Belfast Telegraph

Political leadership is needed so economy can reach new heights

 

By Stephen Kelly, chief executive, Manufacturing NI

Annual external and export sales figures have shown that, despite wider uncertainty, our firms are proving that when the opportunity presents itself, the sector is more than able to grasp it.

The annual Broad Economy Sales and Exports Statistics report for 2016-17 recorded a total sales increase of £1.8bn.

This was largely driven by increasing sales within NI, up some £829m, with GB sales up £281m and exports up £686m, some 7.3%.

Sales to the Republic of Ireland have turned positive with an increase of 2.2% and represent just over one third of our export sales.

Sales to the rest of the EU also increased by 9.4% while sales to the rest of the world increased by 10.4%.

Sales to GB rose by 2% to £14bn, some 20.3 % of total sales.

Thanks largely to the sudden devaluation in sterling after the EU referendum, our firms have been quick at securing new export markets and fulfilling orders at home and in GB as customers switched to import substitution.

Now should be the perfect time to invest for the future.

However, beneath the record annual export numbers hides a story of uncertainty and risk which makes this success insecure, but our firms know well that you can't build a business on the vagaries of the currency exchange, particularly as most have a profit margin of less than 10% - with agri-food businesses closer to 2%.

Indeed, provisional results for Q3 2017 from the Department for the Economy's report last month showed significant headwinds, with manufacturing output falling by 3.6% over the quarter and by 6.5% over the year. Four of six manufacturing sub-sectors saw a decrease in their output, with the Food, Beverages and Tobacco sub-sector recording a substantial decline of 18.1%.

And, when we surveyed manufacturers at the beginning of December, 38% said they are planning on shifting production outside of the UK by developing their own facilities, making a purchase of creating new partnerships inside the EU.

Elsewhere in our survey, three out of four manufacturers said that Brexit will be negative to their business regardless of a good, bad or no deal outcome.

With only 16% saying they thought it would be positive and one in ten believing it will have no impact, it is clear that efforts to convince business that the UK outside of the EU will prosper have, so far, failed.

Given events, a bespoke manufacturing plan, delivered by a local Economy Minister is needed now more than ever.

Focusing on building a competitive, skilled, innovative sector with a target of 20% of local GDP will bring some certainty in an uncertain world.

A credible plan that also ensures there are no barriers to trade across or between these islands is needed.

Three-quarters of manufacturers have no experience of tariffs and non-tariff barriers such as rules of origin, tariff limits and freight forwarding, so it is essential to focus on a way which ensure there will be no delays, hindrances, costs or over-burdening complexity which would threaten the future of businesses and jobs.

There is a way in which we can be a full participant in both the EU and the UK markets, with all the benefits of both - effectively the bridge rather than the border between the UK and the EU post-Brexit.

This could be transformative for our economy, positioning Northern Ireland as one of the most attractive regions in the world in which to invest and create thousands of jobs.

Our employers need to be prepared and take action, and so too must Government.

We really need our Executive back to make informed decisions and investments in infrastructure and skills to benefit the local economy - local people taking decisions which deliver effective and efficient services, instead of lumping an additional cost burden on to businesses and citizens.

When the winds are blowing in their favour, our manufacturing leaders have demonstrated they are capable of making the best of it.

We need more of those favourable conditions in 2018 and beyond.

There is an opportunity to re-industrialise Northern Ireland and we know that when manufacturing grows, the whole economy grows with it.

That's a hugely attractive outcome, but are we willing to grasp this opportunity?

Only we have the chance to have our cake and eat it.

With leadership in place, we could make the cake too.

Belfast Telegraph

Weekly Business Digest Newsletter

This week's business news headlines, directly to your inbox every Tuesday.

Popular