[Article] Manufacturing employment falling steadily in Ireland

Diaspora

Manufacturing jobs fell 13% in five years

July 18, 2006 14:33
A report from the State advisory body Forfás says that employment in the manufacturing sector has dropped by 13%, or 31,000, since reaching a peak in 2000.

Despite this, the body says the sector is still contributing significantly to economic success, with output up 28% in the same five-year period. Forfás today published a report on changes in manufacturing and services which was requested by Enterprise, Trade & Employment Minister Micheál Martin.

The agency warned, however, that productivity growth in manufacturing had been concentrated in a small number of areas, while the high proportion of UK and US-owned firms meant the sector was exposed to currency movements.


Forfás said employment in services had grown by 21% since 2000, with seven out of every 10 people now working in the sector. Services' contribution to Irish exports rose from 22% to 35% between 2000 and 2005.

The report said the movement of higher and lower skilled jobs to low-cost locations abroad may be inevitable in some areas, but there was an opportunity for companies to use the savings to develop higher value activities such as research and development.

Forfás chief executive Martin Cronin foreign-owned firms were more export intensive than Irish-owned firms. He also warned that greater productivity could be accompanied by job losses. He said training and support for workers was essential to bring about a transition to higher skilled activities.

Responding to the report, Minister Martin said a 'high level group' would be set up to look at the challenges facing the manufacturing sector and to identify measures

So much for FF standing on their managment of the economy; it seems the exchequer is becoming ever more reliant on the VRT from imported cars and the stamp duty from when we sell each other houses.

Villain

The fall is worrying for the long term outlook of our economy, the number of low skilled people workng in our building sector is especially worrying. When the slowdown in development of housing comes we will have a vast number of people with low skills who find it very difficult to find employment or at least employment at a simalar pay scale. This country is just too expensive for most manufactoring jobs except those high skilled ones like Intel or Wyeth.

ronbyrne2005

the economys fecked in next decade if we dont get high value added "knowledge" jobs but most people havent got the intelligence or education to work in "knowledge" industries, not every worker in the country can be a "knowledge" worker , in fact most cant, mcdonalds will have loads of cv's to sort through in years to come,

constitutionus

you know one of the most worrying things is theres been no change in turnover in indigenous manufacturing, being static at 10 billion over the last 5 years whereas foreign companies which have no long term loyality to ireland have reached 50 billion. where the hell is the goverment in helping indigenous companies becoming irish multinationals?
we are really vunurable now to a down turn, all we need is a crash in the housing market and even the banks are warning about that, and that'll be it. mark my words lads, get into the essential services sector cause all you marketing and HR lads are gonna end up on the dole

DublinWriter

Diaspora wrote:

So much for FF standing on their managment of the economy; it seems the exchequer is becoming ever more reliant on the VRT from imported cars and the stamp duty from when we sell each other houses.

All manufacuring jobs are heading east. Welcome to the 'knowledge' economy. *cue Martin Cullen PR shot*

Jackie laughlin

Last weak I tried to revitalise the "Whistling past the graveyard" thread when the Taoiseach's reaction to a scary CSO report was that "the boom just got boomer"!!!

By the way, the "knowledge economy" seems to be more neo-liberal babble.

"Problem?"
"Hey, let's have a knowledge economy!"
"What's that?"
"You're just typical of the kind of pinko who wants to drag us back to the dark days of the 80s!"
"I only asked!"

The information industry meant something. An educated workforce meant something.

DublinWriter

Jackie laughlin wrote:

By the way, the "knowledge economy" seems to be more neo-liberal babble.

I was being ironic.

It's just a fairly akward way of saying 'not working in a factory' and a horrible example of neo-politico-management PR babble.

In an attempt to shift the paradigm away from this particular term of reference, going forward, I think we should build a strawman, brainstorm around it, tease out the value-added and devise a better roadmap for going on-message.

...or in other words, anyone got any better ideas?

Cantab.

I work in a reputable telecomms company here in Dublin. I'm only 24 and have just started there. Whilst I love the job and have worked hard at university, I do worry sometimes. The lease (which they acquired in 1992) expires in 18 months and there's talk of moving, most likely out of Ireland where commercial leases are about 10% of the cost in Ireland.

We're competing against all the other 'centres of excellence' around Europe that the company has, and currently we're 9th out of 25. But the worrying thing is that about 85% of our operational costs are pay-related because of the generous tax and benefit regime the government give. In other countries, pay accounts for only 50% of the total operational cost. Pay is rising year on year in Ireland and I think the expiration of the lease will be enough to relocate. 100 jobs went to an Eastern European country last year, and it's only a matter of time before they'll be looking for Irish workers to transfer over (bringing all the knowledge with them). There's no way I can buy a house and have a decent quality of life here in Ireland (not that I expect the house fairy to come along and grant me one), but I do feel somewhat socially disadvantaged in the current economic climate considering I am supposed to be a member of the 'professional class' (engineer). Perhaps a move is a good thing after all?

