Statement for the Joint Oireachtas Committee Onjobs, Enterprise and Innovation

Statement for the Joint Oireachtas Committee onJobs, Enterprise and Innovation

Tuesday 12thMay 2015 at 2.45pm

InterTradeIreland is an organisation which has been uniquely tasked by both Governments to boostNorth South economic co-operation for the mutual benefit of Northern Ireland and Ireland.Putting the firm at the centre, our view of an island economy is one in which that firm can access whatever resources or opportunities it needsto grow, no matter what jurisdiction it resides in on the island.

Our all-island research shows that innovative and exporting companies are more likely to be creating jobs. Moreover, our research shows nearly 70% of all exporters took their first steps in exporting by trading with the other jurisdiction on the island, indicative of a ‘pathway’ to exporting. Our supports therefore focus ontwo key pillars – trade and innovation. Through a portfolio of programmes(summarised in Table 1 below) that are designed to develop these two capabilities in SMEs by connecting them to the resources they need to become more competitive no matter where they reside on the island, we support businesses to improve capability, drive competitiveness, jobs and growth.

Table 1

Trade Programmes / Innovation Programmes
Acumen - Helps source the right expertise and people to target new markets effectively and increase cross-border sales / Fusion – Facilitates technology transfer and provides financial support for the specialist skills your business needs.
Meet the Buyer – Events giving unique face-to-face access to key public sector buyers. / Challenge – Provides SMEs with a proven, reliable and repeatable innovation process to bring ideas to market quicker and with less cost.
Go-2-Tender – Tendering skills Workshop. / Horizon 2020 – Help SMEs and researchers connect across the island to access European funding.
Consortia Facilitator – Helping businesses source tender partners and collaborative opportunities / US Ireland R&D Partnership – Linking with the US for collaborative research.
Elevate-Micro-Business support providing consultancy expertise to help create winning cross-border sales development plans. / Funding Advisory Services – Funding advice for early stage companies and established businesses.
Trade Accelerator Voucher – To help SMEs with funding towards Professional advice in relation to cross-border trading and regulations. / Business Angel Funding – Access to the key Angel investors and Syndicates across the island.

Since our inception 15 years ago we have contributed to the enhancement of economic cooperation across the island through the following achievements:

•25,000 SMEs have benefitted from our cross-border information and advice service

• c.6,000 SMEs have taken part in our all-island programmes

• Generating c.€725m worth of trade and business development value

• Over 3,000 jobs in SMEs

• c.€2.5bn is the value of cross-border trade

Demand for our programmes

Demand for these programmes is high. InterTradeIreland manages demand for its programmes based on available budget. Annual targets, in terms of participating firms, are set based on the budget available to maximize impact and project managers are given responsibility to ensure these spaces are filled. This process of ‘managed demand’ seeks to ensure that InterTradeIreland does not unduly raise firms’ expectations, resulting in InterTradeIreland having to make a large number of refusals which could be damaging for the Body’s reputation. In 2014 Fusion received 477 enquiries for 64 places. In the same period for Acumen there were 430 enquiries for the 112 places available. Similarly the 81 places on Elevate were oversubscribed with 544 initial enquiries. The Challenge programme has moved to phase 3 and as with phases 1 and 2 demand has continued outstrip supply.

Performance of InterTradeIreland

InterTradeIreland has consistently over-delivered on its Key Performance Indicators as indicated in table 2below.

Table 2 - Delivery against Key Performance Indicators over two corporate planning cycles

Key Performance Indicator / 2008 -2010 Corporate Plan
Outturn / 2011-2013
Corporate Plan Outturn against (target) / 2014-2016
Corporate Plan
Targets
Return on expenditure / 10.6:1 / 12:1 (8:1) / 9:1
1st Time Exporters / 200 / 222 (150) / 160
1st Time Innovators / 92 / 282 (100) / 180
Jobs Impact / 508 / 1,902 (500) / 3500
Efficiency savings / n/a / 9% (9%) / 12%
Co’s engaged / 8,824 / 9,432 (10,000) / 8500
Business Value / £232m / £276m (£250m) / £170m
Programme Budget / £23.3 m / £21.8m

This performance to date has been achieved through targeted promotion to the SME community and streamlining of our activities to improve accessibility and turnaround times and a strategy which manages demand to our capacity to deliver. The range and benefits of our activities concentrated in the areas of innovation and sales are validated by this strong performance, stakeholder consultations and more formal performance monitoring and evaluation procedures.

