Industrial Policy in Ireland

Progressive-Economy has links to a new set of TASC papers on industrial policy in Ireland (see especially the paper by Sean O’Riain):  here.

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48 thoughts on “Industrial Policy in Ireland”

  1. The sweeny paper looks provocative. Between 4-6 b pa state money on subsidies to private r&d…but as it’s private sector it must be well spent yeah?

  2. @Brian

    Not ‘r&d’. The paper is about all subsidies to private sector from public sector.

    Provocative might be that wrong word. It’s a debate worth having but the methodology of this paper is totally off the wall. It would have been more coherent to count all exchequer costs not going to other public sector bodies as a private sector subsidy and leave it at that.

    Funding for EI, IDA etc could be argued to be a subsidy to private sector but the paper ignores things like the jobs initiative, tax incentives etc to go for cost items below, few/none of which could plausibly be called subsidies. They make up approx 75% of total:

    The CAP – This is almost half the 4-6bn total, ignores the fact it is EU funded, ignores that it is almost wholly to private households.

    Services provided by services firms – may be an argument some are overpriced but this is not a subsidy, it is by definition a service.

    Public private partnerships – ???

    Grants through SFI – most of which go to universities.

    Rent supplement – again rent may be overpriced but equivalent to saying jobseekers is a subsidy to retail.

    Fás – jobseekers retraining. CE schemes are a subsidy to employers?

  3. The Harvard article link was posted by rf in Germany’s Role in Europe July 9th 11:22 pm

  4. Maybe?

    There is a dearth of data on what works and what doesn’t; longitudinal research is not of interest to the enterprise agencies; ministers rarely if ever publicly deal with policy and challenges; ditto for agency chiefs and Oireachtas members are out of their depth or not interested.

    Who wants to risk saying something isn’t working?

    The Joint Committee on Jobs, Enterprise and Innovation says on its web page it’s “particularly interested in finding new ways to promote job creation and activation measures targeted at the young unemployed and long term unemployed.” This is above a box with a message: “What’s on this week: The Joint Committee will meet at 1.30 p.m. on Tuesday 12 March 2013.”

    There appears to be a reluctance to ask questions that would produce inconvenient answers.

    Last week’s Forfás Annual Employment Survey 2012, tracking jobs in agency supported companies, was in a format that is almost unchanged since the 1990s.

    Most of the jobs in a software firm or web service company may not be in software work, computer programming or engineering but they are classified as IT jobs; as for the lack of local skills that require foreign hires, that information is also not available.

    Firms such as Google and Apple likely have a majority of staff from overseas – there is nothing wrong with this when skills are not available but it’s relevant as regards the potential of the FDI sector.

    Meanwhile lobby groups claim up to 4,000 vacancies, which I don’t believe is credible.

    Innovation is important to every firm: many German Mittelstand firms thrive in traditional sectors because of their focus on process innovation and employee skills.

    However, developing commercial products from research is as much a challenge in the UK as it is in Ireland.

    The most successful UK high tech firm in recent decades has only about 2,000 employees.

    As for the R&D tax credit scheme, at official level, there is no information on whether a claim was ever rejected since 2004.

    As for Seán Ó Riain’s proposal on ‘making winners,’ it would help if we learned from experience.

    In 2006, when the new science strategy was announced by Micheál Martin, almost all the great local tech hopes of the 1990s were bust or had been sold off and two years later, a struggling Iona Technologies, a TCD spinout from the early 1990s, was sold to a US firm of more recent vintage.

    In the past year, Elan, once the world’s 20th drugs company in value, converted itself to an investment shell operation.

    Last April, Minister Richard Bruton announced a plan to grow jobs in manufacturing by 25% by 2020. However, it’s more a joke than a plan. Meanwhile, the Irish apprenticeship system remains craft-based and for males while the participation level is at the lowest in Western Europe.

    Eoin O’Malley’s data on services exports appear to include fake exports resulting form MNC tax strategies while indigenous services export data requires caution as there is one stunning success: Ryanair has annual revenues of over €4bn – – at about double tradebale services exports from indigenous firms.

  5. On Eoin O’Malley’s paper, there’s an GI-GO issue. When looking at competitiveness outcomes for Ireland, it only makes sense to look sector by sector – not at the level of all manufacturing or all services, or worse a combination on the two.

