Comment: In a fairly large midlands town, there is a manufacturing company that employs someone from almost every local family. It is also the largest purchaser of goods in the area.
The management are looking at two lines on a graph. They see factory gate prices standing still or falling because of global competition. They see costs rising far faster even than the general level of inflation.
The national agreement Towards 2016 recognises the urgency of taking special measures to enable the manufacturing industry to compete successfully.
Energy prices, local authority rates, waste disposal charges, professional fees, rising wages and other costs pour in but cannot be passed onto the customer. Margins are being squeezed so tightly that businesses are shutting down completely or are moving to cheaper parts of the world. In the past four years, more than 30,000 manufacturing jobs have been lost.
This has been disguised by the rise in public sector employment and construction, clearly neither of which contribute to the exports we need if we are to prosper.
Despite intense difficulties, manufacturing remains a vital cog in the Irish economy. It employs 300,000 people, spends €25 billion a year on wages and accounts for almost one-third of corporation tax.
Ireland's manufacturing industry has taken more than 70 years to build through a combination of foreign direct investment and indigenous development. The fortunes of the entire economy rely on its long-term viability and success. The issue now is to sustain that.
The social partnership approach that began in 1987 is best understood in the context of the economic problems of the time. The lessons, then hard-learned, are still very relevant to the economic challenges of today.
Today's challenge is how to manage our considerable economic success while at the same time addressing the very significant issues facing our manufacturing sector. The sector is changing very fast and the Republic must respond to the new order or face losing out on investment, jobs and exports.
Towards 2016 acknowledges the risks and sets out a range of measures to safeguard the industry's future. These are aimed not at protecting Irish producers from global competition, but rather at enabling companies here to compete with the best in the world. To do this, business here needs to keep pace with the most advanced competitors in the market, and this requires constant innovation.
We live in an age of non-stop invention: half the products we will use in just five years time have not yet reached the drawing board. More computers, cars and aircraft are being constructed, more roads being built and more steel being made than ever before and, as the 67 per cent of the world population who earn less than €2,000 per year become more prosperous, they will want more tangible, practical manufactured goods.
No manufacturer can afford to be complacent or ignore the need to change.
Change requires flexibility, and the Towards 2016 partnership agreement has this at its core.
Flexibility is not only a key issue for business. It is critical that Government, State agencies and trade unions support the sector in whatever measures are necessary to ensure its ability to compete and safeguard the maximum number of jobs.
The Republic will never be able to compete directly with low-cost economies, and there is little point in trying. Our wage levels alone mean that the production of many products is much cheaper in the Far East, for example. But there remain many areas where Irish companies can look to secure a competitive advantage in the market.
Good manufacturing companies will sustain jobs based on the efficient use of resources, particularly a highly skilled workforce, technology, substantial investment on the ground, market proximity, supplier links, research and development (R&D) support and service to customers.
The manufacturing strategy outlined in the partnership agreement is key to ensuring that Irish manufacturing jobs are secure. The commitment to provide additional resources for upskilling people in employment, particularly the low-skilled, is a measure that can make a difference.
The appointment of a director to support companies accessing EU R&D funds will undoubtedly help firms to make the most of their opportunities with this complex funding area, currently prohibitively difficult to access, especially for small businesses.
Towards 2016 will also run a dedicated promotional campaign to increase awareness of sales and marketing personnel grants within the manufacturing sector. It will also review the operation of existing support programmes to identify further measures by which the take-up by manufacturing companies can be increased.
The proposed High Level Manufacturing Group which is to consider the range of issues affecting the competitiveness of the manufacturing sector - and chaired by an established industry figure - will be particularly valuable.
Such a strategy must be achieved in the context of continued economic stability, a relentless pursuit of efficiency in Government that delivers value for money in public services, helps to minimise the tax burden, and introduces sensible and well-designed regulations that don't distract managers from improving their businesses.
The goods of tomorrow need to be made somewhere. The Republic does it today and can in the future.
•Pat Delaney is Ibec's director of business sectors.
