Ambassador Kenny's Remarks

Straight talking puts Ireland’s goals in focus

A Supplement to The Irish Times: American 2005: A Special Report in association with the American Chamber of Commerce Ireland:

Friday, July 1, 2005

US Ambassador James C. Kenny talks to Deaglán de Bréadún, The Irish Times Foreign Affairs Correspondent.

US ambassadors are political appointees and not career civil servants who work their way up the ladder, as is the case in Ireland. Not for them the niceties of diplomatic nuance and the subtleties of language so beloved of the highly-trained mandarin.

James Kenny is a businessman and was previously executive vice-president of the family construction firm in Chicago, founded some 80 years ago by his grandfather, John J Kenny, a native of Swinford, Co Mayo.

The ambassador has a businessman’s perspective on our economic miracle, readily acknowledging the positive elements in Ireland’s economic climate but not slow either in drawing attention to what he sees as the less-enticing aspects.

It is a misconception, in the ambassador’s view, that our low corporate tax rate is the single most alluring attraction of this country for US firms: “In the 1950s Ireland had a zero corporate tax rate and that didn’t attract investment.”

Of course, he adds quickly, the 12.5 per cent tax rate is important, but it’s only one of the factors. “The English language plays a very important role: for Americans to be able to come over and feel comfortable in a country. That’s number one.”

Then there’s the level of education we have achieved. As Ambassador Kenny puts it: “The educated workforce that Ireland told America about became true.”

The result is that Irish managers have the skills and qualifications to run 98 per cent of the local branches of US firms investing here. Kenny regards this as “astonishing” and believes it is unparalleled in most other countries taking US investment.

The usual pattern is to send US managers over for a period, then train new ones back in the States to replace them: “But here it’s been interesting, where the American multinationals have felt very comfortable with operations being run by purely Irish native people.”

There are other factors we might not often think about, but they stand out when investors are choosing between Ireland and other, perhaps less-developed countries. The rule of law is one of these: “Having a courts system that’s very similar to the US is extremely important, one that you can go to and know you are going to get a fair hearing on whatever problem could arise.”

But another factor that is underplayed but which Kenny considers “monumental”
is the stability of the Irish political system. “The major political parties – Fianna Fail, Fine Gael – their economic policies are not that much different, so if either one was in power American multinational companies would not feel uncomfortable with that.”


He contrasts this with the situation in several countries of Eastern Europe which joined the EU last year. The ambassador believes these accession states will “get their act together” eventually but, in the meantime, the stability of Ireland’s political consensus and the comparative longevity of its governments clearly amount to a major plus in his opinion.

It’s a given, of course, that our EU membership is a big attraction to US investors and as the EU increases in size and the marketplace gets bigger, the desire to set up here grows accordingly. “Ireland is a great launching-pad for American companies to participate in the EU.”

But the ambassador has a few brickbats to go with the bouquets. In a previous interview he spoke of his shock at the cost of an everyday item like getting your suit cleaned, where he was charged three or four times the American price.

The latest survey ranks Dublin as the 13th most expensive city in the world, along with New York. The cost of living and doing business in Ireland is going up exponentially, which is of concern.

Housing is a major item and there is no point in contradicting Kenny’s statement that the price of real estate is very costly, particularly around Dublin. This factor has to be taken into account very seriously when companies want to move people to Ireland because it is a very difficult proposition for Americans.

As a former construction mogul, the ambassador believes it is probably time for a change of strategy. Instead of just going out you are going to have to go up, he says. In the major cities of New York, Los Angeles, Chicago, they discovered that had to be it. Noting plans for a 32-storey residential building opposite Heuston Station as well as moves in the Docklands area, he says, “You are going to have to be able to create an environment here in Dublin and in other cities where people can walk and hop on the Luas to get to work. That’s the type of city you want.”

So skyscrapers for Dublin then? “I would not say skyscrapers, but taller buildings to get more impact where the jobs are. The International Financial Services Centre, for example, employs many thousands, most of them young people who probably want to live in the general neighbourhood. I think the marketplace is starting to address it.”

He warns about the over-development of Dublin at the expense of the regions. ”For the benefit of the island the economic investment has to be spread around,” he says.

“You would want to spread this economic largesse around the country. It’s smart to do it. I know that the Government is trying to do this and it’s difficult, because a lot of Americans who will come here are multinational companies and they’ll see the buzz that’s going around Dublin and they’ll want to be here.”

Besides housing, another problem for expatriate US executives and professionals is getting their children into the schools that will give them the best education.

“There’s over 100,000 Americans living and working in Ireland now and they have difficulty getting their children into the schools, just like many of the other Irish people do too.” he says.

“I know a couple right now that’s turned around. They’re going home. They’ve been here about three years and they’ve been on a waiting list to get their kids in about four schools, and they couldn’t get into any of them.”

He’s worried about lack of investment in third-level education here. “The economy in Ireland is creating a lot of jobs. The figure I just got for 2004 was almost 72,000 jobs and you graduated 16,429 students from your seven major universities. Then you had 12,000 people on retirement that came out of the workforce. So as you can see you are short of employees.

“If the US multinationals that come here cannot fill the jobs, they will go somewhere else: Right now they will even look North across the Border because of the workforce up there that’s available and ready to go to work.

“So even with your low tax-rate, if they cannot fill the jobs they will move North or move East (to Eastern Europe). The solution is greater investment in third level, through tax incentives on the US model for commercial firms or private individuals to grant endowments. Ireland’s universities are at a critical crossroads.”

But the economic relationship between the US and Ireland is not a one-way street. “Ireland has invested, over the last decade or so, upwards of $25 billion and it’s growing every day. They (Irish-owned companies) employ over 70,000 people in America.

“The dairy processing firm Glanbia, for example, already has a cheese-plant in Idaho and now it is opening another one in Clovis, New Mexico. There’s a lot of real estate investment from Ireland going on in the US: Florida, Georgia, New York, Chicago, even Detroit,” he says.

He is very happy about a substantial increase in numbers of Irish students spending their summers in the US on J-1 visas. Kenny is also keen on promoting academic exchanges through programmes such as the Fulbright and Mitchell scholarships.

They are the potential future leaders of industry, universities and even politics. On Northern Ireland, the US position is one of watchful observation and engagement. We want to stay engaged and we’ll do anything we can to help the situation.”

In his office there is a colour photograph of the ambassador with George and Laura Bush, taken near the President’s ranch in Texas, and Kenny is solidly behind the Administration’s policy on Iraq.

“The President has stated that we are in this to get this done, where the Iraqi people can take care of their own security, and their own policemen can take care of their own police work, and we’re helping them to try and get to that day where they can do that.”

Now, almost two years in the job, James Kenny says the main cause of satisfaction so far has been the opportunity to talk and discuss issues and have a pertinent conversation where we are both listening to each other.