Businesses look for new ways to survive

Every sector of society was expecting pain from Budget 2010 and likewise, they all had a wish-list in advance of yesterday’s speech. Claire O’Sullivan travelled to the north Cork town of Mallow last week to talk to retailers and business people about what the town wanted and needed from Brian Lenihan’s budget.

TRYING to generate employment in an Irish city is one thing, but imagine if you’re trying to attract companies to a small town in the south in the midst of the biggest global recession since World War Two?

That is the challenge facing small towns in Ireland as they try to make themselves self-sufficient and not just another rural outpost providing cheap housing to workers in the bigger cities.

Mallow in north Cork long relied on its two big employers, Dairygold and Irish Sugar. Irish Sugar shut down in 2006, with the loss of 330 jobs, while a further 1,500 have been shed at Dairygold in recent years due to its ongoing rationalisation.

Former Junior Cert geography students would know the town as a prime example of a market town serving its agricultural hinterland. But what happens when such a town finds its agricultural base under attack as farm incomes dry up and supports come under attack? And how can a town compete when its traditional shoppers are flocking to the warehouse-style shopping centres of Cork and Limerick where they’ll find international chain stores and open-ended free parking?

John McDonnell is the chairman of Mallow Development Partnership (MDP). There is just one thing, he believed, that the budget must focus on and that’s jobs.

“We need jobs more than anything. For us, the top priority has to be getting people back to work. Here in Mallow, we had our own recession four or five years ago when we lost the sugar factory and its ancillary services and then we lost out again with the rationalisation of Dairygold. The construction boom staved off the full effect of those jobs losses but then when the property bubble burst, we were really hit double time,” he said.

The town’s biggest employer is now manufacturers Kostal, which has up to 400 employees.

The partnership is focused on forging an unique identity for the town and on selling its pluses including its hourly trains to Dublin, half-hour distance from Cork and location on the planned new Atlantic corridor roadway that will run from Letterkenny in Co Donegal to Waterford city.

But while on one level Mallow’s proximity to cities like Waterford and Cork is an asset, it is also a drawback.

“We don’t want to be enveloped by the city. Looking forward, we want to work with UCC so they can see Mallow as a satellite town where they can base research, engineering projects and even part of their medical campus,” says Mr McDonnell.

Out on the Old Cork Road stands one of the biggest commercial developments in Mallow in the past 10 years, the eight hectare Mallow Business Park. Developed by local construction firm, Castlelands, it doesn’t yet have full occupancy but next year, it will house the new Mallow Primary Healthcare Centre due to be opened by the HSE in January or February.

A public/private partnership, it is being held up by many in the Mallow Development Partnership and the Chamber of Commerce as an example of what this town can do.

17 doctors from three practices around town will be operating from one building. Counsellors, nutritionists, physiotherapists, addiction experts and other health professionals will also operate from this “one-stop-shop”. Most importantly for the MDP, UCC will be using the centre for primary care research and as a base for their GP training programme.

“We are very aware that traditional jobs are gone and that we have to become attractive to other types of industry. We decided a number of years back that we needed to seek out particular types of industry.

“We want to work with UCC to attract medical technology firms and biopharma. Biofuels is also another sector that would benefit from our agricultural surroundings and our great water and energy supply. Our proximity to Cork and Dublin and the planned new Atlantic Corridor also makes us an ideal base for a logistics operation,” said Mr McDonnell.

With Mallow’s rich agricultural hinterland, you can’t really understand this town without talking to the farmers who play a high influence on its commerce.

Sean O’Leary is a Mallow farmer and vice-president of the Munster IFA. He says that Finance Minister Brian Lenihan has to realise that any more attacks on farm income will have a downstream effect on retail in rural towns like Mallow.

“There is a 70% return to a town from the surrounding agricultural economy. The rural economy is so important and therefore Minister Lenihan should be looking for the continuation of schemes that have kept country towns going. These include the disadvantaged area schemes that were already cut by 1,000 in the mini budget. REPS payments have also been cut by 17% and closed to new entrants. These schemes have underpinned Irish agriculture and the minister needs to realise that they can’t be attacked any more. I would also like to see exemptions for agricultural fuel from the carbon tax,” he says.

John Sheahan’s accountancy firm also operates from the Mallow Business Park. When I meet him, the chairman of the Mallow Chamber of Commerce is sifting through nominations for the Mallow Business Awards 2009.

“You forget about the many small businesses that are working away and trying to grow their market during this recession. These are the people filling up the small units in our industrial estates and employing 10 or 15 people, people in motor factoring and the like,” Mr Sheahan said.

“There are also a lot of good retailers in town who have found their niche market and who are constantly looking at their business and the needs of the market. We have one fashion retailer in town who has put a coffee shop over her store here in the past year. People aren’t giving up. Just look at the huge development that Neil Kelleher has made in his electrical shop in town. That’s a huge vote of confidence in the town.”

Just as retailers around Dublin and the midlands are beseeching shoppers to shop in the south, here in Mallow, as part of its shop local campaign, the Chamber of Commerce is appealing to shoppers to shop here in Mallow and not just drive off to Cork city.

“We must retain jobs and to do that we must ensure that we stay in business. If businesses go, then jobs go. It’s as simple as that”.

As another retailer, who didn’t want to be named said:

“I have women coming in to me looking for Christmas work for their daughters but they aren’t buying here themselves. I can’t provide work locally if people choose to shop in Cork.”

