move there.

‘If you take research and development, past levels of investment here have been lower than the UK average and that means we can now afford to offer more support than is available in other regions,’ explains Invest Northern Ireland’s Thompson. ‘We have a lot of schemes in place.’

Research and development grants of up to 50 per cent of costs (and a considerable amount of advice and support) are available for those seeking to develop new technologies, enhance their own design capabilities or develop links with local universities and training colleges.

Property strengths
Aside from the savings that can be made in employment, Northern Ireland boasts one other major advantage over other UK regions – the cost of property. Whereas the likes of Birmingham, Cardiff and Liverpool have all undergone substantial redevelopment in recent decades, Belfast is the last major UK city to receive the same treatment. Major business, residential and leisure complex projects are being started at a rapid rate – with many already completed – and this has had several interesting knock-on effects from a relocation perspective.

For a start, there’s a surplus of modern office space available, the cost of which is hugely competitive. So, while businesses in London,
Birmingham, and Glasgow and Dublin could expect to pay £43.50, £27.50, £22 and £31 respectively per square foot for prime office space, in Belfast a figure of £12.50 is more realistic.

As Northbrook’s McFerren points out, ‘In addition to wage levels that aren’t as high as elsewhere in the UK, the property and utility costs are also very reasonable in comparison.’ Communication links are strong, too. Early this year Northern Ireland became the first region in Europe to offer 100 per cent broadband coverage and while most of the UK mainland continues to struggle with the restrictions of a copper-based network, Northern Ireland claims a largely fibre-based infrastructure, which enables a range of providers to offer cheaper and faster packages than those available in most other regions.

And even for those unimpressed by the skills base, generous levels of Government assistance and operating costs, Investment Belfast’s Mullan argues that Northern Ireland has still one more major area of appeal. ‘There’s a good quality of life here,’ he proudly proclaims. ‘The house prices are affordable [with the average three-bedroom house costing £130,000], we have a good education system and you can either be in the mountains or by the sea in 30 minutes – how many other places can claim that?’

Marc Barber

Marc Barber

Marc was editor of GrowthBusiness from 2006 to 2010. He specialised in writing about entrepreneurs, private equity and venture capital, mid-market M&A, small caps and high-growth businesses.

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