22


Issue 5 2012


Ireland looks for answers as


economy struggles


Empty warehouses and industrial estates bear mute witness to an economy that is still struggling to free itself from recession. But the good news for the freight industry is that more Irish businesses see exports as key to their survival.


Can Big Pharma heal Ireland’s economy?


The economic signals from Ireland are ever more contradictory. There was an increase in manufacturing production


in July, and the


government’s tax take moved further ahead of target. Exports are flying ahead. The national deficit has halved in a year. Ireland continues to attract an


extraordinary level of foreign direct investment (FDI) from leading pharmaceutical companies. Allergan is investing €270 million in a new botox facility at Westport, the world’s only production site for the product. Eli Lilly is ploughing €330 million


into a new plant for cancer and diabetes drugs in Kinsale, Co Cork. Amgen has broken ground on a €150 million-plus expansion of its plant in Dun Laoghaire. Abbott is injecting €85 million into its operations in Sligo, while Mylan has pledged an annual investment of up to €76 million in its facilities in Dublin and Galway over the next five years. These projects and others


will create significant numbers of jobs over time, but with smaller businesses still failing, unemployment remains at a


stubborn 14%. The consequent reduction in consumer spending has leſt huge industrial and distribution parks south and west of Dublin, begun speculatively at the height of the boom, lying mostly vacant. Palletised transport company


Transland is thriving aſter moving out to Osberstown, Naas, in 2008 (see separate story), but its headquarters are surrounded by weed-covered lots. Some are labelled “sold”, but there is little sign of construction activity. The excess capacity in high


volume, low margin markets such as fast-moving consumer goods has seen storage charges fall to €1- 1.20 per sq ſt compared with €8-10 a few years ago, according to David Sadlier, sales and solutions director at Kuehne + Nagel Ireland. In contract logistics, 2-3% is now


seen as an acceptable margin but in the fourth year of the slump, companies are struggling to achieve even these levels. Sadlier quotes big names that are looking to exit long-term leases. “Contract logistics is going OK


for us, but we’re shying away from FMCG. People who have the space


are willing to take any contribution, or will offer warehousing for free in return a for distribution deal,” he says.


K+N Ireland generated revenues


of €110 million in 2011 and is targeting €120-130 million for this year, despite the pressure logistics providers are under. “In the last two or three years,


even successful companies in the pharmaceutical business have been looking at their supply chains and their cost base,” Sadlier says. While healthcare compliance


standards differ region by region, the trend globally is for products that were traditionally shipped at ambient temperature, in the 15-25° range, to go temperature- controlled at 2-8°. Temperature logging becomes critical, allowing


the importing


authority to see what happened in transit. This adds cost at a time when the expertise and knowledge base of logistics providers has moved up, Sadlier points out, making the market much more competitive. Ireland’s success with FDI is


thanks to its skilled personnel, management ability, IT


David Sadlier hopes Ireland can retain its management skills base


Sadlier says. Like other global forwarders, K+N is no longer just managing shipments into and out of Ireland, but planning and ensuring fulfilment of complete global supply chains from its Dublin HQ. However, the loss of jobs in


construction and retail has brought a return of emigration, with 500 to 750 people per week currently leaving Ireland. “We need to be careful not to lose


infrastructure and, perhaps most important, its retention of tax incentives. And it is not just in pharma, Sadlier says. Intel, Microsoſt and server


manufacturer EMC are reinforcing their Irish presence and agri-food manufacturers are moving from the commodity end of the market into added value. Danone, for example, is investing €20 million in its baby food plant in Wexford to meet growing demand from across Europe. Dairy exporters that once


dealt direct with the shipping lines are beginning to involve freight forwarders, especially where added-value products are concerned.


International Freight Forwarders • FCL/LCL - EU + Worldwide Services • Warehousing


• Road/Sea/Air/Breakbulk/Projects • Paperfree Trading • AEO Certified • Customs Brokers & EU Customs Compliance Specialists


Email: info@celticfwd.ie Web: www.celticfwd.ie Tel: 353-1-865 6000 Fax: 353-1-874 6745 Ofices - Dublin, Waterford, Drogheda


YOUR PARTNER IN IRELAND “We’re looking beyond Ireland


to lock in the rest of Europe and asking what additional services we can we wrap around your product,”


our higher skills,” cautions Sadlier – “though it’s not as if anywhere else in the world is a land of milk and honey right now.”


Kuehne + Nagel has logistics personnel embedded in a number of Irish pharmaceutical plants


///IRELAND


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