Partnership Critical to the Future of Manufacturing in Ireland

The Business Environment - Costs

The report acknowledges that a range of policies have been developed to enhance Ireland’s business environment so that it continues to be a good place to do business. At the same time, the report calls on the Government to take immediate action to address rising costs that have been facing the sector for some time and that negatively impact on its sustainability, specifically energy, waste, professional services and local authority and development charges.

The report puts forward a number of recommendations focused on achieving transformational changes within firms:

Innovation and Productivity

Supporting firms in engaging in innovation and increasing productivity - and not only in products and services, but also in organisational structure and management to stimulate innovative thinking, flexibility and participation. Recommendations include:

• Establish National Manufacturing Competence Centre(s) that would actively engage with industry, both large companies and SMEs, to address the current and future needs of production, thorugh R&D and innovation in process, supply chain management and energy efficiency, and to address training and reskilling needs
• Develop and intensify supports for business and workplace innovation to include incentives for business process reengineering, change management, organisational change, market development capability and new business model development.
• Develop a User Guide on Productivity Improvement and Management to better inform both employees and employers of the practical actions that need to be taken in the workplace to realise increased productivity.

People – reskilling

Optimising the use of available resources to focus efforts on reskilling people in the workforce at all levels and on developing world class management capability. Recommendations include:

• Increase resources for the provision of relevant courses for people in employment. The focus should be on the development of skills, at all levels, specific to the manufacturing sector in order to increase the productivity, competitiveness and employability of workers.
• Increase funding to meet the demand arising for the services of those organisations that have demonstrated an effective delivery mechanism.

Management Capability for Innovative Firms

As part of its action plan, the Management Development Council should have specific regard to the needs of manufacturing SMEs in Ireland to build leadership and management skills relevant to an innovative environment operating in a global context

The report identifies the need for manufacturing firms themselves to actively engage in the programmes offered and to provide continuous feedback of their needs as they evolve over time.

The report also recognises that there are a significant range of supports already available to assist existing firms, to stimulate entrepreneurship and to attract foreign investment, and recommends that the enterprise development agencies raise awareness of these supports and stimulate take-up by companies.

About the High Level Group

The High Level Group was established in response to the Social Partnership process and the Towards 2016 Agreement. The group brought together representatives from Government, companies representatives from the manufacturing industry and from the Unions to consider the challenges facing the manufacturing sector.

Background

The High Level Group on Manufacturing was established in 2007, resulting from the Social Partnership process and Towards 2016 Agreement. The group brought together representatives from Government, company representatives from the manufacturing industry (the employers) and from the Unions (employees). The enterprise development agencies were represented in an advisory capacity.

The Group identifies a limited number of focused actions required to support the ongoing development of the manufacturing sector in Ireland. It also contends that a collective and inclusive approach on this limited number of areas is essential.

Synopsis

Chapter 1 provides an overview of the sector in Ireland in terms of contribution to employment, the creation of secondary employment for sub-supply and services and expenditure in the economy. It highlights the fact that manufacturing is a key-driver of innovation and technological advance. Sectoral analysis is also provided.

Chapter 2 provides an overview of the Business Environment - trends, challenges and opportunities, including both global and domestic factors. The chapter covers:

Global Factors

The increased pace of globalisation, highlighting the intensified competition for inward investment, the increased competition within multinationals, opportunities for internationalisation and outward direct investment (ODI) and the increased competition for investment domestically.

The shift toward global supply chains, highlights the disaggregation of supply chains, emergence of new global business models, and the potential for manufacturing firms in Ireland to compete within this context by making strategic decisions in terms of location, outsourcing, markets, branding partnering and differentiation.

The blurring of manufacturing and services and the increasing servicisation of manufacturing firms’ offerings.

Productivity and the role of Technology discusses how advances in technology impact upon the nature of manufacturing itself, and on productivity through its application in automation and process improvements. The nature of production in the future will require increased focus on agility and anticipation to permit flexible small scale or even single batch production.

Sectoral Convergence presents both challenges and opportunity for firms, involving increasingly complex production processes, the need for knowledge of IP rights, licencing arrangements, regulations and standards, and the need for multi-disciplinary skills

The increased focus on Environmental Issues again presents both challenges and opportunities.

