Speech by the Minister for Enterprise, Trade and Innovation, Batt O’Keeffe TD, at the Irish Manufacturing Council (IMC) conference in the Galway-Mayo Institute of Technology

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1 September, 2010

Good morning and many thanks for your invitation to open the IMC27 conference and address you today.

I want to thank in particular Marion Coy, president of GMIT; Dr Patrick Delassus, head of research; Gerard MacMichael of the school of engineering; Rory O'Connor of the Galway-Mayo Institute of Technology (GMIT) governing body; and Valerie Butler, lecturer and organiser.

I am delighted that you have organised this conference here in GMIT.

GMIT has carefully brought together courses in science, business, engineering, technology and humanities to deliver internationally recognised accreditation.

GMIT has links with some 100 higher education institutions across Europe and in the US and it is renowned for its range of research activities, collaboration with other higher education institutions and, importantly, with industry.

Its activities in partnership with business and community organisations are key to its delivery of top-class higher education in this region and the promotion of best practice in enterprise and innovation across the country.

Looking at your conference schedule, it is clear that the issues important to the manufacturing sectors in Ireland will be expertly examined by the speakers you have selected throughout the morning.

The companies making presentations here today include world-leaders in terms of manufacturing and firms at the forefront of innovation, development, and marketing.

They are among the world’s best in terms of medical devices, biotechnology, information communications technology (ICT) and more.

The Sustainable Energy Authority of Ireland is dedicated to transforming our society to one based on sustainable energy structures, technologies and practices that will position Ireland as a recognised global leader in sustainable energy.

Finally, the presentation from Enterprise Ireland will no doubt reflect its critical role in supporting emerging firms and technologies, improving productivity and competitiveness and driving growth and exports in manufacturing and across all sectors of the economy.

I can reassure delegates that Government shares the view set out in your chosen theme, ‘Manufacturing Matters in a Smart Economy’.

The manufacturing sector has been a mainstay of Ireland’s economy for many years and the Government recognises the important contribution of the manufacturing sector to our overall recovery.

Today’s NCB Purchasing Managers’ Index survey shows a strong rise in new manufacturing business helped by a pick-up in orders from abroad demonstrating the resilience and opportunities in the sector.

The Government is also aware of the fast pace of change within the modern manufacturing sector in Ireland.

Only yesterday, the advisory body, Forfás, published a report on the future of nanotechnology.

Implementing the recommended strategy will see Ireland competing to win in the global nanotechnology market.

Manufacturing firms’ total direct spend in the Irish economy exceeds €26 billion and contributed 25pc (or about €40 billion) to Irish Gross Domestic Product last year.

Indigenous industry is key to the Irish economy in terms of potential export revenues, employment and corporate and personal taxation.

It also acts as a marker with regard to the attractiveness and competitiveness of Ireland as a knowledge-driven economy.

Being a small open economy we all know that our future economic growth will have to be driven by exports of goods and services.

Improving our competitiveness will also help us attract more foreign investment to Ireland.

We are already seeing a recovery in cost-competitiveness with lower business costs, particularly wages and energy.

We are reducing the administrative burden by driving better regulation.

Local authority charges remain a great concern of the business sector and we will progress the recommendations of the recent efficiency review of the local authority system to secure savings which will further reduce pressure on business and ensure we can sustain and create jobs.

Manufacturing remains at the heart of our economy.

Over 180,000 workers are employed in manufacturing and, in addition, it is estimated that there are 74 jobs in related services for every 100 directly employed in manufacturing.

Creating and protecting employment is the driving force behind so much of our work in stabilising our public finances and getting our banking system working again.

It is the reason why in a time of constrained public spending we are continuing to invest so heavily in our capital programme in building necessary infrastructure and investing so much in enterprise, research and development.

There are far too many workers unemployed and demand remains weak but there are signs of an increase in recruitment activity.

In fact there is evidence to suggest difficulties in filling vacancies in some areas of our economy such as ICT, science and engineering.

It has been estimated that there will be a requirement to recruit up to 96,000 workers on average every year up to 2014.

The skills we will need to ensure that we take full advantage of these opportunities is obviously of concern to both the academics and business leaders here today.

A knowledge economy does not mean a complete flight from manufacturing.

Instead, it means that manufacturing gets smarter, adds more value and better addresses the complex demands of modern society.

Those speaking to you today and over the days of the conference are fine examples of this.