I'm on a thread over on accomodation/property which is getting about 400 hits a day.
http://www.boards.ie/vbulletin/showthread.php?t=2054961482
Imminent pop or not?

To say the least, I do worry about the short to medium term future of this economy given the sentiment expressed on boards.ie (and don't forget, sentiment counts for a hell of a lot in any market - a small spook can have a domino effect in a very short period). If things go pear shaped, I'll be taking my free education with me.

DublinWriter

Cantab. wrote:

I work in a reputable telecomms company here in Dublin... If things go pear shaped, I'll be taking my free education with me.

Where to? Banglalore?

Cantab.

DublinWriter wrote:

Where to? Banglalore?

You might laugh now, but if that's where the money is, then yes (I didn't necessarily have Bangalore in mind).

People forget that immigrants + young people have no commitments, are highly mobile, and with today's communications (email, internet, instant messaging, VoIP phones, low-cost flights etc.), will move where the money is at the flick of a switch.

I love Ireland and want to work here, but if the opportunities aren't here anymore and are abroad (I'm thinking Germany - especially for engineers), then that's where I'll go.

DublinWriter

Cantab. wrote:

You might laugh now, but if that's where the money is, then yes (I didn't necessarily have Bangalore in mind).

Well, that's good, because the reason many companies are outsourcing there is because they can select from a huge pool of graduates with firsts who'd be over the moon getting paid 5K a year.

Cantab. wrote:

People forget that immigrants + young people have no commitments, are highly mobile, and with today's communications (email, internet, instant messaging, VoIP phones, low-cost flights etc.), will move where the money is at the flick of a switch.

Exactly, just look at the Polish here now. Do you think they'll be happy having spent 3 or 4 years in college working the checkout in LIDL in some Dublin suberb in 2 or 3 years time? No. Many working checkouts now have science degrees.

The Poles and the Asians are here to stay and will give us a serious run for our money. Look at the ascendancy of the Irish in America 100 years ago and you'll see a similar thing happening here. The Poles will look after their own here just as the Irish did in the States way back when.

Cantab. wrote:

I love Ireland and want to work here, but if the opportunities aren't here anymore and are abroad (I'm thinking Germany - especially for engineers), then that's where I'll go.

Good for you, but remember Poland are next door neigbours to Germany, we're not!

Jackie laughlin

Cantab,
I think your situation may reflect the problems well.

My I ask you to clarify a couple of points?

Are wages in the telecoms industry higher in Ireland? You seem to say that it will be the cost of the lease which will decide the future of the operation. Are you referring to the cost of hiring the building? Is it cheaper abroad?

What proportion of the workers are involved in assembly as opposed to engineers/tecnicians? Is it assembly wage costs or graduate wage costs or both that are relatively high?

Are you saying that the housing industry is damaging other industries?

samb

Another concern is the state of the US Dollar. They have a huge budget deficet and may similar problems with thier housing market. IF the US dollar goes much lower then these US multinationals may decide to go home and our indigenous companies who export to American will be put under more pressure. and whatever happens to our small vunerable economy we can't rely on the ECB to drop interest rates down to devalue our currency and remain competitive if the Germans and French are doing well. The ECB may have created our housing bubble but it won't pick up the pieces when it bursts.

DublinWriter

samb wrote:

Another concern is the state of the US Dollar.

All bets will be off when, not if, OPEC switches from US Dollars to Euros to sell oil.

You have to remember that if you want to buy oil, you first have to buy dollars, and it's this that's proping up what in reality is a very weak currency.

Cantab.

Jackie laughlin wrote:

Cantab,
I think your situation may reflect the problems well.

My I ask you to clarify a couple of points?

Are wages in the telecoms industry higher in Ireland?

Not necessarily. We are far from the lowest cost in terms of wages in my opinion. I often wonder why I put up with a medium-level salary in a multinational instead of going to work for the government. (One girl who started with me left to go work for the Central Statistics Office and is being paid 75% more for a very technically unchallenging position). I just don't want to work in a government job because I love the area I work in.

Jackie laughlin wrote:

You seem to say that it will be the cost of the lease which will decide the future of the operation. Are you referring to the cost of hiring the building? Is it cheaper abroad?

Yes, the cost of hiring the building. Commercial leases in lower-cost locations wth excellent services are ten a penny-in-Eastern Europe.

Jackie laughlin wrote:

What proportion of the workers are involved in assembly as opposed to engineers/tecnicians?

No assembly here in Dublin. All professional engineers, commerical sales people, finance, HR, etc. We're primarily a design centre with some testing and maintainence.

Jackie laughlin wrote:

Is it assembly wage costs or graduate wage costs or both that
are relatively high?

