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State agency Enterprise Ireland says that in 2006, Irish assisted companies were responsible for exports with a value of €11.8 billion - equivalent to 13.3% of the value of total exports. There was a net increase in employment of 1,261 in Enterprise Ireland supported companies from a total of 86,000 jobs that were created in the Irish economy. Enterprise Ireland estimates that €5.2 billion of the total exports from Irish companies were to the UK - 44% of the total. As foreign-owned companies account for about 87% of total exports from Ireland, recognising the challenge faced by Irish companies in the export sector should be based on good data being available to policymakers. I spoke to the Central Statistics Office (CSO), Enterprise Ireland, IDA Ireland, Forfás, the national policy and advisory board for enterprise, trade, science, technology and innovation, and the Economic and Social Research Institute (ESRI), on the issue of trade statistics. I was specifically seeking a breakdown of trade with Asia-Pacific on a foreign-owned/Irish-owned company basis. The CSO said that it does not seek the company classification status of exporters. The issue of commercial confidentiality was mentioned as one issue that could pose a problem.
The ESRI said that its survey unit tries to get feedback from exporters on an annual basis for Forfás for purposes of estimating the company status breakdown. No regional breakdown is available. Enterprise Ireland informed me that it could not provide a breakdown of trade with Asia-Pacific even though it provides in its Annual Report, an estimate of exports of €654 million in 2006 to the Region from Irish-owned companies - equivalent to 9% of exports to Asia-Pacific in 2006. Foreign-owned Companies in Ireland and Supply Decisions Eoin O'Driscoll is Managing Director of Aderra and formerly a Senior Vice President with Lucent Technologies. In 2004, O'Driscoll chaired the Enterprise Strategy Review Group and is currently Chairman of Forfás.
In 2005, O'Driscoll told a conference that most of the products we manufacture, are designed elsewhere and the bulk of our exports, are marketed/sold by organisations outside Ireland.
Ministerial Spin The conflation of multinational firms' performance with that of Irish firms, provides ministers with useful fodder for spin. New Minister for Trade and Commerce, John McGuinness, T.D., expressed satisfaction with the trade statistics last month. "These figures represent a very good performance by Irish exporters in a difficult trading environment," McGuinness said. Depressingly, the same comment template that McGuinness' predecessor Michael Ahern TD, used several times in 2006, was recycled. "...a difficult trading environment" ? Just a day after the IMF confirmed global growth at the longest sustained level at an annual average of 5%, since the 1950's! The Minister said that he was also pleased to note that the Export performance to Asia was particularly heartening, with exports to China and Hong Kong up by 38% and to the Philippines surging ahead with a 106% increase. "Trade between Ireland and China is growing and there is significant growth also in other key emerging markets in Asia. This builds on our work in implementing our ‘Asia Strategy' to improve trade and related links with the major Asian economies" the Minister added. "Export performance to Asia was particularly heartening..." So exports by the likes of Intel, Pfizer and Microsoft builds on implementation of the Irish Government's Asia Strategy'!!!! Yes, indeed. What absolute rubbish! Irish policymakers don't even have the relevant data. Last year, Michael Ahern lauded the success of exports to Malaysia, which increased from €555m to €953m (+72%). This year, for the period Jan-April 2007, McGuinness' comments excluded some relevant facts: Goods to Malaysia decreased from €244m to €166m (-32%), to Norway from €214m to €162m (-24%), to Italy from €1,168m to €1,033m (-12%) and to Japan from €670m to €616m (-8%). Exports to Belgium, our third biggest destination, jumped 14%. As for the 106% increase in trade with the Philippines as praised by Minister McGuinness, does he know that the site of the former US naval base north of Manila, at Subic Bay, is a major Asia-Pacific hub for FedEx, one of the world's biggest airfreight companies? So shipments from Irish-based multinationals to Subic, likely have ultimate destinations elsewhere in the Region. A curious aspect regarding Asia is that in 2006, exports to China/Hong Kong were valued at €1.5bn and to India, the Region's second economic powerhouse, were €154m - 16% of the value of exports to Malaysia - a country of 25m people. The foregoing illustrates how policymakers can make idiots of themselves when spinning trade statistics. Belgium for example is a transit point for exports for Irish-based multinationals. As to the disparity between India and China/Hong Kong, isn't it time to move beyond the blather in claiming credit for markets developed and serviced by multinational firms and address the facts? The story on spin and maybe delusion is not complete.
