Manufacturing firms highlight cost pressures as key risk factor

Manufacturing companies in Ireland have identified increased costs, supply chain issues and access to labour as the key challenges heading into 2022, according to the survey by employers' group Ibec.

The overwhelming majority of respondents (80-90 per cent) indicated that in the next six months, they expected increases in the cost of energy, raw materials and wage growth, a reflection of the current inflationary pressures in the Irish economy.

Problems

Two thirds also highlighted problems with transport and logistics costs and with attracting and retaining a quality workforce in the wake of the pandemic.

On the upside, they also reported “positive expectations” around export sales, productivity and growth in employment , which Ibec said reflected an overall increase in business confidence.

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The survey was conducted in October among a broad range and size of manufacturing companies operating in pharma, chemicals, med tech, food and drink, electronics and other sectors, both indigenous and multinational.

It was published for the launch of ‘Manufacturing in Ireland - Today, Tomorrow and Beyond’, a new Ibec report detailing the importance of the sector to the Irish economy and the key policies needed to promote growth.

The report finds that the sector here employs 260,000 and accounts for over 12 per cent of total employment. The sector is responsible for €12.5 billion in wages and employment taxes annually, €1.7 billion of tangible investment and 27 per cent, or over €3 billion, of corporation tax.

"We know the country's strength in manufacturing exports - 60 per cent of Ireland's final manufacturing exports are now part of global supply chains, one of the highest such ratios in the world and a hugely significant level of our employment is sustained by this global demand," said Sharon Higgins, Ibec's director of membership and sectors.

Challenges

“This comes from medtech, technology, pharma and many other product lines There are clear challenges ahead for manufacturing in Ireland, for example, this week alone, the focus of the entire world is on Cop26, seeking agreement on addressing climate change,” she said.

“We believe there is an urgent requirement for a national action plan to address competitiveness in manufacturing, and consolidate and grow our success on the world stage,” she said.

The report advocates improvements to tax regime issues such as research and development (R&D); support for the ongoing digital transformation; and support for measures to deepen the single market; and the retention of free access to the UK market.