Non-pay operating expenses increasing competitiveness challenges Engineering sector

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• Engineering Industries Ireland publishes its pre-budget submission
• Further action required to allow Irish engineering to scale and compete globally

 

Engineering Industries Ireland (EII), the Ibec group representing the engineering sector, has today published its annual pre-budget submission to the Government. The submission highlights that escalating non-pay operating expenses- such as energy tariffs, administrative compliance, and infrastructural planning bottlenecks—are increasingly acting as structural barriers to competitiveness. These challenges are also stifling decarbonisation progress and the overall growth of Irish engineering firms.

With 53% of engineering businesses rating their short-term outlook as average or poor, and only 21% expecting profitability to increase this year, EII’s pre-budget submission is calling for State intervention to address key barriers restricting capital investment.

 

Pauline O’Flanagan, Director of Engineering Industries Ireland, said:

“As we saw with the latest announcement from the United States Trade Representative (USTR), the trading environment continues to remain uncertain. Although our sector continues to perform and innovate despite market and supply chain volatility, business sentiment has cooled significantly.

Rising energy overheads, acute skill shortages, and complex compliance burdens are placing a direct squeeze on operational margins. Government must use Budget 2027 to deliver decisive, practical reforms, ensuring that Irish engineering can continue to invest, decarbonise, and compete globally.”

 

Noranne Stack, Managing Director of Enercon Windfarm and Chairperson of EII, said:

“The engineering sector features an impressive 11,906 enterprises, employs over 62,068 people, and contributes significantly to Ireland’s export performance with a net turnover of €28.9 billion and an output value of €22.5 billion. Our sector is at the cutting edge of innovation in Ireland, providing high-value work and opportunities during a period of incredible technological disruption. It is vital that we take action to ensure its continued viability and growth.”

The EII budget submission is built around the following four pillars:

• Competitiveness and Growth: High fixed energy bills and heavy administrative burdens are squeezing operating margins to breaking point. To protect local enterprise, the Government must lower fixed energy charges, launch a state-backed export credit insurance scheme to support growth abroad, and ensure all new regulations undergo strict industry consultation and competitiveness checks before becoming law.
• Talent and Capability: Engineering firms cannot grow without the right people, yet severe skill shortages continue to hold back production. We need to build a future-proof talent pipeline by unlocking the surplus in the National Training Fund, actively supporting more women into engineering careers, streamlining employment permits, and conducting an urgent review of future skill demands.
• Innovation and Digital Transformation: Staying ahead internationally requires Irish firms to lead in advanced technology, but adoption takes significant capital. To fast-track digital adoption and AI preparedness, the State should boost public research funding, modernise the R&D tax credit, introduce a new innovation credit, and facilitate better access to top research talent.
• Sustainability and Infrastructure: Engineering companies are eager to decarbonise, but high upfront costs and infrastructural delays threaten their long-term viability. We must protect critical infrastructure delivery while providing practical green supports, such as scaled-up decarbonisation grants and a super-accelerated capital allowance, so firms can affordably invest in clean-tech and energy efficiency.

 

ENDS