Harney urges flexibility from industry

IRISH industry will have to become more productive, inventive and flexible to survive the increasingly competitive global market, Tánaiste Mary Harney warned.

Announcing a major review of the country’s industrial performance, Ms Harney said the success of recent years had been built on the back of a low-cost, low-wage environment which no longer characterised the economy.

“We can get a bit complacent,” Ms Harney said. “Nobody owes us a living and nobody has to buy our products. They will only do so with competitive reason.”

The Tánaiste is putting together a think-tank of leading business people and independent economists to come up with ways of bolstering Irish business to face the challenges ahead. She said she wanted a “warts-and-all” critique of how things were done and a set of recommendations for how Government should tweak national policy to help private enterprise in future.

Membership of this new Enterprise Strategy Group will be announced tomorrow but Ms Harney said it would be a mix of senior bosses from Irish and foreign-owned industries, academics and trade unionists, and that none would be employees of the State or semi-State companies.

“I have never run a company in the private sector. You can learn a lot from those who do every day,” she said. “The group is made up of people operating in a very difficult global environment, people who have succeeded in some cases against the odds, small companies that repositioned themselves. That’s what Ireland has to do.”

The group will be chaired by former Lucent Technologies vice-president Eoin O’Driscoll, now managing director of consulting firm Aderra, and will have nine months to report. Issues it will be expected to examine will include supports for start-up businesses, inflation, insurance costs, the impact of the changeover to the euro, Britain’s decision to opt out of the eurozone, and the availability of venture capital.

It is thought likely the group will recommend tax breaks for companies investing in research and development along the lines of the incentives available in Britain, and that they will suggest ways of helping industries make the transition from manufacturing to innovating.

“In the past we have been excellent at making products designed by others; in the future we will have to design and innovate our own,” Ms Harney said.

The group will also place a strong emphasis on industrial development in the regions and set out what infrastructure is necessary for business to survive outside of Dublin and the other cities.

They are not expected to suggest changing corporation tax which, at 12.5%, is already one of the lowest in Europe and is under pressure from the European Union to increase in line with other member states, but Ms Harney said the group had free rein to make whatever suggestions they wished. It is 11 years since the last major review group made a set of recommendations in what became known as the Culliton Report. Mr O’Driscoll said the new review would provide a roadmap to guide industry and enterprise over the next 10-15 years.