Manufacturing in Ireland is one of the high performing engines of the Irish economy with clusters of world class manufacturing operations in sectors such as biopharmaceuticals, engineering, medical technology, building materials, and food production.
Manufacturing continues to be a core engine of the Irish economy, adding over 20,000 direct jobs in 2024 to employ over 240,000 people. The sector's contribution grew significantly, generating €14.8 billion in wages, €3.35 billion in income taxes, and €224 billion in total goods exports, underpinning Ireland's public services and economic strength.
Ibec’s latest report, ‘Manufacturing in Ireland 2025 – Securing Competitiveness by Controlling Costs and Mastering AI’, reveals a strategic shift in response to a more volatile landscape. The report highlights how the sector is "controlling the controllables," in addition to highlighting manufacturing successes, its fundamental importance to our economy and presents the results of an October 2025 survey and recommendations to protect and grow the sector.
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Manufacturing Businesses Priorities for Government
This remains our most urgent, unaddressed challenge. Budget 2026 did not deliver the immediate cost mitigation, such as a PRSI rebate, that is essential to protect firms from the margin squeeze they are facing today.
We urge the Government to introduce a PRSI rebate for exposed companies, assess the impact of all labour market policy measures on employers under the SME test, and ensure new national and EU policies support global competitiveness while respecting Ireland’s voluntarist industrial relations model.
To counter global uncertainty and secure market access, reflecting that 59% see trade uncertainty as the top challenge, Government must renew commitment to openness to trade and investment.
We urge Government to advance an ambitious EU trade policy, safeguarding an open and competitive business environment to drive Irish and EU competitiveness in collaboration with key trading partners such as the US and the UK. Building on the political momentum generate by the Letta and Draghi reports, ensure that the new EU mandate delivers on the opportunities to develop the Single Market underpinned by fair competition and support for pro-growth policies of open Member State economies.
The budget funded the R&D for AI, but not the people
to implement it. To effectively bridge the gap between Ireland's funded AI ambitions (52% priority) and execution capability, and address talent concerns (49% challenge), we urge the Government to significantly invest dedicated funding for practical AI skills development through the high-leverage mechanisms of Skillnet Networks and other agile proven models such as Springboard+ and microcredentials.
Skillnet business networks are internationally recognised industry-led networks. They are significantly oversubscribed and currently constrained by a lack of matched public investment, causing millions of euros of committed private funding to be left on the table as capacity is exhausted. Increasing government matched funding, through the National Training Fund, (NTF) is the most efficient and effective way to unlock this private capital for skills development, urgently ensuring Ireland’s workforce is equipped for the future, particularly in AI upskilling.
Building on the revised strategy, we urge the State to adopt a co-ordinated, investment-led approach to secure Ireland’s digital future and competitive edge. The upcoming revised National Digital and AI Strategy must strongly reflect competitiveness needs and enable further access to the Digital and AI opportunity.
Specifically, policy and regulatory coherence that works with competitiveness is essential. Make or enable ‘complementary investments’ in our infrastructure, cybersecurity, research and innovation (R&I) and skills.
Leverage part of the National Training Fund (NTF) for research, digital and AI skills. Establish a national AI research nexus, providing compute credits and access to curated public datasets. Bolster AI adoption through the development of sectoral AI sandboxes to encourage AI-first ventures and create an ‘AI Technologies Innovation Fund (ATIF)’ to support businesses access AI solutions and expert advice.
We strongly welcome the 35% R&D Tax Credit, as it provides clear certainty and a vital signal that Ireland is committed to remaining a world-class, competitive location for R&D investment.
We urge the government to use the forthcoming R&D Compass to expand the qualifying expenditure definitions and reform outsourcing rules (for connected and unconnected parties) to reward innovation and IP creation where the value created benefits Ireland. Clarity is critical to ensuring claimant companies have the certainty they need.
The Irish government must adopt an active and interventionist role to secure a competitive net-zero economy addressing the cost barriers highlighted in this report. This requires a dual focus on strategy and cost mitigation.
