Donegal jobs crisis needs new approach

WOULD the last worker leaving Donegal please turn off the lights?

Seldom has the war-time adage been more poignant than in the north-west where people are reeling after yesterday’s shock news of yet another factory closure in a seemingly endless haemorrhage of jobs from the region.

Ominously, with Ireland’s house building programme down for the first time in more than a decade, and with the oil crisis likely to get worse, this bleak scenario may be replicated in other vulnerable parts of the country.

Despite widely held perceptions that corporate Ireland is going through a boom, economists are in broad agreement that ongoing growth will depend increasingly on the prediction that consumer spending will inevitably get stronger.

But with oil prices pegged firmly above the $50 a barrel mark, both domestic and industry fuel bills are also set to go on rising. And with other household charges increasing across the board, the signs are that consumers are now applying the brakes to personal spending.

According to the latest Bank of Ireland forecast, the prospects for growth hinge mainly on the economy

being fuelled by domestic demand. Essentially, the bank’s quarterly outlook for the rest of the year predicts that spending by consumers, Government and business will drive growth of 5% this year.

But while Ireland’s economic performance is still far ahead of most OECD countries, the other side of the coin is that jobs are being lost in manufacturing, exports are relatively weak and cut-throat competition from China and other Asian economies is starting to hit Irish companies.

One serious problem, as evidenced by the bitter Donegal experience, is that Ireland is becoming less competitive. Effectively, the US pharmaceutical company Hospira has decided to close down its plant in Donegal town with the loss of 560 jobs because Costa Rica and the Dominican Republic are cheaper.

In around 18 months, the plant, which makes medical devices, will move to new locations in the Caribbean where the cost of manufacturing is significantly lower than in Ireland. In a region which has already suffered more than its fair share of factory losses, the lightning closure decision represents a major social, economic and industrial body blow.

Predictably, the Government has responded by promising to throw the full resources of the State behind the task of replacing the job losses. Whatever is set up, it will have to do better than the task force established when the Fruit of the Loom closed in 1998.

Once the biggest textile group in Ireland, it employed around 3,000 people, mainly in Donegal. In its wake, the task force aimed to bring 10,000 new jobs to the region. Seven years later, relatively few have materialised.

Given its remoteness from the main urban centres, what the north-west region needs is for the IDA and other agencies to come up with a more radical blueprint designed to channel jobs to a region where the unemployment rate is running at four times the national average.

In economic terms, while the fall-off in house building was just below 1% to the end of June, it shows that after 10 years of record growth, the construction industry is finally coming to an end.

Though output remains relatively high, it is worrying that future economic growth is so heavily reliant on the twin uncertainties of consumer spending and a construction industry clearly slowing down.