Wage costs are going through the roof - it's hard to attract top engineers that are desperately needed and the company is forced into national wage agreements. The wage bill will probably increase by about 10-15% come 2008 expecially when so many of my colleagues are desperate to 'get on the property ladder'.

Jackie laughlin wrote:

Are you saying that the housing industry is damaging other industries?

I would agree with this - in other countries, middle-class workers can expect to live 20-30 minutes from their workplace and own a modest property for about 4 or 5 times their annual salary.

ronbyrne2005

DublinWriter wrote:

All bets will be off when, not if, OPEC switches from US Dollars to Euros to sell oil.

You have to remember that if you want to buy oil, you first have to buy dollars, and it's this that's proping up what in reality is a very weak currency.

More nonsense, at present even if you have to pay for oil in dollars the recipient of those dollars can immediately change them to euro yen etc,the fact oil is priced in dollars does not keep dollar propered up, to think so is naive in the extreme.

Jackie laughlin

Cantab,
I really do apologise if I'm being a pest but could I try your patience a bit further. You are quite a source!

Your company employs graduates. You say that Irish wage costs are going through the roof. Does this include people in your position? (I'm not suggesting that you are well off!) Are the wages paid to you and your colleagues making the company uncompetitive?

On the other hand, you talk about the building being expensive. Is it wages to engineers/technicians that is causing the problem, the cost of the lease or both?

Incidentally, a part of the success in bringing industry to Ireland was based on providing low cost or no cost premises.

Could I put a political thought to you? Our failure to distinguish between different types of capitalist is hurting us. Profits from a building industry/market out of political control seem to be at the expense of other industries struggling to keep/attract workers at reasonable levels of pay.

I think you may have put your finger on a more sophisticated response to the private sector Vs public sector pay debate. I'm beginning to think that, while lower level public servants are appallingly paid, the middle to upper remuneration may have gone crazy. This might be related to the fact that "managerial" salaries generally have gone crazy based on false claims about the market or the going rate, when it's just an old fashioned relativity claim.

Another "incidentally", I had a dilemma similar to yours when I was younger: a creative job which I loved Vs a highly paid managerial job requiring little or no engineering expertise.

Raskolnikov

To be honest, this move was a long time coming. I would also expect that the construction of Fab24-2 to be the highwater mark of Intel expansion into Ireland, especially considering that there will no longer be any government incentives for Intel to move in under EU law.

Next up to the hatchet block will be Dell. How long can they continue to run a manufacturing company in a high (and rapidly rising) cost area? Profitability and market share are continuing to take battering, job cuts will definitely happen in Ireland. Less likely, but still possible is Dell ceasing to use Ireland as a manufacturing base.

http://www.unison.ie/irish_independent/stories.php3?ca=35&si=1657133&issue_id=14391

Intel global jobs cull could hit Irish plants

CHIP giant Intel did not rule out job losses at its Irish facilities yesterday following a 57pc plunge in the company's second quarter profits and concern over increased competition from Intel's main rival Advanced Micro Devices (AMD).

A spokeswoman for the company, which employs 5,500 people in Ireland, said that Intel is continuing the "strategic review of its business" and that it has not made any further decision on jobs.

Although she added that talk of job losses was speculation at this stage, market sources have suggested that the company will cull between 10,000 and 15,000 staff worldwide.

She said that there would be further updates later this quarter.

Intel has begun a restructuring program to improve profitability, selling off its mobile phone chip business and announcing redundancies for 1,000 managers.

Chief financial officer Andy Bryant said earlier that more decisions would be taken over the next two months to take down spending and the headcount of its 100,000-strong workforce.

Just last month, ceo Paul Otellini officially opened the Fab 24-2 plant in Leixlip, Intel's major manufacturing base in Europe since 1989.

The plant, which began production four months ago, joins similar facilities in two US states in making Intel's most efficient microprocessor, the chips that run computers and other electronic devices.

The company said yesterday that its worldwide sales fell 13pc in the June quarter, while its Asia Pacific sales dropped 14pc from the same period last year.

Profits were down 57pc to $885m, but at 15 cents, earnings per share for the world's largest chip maker in the three months to June beat Wall Street forecasts by two cents.

The company said that with the effects of share-based compensation stripped out, its quarterly net earnings would have come to $1.1bn or 19 cents per share.

"In 2006 we are delivering the strongest product lineup in the industry, with many of these new products shipping ahead of schedule," Mr Otellini said.

But the pressure is on in the chip market in general. Two weeks ago, AMD warned investors that its results would fall short of expectations due to pricing pressures.

Shares in Intel were off 6pc at $17.93.

Ailish O'Hora

Villain

I disagree that Intel are at their highwater mark of expansion in Ireland, Intel Ireland were very close to winning the new Fab that went to Israel and giving the crisis there at the moment I think the next FAB could very well go to Ireland or IFO could be converted to 65nm.

