Manufacturing – Ireland’s Top Performing Sector June 2018
The Irish economy is the fastest growing economy in the Eurozone and the 6th most competitive in the world. As the most important sector in Ireland’s economy, manufacturing has been transformed over the past 20 years by globalisation, technology and the growth of emerging markets. The sector has earned the reputation today as a dynamic global centre of (advanced) manufacturing excellence, showcasing world-class production facilities and a highly adaptable, creative and innovative workforce.
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Sector Breakdown 2018
Pharmaceutical products and preparations account for 37% of production in Irish manufacturing. This is followed by food products (18%), chemicals & chemical products (15%), computer,electronic,optical & electrical equipment (11%), other manufacturing, repair & installation of machinery, equipment & tobacco (7%) and basic metals & fabricated metal products,machinery & equipment (5%).
Strong Continued Growth 2018
Manufacturing production in Ireland achieved an average growth of 8% from 1981 to 2018. The sector has also witnessed an expansion for the last 18 consecutive months.
In January 2018 the sector began the year with a positive start. The widely used index for measuring the manufacturing activities in Ireland, the Manufacturing PMI (Purchasing Managers Index), registered 57.6 for January 2018. This was driven by strong continued demand from domestic and overseas customers. Employment in the sector also continued to grow.
In June 2018 new orders were the highest received in 2018 to date, driven by increased demand. Further strong manufacturing PMI readings are also forecast as 2018 progresses.
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Skills Shortages 2018
Set against this strong background of manufacturing growth, however, a survey in May 2018 of over 250 manufacturing SMEs in the top five sectors (including building materials, print and packaging, equipment assembly, timber and food) found that significant nationwide skills gaps exist amongst manufacturing SMEs in Ireland;
- Despite 28% of SME companies in Ireland hiring new staff since the start of 2018, 44% said that maintaining and hiring a skilled workforce is a real concern for the future
- Over 50% of larger SMEs across Ireland said sourcing engineers is a problem
- Nationally, SMEs were most concerned about the lack of skills in marketing, sales and production
- Outside of Dublin, retention of production staff is a real challenge for more than one in three SMEs
- More than half of Munster businesses said the lack of skills would be a major problem in the future, compared to 22% of Dublin firm
- In the future skills, a shortage could impact expansion and succession plans by SMEs
- Retaining talent was a bigger problem for SMEs than larger organisations, however, 41% do not regard investing in training as valuable or may not have dedicated resources to address it. Wage increases were the most commonly relied upon staff-retention strategy, used by a quarter of firms, while one in six said location is a primary pull factor. Incentives by firms in Connacht and Ulster such as flexi-time, pension schemes and health insurance have proved to be successful in retaining more staff than Munster and Leinster
- Brían Evans, Head of Manufacturing at Bank of Ireland said; “Leading sector indicators over the past few years have shown consistent employment growth and increased demand for Irish produced products in home and export markets. After Brexit, the hiring and retention of a skilled workforce is one of the main challenges for manufacturers. With unemployment in Ireland at the lowest level since before the financial crisis in 2008, competition for skilled workers is increasing across industries with recent research from the construction sector also highlighting major challenges”.
The reality is that manufacturing companies, both SMEs and large global organisations across Ireland will miss opportunities if the skills gaps are not filled. Acquisition of new staff and retention of existing staff will be critical for business sustainability.
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