ISSUE 1 2010

IRELANd

The bubble has burst - but wounded Celtic Tiger claws its way back

by Martin Roebuck

With a budget deficit of over 11% and current unemployment at 12%, more than three times its level during the boom years, the “Celtic Tiger” economy has fallen a long way. Ireland’s competitiveness has been eroded over a number of years “and we are now witnessing the inevitable correction,” says Cathal Sheridan at TwoWay- Aramex. The new commercial reality

has dampened the traditionally cheery Irish mood. A sizeable majority of private companies have seen pay cuts across the board, from shop floor to senior management. “We were all paying ourselves too much, and we didn’t realise it,” admits Peter Canning, MD of GSA International.

Multinational companies

continue to leave, while the domestic freight forwarding and haulage sectors have seen a number of casualties. Some contracts previously managed by Irish logistics providers have reverted back to the UK. Yet for global players

there are opportunities. Client migration to lower-cost economies has allowed TwoWay- Aramex to follow customers into new markets and in some cases to manage contracts even where the goods never touch Ireland. “From a group point of view, we aim to keep the business wherever it goes,” he says. “It is part of business life

that companies fail,” adds David Sadlier of Kuehne + Nagel. “In the last three years cash flow has

been king and you need a strong cash management process.” Firms that are stuck with

expensive property rentals, in a market where demand for space has shrunk, are negotiating for business at any price. There will always be cheaper rates out there, but customers need to take into account logistics providers’ infrastructure, longevity and financial stability as well as their ability to manage the full supply chain, Sadlier says. The Dollar’s strength against

the Euro has helped Ireland a little in the US-driven IT and pharmaceutical markets but the reverse side of the coin is that the Euro has been strong against the pound, penalising exports to the UK.

Whether they are supplying

industrial customers or dealing in consumer goods, companies serving the Irish market are unlikely to see much recovery before 2012, Sadlier believes. “But there are still positives.

Have no doubt that when equilibrium returns and the economy stabilises, Ireland’s strengths will show again. There are a lot of challenges ahead, but it’s not all doom and gloom.” Glenn Murphy, director of

the Irish Maritime Development Office, says an irony of the downturn is that the balance of trade actually improved last year. A 23% decline in the construction-dominated lo-lo sector tells its own story. Ireland is estimated to have a quarter of a million empty new houses, built during the property bubble.

Imports of materials for building and fitting them out dried up in mid-2008. “We’re over the worst now,

provided there are no more shocks to the global economy. But the growth path will be long and slow,” Murphy says. “The things that made us strong before the bubble burst are still there – the workforce, the road network, and foreign direct investment. The government hasn’t changed 12.5% corporation tax, which it views as sacrosanct. You have to look at the contribution of multinationals to our GDP. Make Ireland unattractive to them and the problems become even more severe.” Owen Cooke, chairman

of The Pallet Network, fears lagging economic factors. “It’s

mostly SMEs we handle through the network, not blue-chip companies. Bad debts can hit you at the end of a recession, when people have been hanging on by their fingertips. “We’re told there will be

GNP growth in the second half of the year, but I believe retail consumption will shrink significantly. We won’t see it recover for two years – and there will be no construction industry for 10 years. They’re talking about levelling the new housing estates, and there will be no major capital projects.” He concludes: “We have an

extremely tough macro-economic situation to deal with for the next four or five years. And the Germans are determined to kill off our FDI tax incentives.”

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Dublin gain is small ports’ loss

A number of shipping lines adjusted their port strategy in Ireland during the recession towards the back end of last year. “It has altered the dynamic of the market,” says Irish Maritime Development Office director Glenn Murphy. The main beneficiary was

Dublin, whether as a result of space becoming available during the downturn or simply because operators wanted to get closer to their customers. Waterford and Rosslare

both lost capacity through a new Cobelfret strategy last autumn, while Warrenpoint was briefly left with no lo-lo services at all until Cardiff Container Line began running there from late March.

Cobelfret transferred

its weekly ro-ro service out of Rotterdam and Zeebrugge from Rosslare to Dublin. A twice weekly con-ro service also linking Rotterdam, Zeebrugge and Dublin, on which Cobelfret is selling capacity to the container operator it part-

owns, C2C, was launched and C2C terminated its weekly service between Zeebrugge, Waterford and Warrenpoint. Brenda Daly at Dublin Port

Company says: “Cobelfret’s market is Dublin, but they had never really looked at us and we weren’t sure we could accommodate them.

Dock worked

around the clock to install new ramp

We put a ramp in at our Ocean Pier common user terminal. Cobelfret already had this in Europe. It was brought over by barge and we worked against the clock to cut it to size.” The operator uses a double-decker cassette type system that Daly says could carry 70,000 unaccompanied trailers a year. Overall volume through

Dublin was 26.5 million tonnes last year, down 10.5%. But Daly says the losses were mainly in the early part of the year, and

throughput stabilised from April 2009. Rail is coming seriously

back on to Ireland’s freight agenda for the first time in several years. A twice weekly service carrying cola concentrate from Ballina in Co Mayo to Dublin, introduced in August, promises to take 3,750 trucks a year off the road and could expand further. Rail track already comes

almost all the way to the quayside and the port is to build a new siding, eliminating the need for secondary handling. The reduction in passenger rail travel as Ireland’s road network has improved has ironically freed up track capacity for freight, Daly says.

Further port expansion

could be on the cards. For many years, Dublin port has been arguing the need to reclaim 21 hectares of land and extend further out into the harbour. A decision is expected by early May and new ro-ro and lo-lo facilities could be built in three years. Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36