|US chip giant Intel is Ireland's largest industrial employer and Dell Computer is Ireland's largest exporter. |
A strong euro and both rising domestic costs and competition from Chinese manufacturers resulted in flat manufacturing exports from Ireland in 2006, according to a report published today by the the Irish Exporters Association.
The review of 2006 said overall growth in manufacturing exports from Ireland was flat last year, although services exports rose by 15.6 per cent. The report also showed that Irish-owned exporters achieved an overseas sales rise of 10.2% last year to €11.8 billion.
Foreign-owned firms saw their exports increase by 5%. Foreign-owned merchandise exporters saw a drop of 1% in the value of export goods. Foreign-owned firms account for 91.54% of exports, compared with 87% in 2004.
There were good performances from particular sectors, including food and drink sales, which rose by with 8% and 14% respectively. Exports of C&C's Magners cider to the UK accounted for much of the rise in drink exports.
Exports to markets such as Germany, France and The Netherlands showed little or no growth and exports to the UK were flat. Exporters to Japan saw a 14% fall in the value of goods and exports to China fell 10%.
Exports to the 10 new EU States rose 12% and there was also a growth in exports to South Africa and the Middle East.
The key points of the Review are as follows:
- Goods Exports - €88.5 billion - unchanged on last year
- Services Exports - €53.3 billion - up 15.6% on last year
- Total Exports - €141.9 billion - up 5.5% on last year
- Foreign owned Companies - €130.0 billion Export Sales - up 5.0% on last year
- Irish Owned Companies - € 11.8 billion Export Sales - up 10.2% on last year
- Services Exporters now account for 37.6% of total exports.
The dramatic rise in services exporters, mainly from Dublin's International Financial Services Centre, continued in 2006 rising to €53.3 Billion compared to €4.4 Billion in 1995.
These figures for 2006 are expected to place Ireland as the 10th largest services exporter globally.
Major multinationals such as Microsoft, Oracle and more recently Google and E-Bay are driving the sector, but also there has been significant growth from the wide range of Irish owned smaller software companies, who grew exports by 13.3% in 2006.
John Whelan, CEO of the Irish Exporters Association stated at the launch of the review:
“Services exporters are thriving on the continued rapid growth in Global Trade which increasingly is driven by service related products such as software, financial derivatives, R&D, education and consultancy.
“However”, he warned “they are not immune to inflationary cost increases above their trading partner norms, or adverse exchange rate fluctuation. The increase in R&D actively in companies large and small is giving a very positive push to services exporting. But, he said, more is needed to be done to give tax incentives for specific services sector R&D.”
The sector is reaping the rewards of investing in new product development and aggressive marketing. However, he said, companies in the sector have made it clear they have an Energy Cost Crisis which must be tackled, if production out of Ireland is to be maintained.
The Pharma/Chem companies are now our largest exporting sector accounting for 48% of total merchandise exports. Exporters in the sector have put a strong emphasis in recent years on specific high grade logistics to meet the increasing regulatory burdens they face. Currently we have infrastructure gaps which must be addressed urgently to assist the sector in its continued growth in Ireland.
Companies in the sector have been most severely hit by low cost competition from Asia and Eastern Europe. However, it is still a very significant industry and must be supported with greater attention by Government to inflationary costs in energy, labour and logistics.
Exporters see 2007 as offering:
o The Energy Cost Crisis, with average 24% price in electricity and gas in the past year is unsustainable and will damage manufacturing exporters.
o Irish inflation is heading back up towards 4% whereas the European average is heading down to 2%, again exporters see this as unsustainable and will damage all exporters.
In conclusion, assuming oil prices remain at their current levels and the recent US economy slow down is not severe, the Irish Exporters Association forecast for 2007 is for a 1% fall in goods export sales to €88.0 billion and a 16% increase in service exports to €61.8 billion - a total export sales increase to €149.8 billion up 6% on 2006.