Speech by Mr Pat Breen, T.D. Minister of State for Trade, Employment, Business, EU Digital Single Market and Data Protection at the National Manufacturing Conference and exhibition
31st January, 2018
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Good morning, ladies and gentlemen
I am delighted to open this National Manufacturing conference this morning. Ireland’s manufacturing base, which includes both multinational and indigenous firms is a key pillar of Ireland’s economy in all regions. It supports significant levels of employment and contributes to economic development – both nationally and in the regions. Manufacturing businesses contribute about 25% of GDP and employ over 440,000 people, directly and indirectly. The performance of Ireland’s manufacturing sector, therefore, is key to our continued economic success.
I am acutely aware that manufacturing as we know it is going through significant change and this is a time of challenge as well as opportunity.
Having experienced significant job losses in the early part of the recession, employment in manufacturing has increased by over 35,000 over the last five years. This growth has occurred in all sectors, from engineering and ICT, to medical devices and pharmaceuticals, food & beverages and consumer & environmental goods.
Let me assure you that my Department, and its agencies, will continue to support the growth of the existing manufacturing base and to better position Ireland to win new investments in manufacturing into the future. This will have a particular focus on driving Ireland’s investment in innovation and its skills capabilities.
These days, not only will your businesses be impacted by Brexit, but also by the advances in disruptive technologies and digitisation that are occurring at such a rapid rate. Companies’ capacity to innovate and respond to these changes will ultimately determine their future.
It may be challenging – but there are also some real opportunities. Firstly, let me say how heartened I am by the successes of recent years in the Irish manufacturing sector.
Let’s look at some of the highlights:
Here in Ireland we have 9 of the top 10 pharma companies; 8 out of ten of the leading global automation companies, and as many as 18 of the top Medical Technologies companies.
Half of our med tech companies are Irish-owned.
We have a highly developed entrepreneurial culture and a range of technology-rich Irish companies that have expanded their reach throughout the world.
Our investments in R&D in areas that support manufacturing activities have helped Ireland to become 2nd in world rankings for research in nanotechnologies, immunology, and animal and dairy; and 3rd in the world for materials science – this is no mean feat for a country of our size.
But I want to see even more of our Irish SMEs helping to drive Ireland’s economic growth over the coming decade – and we are starting from a solid base. Indigenous Enterprise is crucial to the economy, with Irish-owned enterprises accounting for over 90% of businesses in Ireland.
The Manufacturing Digital Revolution
As Minister for Digital and Data, I am acutely aware of the importance of the digital revolution for manufacturing in Ireland. The emergence of a new wave of advanced ICT technologies is driving a radical transformation in the sector.
As you will be aware, digitisation of manufacturing is a phenomenon that is happening now, and it is reshaping the global economy. Little wonder that is referred to as the 4th industrial revolution. For Ireland to remain globally competitive, it is imperative for Ireland’s manufacturing base to develop knowledge and capability in digital transformation.
Government Response
My Department recognises the importance of the digital transition in manufacturing, and following extensive engagement with the manufacturing sector, is developing its policies to support the transformation. I can assure you that the agencies of my Department are well positioned to help.
My Department is already investing heavily in Manufacturing Research and Innovation, through Science Foundation Ireland, Enterprise Ireland and IDA Ireland. In the last 12 months alone, we have seen two new SFI Research Centres established with a specific manufacturing focus.
The SFI CONFIRM Centre will focus on smart manufacturing involving convergence of IT and industrial automation systems.; while the SFI’s I-FORM Centre will concentrate on additive manufacturing.
Last year also saw the official launch of the Enterprise Ireland/IDA Ireland Irish Manufacturing Research (IMR) Technology Centre. IMR is a one-stop-shop where manufacturing companies - both multinational and indigenous - can collaborate to solve big manufacturing challenges in partnership with the researchers in Ireland and the EU.
Separately, under my Department’s Regional Enterprise Development Fund allocations which were announced at the end of last year, we have made a further investment in the Irish Manufacturing Research Centre, in Mullingar, to ensure we can stay at the forefront of new 3D and additive manufacturing innovation.
These investments by the State build on an existing ecosystem of research and development supports including the SFI CURAM Centre, in the area of medical device manufacturing, and the Insight Centre which is focused on data analytics for use in smart manufacturing.
Through Enterprise Ireland, we have also made significant early investments in the manufacturing technology area including the Dairy Processing Technology Centre; and the Pharmaceutical Manufacturing Technology Centre as well as a number of engineering and manufacturing-focused technology gateways. And more is planned
My Department together with its enterprise agencies has been progressing proposals for the establishment of the Advanced Manufacturing Centre to include training, technology acceleration and adoption and services delivery.
Our overall objective is to support the transition both of multinationals and indigenous companies in the manufacturing sector into high value manufacturing and to embed SMEs in the national and international supply chains of companies. This is a key pillar of the Government’s “Innovation 2020” strategy.
Skills
We also know that your skills needs are changing as digitisation becomes embedded in activities across all of your operations. The Regional Skills Fora, which have been established in all regions in Ireland, play a key role in ensuring that the skills needed by enterprises are being delivered through HEIs, apprenticeships and traineeships. We welcome enterprise engagement in this dialogue.