    Within that, it is necessary to discount export data on a sector where it is not a good reflection of real economic activity. Pharma and computer services are the biggest areas with the latter problem – the best measure of export-based economic activity in these areas is employment.

    Correcting for those issues, we are doing moderately well in computer services (as measured by employment), although nothing like as well as the export data suggest. As pay in this sector was stagnant in the bubble years, labour costs may provide a significant part of the explanation for this success.

    Once you strip out pharma, the exporting performance of the remainder of manufacturing during the bubble years looks much worse, again supporting the idea that labour costs have a major impact on competitiveness.

  6. On Paul Sweeney’s paper, I think it’s worth noting that a large share of the expenditures he lists are made for reasons not much connected with enterprise policy, and some are straightforward commercial transactions by government. If evaluated honestly as purely enterprise policy measures many of the expeditures he lists would be shut down immediately, first because that is not their purpose, and second because many arguably cause market distortions damaging to enterprise development.

    Taking agricultural subsidies as one of the bigger examples, there’s a whole mess of confused reasons for them, including welfare transfers, environmental objectives and food security among others. There must be some expenditure on enterprise development in there, in areas like developing alternative farm enterprises, but it can’t be very much. Agricultural subsidies are an important factor preventing the formation of farm holdings big enough to be viable without subsidy.

  7. David Jacobson’s paper on R&D versus innovation is quite solid as far as it goes, but he seems to miss a close link with FDI policy. Public expenditure on R&D is a major reason why we still get FDI, and why the numbers employed in FDI are going up rather than falling.

    It provides three important benefits to FDI:

    1) While the overall system of innovation is certainly flawed, university research provides one element of a system of innovation that is valued by FDI companies – access to high quality university researchers working in relevant areas for consultation and collaboration.
    2) It provides skills for the types of jobs that it is still possible to justify locating in Ireland.
    3) At a time when most mechanisms to subsidise FDI have been cut off by the EU, R&D is one of the few areas where it is still possible to provide subsidies. FDI companies like it, and it will be used by our competitors even if we do not use it. The State gets a good financial return through high taxation on the incomes of FDI employees and on taxation of the economic activity that they trigger.

  8. Two possibly relevant readings:
    – “How Asia Works” by Joe Studwell, endorsed recently by the Marginal Revolution blog, and – to judge by the Kindle sample – both fascinating and certainly a challenge to all orthodoxies, and
    – “Why Growth Matters” by Jagdish Bhagwati and Arvind Panagariya, pro conventional economic reforms and so hostile to Stiglitz, Rodrik and others described as ‘anti-market’; again, judged only from a Kinde sample.

  9. @BeeCeeTee

    Building on your points about analysis sector by sector, agricultural subsidies being an important factor in preventing the formation of viable farm holdings and using employment as ‘the best measure of export-based economic activities’ do you have a sense of what the employment potential would be if we did have farm holdings big enough to be viable?

  10. @Richard Fedigan,

    Policies that encourage consolidation of holdings in order to provide scale of operation will inevitably affect the scale of rural communities. These are a significant part of the tourist related image that we market.
    I recall looking at employment levels in tourism and finding them significantly higher than agriculture.
    I can grant that agricultural subsidies are badly focused, but policies that bring community populations below an (unknown?) minimum populations needs to be questioned.

  11. When I think of Irish Industrial Policy one of the first things that pops into my mind is along the lines of businessman gives tens of thousands to councillor to influence planning decision. Close relative of said businessman reports chapter and verse to relevant authorities. Charges are laid, trial is held, jury acquits businessman. This is what passes for industrial policy in Ireland. Everything and I mean everything is perfectly legal and above board.

    Ireland is now and has been for a long time, quite simply a farce.

  12. Hmmm … Ireland: A Farce!

    I sense a one-act play coming on. I hear the manuscript of Beckett’s Murphy went for over a million … does this count as innovation? We are in dire need of another Swift … I also hear that the X-FF fixer can’t remember a million but has no trouble with a few envelopes of a few thousand .. and the FG-er who made 30 million on a land deal in Wexford … and the citizenry landed with an odious financial system debt of ~90 Billion … A Farce? Or a Tragi-Comedy of Errors of Judgment? A Farce …

  13. I looked for a smidgin of judgment without success. What led me to farce was.

    “In theatre, a farce is a comedy that aims at entertaining the audience through situations that are highly exaggerated, extravagant, and thus improbable.”

