Donegal will recover from blows like yesterday's Hospira closure, but there needs to be a refocusing of national policies to address the needs of rural counties, writes Michael Tunney.
Yesterday's announcement by Hospira that it plans to close its plant in Donegal town with the loss of 560 jobs is yet another testament to the fact that it is increasingly difficult for businesses in developed countries to compete on the basis of cost with businesses in low cost, developing economies.
The company has cited the need to improve profitability "through cost savings and increased operational efficiency" as the reason for its decision. The products currently manufactured in Donegal will be made in Costa Rica and the Dominican Republic.
The issue for Donegal is whether this type of decision is as a result of local conditions, or is it a fact of life in the international business environment in which all large businesses operate? And if it is a fact of life, what can we do?
We in Donegal have experienced major setbacks since the initial job losses in Fruit of the Loom in 1998, culminating more recently with the closure of UNIFI in Letterkenny. The majority of the job losses and closures have been in the clothing and textile sectors. This had been anticipated as these were labour intensive industries in which operating costs were - and are - high in Ireland. Similar closures in these sectors have been experienced in other towns and counties throughout Ireland.
But the announcement at Hospira, a business in the pharmaceutical/medical sector, could be read as being of much more significance to Donegal.
IDA Ireland has been very successful in attracting new investment to this country and there have been very noticeable successes in Donegal since 1998 with companies such as Pramerica, PacifiCare and Seatem being established in the county.
But what does the future hold for Donegal and many other rural counties throughout the west of Ireland? Can we expect international mobile investment into the future? Can we speed the level of local investment and entrepreneurship?
Do we just wait and see what will happen and take what we are given?In Donegal we have been looking at this very question over the past 18 months. We believe that in spite of the difficulties over the past seven years, we have a positive future ahead.
Significant progress has been made on major infrastructural investments and developments. Many new businesses, both international and local, have been established, and new business sectors are growing. There has been significant investment in the Institute of Technology in Letterkenny and an expansion of its campus, courses and students.
Unemployment figures have declined since the initial Fruit of the Loom job losses and the retail, services, construction and tourism sectors have grown significantly in the past eight years.
We live in a county of unsurpassed natural beauty, we have a high quality environment, relatively low housing and living costs, no traffic congestion and a high level of local entrepreneurship.
The last factor cannot be underestimated. In my nine years back in my home county I have seen the level of enterprise and entrepreneurship, new business start-ups and business expansions grow beyond all expectations.
Yes, there have been a few local business failures but these have been few and we can expect some (the information which we in the enterprise board have would indicate failure levels of less than 15 per cent).
This is where our future lies with regard to economic development - small local businesses, owned and run by local owners and managers, with many of these assisted and grown by their managers to become exporters and international businesses.
The Global Entrepreneurship Monitor (GEM) Report of 2004 highlighted that only a small number of entrepreneurs saw themselves growing to employ more than 20 people and a similar small number saw themselves exporting - so there is a real challenge for businesses, agencies and Government. But we cannot afford to seek to promote and assist local enterprise by adopting and applying policies that limit public sector support to a very small and elite number of sectors and businesses, many of which have already received significant public sector assistance.
In Donegal we have approximately 9,300 businesses, with over 93.1 per cent employing fewer than 10 people and a further 5.7 per cent employing 10 to 50 persons.
Yet our national policies and resources are heavily weighted in favour of the 1.2 per cent of businesses which employ more than 50 people because they tend to have built up the resources and markets that enable them to access State assistance.
There needs to be a refocusing of our national policies so that the realities of rural counties such as Donegal can be realistically and meaningfully addressed.
In Donegal we will presently set about articulating the vision we want for Donegal - a vision that will, we hope, give us direction and a sense of purpose, and energise us to achieve what we set out to do. I believe that we in Donegal can achieve our vision.
We need flexible policies and real resources aimed at increasing the number of new business start-ups, increasing innovation and management capability in small and micro businesses, reducing operational costs and ensuring the highest level of infrastructure in the county.
The only other thing we need is time!
Michael Tunney is chief executive officer of Donegal County Enterprise Board and co-chairman of the economic development committee of Donegal County Development Board