Home Truths on Irish Exports

[Cael]

Irish Economy: Home Truths on Irish Exports as Ireland faces a changed global economy in the decade ahead
By Michael Hennigan, Founder and Editor of Finfacts
May 4, 2009 - 7:00:36 AM


US multinationals were an overwhelmingly dominant factor in the export led take-off of the Irish economy from the early 1990's. However, after the end of the US high-tech boom, construction became Ireland's engine of growth. Irish full-time employment in manufacturing and internationally traded services fell 10,297 in the period 2000/2007 while the total workforce expanded by 605,000 in sectors such as construction, public services, distribution, retail and other services. During the period, annual venture capital investment in Irish business was less than €200 million while overseas Irish investment in commercial property exceeded €10 billion.

The day before the Taoiseach Brian Cowen had his St. Patrick's Day meeting with President Obama, Cowen announced: "This week, Enterprise Ireland client companies secured contracts worth more than €100 million."

The claim was economical with the truth or in simple terms, a lie.

State agency Enterprise Ireland has provided data, which shows that the orders comprising the €100m total, dated back as far as September 2008.

The misleading claim in Enterprise Ireland's press statement of March 16th, that "contracts worth €100 million were secured by Irish companies during Enterprise Ireland's trade mission of 92 Irish companies to New York and Washington," could be viewed as harmless blather but it's part of the spin, which claims that Ireland has one of the world's biggest software industries, while ignoring the reality that the Irish-owned high tech sector is on a respirator. Last year, Iona Technologies, the biggest home-grown software firm, was sold to an American firm of more recent vintage.

In June 2007, the then Minister for Enterprise, Trade and Employment Micheál Martin, told an international conference on China that Irish innovation in key sectors- information and telecommunications technologies, education and training, environmental and engineering, life sciences and medical devices, aviation, electronics, industrial machinery and food and drinks products- have resulted in steadily increasing sales to China.

"Ireland’s knowledge-based economy, built on innovation and technology, is substantially shaped by the emergence of strong technology-led and export-focused Irish companies. Companies, which have become world leaders in their respective industries," said Martin.

He was talking about American companies such as Intel and Microsoft.

Enterprise Ireland has confirmed that exports by Irish-owned firms to China in 2007, were 6.7 per cent of total exports from Ireland to China.


Full text:

Irish Economy: Home Truths on Irish Exports as Ireland faces a changed global economy in the decade ahead

[HanleyS]

US multinationals were an overwhelmingly dominant factor in the export led take-off of the Irish economy from the early 1990's. However, after the end of the US high-tech boom, construction became Ireland's engine of growth.

I'm not so sure about this. While the Dot Bomb may have ended our run I don't think it was a significant driver of growth on the up cycle in the 90s.

[seabhcan]

Why is it better if a firm is "Irish Owned"?

Do we think that an Irish owned firm will stay in ireland longer than a US owned firm, if it makes business sense to move to a lower cost economy?

If Dell was an 'Irish company' do we think it would still be producing computers in Limerick, perhaps at a loss, just out of patriotism?

[HanleyS]

Why is it better if a firm is "Irish Owned"?

Do we think that an Irish owned firm will stay in ireland longer than a US owned firm, if it makes business sense to move to a lower cost economy?

If Dell was an 'Irish company' do we think it would still be producing computers in Limerick, perhaps at a loss, just out of patriotism?

There's plenty of reasons. Among them:
- The profits retained in Ireland would benefits the wider economy rather than just relying on basic wages.
- Headquarters would tend to have higher value jobs.
- Regardless of whether the main value creation activities are carried out in Ireland or not the profits will benefit Ireland and the Irish economy.

If there's no benefits in having indigenous exporters then why don't all countries just whore themselves out as outsourcing shops? We're better than that.