Domestic Factors

The key concern of the group relates to the pace of inflation, and they highlight the areas of Energy, Waste, Local Authority Charges and professional services as particularly problematic for the manufacturing sector. As well as management of cost/inflation, the report also highlights the need for manufacturing firms to engage in energy efficiency and waste management/reduction initiatives.

Wider Definition of Manufacturing

These factors lead to a wider definition of Manufacturing, which indicates that value-added can be achieved by firms in a number of ways - not only through production, but also through a range of (or selected) activities across the supply chain.

Chapter 3Outlines what these trends mean at the level of the manufacturing firm operating from Ireland.

The manufacturing firm in Ireland will be Capital Intensive, Knowledge Intensive and Skills Intensive – led by an understanding of markets and customer needs, and underpinned by a participative company culture.

The chapter describes what this means in detail, outlines the characteristics of an added-value manufacturing firm and provides case study examples (based on presentation made to the group by different firms). The overriding message is that the characteristics are sector agnostic, and that knowledge intensive is interpreted as being much wider than R&D. The concept of technological and non-technological innovation is discussed in terms of product, process and solutions (whether manufacturing or services) and also in terms of developing an innovative company culture, with relevant work place structures and systems: (this draws from the work of the NCPP).

The chapter effectively pitches up the need for action in a limited (but critical) number of areas at firm level based on the added-value model as outlined.

Chapter 4Actions required (confidential until date of launch)

This chapter outlines the key actions required at both the business environment level and the firm level.

Business Environment:

The HLG acknowledges the complexities involved but reiterates their fundamental concern that escalating costs are having a detrimental impact on the sustainability of manufacturing in Ireland.

The focus on the recommendations is to manage the rising costs with particular regard to the areas deemed critical to the manufacturing sector:

• Energy
• Waste
• Local Authority Charges and Development Charges
• Professional Services

The HLG also acknowledges that firms have a role to play in investing in initiatives to improve efficiencies in energy usage and waste management, supported by the relevant development agencies.

At Firm Level

Focus resources and emphasis on:

• Innovation and Productivity
• Reskilling and Management Development
• Awareness and Take up of Existing Initiatives.

Innovation and Productivity:

Building on already existing initiatives, recommendations include:

Establish National Manufacturing Competence Centre(s) to actively engage with industry to address the current and future needs of production, training and reskilling needs: areas of focus include:

• Transformational change and productivity
• Energy efficiency in manufacturing
• The factory of the future

Intensify supports for business and workplace innovation to include incentives for business process reengineering, change management, organisational change, market development capability and new business model development

Firms should engage in international benchmarking at sectoral level and focus efforts on improvement through capital investment, R&D, skills enhancement and/or organisational change that would have greatest impact on productivity, competitiveness and longer term sustainability

Develop a User Guide on Productivity Improvement and Management to better inform both employees and employers of the practical actions that need to be taken in the workplace to realise increased productivity.

Re-skilling and Management Development

The recommendations are focused on:

• Optimising the use of available resources toward reskilling of people already in the workforce
• Adequately resourcing delivery mechanisms that have proven to be successful (eg Skillsnet)
• Building world class management capability for the innovative firm
• Implementing the agreement (s7.0 Toward 2016) to put in place a targeted fund for part-time courses at third level for those at work who haven’t had previous third level education

Raising Awareness and take-up

The recommendations outlined above will only be effective if firms proactively engage with initiatives on offer

The development agencies need to

• Improve uptake and drawdown of existing supports and streamline processes
• Increase and intensify efforts to promote the range of support initiatives and increase the use of advocates
• Implement a central web-based resource for business.

Chapter 4 goes on to outline that each of the Social Partners has a role to drive implementation of the key actions – Government, Employers and Employees (through their Unions where relevant). It will be through working collectively that we can ensure that manufacturing will continue to play its important role in Ireland’s future economic development.

Establish a Manufacturing Forum to include representation from the social partners to:

• Drive the implementation of actions required
• To be an action oriented advocate for the manufacturing aector
• Act as a clearing house for the sector
• Keep manufacturing high on the agenda
• Stimulate communication and engagement across all parties