Intel imo are at the lowest level possible and the introduction of their new Core 2 chips this month will see them leap ahead of AMD for performance and value.

uberpixie

Raskolnikov wrote:

Next up to the hatchet block will be Dell. How long can they continue to run a manufacturing company in a high (and rapidly rising) cost area? Profitability and market share are continuing to take battering, job cuts will definitely happen in Ireland. Less likely, but still possible is Dell ceasing to use Ireland as a manufacturing base.

Dell have already started on a plant in Poland: I was there a year ago and they had already assigned a manager to the project who was moving it along.

Polish plant has the potential to ship in 1 day 85% of the daily orders due to it's position in Europe.

Shipping cost should be lower because of it position too.

Cantab.

irish1 wrote:

I disagree that Intel are at their highwater mark of expansion in Ireland, Intel Ireland were very close to winning the new Fab that went to Israel and giving the crisis there at the moment I think the next FAB could very well go to Ireland or IFO could be converted to 65nm.

Intel imo are at the lowest level possible and the introduction of their new Core 2 chips this month will see them leap ahead of AMD for performance and value.

Intel are a special case in Ireland (they're also the jewel in the crown), in that so much has been invested in Ireland that they can't just up and leave. I can't see them moving just yet, but what they are doing is employing loads of chinese, indian and eastern european techies who they can get in to Ireland via the visa scheme that operates in this country.

In the mean time, Intel continue to get discount electricity, free water, motorways built, employee work permits and university courses modified. The government will do literally anything to keep them going.

AMD are seriously damaging Intel, whose profits were down 57% last year.

btw, Intel are doing quite a lot of environmental damage with the amount of water, electricity and hazardous chemicals they consume daily. They're very secretive about this.

Diaspora

Diaspora wrote:

So much for FF standing on their managment of the economy

Yeah, maybe they're in cahoots with the Chinese and Indian governments to make those countries more attractive to manafacturers too...

Diaspora

No they just didn't invest enough in promoting research and development like the Swiss Swedes and Dutch to attract the type of projects that are unable to locate in Asia. The lack of investment in sectors where the brain work is done by small teams in studio environments and the manufacturing outsourced is severly hamprered by a lack of investment in design colleges such as NCAD this directly costs jobs as those who wish to pursue such a career go to Paris or London and rarely if ever come back.

Inflation is the highest in the Eurozone and with construction and domestic consumption stripped out the economy is going backwards. Remember that 1980 had the new car sales record until 1995 there is always a bubble first.

Cork

Along with every boom comes a bust.

Irish people now prefer not to buy Irish produce or products.

They generally choose not to gain further skills or qualifications.

Irish wage rates are higher than our EU neighbours.

Our public sector could be more efficent.

So what do people expect?

But the Irish economy is strong.

Ask any person coming here from Eastern Europe?

Diaspora

I worked in Germany in 1990-92 which was just at the end of their boom era and like here now the country was full of economic migrants from places like Ireland, Portugal and Greece as well as non EC states.

By and large most Irish and Scottish people I worked with worked in the service sector and once consumption dried up we headed for the next hot spot. We had no loyalty to the country understood little if anything about the components of its economy and were just there for the wage rate.

Re Education I don't see any Irish University on the OECD List and given our below average investment according to the OECD I am not surprised.

In relation to your assertion that every boom is accompanied by a bust I find that to be most mis-informed Holland has entered one technical recession since 1946. When was the last time Switzerland had a real recession?

Base line inflation is at 3.9% and the attempt to buy the next election in the form of SSIAs is only just about to hit the tills. Go figure

Cork

Diaspora wrote:

In relation to your assertion that every boom is accompanied by a bust I find that to be most mis-informed Holland has entered one technical recession since 1946. When was the last time Switzerland had a real recession?

Base line inflation is at 3.9% and the attempt to buy the next election in the form of SSIAs is only just about to hit the tills. Go figure

Most open economies have recessions.

Inflation is driven by higher energy costs and higher wage demands.

SSIAs gave a bonus of 25% over 5 years. (5% pa).

Avoid the hype.

The Irish economy is still very strong. But people have themselves to blame for the inflated house prices and massive personal borrowing.

Yes - Irish manufacturing has become costly.
Yes - the boom is built on property and VRT.

That is not new.

The boom is not built on manufacturing or has it any sustainable base.

For the moment - our economy is doing fine.

But there are dark clouds on the horizon.

Diaspora

Cork wrote:

SSIAs gave a bonus of 25% over 5 years. (5% pa).

Avoid the hype.

No SSIAs gave a bonus of 25% of all sums contributed so you cannot break this down to an annual figure unless you wish to say that they gave 125% contribution based on the first years contribution if you kept contributing and attributed all government contributions to the first years deposit.

