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News : Irish Economy Last Updated: Jul 12, 2012 - 7:46 AM


Irish Economy 2012: IDA Ireland to present rosy outlook; Bruton in search of ideas on manufacturing strategy
By Finfacts Team
Jul 11, 2012 - 7:13 AM

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Dublin has been chosen to host Europe’s largest science conference, ESOF 2012 (Euroscience Open Forum), from 11-15 July, 2012. Minister Richard Bruton and Patrick Cunningham, chief scientific adviser, at a launch of stamps, Dublin, July 05, 2012.

Irish Economy 2012: IDA Ireland will hold a press briefing on Thursday to present its 2011 annual report, data on the first half of 2012 and an outlook for the second half. Richard Bruton, minister for jobs, enterprise and innovation, will be in attendance. A rosy scenario will inevitably be presented and on Tuesday Bruton revealed a more realistic situation when another external group was established to present ideas on jobs -- this time focusing on manufacturing strategy.

Last week Finfacts was the only news outlet to report on an annual report of a United Nations agency on foreign direct investment (FDI) flows in 2011. It showed a fall in Irish FDI inflows and being perceived as bad news, there were no press releases issued by the inward investment agency nor Bruton's department

Last month it was reported that the value of FDI by US firms in Ireland stood at $188bn at the end of 2011, an increase of just over $30bn on 2010. Ireland accounted for more than 8% of the total stock of US FDI in Europe. Reflecting the size of the IFSC, half of US FDI is accounted for by holding companies. IT and chemicals are the other dominant sectors.

Of course, data like this is taken at face value by most commentators when it is exaggerated as part of tax strategies.

Also last month, Minister Bruton reported that the IDA has recorded a net loss of 2,500 jobs a year between 2008 and 2011 as multinationals cut back during the recession.

However, it is not a recent problem.

Finfacts has repeatedly pointed out that there were ZERO net jobs added in the international tradeable goods and services sectors (foreign-owned and indigenous firms) in the bubble period  of 2000-2007.

In response to a parliamentary question from Sinn Féin’s Martin Ferris, Richard Bruton admitted that IDA-supported companies had lost 10,000 jobs between 2008 and 2011.

The IDA supported 34,579 new jobs between 2008 and 2011, but during the same period 44,650 jobs were lost in IDA client companies.

Bruton said the Government’s performance in attracting foreign direct investment had been robust since 2011, and he claimed 12,500 jobs will be created in 2012.

"IDA Ireland client companies created over 13,000 new jobs despite the current global economic situation and a strong increase in international competition. In accordance with the Government’s action plan for jobs, IDA Ireland is working to target another 144 new foreign direct investment projects in 2012, which will create 12,500 new jobs, with an associated 8,750 in the wider economy, giving a total impact of 21,250. Up to the end of May 2012, there have been 44 IDA announcements with in excess of 5,000 jobs," he said.

Permanent jobs in foreign-owned firms, and indigenous firms that export, are back to the 1999 level even though the workforce is 25% bigger.

In Ireland it is very rare to get an realistic/ honest assessment of the challenges.

So the 12,500 expected new jobs may include temporary workers and after job losses of the range 6,000-9000, the impact on unemployment will be negligible. Every new job counts but spinning and lying is contrary to the public interest.

SEE here for data on job creation and fantasy data that makes policy makers at times seem like believers in leprechauns.

On Tuesday, Bruton established a 'Manufacturing Development Forum, tasked with driving the development of the manufacturing sector which employs 230,000 people today. The Minister also articulated the clear commitment of the Government to the manufacturing sector, which he described as crucial to the economic future of the country.'

The enterprise department said: 'Employment in manufacturing has declined from levels of 299,600 in 1997 to 239,700 today, and -- as has been the case for many developed economies - - its contribution toward total employment has fallen (from 22% in 1997 to 13% in 2011). On a more positive note, the value of Ireland’s merchandise exports has almost doubled since 1997. However, the data doesn’t reflect the changing nature of activities within firms - - for example, many more firms are investing in Research, Development and Innovation, in productivity improvements and in reaching new markets. Although it is a very challenging and internationally competitive environment, there is considerable potential for the manufacturing sector in Ireland.'

As can be seen via the link above, if 2000 was taken as the benchmark year, merchandise exports were almost unchanged by 2010.

However, here we have a persistent example of spin when the performance of foreign-owned firms (boosted by profit-shifting and classifying wholesale trade as manufacturing) is conflated with that of indigenous firms.

Do we really want to know the truth?

Productivity improvements? Could that be due to the fact that the reported jump in output of foreign-owned chemical companies with no jobs added had nothing to do with productivity?

New markets? For indigenous firms? Foreign-owned firms?

Of course they don't know and wonder why another external body has been appointed to produce a list of proposals?

Check out our new subscription service, Finfacts Premium , at a low annual charge of €25 - - if you are a regular user of Finfacts, 50 euro cent a week is hardly a huge ask to support the service.

It's a simple fact that in the prevailing economic climate, the provision of high quality content cannot be sustained through advertising alone. 

Business executives who put a premium on time and value high quality information, should use our service.

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