Part of the reason for this success has been the companies we target to work with. Our programmes have focused on small firms who aspire to grow, whose domestic market has declined, and being small, have often gone off the radar of the larger development agencies. Our programmes are also focused on building companies that are sustainable by providing them with the capabilities and opportunities for sustained growth for example three years after a Fusion project has been completed over 70% of the graduates are being employed by the participating SME.

InterTradeIreland’s performance has been achieved against a background of budgetary cuts stretching back to 2008 as shown in Graph 1 below.

Graph 1 InterTradeIreland’s Declining Budget 2008-2015

What is next for InterTradeIreland

InterTradeIreland’s priorities remain supporting businesses through our innovation and trade initiatives, to take advantage of North South co-operative opportunities to improve capability, and drive competitiveness, jobs and growth. However, in a volatile economic climate and against the background of a declining budget the Body continues to respond quickly and flexibly to changing circumstances and emerging opportunities.

In this regard some immediate priorities and areas of opportunity have emerged including:

• Increase North South applicants to Horizon 2020.
• Assist SMEs to access finance for growth.
• Identify and exploit international funding streams that could be accessed on a North South basis.
• Exploit Public Tendering Opportunities for SME’s.
• Development of cross-border clusters.

These are elaborated in Annex A.

At a more strategic level InterTradeIrelandis engaging in transnational learning on cross-border cooperation policies with a view to informing future corporate strategies and making policy recommendations to government. Over the 2012-2013 period, InterTradeIreland participated in a study by the Organisation for Economic Cooperation and Development (OECD) on collaborating across borders[1]. This study drew lessons and made recommendations on good practice for cross-border cooperation, including:

• Devote more efforts to strategy development and policy intelligence.
• Mainstream the cross-border element in national and regional innovation strategies and policy instruments, or at least align programme rules.
• Make greater use of opportunities created by the border.
• Publicise success stories of cross-border instruments.

These are elaborated in Annex B.

Annex A - InterTradeIreland priorities and areas of opportunity

1. Increase North South Applicants to Horizon 2020

Horizon 2020 is a key priority for InterTradeIreland. There has been a positive start to North South Collaboration, however, with an agreed North South drawdown target of €175m, increasing North South applications to such a level will be difficult given the limited pool of potential candidates in Northern Ireland.

1. Assisting SMEs to access finance for growth

InterTradeIreland launched their new Funding for Growth Advisory Service at events in Croke Park on 10th February and Belfast’s Ramada Encore Hotel on 12th February. The new programme is being rolled out across the island through a series of workshops and one-to-one clinics.The key objective of the new Advisory Service is to increase the diversity in the market that supports finance for growth by improving awareness of all sources of finance. It is anticipated that at least 12 regional workshops will take place each year (at least 4 in Northern Ireland and at least 8 in Ireland) to ensure widespread coverage. Early stage companies will continue to avail of the advice of a venture capital professional on all aspects of equity fundraising through the InterTradeIreland’s unique equity advisory clinics which are held each month.

The HBAN programme will continue to grow and expand its remit in 2015. A new programme is being rolled out from April 2015 for three years with funding from InterTradeIreland and Enterprise Ireland. The numbers of deals and in particular deals being facilitated via syndicate groups is expected to increase. New developments will include the establishment of the North West syndicate group with potential synergies along the western sea board and the possibility of cross-border deals if angels are interested in deal flow from Northern Ireland, especially following the opening of the new North West Science Park. One area of particular focus will be additional training to be provided to new and existing angels to ensure they understand the investment process and to make them aware of international best practice. HBAN will work in conjunction with Halo in Northern Ireland to share speakers for angel master class training events. The planned roll out of the European Angel Fund (EAF) is much anticipated with the potential to increase the number of deals and enable more angels to follow on their investment. The EAF is an initiative funded by the European Investment Fund (EIF), which provides equity to angels and other non-institutional investors for the financing of innovative companies in the form of co-investments. It has already been rolled out in Germany, Spain and Portugal.

1. Exploiting international funding streams

InterTradeIreland has been in discussions with the Special European Union Programmes Body for over a year in relation to INTERREG V Research and Innovation Specific Objective 1.2.1, “To increase the number and capacity of SMEs engaged in cross-border research and innovation activity in the region aimed at the development of new products, processes and services.” InterTradeIreland will submit an application to be lead partner for the programme. InterTradeIreland is uniquely positioned for this role as its innovation programmes currently cover both jurisdictions.