    ” Farces are often highly incomprehensible plot-wise (due to the large number of plot twists and random events that often occur), but viewers are encouraged not to try to follow the plot in order to avoid becoming confused and overwhelmed.”

    I would have used tragi-comedy for Greece since I understood the plot. In Ireland the twists, turns,and fantasies, of the role playing Leprechauns is way beyond my limits of comprehension. How to avoid becoming confused and overhwelmed. I think I will have a few more Hennessys to clear my mind.

  14. @ Conor O’Brien

    I take your point about consolidation of farm holdings, ( ‘to provide scale of operation’) potentially bringing community populations below an ‘unknown minimum’ necessary to preserve the ‘tourist related image that we market’ Are these communities not those most threatened by further emigration if we don’t implement viable ‘industrial’ policies to replace the policies currently generating the emigration?

    If, as you say, employment levels in tourism are significantly higher than in agriculture, then perhaps we need joined up policies that integrate agriculture and tourism? Is anyone responsible for generating such policies?

    From memory, tourism represents about 3% of Irish GDP, with agri-food accounting for under 5%. ( and less than 10% of exports).

    Don’t have figures for employment in tourism but agri-food, even allowing for doubtful double counting of large numbers of part time farmers, also accounts for less than 10% of the workforce.

    To the best of my knowledge, the agencies responsible for agri-food ‘industrial’ policy are under the control of the Department of Agriculture, Food and the Marine, not the Department of Jobs Enterpriseand Innovation.

    I don’t know how many experts in international food and consumer goods marketing work for the Department of Agriculture, or indeed whether there are any members of the boards of those agencies with experience of working for (non-Irish) international food groups.

    Not easy to see how integrated policies, much less strategies, for these ‘vital’ indigenous sectors ( agri-food and tourism) could emerge from these curious, out-dated ( and highly politicised?) structures, incomprehensible to international buyers and customers.

  15. I guess all the TASC folk are on their summer holidays?

    @ Conor O’Brien

    Your fears that more efficient farming would cannibalise tourism is misplaced.

    Tourism is very much localised and for example in West Cork, towns and villages on the way to coastal destinations and say Killarney, would pick up some business but most of the money would be spent at the destination.

    In beautiful Gougane Barra, apart from the forest, there is little commercial activity, which is a good thing.

    In recent decades, American giants such as Eli Lilly (near Kinsale) and Schering-Plough (at Upton near Bandon) built plants on greenfield sites in the countryside.

    Carbery Milk Products, the first major cheese plant in West Cork was opened in the 1960s near the village of Ballineen and has been an impressive success for farmers and workers.

    Inspired industrial and agricultural policies would not imperil the countryside.

    Apart from the subsidies or welfare, some farmers are also beneficiaries of a massive stealth tax during normal and bubble times from the corrupt land rezoning system that manages to make land scarce in a country that is 4% urbanised.

    @ All

    In Ireland there are more farmers over 80 than under 35; crop production occupies only 9% of arable land; public subsidies amounted to 81% of average income in 2012.

    A work unit metric used by Eurostat shows that in France farmers with over 100 hectares account for 26% of the French total compared with 6% in Ireland.

    In France, young people are given a preference in land sales.

    In milk yield: kg per head, the Irish cow at 5,400 in 2011, compared with 8,400 in Denmark, 7,900 in the Netherlands, 8,100 in Spain, 6,900 in France and 6,400 in Italy.

    The Israeli cow was at 11,700 – the highest in the world.

    Israel is selling technology to China, which has GPS devices fixed on cows’ collars to sense when a cow needs to be milked, and then automatically sets up the milking equipment.

    What is interesting about Israel is that its exports only amount to 20% of GDP, while it is the only overseas location to successfully clone the Silicon Valley model – the value that is added is the key.

    It is seeking to win a $10bn investment from Intel where the chip giant engages in significant research. Intel has 8,500 employed in Israel.

  16. @ Michael Hennigan

    Are you saying that we need to completely revolutionise the Irish agri-food sector and that this would:
    1. Not impact negatively on Tourism
    2. Possibly increase efficiency, reduce costs and increase exports
    3. Possibly enable us to export technologies, processes and services that we will need to use anyway to revolutionise the agri-food sector
    4. Possibly attract more young people into the sector, preserve rural communities, increase employment, attract more tourists to a genuinely ‘greener’ environment and reduce emigration
    5. Possibly continue to successfully export ‘hi-tech’ ingredients and flavourings but consider moving up the value chain with the appropriate level of investment, selling food products recognisable to global consumers or even building, albeit over time, global brands.
    6. Reduce dependence on Brussels/CAP hand-outs/social welfare

    If so, it’s very doubtful that all this could be led by the department of Agriculture and its agencies as currently/historically constituted. So who?

