Recently we have seen a shift in US patterns of investment into Western Europe, with the UK, Germany and France all seeing a reduction in their market share of US FDI projects (compared to the average 2013-2019). The beneficiaries have been Ireland, Portugal and Spain, with Ireland replacing France as the third-largest recipient of FDI from the US in 2022.
In 2022, the US was responsible for 137 FDI projects into Ireland, creating nearly 8,000 jobs. This included new and continuing investment from well-known names such as IBM, Abott Laboratories, Apple, Citigroup, and Dell Technologies.
In this globally-connected world, US investors are now less worried about proximity to customers and more interested in skills, government support, and regulatory environment – all things Ireland can provide.
When US-based Artificial Intelligence company WorkFusion announced the creation of 100 new jobs in Dublin in October last year their CEO Adam Famularo explained
“When considering where we should locate our European headquarters, Dublin was an easy choice. Ireland has a booming technology sector and an abundance of skilled talent, plus it’s ideally situated as the gateway to the EU. It also has great technical universities and, as an AI company, Dublin’s focus on being the world’s AI centre of excellence was an added bonus.”
The country’s success in attracting US investment reaches well beyond the capital. Locations outside Dublin received more than half of all projects in 2022 (55%). These accounted for nearly 5,000 new jobs, with Cork, Galway and Limerick leading the chase after Dublin.
This long history of investment makes a significant impact on the Irish economy. More than 200,000 people are employed by 950 US companies in Ireland. This contributes €31bn to the economy through a payroll of €14bn, €9bn spent on goods and services, and €8bn on capital expenditure.
US investors remained committed to Northern Ireland during the pandemic
North of the border the US remains a strong supporter of the Northern Ireland economy. The US has been the largest investor in Northern Ireland, accounting for almost half of all projects (48%) in the last ten years, creating more than 12,700 jobs. To put this in perspective the third highest source of FDI into Northern Ireland was the Netherlands with 3% of all projects and 106 jobs since 2013.
Allstate is a great example of how US companies have thrived in the supportive environment. The company first invested in Belfast in 1998 and had 148 employees by 2000. Fast-forward to today and Allstate has grown in Northern Ireland to employ over 2,400 people across three locations.
While project numbers were lower in 2022 (14 projects were the lowest in the last five years) that still represents more than 1,000 new jobs in the region. This also follows an all-time high during the pandemic, when US investors account for nearly two-thirds of total investment (63% in 2020).
It is hoped that President Biden’s visit to Northern Ireland will help drum up more successful investment. Accompanying the President will be Joe Kennedy III, the US special envoy to Northern Ireland. Mr Kennedy is expected to stay in Northern Ireland for several days to fulfil his role of attracting US investment into Northern Ireland.
If the noises from the States are to be believed, then there is a good chance more investment could be on the way. At a recent British Irish Chamber of Commerce meeting in Washington, the main topic of conversation was reported to be ‘investment, investment, investment.’
Ireland is less exposed to rising protectionism in the US
The Inflation Reduction Act, a $400 billion incentives package for clean energy has been slated in Europe for creating an unfair playing field for US-based manufacturing. While the overall impact will take time to work through the FDI system, the most likely outcome will be to extend the current trend of many US manufacturers staying at home.
In 2022 outward FDI from manufacturing sectors was just 22% of all US FDI, down from an average of 32% between 2013 and 2019.
Tech and Financial & Business Services on the other hand have continued to grow. In 2022 there were 2,400 projects in these sectors compared to a yearly average of 1,660 between 2013 and 2019.
Ireland has benefitted greatly from these dynamics with US investment in Software & IT projects increasing (the number of projects in 2022 was 30% above the pre-pandemic average), while the country has never been a significant destination for manufacturing sectors such as Automotive, Automotive, Consumer Products, Metals, and Textiles.
Of particular importance is expansion of companies that have already set up in Ireland. In the last three years alone, expansion from existing US investors has created over 6,000 jobs in the Software and IT sector alone.
Access to skills is at the forefront of this growth. When Dell Technologies’ subsidiary Vmware expanded its R&D centre last June with a promise of over 200 new jobs by 2025, the exceptional talent pool in Ireland was cited as the main reason.
At the same time, Irish strengths in Life Sciences have helped Ireland increase US investment in sectors such as Medical Devices and Biotechnology, while also maintaining pre-pandemic levels of US investment in Pharmaceuticals – a sector that has seen reduced FDI from the US.
US Tech is both a benefit and a danger
US Tech investment has been an Irish success story and a look at the largest US companies in Ireland reads like a who’s who of the technology eco-system. Apple, Amazon, Google, LinkedIn, Microsoft and Meta are all here, often operating a European HQ out of country.
The presence of these global tech players is also a major draw for others. As Kevin Fortuna, Founder of marketing technology company GeistM explained, they chose Ireland due to “the proximity to large advertising partners like Facebook and Google, the depth of talent on the sales, marketing and engineering sides, and access to the single currency European market.”
Tech employees in Ireland have also benefited from these major US investors. New research from the Central Bank of Ireland shows that the average weekly earnings for tech workers are well above the national average (€1,535 compared to €897).
But US Tech investment has also created a dependency that the Bank suggests may illustrate a wider structural vulnerability in the Irish economy to firm or sector specific downturns.
While recent layoffs (around 2,300 from multinationals such as Facebook, Microsoft, Twitter, Dell, and Hewlett Packard) are a small proportion of the total ICT workforce in Ireland, there remains uncertainty about the future. In particular, the Bank feels that any prolonged slowdown in the US Tech sector may have a significant impact on output, employment and tax revenue in Ireland.
What is the future of US investment in Ireland?
The sentiment of Corporate America towards Ireland remains strong, both from a business and cultural perspective. With an English-speaking workforce, well aligned business practices, and an investor friendly environment, Ireland remains a welcoming front door into the EU, while Northern Ireland offers hassle free dual access to EU and the UK.
There is no doubt that the Tech world has been spooked by the collapse of Silicon Valley Bank (SVB) last month and layoffs that have made the headlines around the globe. But we feel there are reasons for positivity among these bleak headlines.
The speed at which regulators stepped in to save SVB will provide funders with confidence in the overall stability of the system. While layoffs can be seen as a post-lockdown recalibration after a hiring frenzy to meet the demand of everyone locked at home and online – the tech industry had recruited more than one million workers during the pandemic.
In the eternally optimistic world of tech, these events can be the springboard for the next generation of innovation. Laid-off techies are the disruptors of the future, using their experience in the industry to develop new products and services.
These new innovators are the investors of the future and attracting this talent to Ireland could lay the foundations for years of expansion and job creation.
 IDA Ireland (2022) WorkFusion expands global footprint with new European headquarters in Dublin
 Financial Times (2023) O’Neill calls for US investment ahead of Biden trip to Northern Ireland
 IDA Ireland (2002) VMware boosts Irish presence with commitment to 200+ new hires by 2025 in Dublin
 IDA Ireland (2022) 241 jobs in 8 IDA Ireland high growth companies announced
 Central Bank of Ireland (2023) The Role of the ICT Services Sector in the Irish Economy
 The Economist (2022) Where have all the laid off tech workers gone