Inside the world of business
Sparing us from Greek tragedy
IF ANY confirmation was needed of what is keeping the Irish economy afloat, it was provided in yesterday’s survey of Ireland’s leading exporters, released by the Irish Exporters’ Association.
Put simply, without the presence of multinational pharmaceutical and technology companies here, the Irish economy would look a lot more like Greece.
International firms account for three-quarters of our exports, and just 20 firms make up 44 per cent of the total. With shipments of €8.5 billion last year, pharma giant Johnson Johnson is now our leading exporter, a spot only a few years ago occupied by computer maker Dell. The IT industry in Ireland has been undergoing a rapid change from a hardware base at the turn of the century to a service orientation now. Despite this, five of our 10 largest exporters are computer-related enterprises. Microsoft tops the chart with overseas sales of €8 billion, followed closely by its rival Google.
The bright spots for indigenous industry are in the agri-food sector with Kerry, Aryzta, the Irish Dairy Board and Glanbia. The good news for the wider economy is that these are much more labour-intensive undertakings than IT and the life sciences. It is also growing at an estimated 11 per cent in the first half of the year, and the exporters’ association estimates food and drink could account for 40 per cent of Irish exports within a decade.
Despite this, the reliance on overseas investors could be seen as an Achilles Heel of the Irish economy. It was certainly one of the reasons our 12.5 per cent corporation tax was so fiercely defended in recent negotiations in Europe.
But such a heavy dependence on a relatively small number of major multinational corporations is not unusual for small open economies such as ours.
Perhaps the most important facet of the survey is that investment by the multinationals in Ireland is increasing. Having averaged €9.7 billion in the 10 years to 2009, it has averaged €11.5 billion in the last two years.
John Whelan, chief executive of the association, attributes the increase to a falling cost base and changes to the tax system last year, which made such investments more attractive.
With little sign of the domestic economy bouncing back, our reliance on multinational exporters looks set to continue for the medium term. Fortunately their Irish subsidiaries seem to be largely in good health.
Down to business at the new Superquinn
AFTER MORE than a week of legal wranglings, some form of closure has now been brought to the Superquinn saga.
The decision by the directors of Superquinn to withdraw their petition for examinership has been widely welcomed by most stakeholders.
While the directors have insisted their surprise U-turn was a result of the announcement of a €10 million fund for suppliers, the question of whether the directors could have really put up a credible case for the company to be put into examinership remains unprobed and unanswered, as does the truth behind the widely divergent views of the directors as to what happened at the board meeting on Monday, July 18th.
While Musgrave is undoubtedly breathing a sigh of relief, attention will now turn to the task at hand. Mumbles about the parlous state of the Superquinn financial and business model, and Superquinn’s struggle to maintain its market share, mean that Musgrave could have a sizeable task ahead.
One of the main challenges will be its relationship with unions. Superquinn employees are widely believed by those in the industry to have some of the best terms and conditions, wages, and pensions in the sector. How Musgrave squares employee demands with an urgent need to prioritise the management of the business will be interesting.
Meanwhile, with the examinership bid dead in the water, Superquinn’s previous owners and directors – many of whom are heavily indebted through property commitments and some who have given personal guarantees in relation to their purchase of the supermarket chain – will be facing up to the personal fall-out from the receivership. Life after Superquinn might take some adjustment.
TODAY
The National Asset Management Agency (Nama) will publish its first annual report this morning.
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