IRELAND\\\


Irish Exporters Association chief executive John Whelan has lambasted the EU for its failure to resolve the Eurozone crisis. He says it is creating uncertainty among businesses and consumers not only in Europe but also in the two largest global economies of the US and China. In its newly-published Half Year


Review for 2012, IEA is forecasting a 3% contraction in merchandise exports for 2012, with a return to growth of 2% by value in 2013. The manufacturing sector will continue to be massively outpaced by services exports, which the IEA predicts will grow at 14% this year and 8% next. “The impact on Irish


merchandise exports is extensive, with exports to the Eurozone contracting by 5% in the first six months of the year, effectively derailing the recovery of the many indigenous manufacturing exporters to the region.” The report also highlights the


opportunities being missed in the BRICS economies (Brazil, Russia, India, China and South Africa), to which exports also fell by 5% in the first half, and calls for more urgency from the government. “The Partial Credit Loan


guarantee scheme agreed last year as a necessary support mechanism to help 1,600 medium-sized businesses expand in these higher- risk markets has not yet been rolled out to industry,” Whelan said. The agri-food sector, largely


made up of indigenous companies rather than inward investors, is strongly represented in the IEA’s listing of Ireland’s top 250 exporters. Producers of traditionally commodity-priced foodstuffs, including Kerry and Glanbia, are adding value by focusing on health and nutritional trends. Kerry is reformulating products to meet demand for reduced fat, salt and sugar to reduce cost by substituting expensive ingredients and to replace artificial ingredients with more “natural” ones. Glanbia has seen strong sales


growth in its nutritionals business, which produces foods that are high in vitamins and minerals, but has done little of this manufacturing at home in Ireland until now. That is changing with its €20 million investment in a production line for high-protein whey, most of which will be exported to Europe, that comes on stream later this year. Asia, the Middle East and


Africa are also set to increase their consumption of Irish dairy products, benefiting two other names in the top 15, Irish Dairy Board and Lakeland Dairies, as well as Glanbia. Staple foodstuffs remain vitally


important alongside higher value niche products. Ireland is campaigning hard to get itself recognised as a reliable and keenly priced supplier. “Governments in consumer markets tend to control where supplies come from, so you have to have good relationships,” Whelan says. Egypt has been open a few


months now, while huge amounts of


frozen beef and live animals


are going out to Libya, a market that had been closed since the mid-1990s. And Whelan says the massive Chinese beef market is “on the cusp” aſter being closed to Irish producers since the foot-and- mouth crisis. Yields are still below the


European average but productivity is now improving. Irish producers have


suffered from under-


investment in the past, he admits, but the banks are now happy to pump money in, seeing it as a lower-risk sector than some of those in which they recently speculated and lost out. The


life sciences sector


continues to dominate the top IEA’s 250 listing. Johnson & Johnson (in third place with export sales of €9.8 billion), Pfizer (fiſth) and medical devices manufacturer Stryker (seventh) lead the way. Boston Scientific, Forest Laboratories, Gilead Sciences and Astellas are all among Ireland’s top 20 exporters. The country’s exports of pharmaceuticals and medical devices were worth €56 billion in 2011. However, Ireland’s over-


dependency on pharma exports to the US carries dangers as blockbuster drugs come off patent, Whelan warns, since most of the early patent registrations were made there. This was partly responsible for a 30% fall in pharmaceutical exports to the US in the first half, though exports to the EU in this sector maintained their long-term trend with 6% growth. A complete shiſt in information,


communications and telecoms (ICT) has occurred in the last decade, sharply reducing the movement of freight although Irish earnings from the sector have held up well.


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ICT exports from Ireland in


2002 were worth €40 billion, with hardware from Dell, IBM, Apple and others accounting for more than €30 billion of this while soſtware exports were only €10 billion. This has totally reversed


following the rapid growth of internet companies globally


and the success of the Industrial Development Agency in attracting them to Ireland. In 2011, ICT exports from Ireland were still €40 billion, but now made up of €8 billion hardware exports and €30 billion soſtware sales. Google is now Ireland’s largest exporter, topping €10 billion, aſter recording 55%


Issue 5 2012


25 Exporters burn as Eurozone dithers


growth last year. Whelan says general


engineering is doing better than many commentators appreciate, thanks to low labour costs and an Irish exchange rate that is at its most competitive since the launch of the Euro. He cites the successes of companies such as Dromone,


the manufacturer of agricultural and construction products, and Athlone Extrusions. “Selling into Asia, which is mainly


dollar-based, and to the UK we have a good backwind on currency, which has to be factored in together with our own cost reductions over the last four years,” Whelan says.


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