Deirdre Joyce is working behind the counter at Just Kidding on Mallow’s Main Street. The widely expected cuts to children’s allowance are causing her concern. “Women have always used the children’s allowance to save for clothes for children whether it is for Christmas, birthdays or for special occasions like communions and confirmations. Any reduction, never mind the touted 100% removal, will affect us here,” she says.

While competition from city stores like Penney’s, Zara, Debenhams, Marks and Spencer and Adams will always be a problem, she says they thankfully will always have regulars.

“What I really have noticed this year is the amount of people coming in already asking when the communion stock is in. I don’t know how many people have told me ‘my husband lost his job so we need to start putting stuff away’ or ‘we need to be organised this year as we just don’t have the money anymore’.

“There is no doubt that things are much tougher this year. People don’t have the money in their pockets that they had before between increased taxation and pay cuts. I really hope that they don’t try and tax people anymore,” she says.

John Sheahan isn’t certain that the budget can really kick-start the economy. “So much depends on NAMA. We really need to start seeing a supply of credit so that people can pay debts.”

The Government’s Transport 21 strategy set down the need for an Atlantic Corridor between counties Donegal and Waterford. A public consultation took place around the planned road that will run east of the existing Cork-Mallow road but then last year the planning process and EIS were deferred.

John Sheahan and John McDonnell are adamant that such infrastructure projects cannot be shelved indefinitely.

“The Atlantic Corridor is vital to Mallow. The inner relief road will relieve traffic in the town and make it a much more pleasant place to shop. The road itself will allow much faster travel to Cork and Waterford,” said Mr O’Donnell.

“There is value for money there now that will build our future” adds Mr Sheahan.

Liz and Jim O’Flynn live outside Mallow. After 20 years of working at Waterford Crystal where Liz oversaw the content of the Cash’s catalogue, a catalogue that turned €26 million, she was made redundant earlier this year. Jim, her husband, is an accountant and has worked at Banta Global Turnkey and Apple.

In the past 10 months, they have put a project that they had dreamt of for years into action with the establishment of their claddaghlane.com website. The gift site is a one-stop-shop for people wishing to buy top Irish and international brands, including Waterford Crystal, Belleek and Border Fine Arts. It is a truly global venture and the O’Learys plan to have the site translated into French, German, Italian and Russian. They have servers in Detroit and Dublin and the site is running off the impressive Magenta platform.

It’s clear the couple are excited about the project which is based upon providing quality brands at lesser cost.

Jim’s eyes sparkle and he can’t help but get animated when he talks about their simple but clever business model which sees all clients paying up front for purchases

“We have prices negotiated with the various brands. We then operate at tight margins by selling them as competitively as we can and offering free shipping. We can afford to do this as we don’t hold stock. Your order comes to us and immediately our computer system sends an order to the brand. They supply to order and are paid immediately and so neither of us deal with credit. We have no debtors. We all get paid immediately. This is how the next generation of business will be done. No business can afford to keep inventories any more.”

Immediacy is what the business is all about. “Nowadays people want to get everything done as soon as possible.

“Take the other day: we had this guy from Tennessee that wanted to buy some crystal. He told us how he looked up the site, rang us, paid for the present and ordered it to be sent gift-wrapped all over his iPhone while walking down the street. People want that ease of purchase.”

According to John Sheahan and John McDonnell, it is people like Jim and Liz who will bring this country out of recession. “The days of the multi-nationals coming in providing hundreds of jobs are over. The future is about ambitious small and medium-sized enterprises. Such businesses need help to establish in towns like Mallow,” says Mr McDonnell. SMEs provide 70% of employment in this country.

But Jim O’Flynn doesn’t feel he’s getting help where he needs it most — by linking him up with skilled e-commerce graduates. He is adamant the finance minister needs to come up with some innovative internship projects in this budget to counter unemployment and the inevitable graduate brain drain.

“We could really do with more e-commerce skill at Claddagh Lane but we can’t afford to hire someone yet. It is an absolute crying shame that we have all these top computer science and marketing graduates who can’t get work experience.

“The Government will pay them to go on the dole but they won’t pay them to work. There should be encouragement for start-ups to tie in with universities. Surely graduates would much rather work with us than do Mickey Mouse Fás training? Surely the Government should focus on where the jobs will be rather than focus on just training for sake of training? They have got it backwards”.

Further along Main Street at Bank Place is John O’Connell’s auctioneering business. Mr O’Connell is a straight talker and says Brian Lenihan has to get the public finances under control if there is any hope of revitalising the paralysed housing market in the medium term.

“The most important thing is that we bring order to the finances. We can’t continue to spend borrowed money for everyday spending. We have to get that sorted before we can move on. There is still a huge feeling of uncertainty out there because of the mess the country is in and people are scared to make any big purchases.

“People are also very worried about their jobs. You hear about the Dells but there are lot of small companies out there closing down and shedding 5,6 and 7 jobs as business is down so much or else they can’t get paid. We have to get rid of that uncertainty and bring back confidence,” he says.

Ian Lucey’s family have been trading as butchers in Mallow for five generations. He is more than aware of the pressure on people’s purses and how each purchase is well budgeted for these days.

Mr Lucey hopes that punters’ incomes aren’t squeezed too much in the budget as he says people’s disposable income is already tight enough.

“I have a lot of competition from the supermarkets including the discount supermarkets. I have spent my time and energy over the past year on just trying to keep my quality and variety and yet reduce prices as much as I can.

“I didn’t go mad in the good times so I haven’t had to let staff go or cut pay. The thing now is to just try and keep the business going, keep competing and continue getting people into the shop so that you are there still when things improve”.

His was and is a no-nonsense business philosophy, one that a lot of people, including the mandarins at Department of Finance, could learn lessons from.