In recent years Ireland has appeared in the media as one of the major casualties of the global recession. During the boom years, unfortunately we reduced our emphasis on manufacturing and concentrated too much on the construction and banking sectors – both of which have suffered a tumultuous decline in fortune in recent years.

Ireland, however, is poised for recovery once the global recovery comes and the manufacturing sector can play a significant role this - not least due to its labour intensive nature and the potential impact this can have on unemployment – currently at a historic high level.

As a small open economy Ireland is heavily reliant on exports of which manufacturing still plays a massive part. Nearly 25% of Irish GDP is based on manufacturing, making it the highest in Europe and demonstrating how fundamental manufacturing is to the Irish economy. As a result Irish government policy strives to make Ireland a great place to do business through a combination of low corporation tax (12.5%), capital grants, R&D tax credits and so on. The impact of the recession has widened the fiscal deficit meaning investors can expect exceptional levels of support for new enterprises and expansions. This is no secret to many of the world’s leading corporations who have continued to invest heavily in Ireland over the last few years.

Despite the downturn in the global economy, manufacturing output in Ireland continues to grow and is now 12% above the 2005 baseline. Employing over 180,000 directly in 4,500 enterprises (and approximately 160,000 indirectly), the sector spends over €35 billion in the Irish economy and contributes  €64 billion to Irish Value Added in manufacturing annually. Indigenous and foreign companies, large and small, are involved in a range of capital intensive industries – food processing, engineering, electronics, chemicals, pharmaceutical, medical devices etc. – and many are located in various regions across the country outside of the main population centres, producing value-added products and services. The creation of specialised industrial clusters has been a particular success and many manufacturing companies have developed significant global service centres alongside their manufacturing arm.

There are many reasons for the success of the manufacturing sector in Ireland. These include global management skills, tax policy, languages, sub-supply capabilities, access to European markets, work ethic and productivity, business friendly environment etc.

The cost of doing business in Ireland has fallen since 2009 and by 2013 our labour costs will have fallen by 15% - compared to an average increase of 7% across Europe. The sector is recognised globally for its agility, flexibility, ingenuity, innovation and especially excellence in execution – delivering quality products on time.

Educational attainment within the economy is regarded as a key contributor to the success of the sector. Over 50% of the 30 – 34 age group have successfully completed University education (double that of some European countries) and Ireland is also ranked first in the 20 – 24 age cohort for educational attainment.

Productivity improvement has been a key element of success in the sector in recent years. Increasingly, companies are achieving increased operational excellence through the implementation of modern management techniques and the cooperation and participation of employees. Supports available to the industry for management development, training and up-skilling have been a significant contributor to these improvements.

Technological advances, innovation and an increase in more complex manufacturing techniques have led to higher quality and more sustainable jobs in the sector. This migration from high volume, low value-add jobs to more complex high value-add jobs (knowledge and skills intensive) has helped to grow the sector. This transformation is necessary to sustain a modern economy.

The contribution of state agencies like the Industrial Development Authority (IDA), Enterprise Ireland (EI) and others has been crucial to the success of the sector. Attracting foreign direct investment in the manufacturing high tech sector has been key element of industrial strategy and supports available to the indigenous sector has helped them become more competitive.

The Irish Centre for Business Excellence (ICBE) – a non- profit enterprise led self-help network - disseminates best practice, innovative insights and organisational excellence among its members. This knowledge sharing network is tacit knowledge dissemination in practice. Its activities include international conferences, study trips abroad, training, education & development and a unique ‘call for support’ process.

The Irish Centre for Manufacturing Research (ICMR) is a consortium of leading Irish manufacturers collaborating with the University sector to conduct embedded research and innovation. The enterprise led research agenda is designed to deliver breakthrough solutions required to maintain competitiveness.

Conclusion

The success of the Irish manufacturing sector is built on a dynamic layer of inter-related forces and interests. Central to this success is the flexibility and innovation of its young well educated workforce. Allied to this is a web of formal and informal networks and support structures that are committed to keeping Ireland at the forefront of international manufacturing developments. Ireland has strong University based basic research centres focussed on manufacturing challenges and the factory of the future. A supportive political and fiscal environment is hugely significant to the future development of the manufacturing sector in Ireland.

Patrick O Connor.

Chief Executive

Irish Centre for Business Excellence