.

Cork wrote:

Yes - Irish manufacturing has become costly.
Yes - the boom is built on property and VRT.

Mostly based on credit which if the manufacturing goes there will be nothing to make the repayments with; when manufacturing and wage costs are high it is imperative that inflation be at the bottom of the table and not education expenditure

Cork

Diaspora wrote:

Mostly based on credit which if the manufacturing goes there will be nothing to make the repayments with; when manufacturing and wage costs are high it is imperative that inflation be at the bottom of the table and not education expenditure

I agree.

Manufacturing jobs are already gone leaving the economy pretty exposed in the future.

No SSIAs gave a bonus of 25% of all sums contributed so you cannot break this down to an annual figure unless you wish to say that they gave 125% contribution based on the first years contribution if you kept contributing and attributed all government contributions to the first years deposit.

The vast majority of the SSIA poceeds are savings - coming to maturity at the same time.

Inflationary?

Maybe not - just substituting debt with savings.

DublinWriter

Cork wrote:

Maybe not - just substituting debt with savings.

Savings that next year will be spent on foreign holidays and foreign goods, throwing our balance of trade deficit out the window.

Another attempt by FF to buy the electorate.

Cork

Encouraging a savings habit was an inovative iniatative that Charlie McCreevy deserves full credit.

Some Irish people suffer from sheer financail stupidy. Encorageing people to save is better than a spend and borrow behaviour patterns enjoyed by many.

Irish debt levels are crazy.

Many in this country need to be in financial kinder garden.

I see nothing wrong at encouring people to save.

A government bonus was needed as banks offering 0.1% deposit rates was zero incentive.

But Irish debt levels remain crazy. Big Worry. The chickens will come home to roost.

That said the Money Advice Bureau is top class.

Diaspora

Cork wrote:

Encouraging a savings habit was an inovative iniatative that Charlie McCreevy deserves full credit.

If the scheme wasn't launched just before the last election and due to mature just before the next election you might have a point.

But lets be honest it is Charlie McGravy we are talking about here whose own financial idea of forward planning is getting on ante post for the coming Cheltenham festival.

It was a gamble that may get inflation back to silly levels last seen in the late 1970's the very thing his PD colleagues fear most. Reckless behaviour from a serial gambler at best.

DublinWriter

Cork wrote:

Encouraging a savings habit was an inovative iniatative that Charlie McCreevy deserves full credit.

Some Irish people suffer from sheer financail stupidy. Encorageing people to save is better than a spend and borrow behaviour patterns enjoyed by many.

FF's own Haughey being the prime example of this.

Encouraging people to save is one thing, giving away 'free' money to encourage people to save is another.

McCreevy deserves full credit for a very clever attempt to 'buy off' the Irish electorate. 80% of SSIA's will mature next February and I'd bet any money that Bertie calls an election no more than eight weeks later.

I think the whole 'SSIA-effect' will backfire on FF - putting that amount of money suddenly into consumer circulation is like trying to put a fire out with petrol in terms of our already high rate of inflation.

You really are living in la-la land if you think the SSIA scheme will make a greater number of people save.

The money will fly right out of the country as people spent it on holidays and plasma TVs.

Come next year people will see SSIA's for the cynical vote-buying attempt that they were.

constitutionus

ive got a SSIA and i can tell you its not influencing my vote in the least so ta for the money bertie and dont let the door hit your arse on the way out:D

im really interested to see what happens next year, one of the reasons the SSIA was set up (besides to buy the election) was to keep inflation down, which was starting to go mental then, now were in the situation where 80% of 16 billion will come on stream all at the same time. and thats not including the extra money people will be spending now that the schemes over, i predict inflation will go through the roof. i can tell you for a fact i for one already know what i intend to blow my SSIA on and it'll cost the full 20k i'll have saved. cant wait to be able to spend the 250 a month im putting away at the moment as well cause in case you havent noticed we are the most expensive country in western europe. with bills going up left right and centre the gov have two chances of a "savings culture" and slims just left town, ditto for puting it in a pension. of course a few will but the vast majority of this money is gonna be spent by christmas. word to the wise, you need work done on your house get it done now. you wont get a trades man for love nor money next year and the cost will be double

DublinWriter

constitutionus wrote:

word to the wise, you need work done on your house get it done now. you wont get a trades man for love nor money next year and the cost will be double

Damn right. We're trying to get the place re-plumbed now and can't even find a decent plumber, Irish, Polish or otherwise.

constitutionus

DublinWriter wrote:

Damn right. We're trying to get the place re-plumbed now and can't even find a decent plumber, Irish, Polish or otherwise.

heard a rumour alot of thats down to people getting loans againts their SSIA so they can get work done now and hand the cash over to the bank when it matures in a year. maddness

Hotblack Desiato

DublinWriter wrote:

Encouraging people to save is one thing, giving away 'free' money to encourage people to save is another.
McCreevy deserves full credit for a very clever attempt to 'buy off' the Irish electorate. 80% of SSIA's will mature next February and I'd bet any money that Bertie calls an election no more than eight weeks later.