  17. For seafóid and David O’Donnell.

    At the Spar at the Phibsboro crossroads I want to go in
    and buy my kid a Callipo.

    The young homeless man with the scrubby fuzz of a beard,
    and his dog
    planted between his thighs,
    holds the edge-bitten cardboard up.
    I have to cross him.

    I am angry with him that I don’t have the money to give
    and I can get a Pat the Baker’s Toastie, or a Callipo,
    but not both.

    I sweat
    Amongst the vinegar stink of
    Phibsboro,
    And flick whitened eyes from urine stains to shit
    To the big church at the fork.

    Idly I consider the risk of reading
    “You have insufficient funds for this transaction”
    From the blanched-out ATM.

    The child has stayed home alone
    While I have done my interview.

    They don’t just say these days, you didn’t get it the job.
    The position.
    The jobbridge.
    The placement.

    You get feedback, you get tips.

    Make eye contact.
    Answer the question fully.
    Take your time.
    Don’t ramble.
    Be specific.
    It’s not a judgement on you as a person.
    It’s to see if your skills match the skill’s they’re looking for.
    It’s a fair system.
    You can read your written feedback.
    Look, 200 people have applied for five positions.
    You have to keep your head up.
    You have to keep applying.
    You have to keep positive.

    In the Spar,
    Amongst the tolerated damaged of the Northside
    – tolerated because they still buy –
    I take my toastie loaf.

    In spite of best advice,
    I can’t make eye contact.
    I just stare at the star tattoos on the inner forearm of the young-fella who has a job.

    The child shouldn’t be alone at age eight
    but she is proud to have looked after herself.
    You can’t miss an interview,
    they record it.

    And we will make it through the week I think.

    “Come on”, I say, “It’s lovely out.
    Let’s go and feed the ducks in the basin.
    And go to the park after.”

    It hurts to take out a slice.

  18. @Michael Hennigan

    In milk yield: kg per head, the Irish cow at 5,400 in 2011, compared with 8,400 in Denmark, 7,900 in the Netherlands, 8,100 in Spain, 6,900 in France and 6,400 in Italy.

    The Israeli cow was at 11,700 – the highest in the world.

    Do you think perhaps that there might be other costs factors in milk production other than acquiring and feeding the cattle?

    Do you think that there might be any potential advantages in allowing cattle to produce less milk?

    Do you think that climate might have any effect on milk yield?

    Lastly one should avoid comparisons between jurisdictions where the use of rBST is permitted (eg: Israel, the USA) and those where it is banned (eg: the EU).

  19. @michael
    Do Israeli cows also produce honey?
    Also any comparison of working life of the beasts? Maybe relaxed cows produce better tasting milk. It is not always about quantity.

  20. In the milk business it is all about profitability. The edge inputs are increasingly high tech. At one point you could ensure profitability by breeding Holsteins for volume and Jerseys/Guernseys for butter fat or run Kerrys on marginally productive land. Then breeding became important much like the horse racing business. It then moved on to biological stimulants such as hormone therapy along with prophylactic antibiotic treatment.

    Then we come to diet, high protein, high fat as well as the staple grass, hay and silage. Load on the corn (maize), oats barley and cook the ingredients to improve digestive absorption of nutrients. There really is no end to what can be done to improve volume.

    The bottom line is first what is profitable and two what is socially acceptable. The Danes doing this or the Israelis doing that to improve volume is irrelevant to an Irish farmer up to his knees in mud and cow dung trying to optimise output and profit in local conditions.

    We have a backward and dysfunctional political and legal culture but where the rubber hits the road in the competitive private sector we are as good as anyone anywhere.

  21. That’s very interesting Michael

    These little nuggets tell so much, there is little difference between Denmark, the Netherlands and Ireland in terms of regulatory or climatic environment. Yet the yield is so different, why? Grass fed maybe, happy cows would produce more, why else do the corporate bean counters have such interest and faith in HR?

