Yes we can get the country working -- if we pull together
Published 22/01/2012 | 05:00
Continuing our series where business leaders suggest ways of kick-starting the economy, Alf Smiddy says the number-one priority must be the creation of jobs, over a range of areas
I recently took a Ryanair flight from Faranfore to London to visit my 18-year-old son who, two months earlier, had gone to England to find work and experience a new city and culture.
As I made the journey, I was amazed to see so many young people heading away in search of work. There was a real sense of foreboding about things in Ireland and many of these people were leveraging old contacts in London from emigration in the Seventies and Eighties.
I was also taken aback to see that all the Ryanair staff were from Eastern Europe and wondered why Irish people were seemingly being bypassed for jobs in an Irish company -- one of the most successful airlines in Europe.
My thoughts went from there to 1983, when I graduated from UCC and fortunately began a career with PricewaterhouseCoopers that lasted until 1988, at which time I secured a job in the Irish brewing industry in a subsidiary of Australia's Fosters Brewing Group. Sadly, most of my graduate peers in 1983 had no option but to head for the airports in search of work.
Indeed, the Economist published an article in January 1988, which described Ireland as "a poor struggling economy" and a heavily indebted "banana republic". Unemployment was at 18.5 per cent and the top rate of tax was at 65 per cent.
Cork was described as a "run-down" and "economically devastated" city, from which thousands had to emigrate. Two of the biggest factories in the country, Dunlop and Ford, located in the heart of Cork city, folded in 1984 with the loss of thousands of jobs.
In the 15 years that followed, the country managed to get things back on track, albeit with many of the foundations built on sand. It is appalling that in the space of a few years we've gone from full employment to about 15 per cent on the Live Register.
About 70,000 Irish people are forced to leave our shores annually. That is considerably more than the total number doing the Leaving Certificate each year. The number one priority in Ireland has to be to fix the jobs crisis. Job creation has to be put centre stage and my five-point plan to create jobs is:
Our enterprise agencies need to have a more direct conversation on job creation with each multinational and large employer. There is huge potential, including:
Most of the larger companies have moved to global procurement, bypassing Irish SMEs for all types of goods and services. This is crazy. We need to fix this because by doing so jobs can be restored fast. By all means think global, but the priority has got to be for these companies to act local.
Import substitution creates opportunities for significant job creation. As an example, take the Irish drinks industry -- every bottle and can of beer sold in this country is produced overseas. That makes no sense.
Like Ryanair, we need to find out why the Irish seem to be losing out in the jobs market in many of our multinationals and multiple grocer retailers. This is also true of our hospitality and general retail sectors. This is worthy of a big debate, especially when we are so often told that the Irish education system is second to none.
The new engine of jobs growth In Ireland has to be through the 250,000 SMEs. Imagine if we could get every SME to recruit just one person -- that would bring the unemployment rate back to about 6 per cent.
I know first-hand how many sectors are seriously reinventing themselves and looking to export markets for new growth. As an example, a highly vibrant software sector is developing in Ireland.
It's all about mindset and we could easily develop our very own 'Silicon Valley' and rapidly create a European, if not global, powerhouse for technology entrepreneurship and jobs.
We have to become much more energised about securing a greater share of the international tourism market.
In 2011, two major events took place (the visits of the Queen and President Obama) which were huge catalysts for the resurgence of our hospitality industry, an industry that has done much to reinvent itself in recent years. The result is that tourism increased by 7 per cent in 2011.
Often, initiatives like these are staring us in the face and with a bit of imagination and creativity on marketing the Irish brand overseas, Ireland should be well able to strengthen its entire tourism industry. We should target similar high-profile events in 2012 and beyond.
Revenue from tourism is fresh money coming into the economy, which will inevitably drive growth and jobs.
There is also too much confusion about the roles of Tourism Ireland and Failte Ireland. We should take the very best of both and create a single, focused, dynamic agency to spearhead the transformation of the entire tourism sector in Ireland.
The focus from our enterprise bodies over recent years seems to have been rigidly on high-value sectors.
As a consequence, we became uncompetitive and regrettably I feel that we also turned our back on SME manufacturing as we had once known it.
We actually need a broad base of manufacturing activity across all sectors to compete in the global economy.
We must find ways of rekindling manufacturing in Ireland, substituting home-produced products for imports and targeting specific sectors for export.
We need a major drive, focus and also co-ordination from the network of offices of Enterprise Ireland, the IDA, and Irish embassies to actively engage with Irish manufacturers and unlock their potential all over the globe.
A new corporation tax rate of 6 per cent for manufacturing companies should be introduced, to be offset, if necessary, by increasing the general rate to 15 per cent.
The agri sector has successfully managed to reinvent itself and enjoys a new confidence that seems almost unstoppable.
Ireland has a natural competitive advantage in the agri-food sector and we are only scratching at the surface.
We are well placed to compete for a much larger share of this market globally, be it in commodities or products for supermarket shelves.
As an example, Ireland is the largest exporter of beef in Europe and this can surely be extended to a much wider range of products.
A focus on innovation and new product development would help displace many imports.
By getting the pricing and branding right and with a proper marketing campaign to buy Irish, we would be well placed to supply the multiple grocers in Ireland and across Europe and create huge numbers of jobs.
In conclusion, the future is not about trying to invent a new economic model -- it is more about going back to the model we had throughout the 1990s, prior to the worst excesses and lost competitiveness associated with the years of 2001-2007.
Confidence has to be restored and this calls for strong, inspiring leadership in both Government and business.
Leadership that inspires people also mobilises people and creates an energy, an enthusiasm and a confidence that can help overcome all our challenges.
Former Beamish & Crawford boss Alf Smiddy now runs his own consultancy and sits on a number of boards.
Sunday Indo Business