Strategically, the government must communicate a clear net zero vision and implement an all-of-government masterplan to overcome the current policy gridlock and incoherence. The masterplan must be owned at a senior level with authority to direct resources and make difficult decisions. Crucially, the State must reduce Ireland’s high costs by replacing the PSO with a dedicated fund and introducing a strategic annual subvention to bridge the competitiveness gap.
Finally, the State must tackle the slow pace of infrastructure delivery by streamlining the permitting process and building public support to unlock the necessary private investment.
To reduce unnecessary burdens the government must commit to effectively monitor and work to substantially reduce the cumulative national and EU regulatory and compliance burden on business.
Put the better regulation agenda back at centre of Government and properly adequately resourcing regulatory bodies to provide certainty and predictability to manufacturers in decision making timelines.
Underpinning all growth: Government must streamline and adequately resource the planning and consents regime to enable delivery of world-class transport and utilities infrastructure.
Ensure critical infrastructure in energy, water, wastewater and other utilities is in place to help manufacturers invest in Ireland with certainty. Boost regional development by providing critical transport infrastructure in all of Ireland’s regions.
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Softening of sentiment While the sector remains resilient, overall optimism has declined significantly. The percentage of leaders rating the business environment as 'Good' or 'Very Good' dropped from 69% to 51% in 2025. This shift is characterized by a move toward a more neutral or "Average" outlook (surging to 43%), reflecting a pragmatic and cautious stance following a period of production front-loading in the early 2025. |
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Cost driven by wages and energy Cost inflation is a dominant concern, driven primarily by labour and energy with 81% of respondents expecting wage growth to increase. Expectations for rising energy costs have nearly doubled, with 64% of leaders anticipating an increase (up from 34% in 2024). These pressures are forcing a strategic recalibration, with many firms reducing expected capital investment and R&D expenditure to preserve capital. |
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Trade and profitability are top challenges Trade uncertainties have surged to become the top overall challenge for the sector, cited by 59% of businesses (up 30% last year). This concern is validated by data showing 77% of firms directly impacted by US tariffs anticipate a negative effect. Consequently, profitability expectations have dampened, with only 18% of leaders forecasting an increase, down from 37% in 2024. |
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Digitalisation and AI investment do drive competitiveness Despite cutting back in other areas, manufacturers are selectively investing in technology to protect margins with 64% of leaders plan to increase investment in digitalisation. AI is now a priority for 52% of businesses (up from 39%), with 97% of those companies adopting it specifically "to improve efficiency/productivity". AI is viewed as a "singular resilience investment" immune to the broader downturn in capital spending. |
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Strategic pause on sustainability focus Focus on sustainability measures has dropped significantly, with concerns declining from 37% in 2024 to 18% in 2025. This decrease is attributed to the "administrative burden" of new regulations like CSRD and the intense pressure of immediate operational costs. High energy costs are currently eclipsing the focus on green capital investments, making long-term sustainability projects less affordable in the short term. |
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Infrastructure and planning barriers intensify Challenges related to the Irish planning regulations are intensifying, rising from 25% (up from 21% in 2024). This lack of planning certainty exacerbates the housing crisis, which remains a major challenge for 48% of leaders as it directly impacts their ability to house employees. |
Representing all manufacturing sectors
Manufacturing in Ireland is a highly advanced sector spanning diverse industries including biopharmaceuticals, electronics, medical technology, and food production. Ibec is Ireland’s largest and most influential lobby and business representative group and has 39 trade associations that support, champion, advocate, provide great knowledge sharing, networking and training for all these industries.
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For more than 30 years, Ibec and its 39 trade associations have delivered results for key sectors of the Irish Economy. We support thousands of businesses of every size, spanning every sector of the economy.
Together with our 39 trade associations, we promote a positive business environment in Ireland by campaigning for evidence-based policies that are formulated in consultation with our members.
For any questions or enquiries, please call us on 01 605 1500 or
Executive Director, Membership & Sectors
