BUSINESS FIRST NORTHERN IRELAND ECONOMIC OUTLOOK 2017
Manufacturing is the key to economic growth in 2017
“ When manufacturing grows , the whole economy grows with it ,” was the conclusion of a report by Oxford Economics published by Manufacturing NI in spring 2016 . Stephen Kelly CEO , Manufacturing NI looks at the challenges and opportunities that face this sector in 2017
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he Oxford Economics report uncovered the full impact on jobs , wages , GVA , exports and other areas on both a macro Northern Ireland level and in each of our 11 new Councils . It was a call to action for the Northern Ireland Executive , its Departments and agencies as well as local Councils develop a plan which will grow the economy and build strong communities .
It is clear from this Oxford Economics report that no other part of our economy can deliver ‘ more , better and regionally dispersed jobs ’ more than the manufacturing sector .
It provides 214,000 direct and supported jobs – 1 in 4 of all jobs in the economy – delivering £ 4.2bn in wages . It contributes £ 9.9bn in GVA ( around 1 / 3rd of the economy ) and the latest quarterly exports figures , £ 7bn , is almost twothirds of all export sales .
The sector delivered over 60 percent of total business investment in R & D and from 2010 to 2014 attracting £ 900 million in FDI . Productivity at £ 55,700 is 38 per cent higher than Northern Ireland average with advanced manufacturing contribution 27 per cent more .
We also know that 70 per cent of the much trumpeted knowledge economy jobs are in ‘ traditional ’ sectors .
An enormous opportunity to transform our economy exists . Europe wants to reindustrialise with the target being 20 per cent of GDP . Our local sector currently contributes 14 per cent , ahead of the UK ( 10 per cent ), yet in the Republic of Ireland , it contributes some 23 per cent .
Think for a moment what reaching that EU target would mean for jobs right across Northern Irealand !
So , how do we get there ? For us , it is about creating the most competitive region in Europe in which to start , sustain and grow a manufacturing businesses thus creating wealth and work .
Governments don ’ t create manufacturing success but it does create the conditions which allow manufacturers to grow , generating wealth and work . What happens in the White House , Westminster and Stormont matters !
Given world events , the sector is “ brittle and uncertain ”. Washington ’ s trade policy and attitude towards foreign investment and what deal Downing Street can secure with the EU will define 2017 and beyond .
Locally , a refreshed Economic Strategy will
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direct investment , skills development and enterprise and trade support out to 2021 . It will also , hopefully , secure competitive energy prices .
The Economy Minister ’ s plans will hopefully build on good news on business rates . Manufacturing NI welcomes the Finance Minister ’ s commitment to the industrial rates cap . We hope both the Executive and Assembly will provide its support .
MNI secured the cap and demonstrated that this policy is not simply about avoiding harm but doing some good .
It encourages investment in production facilities and has secured existing and new jobs across Northern Ireland . It is a positive demonstration that the Executive are keen to deliver competitiveness .
We share the Finance Minister ’ s desire to see empty factories put to positive economic use , but this proposal confirms the need for a local Manufacturing Strategy , a cross cutting and deeper plan than a refreshed Economic Strategy , building and benefitting from Westminster ’ s forthcoming Industrial Strategy .
This would drive demand for empty spaces and direct Invest NI to secure new FDI and support the expansion of existing firms .
A Manufacturing Strategy focusing on building a competitive , skilled , innovative and growing sector with a target of 20 per cent of local GDP will bring some certainty in an uncertain world .
It should set ambition but should also a competitive energy price target , deliver a labour market regime fit for our new economy and is an opportunity to cherish and celebrate the sector . One per cent of our manufacturers , our large firms , provide half the manufacturing jobs and account for half the turnover .
We need to positively support our SME ’ s to quickly become world leaders and grow their impact on the economy .
The Programme for Government directs greater cross departmental work .
So whilst the Economy Department must deliver skills , competitive energy and enterprise support , equally as important is how Departments , agencies and indeed Council ’ s procure more local content ; getting goods and people moving through better infrastructure and education stretching to more than just the school curriculum , but also Universities , Colleges , apprenticeships and indeed research .
The Brexit challenge
Equally critical is the need to retain access to the EU market and skilled and semiskilled labour . It ’ s not simply about “ no return to the borders of the past ”, it should be about no return of any border , in any form . Borders bring costs and smuggling both of which destroy legitimate businesses .
If the right postBrexit deal were achieved , and a plan in place , we could see the reindustrialisation of Northern Ireland and with it more and better jobs in every constituency .
Just as politics creates the conditions for business to create work , so too can business create the conditions to make Brexit work . It will require ambition , bravery and creativity . A rational and not just a political outcome . A failure to do so could kill our engine of prosperity .