This is utter bollox.

SSIAs are nothing more than standard rate tax relief on the sum invested. A shock to the system in dear old Ireland where small savers traditionally get raped by the tax system, but nothing at all unusual in more progressive economies.

Jackie laughlin

Cantab,
I'm off on holidays soon. Should you happen to come on-line, could you oblige by having a look at my last questions to you. I'm very interested.

Diaspora

ninja900 wrote:

SSIAs are nothing more than standard rate tax relief on the sum invested. A shock to the system in dear old Ireland where small savers traditionally get raped by the tax system, but nothing at all unusual in more progressive economies.

Standard Rate tax is 20% of income and subject to PRSI and is deducted at source from earnings whereas this is a 25% top up on income howsoever derived either legitimately or otherwise it involves taking funds from taxpayers and giving to all comers and unlike a tax allowance it involved paying out regardless of what the prevailing economic conditions were.

silverharp

The government should be mindful that the Irish economy carries a lot of risk compared to countries like Holland or Switzerland which have built up a lot of capital and intellectual capital over the years. Just because Irish GDP is high now (and overstated due to transfer pricing) there is no guarantee that the drivers of success will remain and any country whose costs base compounds faster then output deserves and will get a hammering.
Ultimately the global corporates and consumers doesn’t care about the price of housing or energy costs in Ireland, if the price isn’t right they will move on.
The gov should also be mindful that the a high % of gov tax comes form taxing debt (property) and foreign multinationals which are subject to legal changes. What if the US were to lift the veil on transfer pricing and tell Coke Cola for instance that it had to pay US corp tax on its operation in Ireland. Hopefully we can retain our role as the “Jersey” of Europe but other countries may not allow this

Cantab.

Jackie laughlin wrote:

Cantab,
I'm off on holidays soon. Should you happen to come on-line, could you oblige by having a look at my last questions to you. I'm very interested.

Hi Jackie. I'd be very happy to reply to you. Firstly, regarding SSIA money that everyone seems to be talking about, I'm in no doubt that this money will pour out of this country just as fast as it came in (I'm thinking japanese LCD TVs, chinese garden furniture, japanese cars and shopping trips to New York). People my age have never known bad economic times (let alone prudent economic times), and sooner or later it's going to go pear shaped. There's no point in living this debt-fuelled life of exuberance (that many of my peers have), as it's an unsustainable fantasy-land that must one day be paid back.

Jackie laughlin wrote:

Cantab,
I really do apologise if I'm being a pest but could I try your patience a bit further. You are quite a source!

Your company employs graduates. You say that Irish wage costs are going through the roof. Does this include people in your position? (I'm not suggesting that you are well off!) Are the wages paid to you and your colleagues making the company uncompetitive?

I would say that the national pay agreements are certainly making the company uncompetitive. I had a friendly chat with one of the senior engineers on the DART home one evening and he basically said that generous pay agreements could kill us off altogether. Irish graduates are relatively cheap, I guess, but eastern european/chinese/indian engineers are cheaper. Irish engineers can be good, but many are lazy and have poor work ethic. The foreigners on the other hand have that hard-graft mentality where they are delighted to be working in a company that pays them 3-10 times what they'd earn at home and get to learn English at the same time.

So what does all this mean? Basically what I am saying is that the tech sector in Ireland (from my perspective) is driven by imported expertise and not indigenous. Ireland is not capable of driving this knowledge economy on its own because we're not getting enough young people studying engineering/computers/physics relative to demand (there's more money in building houses - no wonder there's more girls going to university because the boys make better money house building). The higher the cost of living gets, and the worse our infrastructure gets (because of poor planning), the less desirable a location Ireland becomes. If this negative sentiment gets out amongst the migrant workers, then they will stop coming and go to pastures greener. Other countries have copped on to Ireland's economic wonder-recipe and are offering more attractive packages to companies.

Jackie laughlin wrote:

On the other hand, you talk about the building being expensive. Is it wages to engineers/technicians that is causing the problem, the cost of the lease or both?

The cost of the lease will be huge if it's renewed in 2008 (there's no way it will be renewed at current prices). Wages and services costs will undoubtedly have gone up by at least 10-15% by then.

Jackie laughlin wrote:

Incidentally, a part of the success in bringing industry to Ireland was based on providing low cost or no cost premises.

Could I put a political thought to you? Our failure to distinguish between different types of capitalist is hurting us. Profits from a building industry/market out of political control seem to be at the expense of other industries struggling to keep/attract workers at reasonable levels of pay.