[bormotello]

US multinationals were an overwhelmingly dominant factor in the export led take-off of the Irish economy from the early 1990's. However, after the end of the US high-tech boom, construction became Ireland's engine of growth. Irish full-time employment in manufacturing and internationally traded services fell 10,297 in the period 2000/2007 while the total workforce expanded by 605,000 in sectors such as construction, public services, distribution, retail and other services. During the period, annual venture capital investment in Irish business was less than €200 million while overseas Irish investment in commercial property exceeded €10 billion.

i.e. everybody was borrowing in hope that exports will grow,
As result economy was growing only in non-manufacturing sectors,
People were selling and buying homes in hope that guys from export industries will buy those overpriced properties,
Retail sector was growing in hope that guys from export industries will buy overpriced furniture
Public services were growing in hope that guys from export industries will be delighted to pay for poor public services

[seabhcan]

There's plenty of reasons. Among them:
- The profits retained in Ireland would benefits the wider economy rather than just relying on basic wages.
- Headquarters would tend to have higher value jobs.
- Regardless of whether the main value creation activities are carried out in Ireland or not the profits will benefit Ireland and the Irish economy.

If there's no benefits in having indigenous exporters then why don't all countries just whore themselves out as outsourcing shops? We're better than that.

The profits go to the company's share holders. Most large companies have a wide range of shareholders in multiple countries. Dell may be registered in America, but plenty of Irish people, hedge funds managed in the IFSC and Irish pension funds are amoung its shareholders.

If its the corportate headquaters we want, why not campaign for US corporations to headquater here?

Only if all the company's shareholders are Irish residents would all the company's profits stay here.

Look at Nokia in Finland. Finish company, finish shareholders for the most part, yet everyone expects Nokia to move east at some point. Being a native company doesn't mean you stay native.

[Dios]

Being a native company doesn't mean you stay native.

Sorry now, domestic export based industries are the only way forward. For reference, take a look at the top ten exporters and compare and contrast with the size of their economies on a global scale. This bears no relationship to population, if it did Germany wouldn't be beating out countries 20 times its size. FDI is good as a stepping stone but spins off no real industries, and leaves no IP behind, case in point, Dell.

Domestic export based industries are one of the few methods that exist to bring money into an economy, along with FDI and tourism.

[seabhcan]

Sorry now, domestic export based industries are the only way forward. For reference, take a look at the top ten exporters and compare and contrast with the size of their economies on a global scale. This bears no relationship to population, if it did Germany wouldn't be beating out countries 20 times its size. FDI is good as a stepping stone but spins off no real industries, and leaves no IP behind, case in point, Dell.

Domestic export based industries are one of the few methods that exist to bring money into an economy, along with FDI and tourism.

You think Germany doens't worry about its 'domestic' industries offshoring?

My point is that both domestic and FDI industries move abroad if they see an advantage. Just because the industry is domestic doesn't mean we can forget about being competitive. And when domestic industries move they take their ip with them too.

[Dios]

You think Germany doens't worry about its 'domestic' industries offshoring?

Outsourcing has been slow to take off in Germany, stymied by the country's restrictive labor laws, language issues and the conservative nature of Germany's corporate culture. Its also a political hot potato at the moment, with widespread opposition to the practise among the population. Not to mention that if its "made in China" they lose the brand.

My point is that both domestic and FDI industries move abroad if they see an advantage. Just because the industry is domestic doesn't mean we can forget about being competitive.

Who said anything of the sort? Being competitive is key, but you have to pick your fights. Its unlikely that we'll ever beat the Chinese at textiles, since we can't use near slave labour rates, but I'd say we might give the Danish a run for their money on wind turbines over the course of a decade.

There are many reasons why companies choose to stay where they are, but if we can attract major multinationals to set up in this country, we shouldn't have much difficulty holding on to our own.

[Cael]

Native Irish private companies will never have the capital or expertese to succeed on the international market while our current economic structure remain in place. The figures of 10 billion spent on foreign property per annum, with only 200 million made available for Venture Capital should make clear to everyone where the problem lies. Irish land needs to be nationalised, so that it is no longer used as a mideval gold standard, and the state has to use this wealth to establish state companies like ESB that can trade successfully on the international market. The huge amounts spent on giving grants and tax breaks to foreign companies would also be much better spent on state companies. Nationalising the banks is also of the utmost importance. Many readers here will reject these proposals out of hand. But ask yourself if this rejection is not out of recieved ideas rather than a careful consideration of the facts, as they apply to Ireland.