The Minister said "this strong performance in this region reflects our ongoing efforts to promote and grow our markets through our Asia Strategy." There we go again on the so-called Asia Strategy. Earlier in June, Martin told a conference in Cork, that Ireland’s export trade to China continues to boom powered by Irish companies that are world leaders in their respective industries. The Minister who is a former school teacher, may well have moved from spin to delusion. The self-delusion can set-in when an individual begins to believe his own spin, in particular where there is no countervailing point of view to restore a sense of reality. "Ireland’s knowledge –based economy, built on innovation and technology, is substantially shaped by the emergence of strong technology-led and export-focused Irish companies. Companies, which have become world leaders in their respective industries. Ireland, thus, has much to offer the Chinese market - and China recognises that fact," Martin told the conference. In a strict legal sense, the likes of Intel, Pfizer and Microsoft operate in Ireland as Irish companies but the blather about the emergence of strong technology-led and export-focused Irish companies...which have become world leaders in their respective industries, is dangerous pap. The spin and delusion are also contagious. Last February, business lobby group IBEC published a report and a four point plan on trade with Asia. There is no evidence from the report that the trade trends largely reflect exports that were made by multinational firms e.g: After Japan and China, the next most important Asian market for Irish exports is Singapore. The average value of Irish goods exported to Singapore per annum during the period 2003 – 2005 was €792 million, up 25.9% on average annual exports in the previous three years, with the result that Singapore now accounts for 12% of total Irish exports to the Asia region. This is quite an impressive performance, especially when one considers that Ireland currently exports more to Singapore than the vastly larger market of mainland China. In contrast, average annual export of Irish goods to Malaysia during the 2003 – 2005 period fell by over 40%, when compared to the previous three year period, to €531 million or just over 8% of total Irish goods exported to the region. Average annual exports to South Korea also fell substantially, by over 31%, to €547 million or 8.4% of total exports to the region. Average annual exports to India during the 2003 – 2005 period were down slightly (3.7%) to €112 million, less than 2% of the export of Irish goods to Asia. Given the size of the Indian market this can only be seen as disappointing but perhaps reflects the difficulties of trading in such an infrastructural underdeveloped market. Beyond Fantasy Ireland is more dependent today on the foreign-owned sector that it was at the dawn of the Celtic Tiger period in 1993. Top tech company Iona reported a loss last month in it second quarter and the main focus of investors is on commercial property. The Irish invested €3bn in overseas commercial property in H1 2007; €62.6m was invested in venture capital in Irish tech companies in same period Last Friday, Bank of Ireland Private Banking announced that it has invested €100m on behalf of its clients in a new US Infrastructure Private Equity deal - more than 50% of the total Venture Capital raised in 2006, for Irish business. We have a goal to become a world-class knowledge economy in six years and in the July 2, 2007 issue of the US magazine BusinessWeek, IDA Ireland had a four-page promotional spread selling Ireland as a location for R&D centres. There is nothing wrong with that but let us move beyond fantasy about Irish companies being world leaders in their respective industries. Most of our eggs will remain in the multinational sector basket as manufacturing in particular, will continue to move East. There was also a story on Israel in the July 2nd issue of BusinessWeek. The country has a population of 7.1m and has benefited from the development of a technology base through the crossover from R&D for military purposes and has more than 70 companies on the Nasdaq Stock Exchange. The last Irish company floatation on Nasdaq, was in 1999. BusinessWeek said: the country is sprouting global companies in real estate, chemicals, energy, and more. The (Tel Aviv) exchange has seen 46 initial public offerings so far this year, more than the total for all of 2006. Together, they have raised $2.4 billion, triple last year's total. "There has never been a better economic climate here for investment," says Stanley P. Gold, president of Shamrock Holdings Inc., a Los Angeles fund led by Roy E. Disney. Minister Martin should know that the real world class Irish companies that are operating in multiple markets are: CRH, Ryanair, Digicel and Independent News & Media. Research published by Bank of Ireland in December 2005, showed that only 3% of Irish SMEs are medium size with more than 50 employees. Overseas expansion and exporting are dependant on businesses growing to a medium sized enterprise, yet the research indicates that only 7% of Irish SMEs intended to expand abroad in the following twelve months. This contrasts sharply with the UK where medium enterprises, which employ 30% of the workforce, are the powerhouse of the economy. Looking beyond our our property-crazed market, there is a steep challenge ahead but delusion and spin is hardly the answer. RELATED Greencore's Irish operations become property play at time when Irish food industry is faltering © Copyright 2007 by Finfacts.com |