I would agree with this. The interest in technology is nothing compared to the vested interest in land-owning and property development. Considering Ireland has one of the lowest (if not the lowest) population densities in Europe, it's surprising that there's a land shortage and that property prices are akin to those in the major established European capital cities with much larger populations/economies. I wonder how the economy would look if FF party members were large technology shareholders?

Jackie laughlin wrote:

I think you may have put your finger on a more sophisticated response to the private sector Vs public sector pay debate. I'm beginning to think that, while lower level public servants are appallingly paid, the middle to upper remuneration may have gone crazy. This might be related to the fact that "managerial" salaries generally have gone crazy based on false claims about the market or the going rate, when it's just an old fashioned relativity claim.

Yeah, it's a big issue alright. I would seriously consider a position in the civil service, given the favourable working hours and pension schemes. If the economy goes belly up, I'll have to emigrate. It would be nice to have the job security.

Jackie laughlin wrote:

Another "incidentally", I had a dilemma similar to yours when I was younger: a creative job which I loved Vs a highly paid managerial job requiring little or no engineering expertise.

Perhaps it's the nature of the game? In China, all the top politicians are engineers! We should be valued more! The economic output of an engineer must be several factors higher than that of an accountant, lawyer, civil servant...

We can't live on stamp duty, VRT and borrowed money from German pension funds forever.

Jackie laughlin

Cantab,
Many thanks for that. It was really useful.

By the way, in the 70s and 80s engineers tended to dominate management ranks. They've been ousted by other professionals in the last couple of decades. It's always been a kind of rolling demarcation dispute or a rough test of the strength of various professional bodies. The Dail tends to be dominated by publicans, farmers, auctioneers and to a lesser extent teachers.

I have a problem with the failure or inability of professionals and young educated people particularly to think politically - perhaps I mean "critically". I've no problem with their disagreeing with me but they seem so often to be convinced by whatever views happen to be popular, no matter how daft those views might be.

I hope you don't have to leave.

Thanks again.

Hotblack Desiato

Diaspora wrote:

Standard Rate tax is 20% of income and subject to PRSI and is deducted at source from earnings whereas this is a 25% top up

:rolleyes:
If standard rate tax is 20%, then you're left with 80%. To give standard rate tax relief on that sum, you'd need to increase it by one-quarter to get back to 100%.

on income howsoever derived either legitimately or otherwise

Oh come on, it's hardly offshore accounts all over again. The money has to be in an Irish on-shore institution, PPSN supplied etc. You'd have to be pretty thick to route hot money into one tbh.

it involves taking funds from taxpayers and giving to all comers

The reason for the 25% bonus was to give a benefit equivalent to standard rate tax relief to non-taxpayers. Would you begrudge it to, say, pensioners, sticking a few euro away?

and unlike a tax allowance it involved paying out regardless of what the prevailing economic conditions were.

Tax allowances were let continue for years, e.g. property reliefs even at the height of a construction boom. At least the SSIA had an in-built cutoff date.

Diaspora

Dairy processing set for €300m investment

28 July 2006 12:49
The dairy processing sector is set for a €300 million investment over the next few years.

The Minister for Agriculture, Mary Coughlan, said the Government would contribute a third of the finance to reinvigorate the sector if the industry comes up with the remainder.

Ms Coughlan said the much-needed injection of capital would go a long way towards the development of a modern, innovative and highly efficient food sector in Ireland.

She said there has already been a hugely positive response to the initiative from within the industry.

And she said farmers should greatly welcome the investment which should enable them to secure a fair return for their important contribution to the supply chain.

The dairy business remains one of the most important industries in rural Ireland - with exports worth €1.5 billion annually.

The raw material is provided by about 20,000 dairy farmers and the end-product is marketed right around the world.

Despite the success of the industry over the past 30 years, it is now under pressure because of cuts in EU subsidies and stiffer competition on global markets.

Various reports have called for the industry in Ireland to increase scale and to achieve greater efficiency and better use of processing facilities.

That article is criminally light on specifics

redspider

A report from the State advisory body Forfás says that employment in the manufacturing sector has dropped by 13%, or 31,000, since reaching a peak in 2000. Despite this, the body says the sector is still contributing significantly to economic success, with output up 28% in the same five-year period.

Two things to think about. The first is that Manufacturing output has increased 28% in 5 years. Most of it from multi-nationals. Many of these MNC's are producing more than they would if they were accounted for accurately, but 'transfer pricing' as it is called, means that it is possible for employees to produce millions of value per annum. It is false accounting but totally legal and is advantageous for tax reasons. The figures have to be taken with some quantity of sceptism therefore. Reality is different.