  22. @ Gavin

    “You have to keep your head up.
    You have to keep applying.
    You have to keep positive”

    Even though the system is banjaxed. Something like this
    http://www.lyricsmania.com/serotonin_lyrics_simple_kid.html

    ““Happiness is nothing but the flow of serotonin in your head, got nothing to do with Jesus Christ, nothing got to do with wrong or right”

    Nothing got to do with your attitude if the system is broken.

    The Tiger never reached some parts of Dublin either. And now the tide is out.
    You know that sort of way.

  23. I visited a cheese operation in a farm down in Tipperary once. The cheese put 4 kids through college. The father said he could tell from which field the grass the cow ate came in the cheese.

    But maybe the yield was low.

    I recently read an interesting article about the wine business. The top 10 selling wine brands are all American- Yanqui and South American . Gallo sell 16m cases a year. It never changes so there is no need for vintages.

    But not everyone wants to drink that.

    I imagine the Israeli dairy business is heavily dependent on irrigated water from the Palestinian territories. It may not always be available.

    Political economy.

  24. @Mickey Hickey

    Sounds like you know a bit about what you’re talking about…… on the production side at least. What, in % terms, is the scope for production capacity growth ( milk and beef, for example. Cheese, sheepmeat, pork and seafood seem to be miniscule or marginal at best) over the next 5 years?

    For my part, I know nothing about farming but quite a bit about global food, drinks and consumer goods sales and marketing through ‘modern’ retailing.

    Now, with the exception of very small ( by market leader standards) volumes and values of drinks marketed by two global (non-Irish) multinationals, Ireland produces no food products that global consumers would recognise as ‘Irish’. The global consumer therefore has no perception, in SUBSTANTIVE terms, and contrary to what Irish politicians and representative organisation constantly contend, of Ireland as a producer of food and drinks.

    If, as you say, ‘in the competitive private sector we are as good as anyone anywhere’, what is the potential in this sector for mopping up some of our unemployed?

    Or is current ‘industrial’ policy in this area ( and the state and semi-state organisational and governance structure) just right to underpin significant future growth and global consumer recognition? Hunky dory, in fact.

  25. Kobe cows apparently like music and being massaged; I’m not sure how other Wagyu (meaning Japanese cow) cows are tuned up.

    I’m not suggesting that it’s practical to aspire to Israel’s cow yield levels or that we could emulate their knowledge economy success.

    Intel is discussing a $10bn investment with Israel where 8,500 are currently including development teams.

    The research base dates back 60 years with the necessity to develop technologies in the semi-arid region for water and agriculture and also its military capability (I’m not making a political statement. I have had a positive experience living in the Arab World).

    We Irish inherited British systems and there is a common reluctance to embrace positive examples from elsewhere.

    This ties in with the low level of entrepreneurship as reported last week in a government report and the long-term low level of firm creation.

    It was surely a shock when a gin maker began buying milk from farmers!

    There will always be a demand for food and drink and maybe Nestlé, the world’s biggest food company did not achieve success by accident.

    @ Richard Fedigan

    I’ve said before that it’s too early for the ‘Whitaker moment’ as there are still many sacred cows to cull.

    The situation will have to get more grim where ‘Action Plan for Jobs’ laundry lists will be met with derision.

    There was an interesting choreography in two recent announcements from Pfizer within a month; the first one in June was on the cutting of 177 jobs and today’s merited a ministerial visit on an announcement of a $130m investment; no direct jobs and some in construction.

    Investment of course is needed to sustain jobs but my point here is that the decision to separate the two developments is part of the spin that dominates the system.

    An enormous property crash and a public tribunal sitting for 15 years has not been enough to prompt reform of the land rezoning system.

  26. @ Michael Hennigan
    I’m inclined to agree that some generalised positive ‘derision’ toward spin and B-S is perhaps the only way to clear decks for the sort of reality check on which a new ‘industrial’ policy can be based.

    I’m just not convinced that things getting grimmer as you put it will necessarily, as if by magic, produce the right conclusions, policies, strategies and solutions to challenges that have been around for at least half a century. Solutions and strategies which are well known elsewhere in the world and are not mysteries at all.

    If we need to wait for radical land rezoning in Ireland to produce the landscape for the type of scale food production that would enable us to actually figure on a European or global scale, we will, quite simply, have missed the boat. Again, as we’ve missed it for the last fifty years.

    It may even already be the case that the two or three Irish food ‘multinationals’ with any scale at all (€5 billion or so) will inexorably have dealt with the demands of the real global market and secured their own futures by reducing their dependence on Irish farming.

