As the great re-opening gets underway, it’s a good time to take stock and build on past economic success

August 11, 2022

Irish industrial production data published on May 7th showed output up by 10% in Q1 2021 and by 22% on the year. This is unsurprising when we look at the modern manufacturing sector in the Irish economy, dominated as it is by multinational pharmaceutical companies, which saw output up 14.7% in Q1 and 29% on the year. Importantly, indigenous output was also up 0.5% on the quarter, and down 1.7% on the year, indicating fairly minimal disruption from the pandemic and perhaps benefitting from the pick-up in global manufacturing. It’s fair to say, then, that Ireland’s factories have held their own throughout the pandemic, enhancing the country’s reputation by keeping the global supply lines stocked and running smoothly, thanks to our strong, highly skilled, adaptive and dedicated workforce.

This data tells a tale of a modern manufacturing sector, central to Ireland’s economic success, and perhaps runs counter to the more traditional idea of industrial output that conjures up a vision of a low tech factory floor environment. The high tech manufacturing sector now has deep roots across every county, operating in modern facilities that are designed for the cutting edge technology needed in the advanced manufacturing process. And the careers that our people can experience in these environments are also a far cry from the old idea of factory work; high skilled, exciting careers delivering products and services that are tangible and valued by the global community. From advanced drug therapies and medical devices in the pharma sector to high quality food products in our world renowned food and agri sectors, our people operate to the highest manufacturing standards to meet the needs of the global community.

Last week, we took our first tentative steps out of one of the longest lockdowns imposed anywhere in the world. And, while our manufacturing sector continue to operate throughout the restrictions, it’s a good time to stand back and assess where we are with this important sector and look at what we need to do to nurture and grow our already strong global position.

Over many years, we have been developing strong clusters in life sciences, technology, food and drink. Our ecosystem has been highly supportive and adaptive, enabling ongoing FDI investment and transformation. But international competition for multi-national investment is aggressive and unrelenting, and this puts the onus on Ireland to remain highly vigilant, agile and visionary, and to invest in the future at all times.

A hard working, highly skilled and agile talent pool is often cited as the number one reason FDI will choose where to locate, and Ireland has an extremely strong reputation for its talented workforce. One thing we’ve learned from the pandemic is that we are even more adaptive and resilient than we thought, as we seamlessly and successfully pivoted our businesses in many ways in order to deal with the challenges of the various restrictions. In some ways, this has merely hastened change that was already coming, for example, in the retail sector which has been forced to pivot to the online environment in order to survive. Covid-19 has provided us with a taster of the kind of adaptations that will be required of us as technology accelerates the pace of change.

Navigating the disruption in 2020 and 2021 has required all of us to develop new skills, agility and resilience. The challenge, as we emerge from the restrictions, is to keep learning and developing new ways of doing business. Lifelong learning is critical to that, but Ireland, which already has a lower rate of lifelong learning participation than some of its peers, must now continue to boost investment in upskilling despite the uncertainties facing learning and training budgets. Ibec research indicates that over 35 per cent of businesses are seeking, as a priority, targeted supports for employee upskilling and retraining, to help them return their business to pre-crisis level of activity, which is an indication that business knows what is needed and is trying to respond.

We have for a long time recognised the importance of bridging the gap between education and industry to boost our talent pipeline and build stronger businesses. We can anticipate that the global war for talent and rapid changes in technology and consumer behaviour skills, will be greatly heightened as economies seek to adjust to the post pandemic world. This makes it more important and timely to focus on upskilling our people to compete for the high skilled jobs. An education system that is more closely aligned with business needs will have a better chance of turning out graduates who will be in demand. More collaboration between education and training programmes and industry are essential. We need to broaden our thinking around university degree programmes, seeking to develop the basic skills needed by graduates on entry to their chosen profession, but not necessarily viewing this as the completed educational journey, i.e. opening our minds to more on the job training, apprenticeships and other pathways to high skilled employment.

Ireland also has a couple of problem areas that urgently need attention. Some of these relate to the fundamental issues in our economy currently, for example, access to housing, broadband, road infrastructure, etc,; issues which require significant financial and policy input to solve. But some are particular to industry, for example, our cost of labour is high and this could prove to be a major drawback in the FDI decisions. We need to review where we can realistically and sensibly take cost out of the system for employers and employees and regain some cost competitiveness. Recognising that technology will continue to advance exponentially, with the power to fundamentally change the manufacturing processes on an almost constant basis, we need to understand more about how to ‘cross fertilise’ our skills and apply collaborative strengths to drive better innovation. And we need to focus on developing and enabling those who will lead the tech advancements, the Next Generation Leaders, so that Ireland continues to have a central role in building successful multi-national businesses.

As our people and our economy emerges from the lockdown, now is the time to plan for the future.

Sharon Higgins, Director, Member Services, Ibec