Mr Damien English , TD

Chairman of the Joint Committee on Jobs , Enterprise and Innovation

Leinster House , Dublin 2. 18th September 2012

Dear Damien,

Many thanks for the invitation to IEA to discuss Irish export issues at your Committee meeting on the 25th September 2012 . As the agri-food sector is by far the largest of the indigenous export sectors Mr Bernard Coyle , chairman of the IEA Food And Drink exports division will attend the Oireachtas meeting with me .

We started out by making a general observation ;

‘’The likelihood is that exports will remain the only significant source of positive momentum in the economy for the next couple of years .That being the case , safeguarding and expanding the economies export base should remain a critically important objective of the Government’s overall economic strategy.’’

In 2010 and 2011 we have seen a return to good growth in exports 8% and 5% respectively.

However, there has been a deterioration in the outlook for the global economy over the past 6 months , with the most recent OECD forecast indicating that the euro area as a whole will see GDP growth of 0.3% for 2012 and 1.5% for 2013 .And with the UK in technical recession no growth in GDP can be expected in 2012 .

As 57% of exports from Ireland over the past few years have gone to the EU27 , we expect and have already seen significant loss of exports to European markets this year. We now expect that exports from Ireland will increase by 3% at best .But underlying this figure is a wide range of companies struggling to survive in a recession hit UK and a very slow trading Eurozone .

The implications of this revised growth outlook for export industry and for the labour market are matters of particular concern which we wish to address in our meeting in the Oireachtas on the 25th Sept. We also wish to underline the urgency of designing and implementing reforms that will enhance export industry’s potential growth rate and it’s capacity to generate employment .

The Key areas of concern to the Irish export industry are as follows ;

  1. Access to Finance

The is a particular concern for the SME export sector . It is holding back international sales growth and employment expansion .

IEA and EC studies show a significant (28%) percentage of Irish export business are being restrained from growing their exports due to lack of adequate /competitively priced funds being available from Banks .

Actions are being taken by the Government , but are far too slow in being implemented –such as the ; Credit Guarantee Scheme which is designed to release €450 million into 1600 SME exporters and create 1300 new jobs , which was agreed this time last year but still has not been released to industry .To put this incontext there are 1700 EI exporting companies , and only 6 net new jobs were created last year in the EI client network.

We urge you and your colleagues in the Oireachtas to ensure the immediate release of the scheme , but to also ensure it gets released at an Interest rate of at least 1% below current bank lending rates ( similar to the €20 billion scheme released last year in the UK).

But the export sector is also being restrained by lack of availability of competitive

  • Bank bonds –performance bonds and
  • Export Credit Insurance

And we requested that you have this looked into .

  1. Cost of doing Business ,is a major issue for both MNC and SME exporters , and will need scrutiny by the Government to ensure reduction in costs where possible , if exporters will be able to trade competitively out of Ireland , over the coming 12 months and beyond . We cite the following examples ;
  • Labour costs at end 2011 in Ireland were €27.4 per hour , whereas the UK labour rate was €20.10 according to the latest Eurostat release.

We urge the Oireachtas to ensure that no costs are added to the current high costs of employment and in particular to ensure employers and employees PRSI , USC or income tax were not increased in the December Budget

  • Rates , have risen to 50% of rental rates in many industrial estates.

We urge the Oireachtas to accelerate the re –valuation process under way, and to improve the rates collection compliance from the current 75% level, which should bring about a more equitable system of rates .

  • Energy; costs are still one of the highest in Europe.

We urge the Oireachtas to request your responsible Government colleagues to extend the large user rebate due to expire at the end of 2012 , to support our manufacturing exporters .

  • Transport; due to fuel cost increases and distance to European markets the cost of transport has eroded manufacturing competitiveness .

We requested that Oireachtas members put their support behind the IEAs call for an essential diesel user rebate to be introduced in the December Budget , similar to that operated in France and a number of other EU countries , who use the mechanism to support their manufacturing exporters. We have also have made submissions to the Minister for Transport and Minister for Finance on this matter .

  • Exchange rates currently in Irish exporters favour , are expected to move negatively again later in the year , as the Bank of England continues with its quantitative easing to help their exporters and their economic recovery .

We recommend to the Oireachtas to urge the ECB to also move to ensure that the Euro stays competitive , to counter UK and USA quantitative measures .

  1. Targeting Fast Growing Emerging Markets ,must be given a higher priority , if we are to grow exports from Ireland at a faster pace than that dictated by the sluggish EU markets . Currently exports to the BRIC countries account for 4% of total Irish exports , whereas the EU average is 20% of exports to these markets .Emerging and high growth markets present many opportunities for Irish exporters , with potential to provide access to new suppliers which can increase our competitiveness ,as well as give access to large and fast growing consumer and industrial customers for goods and services . But they are more costly to enter and need Government flag opening .Hence we urge added measures to stimulate and assist exporters to expand sales into these fast growing , but difficult markets , by means of ;
  • More Ministerial led trade mission
  • Extend the Foreign Earnings deduction scheme to other priority markets , such as Gulf States , Korea, Japan , Indonesia, Vietnam , Malaysia and South America.
  • More focus on Free Trade Agreements and advise on benefits /threats to Irish exporters under these agreement
  • Extension of the Joint Economic Commissions(JEC) , following on from the success of the Russia JEC.
  1. Outreach Exporter Programme ; Many mid-sized companies have difficulties in growing their businesses internationally and find themselves outside the state supports agency system for export support . The IEA estimate that there are 14,700 companies of this type , employing 447,000 people . EI have 1700 of these companies as client exporting companies , which leaves a large group of businesses with potential to become successful exporters and job creators .

The IEA urged the Oireachtas to support our call for a new Outreach Export Development programme to enable more of these mid–sized companies to become successful exporters.

I wish to once again thank you for allowing the IEA TO discuss these matters in open session with the Oireachtas Joint Committee . We look forward to working with you and your colleagues to deliver on a progressive export led recovery to our economy.

Yours Sincerely

John Whelan

Chief Executive

Irish Exporters Association