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By Robin K. Cooper – Reporter, Albany Business Review
Feb 13, 2020, 12:45pm EST Updated Feb 14, 2020, 9:00am EST


 

Donal Byrne, founder of Big Red Barn Ltd. in Ireland, will decide in the next two months whether to open his first American factory in Saratoga County.

The manufacturer of modular homes, warehouses and music festival barns scouted potential sites and met with prospective steel and lumber suppliers last month during a tour of New York’s fastest-growing county.

His goal is to start production in the United States within the next 12 months.

“When it comes to Saratoga, everything at the moment ticks the boxes,” Byrne said. “What we are looking for is a partner to have some skin in the game. We want someone who knows America in relation to opening doors to steel, timber, labor, insurances and taxes so that we are not going to get lost in all of that.”

Byrne’s trip through Saratoga County came two days before Britain pulled out of the European Union, a move the County Mayo resident and hundreds of his fellow Irish executives fear will drive up costs and make it harder to do business in the United Kingdom.

The specter of shrinking margins for Irish companies, who at one time saw the United Kingdom as the fastest path to growth, is motivating Big Red Barn and other Irish businesses to turn their attention across the Atlantic to look for opportunities in the United States.

Irish foreign direct investments in U.S. manufacturing industry

Approximately 450 Irish companies and investors are interested in opening offices or factories in the United States over the next 12 to 36 months, according to Globaify, an organization that helps European companies pull together deals to do business in America.

Those companies want to create American affiliates or form joint ventures to sell everything from medical devices and medicine to modular homes, software and engineering services.

The pipeline of investments flowing across the Atlantic from Ireland has quadrupled during the years leading up to Britain’s exodus from the European Union, more commonly known as Brexit. Total foreign direct investments from Ireland into the United States increased from $55.8 billion in 2015 to $235.7 billion in 2018.

“We have never seen that kind of movement from Irish investors into the U.S.,” said Mary Daniels, chief executive of Globaify.

“The U.K. has always been our biggest trading partner,” Daniels said. “That changed when Brexit, the big B word, came along and Britain shut their doors. Certainly that was the allusion. The move out of the U.K. by Irish investors was slow and then in late 2018 that started to ramp up … Now, the U.S. is our No. 1 trading partner.”

Mary Daniels, chief executive of Globaify

Mary Daniels, chief executive of Globaify COURTESY OF MARY DANIELS

The transition bodes well for Saratoga County, where Saratoga Economic Development Corp. has spent the past 18 months building relationships with Daniels and Globaify, meeting dozens of Irish business executives with a goal of luring some of those companies and jobs to upstate New York.

The nonprofit economic development group, which helped convince GlobalFoundries to build a $15 billion computer chip plant in Saratoga County a decade ago, met with seven Irish companies last fall.

Then, SEDC’s leaders joined Daniels and Globaify in a meeting with Daniel Mulhall, Ireland’s ambassador to the United States, with a goal of putting Saratoga Springs on his radar as more Irish companies set up shop on American soil.

Now, SEDC and Globaify are preparing to bring executives from 25 Irish companies to Saratoga Springs for a four-day trade mission in July.

“It’s all about timing,” said SEDC president Dennis Brobston. “Saratoga County has a big opportunity and we are really starting to build momentum.”

Among the Irish companies that will look at Saratoga Springs as a potential home for their American affiliate are food producers that may only have enough money to hire one salesperson to a medical device company with 720 employees in Europe.

“Some may want to invest in three months, some will take longer,” Daniels said. “Some may initially want to open with two people on the ground. Others will want to go in and do 300 or 400 jobs.”

SEDC projects and job creation by year

Historically, when Irish companies wanted to do business in the U.S., they focused on Silicon Valley and Boston.

“That worked out for some,” Daniels said. “But it didn’t work out for a lot of them. To be frank, a lot of larger states had let them down. They overpromised … A lot of Irish businesses that came in and initially employed 30 people, with plans of scaling to 100 within the first year, were let down because they had been abandoned when they needed help trying to sort through the complexities of doing business in the United States.”

That is why Saratoga County and upstate New York are attracting the attention of a growing number of Irish businesses, she said.

Daniels first connected with SEDC vice president Tori Riley 18 months ago through LinkedIn after talking to Irish companies about challenges they were having in other U.S. markets.

“The conversations I was having with new investors in Ireland were around some of these horror stories about doing business in larger areas,” Daniels said. “Irish investors, more than any of our European counterparts, are relationship driven. They need those relationships when they come and invest. It wasn’t happening in the larger areas.”

That raised several questions for Daniels: What is Saratoga Springs really like? What does it have to offer? What is the mission of SEDC? What is the vision?

Daniels needed to figure out if there was compatibility between her Irish clients and Saratoga County.

“It was very obvious, very fast that there was,” she said. “I realized they were ambitious and very committed to their own economic development program. Dealing with lots of large partners over the years, I am afraid to say that doesn’t always exist.”

The prospect of Daniels and Globaify introducing Irish entrepreneurs to a portion of upstate New York also is a divergence from the way business has been done over the past decade.

“The state has got a bad rap a little bit because a lot of European companies went in and they were possibly encouraged to go a certain area or maybe they just all went to one particular area and they weren’t nurtured a little farther up the state,” Daniels said. “We have those problems in Ireland as well.”

That is why she reached out to SEDC to offer another option to Irish businesses.

Financially, the decision by Irish companies to invest in the U.S. over Britain also makes sense.

Corporate and sales tax rates in New York, for example, are much lower than the 51% of profits that Irish businesses end up paying when you combine all taxes on their operations in the U.K., Daniels said.

“When you add in potential tariffs after Brexit, there is absolutely no comparison,” she said.

BOCES instructor Jeff Rescott and Donal Byrne at the F. Donald Myers Education Center in Saratoga Springs.

BOCES instructor Jeff Rescott, left, and Donal Byrne at the F. Donald Myers Education Center in Saratoga Springs.

Those figures also are part of the math that drove Donal Byrne of Big Red Barn to shift his attention away from trying to grow his business in the U.K. and redirect his investments to the U.S.

While the amount of potential tariffs in Britain are not yet known, Byrne said, they are definitely going to sting.

And high transportation costs mean it is not an option to ship panelized modular homes from Ireland to the United States because it would add $10,000 to $12,000 to the cost of each home.

“There is no margin in it,” Byrne said.

Starting an American factory will solve that problem. That is another reason why he is searching for a 40,000-square-foot building with high ceilings and room for expansion.

But Saratoga County is not the only community competing for Byrne’s business.

Big Red Barn also is being courted by the Altantic coastal town of Warwick, Rhode Island, where Byrne has sold several dozen modular homes, the first of which will be delivered in April.

The company is just 6 years old, and has started off strong, growing revenue by 55% every year for the past four years

“We did all that from a tiny space in County Mayo in western Ireland,” Byrne said. “We feel it can blow up and be huge in America.”

Fastest-growing sources of foreign direct investments in the U.S.