Not only does manufacturing contribute directly to employment, economic output and exports but it is also a key driver of innovation and technological advance.

It increases opportunities for attracting and embedding research and development activities, collaboration with the higher education sector and stimulating networks.

Ireland’s management capability, high-quality outputs, productivity growth and project management skills have evolved as a result of our success in attracting high-quality foreign direct investment in manufacturing and in stimulating the growth of indigenous firms with a focus on exports.

In order to sustain and grow employment in manufacturing, Irish-based enterprises will have to continue the progression to high value-added sectors and activities and continue to increase productivity through investments in human capital, technology and innovation.

Trade is the cornerstone of Ireland’s economic success and Ireland’s enterprise base can take some pride in the incredible resilience they have shown in the last two years.

We are not complacent, however, and our aim is that by 2020 Ireland will have a significant number of large, world-leading, innovation-intensive companies.

These companies will provide high quality employment and generate exports and tax receipts.

They will vary in scale, type of activity and pattern of company ownership.

What will be distinctive about these companies is that they will be ambitious, export-focused and, above all, innovative.

Manufacturing will have a central role to play in the realisation of this vision.

The Government has made a major commitment through the substantial public investment in the Strategy for Science, Technology and Innovation to building the critical research and development mass for transition to the smart economy.

This whole-of-Government strategy comprehends research and the application and commercialisation of the fruits of that research to industry.

Many companies in Ireland have built world-class high value-added manufacturing and services capabilities particularly in food, ICT, software development for manufacturing technology, pharmaceuticals and medical technologies.

We envisage that Ireland’s manufacturing base will continue to move up the value chain.

Programmes such as SFI’s Centres for Science Engineering and Technology and Strategic Research Clusters programmes, along with the EI/IDA Ireland Competence Centre programme all have the same objective in view - to harness the benefits of research collaboration for the benefit of the Irish economy.

We have seen in this recession that the companies that have invested in research and development and ensured their products or services have a competitive edge are the same companies that have held or grown market share and held or grown employment.

This has reinforced our belief that our research and development strategy is the right one.

Keeping the manufacturing sector strong is based on keeping ahead of the competition through market-focused research and development.

Enterprise Ireland and IDA Ireland are working closely with companies to strengthen the research and technological base of the enterprise sector in order to drive productivity, competitiveness, exports and jobs.

IDA Ireland offers information, advice and ongoing support to companies setting up or expanding high-value manufacturing operations in Ireland.

Support is available to companies making the required changes to be at the leading-edge in terms of production processes, global business models and organisational structures.

In 2009, almost €29 million was approved to industry for 100 manufacturing industry research and development projects under Enterprise Ireland’s research and development supports.

Further, significant support was made available by IDA Ireland to the companies it helps.

These projects will position these forward-looking manufacturers in key positions as the global upturn takes hold.

Manufacturing and the manufacturing model has changed fundamentally in recent years.

Manufacturing today encompasses a broad range of activities from research and development through design, production, logistics and distribution to marketing and after sales service.

These sectors often require specialised skilled staff, specialised technologies and flexible operations and other factors not readily available in many low-cost economies such as modern intellectual property protection laws and a business-friendly regulatory environment.

The model of manufacturing in developed countries is changing and Irish-based enterprises are adapting to those changes and engaging in higher value-added activities in order to compete in the global marketplace.

This has been achieved as a result of increased productivity, technology levels and sophisticated skills of Irish employees.

In this context, SFI is playing a critical role in building our human capital - the knowledge, skills and creativity of people - and our ability and effectiveness in translating ideas into valuable processes, products and services.

This work has been highly rewarding as today SFI-funded researchers are connected to over 300 companies in Ireland who support employment of 56,000 workers.

The range of topics to be discussed at this year’s IMC conference embraces the span of new manufacturing technologies that will enable manufacturing companies in Ireland rise to the challenges ahead.

The role of knowledge providers and developers such as GMIT is a vital support to industry and we will continue to support interactions with industry through a range of measures such as Innovation Vouchers.

I wish you well in your work over the next few days.

I will conclude by encouraging you to keep up the production of ideas and technologies and by reaffirming the Government’s support for an innovative manufacturing sector at the heart of our economic future.

Thank you very much.

ENDS/ETI2270

Bernard Mallee, Press Adviser to Minister Batt O'Keeffe, Department of Enterprise, Trade and Innovation, Tel: +353 1 631 3944, Mobile: +353 87 9173022, Email: bernard.mallee@deti.ie