In relation to skills planning and requirements at firm level, the Department of Education and Skills is also actively supporting the transformation needed. For example, “Skills for Growth” is a new company-level skills assessment programme that assists employers in helping them to address skills needs in their organisations.
Brexit
But, of course, no discussion on the future of Irish enterprise would be complete without discussing Brexit which, as we all know, is the most significant challenge facing Irish enterprise in over 50 years.
It will involve long term, structural and disruptive change that will have a significant impact on how business in Ireland is conducted in the years ahead.
We have already seen the impact of Brexit in terms of currency – the drop in value of sterling has impacted on profit margins and the value of our exports to the UK. However, the impact of Brexit goes well beyond currency alone.
The Government is intensifying its focus on the economic implications of Brexit, including on domestic policy measures that:
- reinforce the competitiveness of the Irish economy,
- strengthen our capacity to deal with potential negative impacts of Brexit,
- and help to pursue all possible opportunities that might arise.
The range of activities by my Department and its agencies to support the broader enterprise sector has been clearly set out in the publication titled “Building Stronger Business: Responding to Brexit by competing, innovating and trading”. I would encourage you all examine this publication which is available on my Department’s website.
Beyond this, my Department continues to engage extensively with business to understand the implications of Brexit and the supports that businesses need.
The needs that have been identified through this engagement have informed the discussions between my Department and other key cross-governmental bodies including the Department of Finance, Enterprise Ireland, the Strategic Banking Corporation of Ireland and the Department of Agriculture, Food and the Marine towards the development of required supports.
But regardless of whether Brexit represents a challenge or an opportunity for your company, as a first step, I strongly encourage you, at company level, to ensure you have prepared and planned for Brexit.
While the Government is leaving no stone unturned in its efforts to respond to Brexit, it is critical also for companies themselves to consider their business operations and to ask some key questions. For example:
- Do you know and understand your supply chain and what risks you might face if your supplier sees the UK and Ireland as one end market?
- Are you focused on improving competitiveness – on knowing your break-even point for each product?
- Are you taking steps to diversify export markets and reduce risk exposure?
- Have you identified opportunities to supply into the existing multi-national base here, and replace their UK suppliers?
For those who may not yet have begun their Brexit planning, I would urge you, as a first step, to visit our website prepareforbrexit.ie where you can get relevant tools and information needed for contingency planning.
And there is an apparent need for companies to be more Brexit-ready.
A Behaviour and Attitudes survey which was conducted last autumn for my Department, found that 75% of SMEs expect to be impacted by Brexit over the next 18 months. However, less than one-fifth of those SMEs had a formal Brexit contingency plan. The survey also revealed that Brexit is discouraging SMEs from investing in their businesses.
In response to these challenges, my Department is continuing to tailor solutions to support companies at different stages of development who face Brexit challenges.
Just last week Minister Humphreys, along with Minister Donohue and Minister Creed, signed the formal agreement of the €300 million Brexit Loan Scheme with the European Investment Bank Group and the Strategic Banking Corporation of Ireland.
This Scheme will be open to eligible businesses with less than 500 employees from the end of March 2018.
This Scheme will provide support and encouragement to businesses to face the challenges and to apply new and innovative business and marketing strategies.
For longer term solutions, my Department is currently exploring the possibility of offering a development loan scheme to help businesses invest over a longer period of time.
Finally, my Department is also exploring the creation of a Business Advisory Hub to help businesses make informed financial decisions. This would build on existing supports available from bodies such as Enterprise Ireland and Local Enterprise Offices.
In addition, we are taking action to drive firm-level innovation. We are targeting R&D funding through our agencies to support innovation in new products and processes which firms need to compete and grow. And we are investing in the pipeline of the next generation of innovators through a new postgraduate researcher programme worth €7.5 million.
Brexit Negotiations
In relation to the forthcoming negotiations, we know the best mitigation is effective negotiation. Therefore, my Department is working across government to ensure we get the best outcome possible for enterprise from Brexit negotiations. The Department is leading a range of Brexit research projects which will provide an extensive evidence base and valuable analysis to inform and guide Ireland’s position within the EU-27.
Our response to the UK decision to leave the EU has been evolving significantly over the last year and more. Our response will continue to evolve in the months and years ahead as the future relationship between the UK and the EU becomes clearer.
Of course, it is in the interest of everyone that a future relationship agreement is concluded as quickly as possible after the UK leaves the EU to provide certainty sooner rather than later.
Conclusion
In conclusion, I want to wish you all continued success in driving and delivering on an ambitious agenda for manufacturing in Ireland.
Ireland is a leading player in Manufacturing, and I and my Department are ambitious for manufacturing for the future. We are determined Ireland will continue at the forefront of manufacturing innovation, providing rewarding and quality employment in all regions. The manufacturing sector has demonstrated its resilience and adaptability over the last decade and continued to grow strongly, and as we face the challenges and opportunities of the digital revolution in manufacturing and of Brexit and intense international competition for investment, I have every confidence that, working together, we can continue to succeed in international markets.
Thank you.