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Lilting Shannon means business in attracting foreign companies

By Maura BolandSpecial to The Christian Science Monitor / November 29, 1984



Shannon, Ireland

For much of the 20th century, the Industrial Revolution seemed to have bypassed Ireland, but all that changed with a series of incentives enacted by the government in the late 1950s and '60s.

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Since then more than 800 multinational companies, including Mitel of Canada and De Beers of South Africa, have set up plants here. They make everything from synthetic diamonds to digital watches, with special emphasis on high technology and pharmaceutical products. The highest concentration of foreign firms is found in the industrial zone near the Shannon airport, the nucleus of Ireland's export economy. The country's exports exceed IR(STR)4 billion (US$4 billion), compared with IR(STR)85 million in 1960.

American influence predominates in Ireland. In 1980-81 a new American plant opened nearly every week. There are now more than 350 subsidiaries of American companies here, employing one-sixth of the total industrial work force. Among these are General Electric (which has four plants), Westinghouse, Raychem, Pfizer Chemicals, and Digital Equipment.

In the beginning, the majority of these companies had American managers. Most have long since gone. One who remains is Tony Lind, managing director of Kwik-Lok Ireland Ltd. The 35-employee factory, an affiliate of a Yakima, Wash., corporation, is one of the smaller companies in the industrial zone. Its products - plastic bag closures and printed labels - are exported to a dozen countries.

What prompted Kwik-Lok to set up shop here? Grants from the Industrial Development Authority (IDA) were not the prime incentive, although Mr. Lind accepted some help toward construction costs. Neither was the cheaper labor, which, Lind says, is significant only if you employ thousands of workers. For him, the main advantages are lower shipping costs to the Continent, lower entry duties, proximity to customers and suppliers, and the lack of a language barrier.

Ireland's new commitment to economic growth has proved successful. It joined the European Community in 1973 and today has the fastest-growing economy in Europe. It was not always so. Before 1960, more than half the working population was engaged in farming. Industry was sparse, with the few native manufacturers protected by heavy tariffs. None of this made for a viable economy. Irish economic growth slowed in the first half of the 1950s and declined in the latter half. Unemployment was rampant, and emigration threatened the country's very existence.

The Shannon airport, which was important just before and just after World War II as a way station on transatlantic air routes, lost out as longer-haul jet flights bypassed it.

But in the late 1950s, in a dramatic change of direction, the Irish government of Prime Minister Sean Lemass embarked on an economic program stressing private investment. It lowered trade barriers and the state-administered IDA set out to attract foreign capital with a package of benefits. This included tax relief, nonrepayable cash grants toward the cost of fixed assets, and training grants for new workers.

The most important incentive to Lind is the tax breaks. Because Kwik-Lok opened in 1972, it pays no corporate income tax. New manufacturing companies established in Ireland since 1980 pay a 10 percent corporate income tax, effective to the year 2000. Kwik-Lok has been profitable even through several recessions.

But despite government inducements, foreign companies in Ireland have had their share of problems. Over the years, a number of plants have closed down. Irish suppliers can be uncooperative, and there has been tension between the newcomers and the natives.

''People wondered that, if the Americans came in for, say, two years, did they really have a commitment?'' says Lind. And managers, he says, feared that if they stayed too long they might find their path to promotion blocked at home.

Many of the difficulties centered on Ireland's lack of an industrial tradition. Lind says that when he first arrived here he found conditions ''almost feudal'' and recalls that ''18 years ago, middle management was almost nonexistent. . . . Few workers had any technical training whatsoever.''

He has seen a radical change since then. A young, highly trained work force has come of age, he says, and Irish people have advanced through the ranks: ''Jerry - my foreman - started 12 years ago as a machine operator. He now runs product planning and has complete control.''

Lind's willingness to delegate responsibility may be one reason he's had none of the labor problems other companies have had. Kwik-Lok has a very low turnover rate and almost no absenteeism. He has never had to deal with unions: ''I'm not necessarily anti-union. Under certain conditions, they can be very helpful.'' But he says selection of personnel has been crucial in averting labor problems.

He pays his workers the going rate, conceding that the local wage scale is ''appalling.'' Skilled workers in Shannon earn between IR(STR)108 and IR(STR)160 for a 40-hour week (the Irish pound and the dollar reached parity in mid-September). In a country where a gallon of gasoline costs nearly $3 and taxes are among the highest in Europe, that scarcely represents affluence.

While he feels it important to be a strong leader, Lind says he has been determined to see his employees as human beings. If lads from outlying farms did not always come to work on time, there were good reasons: ''Not everyone had a car. Some had to walk. The buses were unreliable.''

Many bigger companies have rigid rules, but Lind pursues a more flexible policy: ''I'd break a rule if I had to,'' he says.