Minister can give Northern Ireland the right environment
The Executive's new Energy and Manufacturing Advisory group is welcome, says Stephen Kelly, and hopefully will it address the ongoing issue of crippling energy prices faced by businesses here
Last week, Enterprise Minister Jonathan Bell announced the establishment of an Energy and Manufacturing Advisory Group, stating "everything possible must be done to find a solution to combat energy costs for the manufacturing sector" and that "a strong, flourishing manufacturing sector was at the centre of the Executive's vision for the Northern Ireland economy".
This is very welcome recognition of the problem caused by energy prices, the importance of manufacturing in modern progressive economies and a commitment that the Executive want to create the right conditions for to sustain and grow a critical part of our economy.
As the fearless independent voice for local manufacturers, Manufacturing NI has agreed to participate in the group to ensure members' ideas are put forward.
We will positively contribute to the debate and deliberations. For now, we'll leave our ideas for the discussions "in the room" but perhaps it's worth setting a little context as to why the work of the group is so important.
DETI's recently released Northern Ireland Business Inquiry for 2014 has some pleasant reading from the manufacturing sector. Manufacturing's contribution to the non-financial business economy in 2014 grew to 24% of GVA, contributing some £4.7bn after the fourth year of increased turnover, and is almost on par with the traditionally larger wholesale and retail sector.
Jobs numbers are also up. A rise of 4.1% to just over 82,000 jobs with reports earlier in the year showed that, on average manufacturing wages had risen to an average of £508.40 a week before overtime. And the recently published skills barometer signalled the prospect of 14,000 vacancies out to 2025. Manufacturing is providing wealth and work here, now and into the future.
These jobs and the contribution to GVA is largely from home-grown businesses. But we mustn't rely on home-grown loyalty. We owe it them to create the best environment to do business. If we have the right conditions for them, then we have the right conditions for multi-national and potential FDI investors too.
Little has been done to deal with the perpetual problem of power prices. "Our energy bill in NI last year was £9m - it has been an Achilles heel for us".
These words from Wayne Culbertson, chief executive of Michelin UK should be final warning shot for policymakers, regulators and indeed the energy industry itself.
We have too few very large and strategically important manufacturers and certainly can't afford any points of weakness to attract more or indeed retain those we have. Indeed, more large consumers can bring down the costs for all others on the network.
The most recent price comparison report from the Utility Regulator was ugly reading. All bar very small business consumers are now enduring the second or third most expensive power bills in Europe. Almost 24,000 businesses, including the critical SME sector should not be asked to suffer these prices whilst the energy industry is guaranteed huge profit for minimal risk.
A commitment that all consumers, domestic through to large energy users, should enjoy prices competitive within Europe will direct policy, the regulator and how the redesigned all-island generation market will work. All the levers needed to ensure competitive prices are within the gift of the department (policy costs and levies) and the Regulator (price controls and market design and operation).
Manufacturing is big and important but particularly sensitive to costs. We can't do anything about currencies, commodity prices nor global demand but it is within our gift to deal with rates, energy and the labour environment. Manufacturing NI members will not be found wanting in creating wealth and work, filling the 14,000 spaces forecast. They just need the Executive and its agencies to create the environment that allows them to meet those ambitions.
Stephen Kelly is chief executive of Manufacturing NI
Minister can give us the right environment