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.