North West Region must demonstrate competitiveness to attract new Investment
"Businesses in the North West region have survived one of the most difficult years on record and the issue for all companies, both indigenous and multinational is to position themselves to take advantage of the forecasted return to growth in 2011. That means a determined focus on costs and productivity so that we are competitive in the global marketplace", said Fergal Broder, Chairman of the American Chamber of Commerce in Ireland North West Region.
"Over the last decade Ireland has experienced a loss of 30% in our national price competitiveness. We need to ensure that all of those costs that are within our control are managed competitively. Insofar as it is possible, for example, we need to align our salary structures to the EU norms. Wage costs for manufacturing workers in Ireland exceed that of the OECD average and the US by approximately 20% and this is not sustainable", he said.
Mr. Broder said that the North West Region had much to offer multinational companies and that the combination of a lower cost of living and higher quality of life were very attractive to people looking to relocate from other more expensive cities. "Attracting skilled people will increase the overall attractiveness of the region for foreign direct investment. But as a region we also need to ensure that we maintain a lower relative cost base. If the North West is to continue to win new investment it must demonstrate that is competitive with other locations, both within Ireland and across the globe", he said.
Mr. Broder said that in terms of our competitiveness the retention of Ireland's12.5% Corporation Tax rate is vitally important. "Being a competitive tax jurisdiction has helped to mitigate the fact that Ireland has been uncompetitive from a cost perspective", he said. "However, we cannot use our lower corporate tax as a ‘silver bullet' in relation to higher costs and we must address our overall cost competitiveness".
Pointing to the long term presence of leading global companies such as Abbott, Lotus, Pramerica and Bank of American/MBNA in the region, Mr. Broder said that multinational companies were important to the economic prosperity of the region.
"Its important that we enhance infrastructural supports in the region in order to encourage more investment. For example, local electricity transmission infrastructure is particularly poor in the North West and needs to be greatly enhanced, both to provide security of supply to existing customers and to give investment confidence to enterprise in the region.
"In addition access to the region is incredibly important and while we welcome the improvements to the national road network in recent years significant connectivity issues remain to be addressed. Transport corridors need to be developed and while we recognize the pressures on government finances, we believe the N14 (Lifford-Letterkenny), N16/A4 (Sligo-Dungannon) and N17 Galway-Sligo road networks should be prioritized", he said.
"Ireland is at a crossroads. As a country we cannot continue to spend more than we earn and the Government has taken some difficult decisions in order to restore the public finances. It is in our vital interest that they succeed and we all must play our part, whether in the public or private sector.
"The American Chamber and the multinational community would be particularly concerned that any action by Public Sector workers must not impact on our ability to maintain the flow of goods and services to customers across the globe. Such disruption would be very detrimental to the international reputation of Ireland thereby risking incremental investments into Ireland by multinational companies", he warned.
Mr Broder welcomed the publication of the report from the Government's Innovation Taskforce, saying that it demonstrates recognition by Government that Ireland will need a step change in its programmes and policies to secure future prosperity driven by Innovation and continued inward investment.
"In today's global trading environment, intense competition means we need to look to new areas of innovation and added value to generate and sustain our economic success. Ireland needs to continue to offer something distinctive and we welcome the series of measures identified by the Taskforce which aim to make Ireland a global innovation hub which continues to attract foreign direct investment.
"It is not just the Irish economy which has undergone profound change; the global picture has altered dramatically. The world will not change to suit us, we must make compelling business reasons for investing in Ireland and in the North West to in order to stimulate economic recovery and ensure that Ireland remains an attractive location for inward investment. I have no doubt that Ireland can overcome this current adversity and emerge as a leaner, fitter and stronger player on the global stage".