    You mention a Swiss global food company that achieved its global dominance by NOT relying on Swiss agriculture, incidentally!

    We may indeed not perceive that have reached a ‘Whitaker moment’. The reality is that we reached it a long time ago and more grimness won’t bring it back.

    You may not have meant this but the real problem is indeed with our ‘systems’ and our prideful inability to recognise that we need help from outside.

    We certainly have enough agencies and systems. I wonder if any of them have really, seriously said ‘Help’ in a meaningful way.

    Has one of them ever asked the retired CEO of that Swiss company for advice on what to do? Seriously!

    In the meantime, whatever about politicians spinning ( they do that everywhere), when it comes to our private sector and its future in the real global food sector, we need to stop the B-S. Now.

  27. I commented in an earlier thread years ago on free range Danish pigs – who have a little chip to identifiy them when they go to the feeder (which reads the chip) and dispenses food – up to the pig’s predetermined limit. Little shelters abound where they can pop in from the strong winds in North Denmark. Little human labor is needed. BTW their rashers are glorious – unlike many of the Irish which swim in white dross and added water.

    Now, these Danish pigs do not fly – but when it comes to Industrial policy [constituting structure of industry, education & training, industrial relations, class structure, political culture] we can learn a lot from the Danes; I certainly have.

  28. @Richard Ferdigan

    I have daughter in the diet/nutrition (institutional) business in Toronto, Canada.

    Local, fresh and natural is in vogue along with niche products from all over the world.

    In a local Costco I see Kerrygold White Cheddar(fresh) along with a White Cheddar (fresh) from a local small town dairy and a White Cheddar from Baldwin (major) aged 2, 3 and 5 years. To stick to cheese, a dozen artisanal cheeses from Quebec some unique and some knockoffs of Brie, Camembert, Roquefort, Mozzarella, Gruyere, Emmental, Raclette, Edam, Gouda and so on. Foreign cheeses Norway Jarlsberg, Swiss Gruyere, Holland Gouda, Italy about 8 types, America 3 or 4 European knockoffs.
    Costco (membership) is a well respected high value American big box chain if you buy food that has been recalled they will email and phone you immediately. I notice Kerry Group got into a chain that has very high standards with in house testing of products. My daughter tells me women with young children do not buy coloured cheese because of the colour and other additives and that the Kerry Gold product has good texture and flavour that fits the bill for 3 to 60 yr olds.

    I am in the marine and aviation navigation,communications and control business which requires me to travel. I look at things through the lens formed by the shop my mother owned and ran and the farm and farm equipment sales business my father owned and ran in small town Ireland. At various times we manufactured furniture and ran a touring theatre production during Lent. Talk to me about being versatile.

    I also notice the main food terminal for the Toronto area, called Ontario Foodland (massive) has open to the public days as well outreach to outdoor festivals by its local suppliers. This is to get around the thinking that it does not matter that it says Leamington on the label they just repackage it out of the crate from Florida or California.

    There are chains of Chinese, Korean, Italian, German, Italian specialty stores carrying a wide range of food and other products. The Koreans eat a lot of green onions and pickled cabbage highly spiced, the Chinese like duck and cabbages such as Bok Choy, Napa, Chinese Brocolli, the Italians have a half dozen types of lettuce. In the major chain stores you will find a dozen kinds of 10KG bag rice.

    The choices seem limitless but a whole niche market garden industry has grown up to fill the void. Ginseng for example is covered by spaced wooden planks about 8-10 feet high to provide the right amount of shade.

    It does not seem to be common knowledge in Ireland that Kerry Group has distribution and production facilities around the world with a significant presence in North America. My wife was involved with a German chemical company that spanned the range from food additives to paint pigment for automobile manufacturers. They had the NA distribution franchise for an Austrian, spice and dried herb company selling to major food processors. What you eat at a single sitting can come from 20 countries.

    If Ireland is to get into food exports at the medium to high value end in a serious way it would have to be through established operations like Kerry Group. They are a hard nosed, inbred group who strike a hard bargain but the results speak for themselves.

    When the Germans I know eat Denny’s cured bacon at home or in Irish restaurants they comment on how good it is. If I wanted to sell Denny’s cured bacon in Canada I would talk to Brandt Meats and Delicatessen in Mississauga. Look up brandtmeats.com

    It would be very difficult for a small Irish producer to produce 1/2 container (Maersk 20 ft. 33.2 cu metres) lots. Efficiencies have to be found at every level of business in a hyper-competitive world. Hence the need to have agreements with a major.

