Getting the package right
Ireland is losing out on foreign direct investment (FDI) a new survey by National Irish Bank has revealed, as the economy becomes increasingly uncompetitive vis-a-vis competing jurisdictions.
But, while lobbyists are crying out for the Minister for Finance Brian Cowen to try and return some competitiveness to the Irish economy in his forthcoming Budget, it is important to remember that this is not the only factor in attracting foreign firms to set up in Ireland.
One sector which is booming right now is aviation finance, a sector whose presence in Ireland can largely be attributed to the emergence of Guinness Peat Aviation (GPA) as a world leader in the sector in the late 1980s. The company was led by the inimitable Tony Ryan, whose recent passing is marked in a reproduction of an article he first wrote for FINANCE back in August 1987. (See page 7)
In it, he urged national airlines to de-regulate and highlighted the importance of aviation finance in transforming the structure of civil aviation worldwide. Twenty years on, even Ireland’s flag carrier, Aer Lingus has privatised – or at least partly - and Ireland as a location for aviation finance is booming.
Despite GPA’s difficulties in the early 1990s when a failed flotation led to the firm being bought out, the aviation financing sector, buoyed by both the Shannon and IFSC 10 per cent taxation regimes, continued to flourish. Moreover, GPA provided a valuable training ground for Irish managers, and was known as the asset financing hothouse of its day.
Today, the aviation finance sector has probably never been more robust, with a flurry of new firms, including Genesis Lease, AWAS and Volito all recently making Ireland their home. And these new firms have serious plans for Ireland. Shannon-based Genesis was one of the world’s first aviation finance firms to go public, and was recently followed by Babcock & Brown’s aviation division’s similar entry on the stock markets. The GPA legacy is strong in both these firms, with Genesis’ chief commercial officer Cian Dooley, and B&B’s CEO Colm Barrington, both learning the ropes at GPA.
As reported on page 11, Genesis is now entering an expansion phase, and is looking to recruit a number of senior executives for its operations in the west, including a commercial vice president, a technical vice president, a treasury manager, and a finance manager.
However, while Ireland evidently provides an attractive environment for this business in light of the sheer number of players who continue to seek out an Irish home – AWAS actually re-located its corporate headquarters to Dublin from Seattle, home of Boeing in the US - competitiveness is also a key concern for this sector.
While much has already been made of Aer Lingus’ recent decision to pull its Heathrow route from Shannon airport, one business which hasn’t had much attention in this regard is the aviation finance sector. However, firms such as GPA’s successor, Shannon based GECAS, is one of the firms likely to lose the most from the decision. As in Tony Ryan’s time, executives at this firm, a subsidiary of General Electric, spend much of their working week jetting off to meet with clients all around the world – more often than not making their international connection via Heathrow.
Moreover, in a niche sector such as aviation finance attracting the right staff at the right price is of major importance. However, the Government’s decision in 2005 to abolish the remittance basis of taxation took away a significant recruitment incentive for firms in this sector.
So, while returning competitiveness to the Irish economy should be a key element of Cowen’s forthcoming Budget, it would not be wise to disregard the importance of other factors, such as connectivity and being able to attract senior management, in attracting FDI. |