Other international funding streams that are currently being explored include The Marie Curie CoFund and Horizon 2020 ‘Innovation in SMEs’ Programme’. The Marie Curie CoFund action is open to public or private bodies that are responsible for funding and managing fellowships or research training programmes.The essential element of the CoFund is mobility across borders. Horizon 2020 ‘Innovation in SMEs’ Programme’ is a bridge between the core of the framework programme, the provision of support to research, development and innovation projects, and the creation of a favourable ecosystem for SME innovation and growth. Within this programme, there are a number of calls to provide opportunities to Member States and regions to enhance their innovation services through collaboration, peer-learning and uptake of new approaches.

InterTradeIreland will continue to identify and explore potential to access other funding streams.

1. Public Procurement

The Public Tendering market on the island is estimated to be worth £10bn/€11.7bn per annum. As a cross-border body, InterTradeIreland can take a unique holistic view of the market and its well established track record allows it to support SMEs to take advantage of the opportunities presented. InterTradeIreland works on behalf of the key business development agencies to deliver its award winning Go-2-Tender programme of capability building workshops to nearly 400 participants. Working with the Local Government Strategic Procurement Centre in Ireland it will address “Below Threshold” opportunities with Local Authorities which directly impacts on micro-enterprises. InterTradeIreland’s successful “Meet the Buyer” events will now have a sector/category focus to take advantage of contract aggregation opportunities. InterTradeIreland continues to be perfectly placed to support the valuable interaction between the buyer and supplier communities. Given the trend towards Frameworks within public tendering, the unique Consortia Facilitation service will work with SMEs which are considering collaboration as a means of taking advantage of the opportunities and support the development of successful partnerships. By supporting the indigenous SMEs to exploit this market, InterTradeIreland will promote public tendering as a route to export markets.

1. Development of cross-border clusters

Identifying and accelerating the growth of regional clusters that contain both high potential businesses and world class research is widely recognised as a means of driving innovation and regional economic development. While early concepts of economic development focussed largely on regional or national growth, given the development of information technology the globalisation of production and the liberalisation of markets, more recent concepts have highlighted the importance of interaction at varying spatial scales encompassing the local, regional, national and cross border or international level. This focus is particularly relevant for border regions and spatially peripheral territories.

InterTradeIreland’s forthcoming report – ‘Mapping the potential for all island clusters’ will identify sectors where the development of clusters would be mutually beneficial to both jurisdictions and will quantify their potential size, scale and economic contribution including potential barriers to cross border/all island development. These sectors include pharmaceuticals, medical devices and software.

Annex B - OECD Recommendations on making cross border instruments work

1. Devote more efforts to strategy development and policy intelligence.

Case studies reveal that greater attention is needed to identify opportunities where collaboration would create a true and significant value added, as well as opportunities for complementarities in fields of expertise. The incentive structures for different actors should also be taken into account. Developing a common understanding of why certain previous cross-border initiatives did not succeed can help avoid the replication of similar mistakes. Benchmarking with other cross-border areas may help define more efficient cross-border initiatives or instruments.

1. Mainstream the cross-border element in national and regional innovation strategies and policy instruments, or at least align programme rules.

Allowing cross-border actors to participate in programmes in the neighbouring country, subject to the demonstration of cooperation benefits, is a powerful means to stimulate and support cross-border collaboration. Aligning programmes on the various sides of the border, so that actors can benefit from simultaneous and coordinated support in its own jurisdiction, is another option, in line with current practice of only funding actors in one’s jurisdiction. Such efforts can achieve impact without an increase of budgets dedicated towards cross-border activities. It allows the creation of “virtual common pots” for joint efforts whereby funds may still stop at the border, but meet funds on the other side.

1. Make greater use of opportunities created by the border.

While in many areas the border is a burden, there are cases where it can be an opportunity. Working across the border may allow firms to gain easier access to another national market, including the public sector of a neighbouring country. There are several examples of problems that are created by the border that can be the source of inspiration for a solution marketable elsewhere.

1. Publicise success stories of cross-border instruments.

Given the challenge of trying to convince politicians and cross-border residents that such efforts are worthwhile, some concrete and successful projects can inspire and garner greater willingness on behalf of constituent jurisdictions to finance other projects. Such success stories should focus on the unique contribution of the cross-border dimension.

Joint Oireachtas Committee 12.05.2015Page 1

[1] OECD (2013) Regions and Innovation: Collaborating across Borders, OECD Reviews of Regional Innovation, OECD Publishing.