Another thing is that the stats dont count internationally traded services in the same way as internationally traded manufacturing. An MNC that is here and provides services and an MNC that is here and manufactures, in some cases such as Microsoft, Oracle and other software companies, manufacturing needs to be written in quotes, is providing the same type of input into the economy. Both business are moveable, although that is the case for many businesses whether MNC or indigenous, they are also moveable.

Some services cant be moved out of the country as they are delivered locally and in person, eg: Health, Lesiure, etc. Most of retail also cant be moved and as much as we would like to outsource the Civil Service to eastern europe (now thats real decentralisation) it just aint gonna happen.

Of course, the over-reliance on the property 'frenzy', as I like to term it, is a big big danger. It cant go on but how and when it ends are two big questions. Everyone is hoping for the soft landing that is manageable. A lot will depend on that unforecastable element, Human demand. If the majority decide to sit it out and wait it could be a devastating crash where negativity breeds negativity, lack of investment, a slow down etc. Not the end of the world but just think of 10 years in stagnation - ie: the 1980's all over again. World factors and external factors have a huge bearing. MNC's staying here is helping. Cheap new-EU-land labour is helping.

ESRI are calling it coming to a halt in 2008.

Forfas will have some interesting reports when it does, if it does. The question is whether that if is a big IF or really a when .... only time will tell.

redspider

Cork

The recent annoncement of ESB and gas price hikes will do nothing to attract manufacturing industry.

It is crazy - how dependent this country is so dependent on construction.

Interest rates going up again.

The Irish paying thru the nose for crap houses in crap locations.

These people buy houses miles and miles from their place of work and then give out about fuel prices.

These people buy houses miles and miles from hospitals, schools and decent roads. They then expect government at local and central level to step in.

We live in a country that is sinking in personal debt.

We might even get another year of boom with the SSIAs.

Many may even squander these as well.

Ah still, vat reciepts will be up.

DublinWriter

Cork wrote:

These people buy houses miles and miles from their place of work and then give out about fuel prices.

These people buy houses miles and miles from hospitals, schools and decent roads. They then expect government at local and central level to step in.

Yes they do because THEY DON'T HAVE A CHOICE!!! Geddit? They can't afford half-a-mil plus to live in the average semi-D in Dublin.

Thanks to the brown-baggism and lack of urban planning of your favourite party Cork, that is the situtation people have been forced into.

Hotblack Desiato

I don't buy that argument.
People DO have a choice - between a smaller or less attractive house or apartment in a more convenient location for commuting and amenities, or Deh Big House Down De Countreh. Eventually they wise up to the fact that, while the house may be lovely, living there and working a long way away has serious disadvantages.
What they don't realise is that getting the foot on the first rung of the Dublin property ladder is the hard part. Trading up in a few years from your less-than-ideal first home is a lot easier than buying the first home.

Cork

DublinWriter wrote:

Thanks to the brown-baggism and lack of urban planning of your favourite party Cork, that is the situtation people have been forced into.

Poor planning cannot be put at the door of any one party.

The party that you refer to was trashed at local elections - people are still buying houses situated in the back of the beyond.


They then rant about petrol prices.

Our manufacturing sector cannot compete because of inefficency.

Costs are cheaper elsewhere.

Will the Irish work for the same wage rates as the Eastern Europeans?

The recent national agreement would say "No".

It is no wonder many manufacturing companys have left.

If this country had not an english speaking labour force and low coperate taxes - we would have been down the tubes years ago.

Looking at the paper yesterday- the vast majority of jobs do not justify prices paid for houses.

Even with two people working, deposits from parents - the bubble will bust.

Even warnings of rising interest rates seem to be ignored.

Hotblack Desiato

Cork wrote:

Costs are cheaper elsewhere.
Will the Irish work for the same wage rates as the Eastern Europeans?
The recent national agreement would say "No".

Ah, right, blame the workers.
You can't honestly think that people should, or could afford to, work for 2 or 3 euro an hour given the cost of living in this country.
The proposed national agreement may well turn out to be less than inflation.

DublinWriter

ninja900 wrote:

I don't buy that argument.
People DO have a choice - between a smaller or less attractive house or apartment in a more convenient location for commuting and amenities, or Deh Big House Down De Countreh. Eventually they wise up to the fact that, while the house may be lovely, living there and working a long way away has serious disadvantages.

Crap. Would you bring 2 or 3 kids up in an apartment?

Consider two Civil Servants at CO/EO level, both *jointly* earning about €80k with two kids.

Go find me a house in the greater Dublin area that would be affordable to a couple in this situation, considering creche fees will reduce their earnings by about 20K.

DublinWriter

Cork wrote:

Poor planning cannot be put at the door of any one party.

How about the party that has been in power for 17 of the last 20 years?

...or maybe you'll scapegoat FF's minority coalition partners?

Cork wrote:

The party that you refer to was trashed at local elections - people are still buying houses situated in the back of the beyond.

And will be trashed at the generals next year.