Firms count cost of sterling weakness

WEAK sterling has sparked a crisis for Irish-owned industries which are suffering from massive falls in output.

Figures released by the Central Statistics Office (CSO) to the end of March show that traditional industries, which are mainly Irish owned are almost all reporting falls in output.

Employers group IBEC said the weakness of sterling has “greatly accentuated” the difficulties faced by many manufacturing businesses right now. IBEC senior economist Fergal O’Brien said: “These businesses require urgent Government intervention in order to help them survive the current economic crisis and to ensure that as many jobs as possible are protected.”

Output from traditional manufacturing fell by 15% in the first quarter of the year while output from the advanced sector, which are almost totally foreign-owned rose nearly 2%.

Food and beverage production fell by 8.5% in the quarter, rubber and plastic output was down 30%, while machinery and engineering equipment production fell by 36%.

Also separate figures from the CSO show that the value of goods exported in March was down 6% from February to €7.28 billion. Imports were unchanged at €4.14bn. Goods to China decreased by 24% and to Britain by 6%, but goods to the US increased by 6%.

Alan McQuaid of Bloxham Stockbrokers said: “The operating environment for Irish exporters has been considerably more challenging in 2009 due to a combination of adverse developments. Given the openness of the economy, Ireland is more vulnerable than most to a decline in world trade demand. At this juncture it looks like 2009 will be the most difficult year for Irish exporters for some time, though the overall net trade performance will again be helped by weaker imports due to falling consumer demand.”

Meanwhile the new president of Engineers Ireland Dr Chris Horn said Ireland’s economic recovery will only be sustainable if it is generated by export-led growth fuelled by innovative firms.

Dr Horn said that since the 1960s, Ireland has always placed international trade as a key national focus until the recent “unsustainable reliance on domestic demand in the construction sector”.

“We have traditionally been one of the most openly traded economies in the world, but we lost sight of this in the recent construction industry bubble that was based on publicly-funded infrastructure, commercial property and domestic housing.

“In my view, our construction industry now needs to more proactively consider export growth while retaining appropriate domestic capacity, using the skills we have gained at home to bring new techniques and processes and skills to the global market.”