‘High operating costs and underlying inflation a challenge for Irish firms’

FOOD group Glanbia hit out at the high cost of doing business in Ireland when it announced results for 2006 yesterday.

The loss of a key customer to Poland was the last straw for the food group’s pork cannery operation in Rooskey which it was forced to close at a cost of €3.3m, with the loss of over 80 jobs.

Canned meat sales have been declining sharply and plant was under pressure but when a key customer turned to Poland for supplies “we decided enough is enough” said chief executive John Moloney.

He added that the cost of doing business in Ireland was quite challenging with “underlying inflation” a real issue.

“Non-pay costs have probably been north of 20% over a couple of years in Ireland and that’s everything from local authority charges right through the gamut to energy.

“Large scale users of electricity in Ireland are paying 30% over the European average for electricity. And I think all of those factors combined continue to put pressure on operating costs and the need for businesses to continue looking at its cost base.”

Mr Moloney was responding to claims from food analysts that the Irish market would prove a difficult environment again in the current year.

However, Mr Moloney said it wasn’t all bad in the Irish context and the group enjoyed a very commanding position across a range of its products.

Food ingredients in Ireland had a particularly hard time where continuing EU reform hit margins.

Overall however, the outlook for the group’s US ingredients is very positive and it is looking forward to its operations running to full capacity.

Within that nutritionals, an increasingly critical part of the group’s overall business is also in line for another very good year.

That business delivers whey formulations used in a wide range of consumer products from health bars beverages and powders for clients across the globe.