The value of the euro needs to fall by a further 10 per cent to give Irish manufacturers the chance of continuing to export their goods, the Irish Exporters Association (IEA) has said.
Exports from labour-intensive manufacturers, such as computer equipment makers, fell by 20 per cent in the first half of this year from the year-earlier period, while exports from medical device manufacturers also slowed to an increase of just 1.5 per cent, according to the IEA's half-yearly report released yesterday.
Both sectors are struggling to remain competitive, with the high value of the euro hindering growth at home and cheap labour costs overseas making other parts of the world more attractive for businesses.
This week alone, two manufacturing plants have closed in Dundalk and Donegal, resulting in hundreds of job losses. Both companies cited high manufacturing costs in Ireland and moved their operations overseas.
Overall, merchandise exports are expected to grow by 5 per cent in the second half of the year as companies start to reap the benefits of the decline in the euro and the positive performance of the pharmaceutical manufacturing sector, whose exports rose by 5 per cent in the first half.
"Things are looking better for the second half of the year, but something still needs to be done to help our manufacturers," said John Whelan, chief executive of the IEA. He urged the Government to take the problems faced by manufacturers seriously.
However, it is not all bad news. The slowdown in merchandise exports is being offset by a surge in service sector activity, which is benefiting from having access to Ireland's young, highly qualified workforce.
International companies such as Google and Amazon helped boost service sector exports by 15 per cent in the first half. Services will contribute about 34 per cent to the €129.8 billion of exports forecast to leave the Republic this year. That is 6.5 per cent more than 2004's total exports.
"Things are looking much better for the service sector, but we must still not be complacent," said Mr Whelan.