    This is how it looks, through my no longer pure green lenses, I am almost wide spectrum now.

  29. @ Gavin

    The people at the sharp end often don’t have the means of expressing what is being done to them. And the poorer parts of Dublin get a lot more punishment.
    Thanks for the piece.

    http://www.nybooks.com/articles/archives/2012/apr/05/blood-sport-beneath-city/

    “What do we know of the poor? The question is connected to how we—by which I mean the relatively rich—write about them. Poverty first became a focus for literary investigation in the industrial cities of the nineteenth century, when its sights, sounds, and smells moved too close to middle-class houses to continue being ignored by the people who lived inside. “We had but to go a hundred yards off and see for ourselves, but we never did,” wrote William Thackeray of his friend Henry Mayhew’s newspaper series on London street life, which in book form became London Labour and the London Poor. By traveling “into the poor man’s country” and returning with tales of “terror and wonder,” the novelist believed that Mayhew had revealed to the rich the “wonderous and complicated misery” of the poor for the first time.

    This explorer’s approach, in which the poor are a foreign territory to be penetrated, was widely adopted in the last century when socially concerned writers not only spent time among the poor but also tried to live as poorly, so that they might close the gap with their subjects and underpin their observations with firsthand experience. The writer’s immiseration was sometimes brief. George Orwell spent less than a month in Wigan for the book that became The Road to Wigan Pier, and only some of that time in what must have been that coal-and-cotton town’s filthiest lodging house, which he had determinedly sought out. Nonetheless, the experience provided some of the book’s most memorable images: the chamber pot that was kept under the kitchen table, the landlord’s dirty hand that left thumbprints on the bread. Like Mayhew, Orwell returned with stories of wonder and terror, but where in his book did the poor speak or establish their personalities?

    The only voice to be heard was the author’s. The distinct aspirations and fears of the people he happened upon couldn’t fit a book that was split between a polemic and a travel account, even in the hands of a writer as gifted as Orwell. Starting with Dickens, that individual complexity had become the province of the novel. In the 160 and more years since the Artful Dodger and Jo the Crossing Sweeper first appeared, it has tended to be compassionate fiction rather than the inquiring reporter that has fixed the poor in our memory as something more than a condition or a cause—as people as diversely and richly human as ourselves.”

  30. @Richard Fedigan

    “We certainly have enough agencies and systems. I wonder if any of them have really, seriously said ‘Help’ in a meaningful way.

    Has one of them ever asked the retired CEO of that Swiss company for advice on what to do? Seriously!”

    Having never been a public servant I don’t know the answer to this. There is a new initiative this year to develop a small band of Irish ‘ambassadors in sustainability’ somewhat along the lines of the excellent Bord Bia Fellowship – but targeting a more senior demographic. The intention is that they will work offshore in multinational food groups at strategic level on sustainability issues then return to Ireland to disseminate and advise.

    It may be the case that any strategic advice received from business leaders would be sterile, simply because there is insufficient ability to plan, manage, monitor, coordinate and deliver programs of scale.

  31. @ Mickey Hickey

    Very little I would disagree with in your post.

    Except, perhaps that Irish food may not fulfill at least one and often more of the ‘local, fresh and natural’ at the ‘medium to high value end’ criteria you say are in vogue, depending on what market we’re discussing. No need to deal with ‘local’ but fedinitions of ‘fresh’ and ‘natural’ vary widely.

    In your daughter’s market, Canada, along with Costco, there are only three or four major retail multiples pretty much controlling the entire food market ( Loblaw’s, Sobey’s, Metro and possibly the Jim Pattison group on a regional basis). (Your Brandt meat company is most likely a very small, maybe family, speciality food packer and processor.) This 3/4/5/ retailer dominance scenario is the same all over the world and only a few retailers ( Wal-Mart, Carrefour, Metro, Tesco) would even claim, some spuriously, to be truly global.

    These retailers will stock or ‘list’ products in function of their demonstrable profitability per metre of shelf exposure. In order even to be ‘listed’ a supplier would have to demonstrate that his product is already generating profit per metre results in analagous markets, chains and stores in other parts of the world.

    This is what often makes the decision for a food supplier regarding whether they can afford or attempt to afford a branded marketing approach. It is also what leads many companies, Kerry Group included, to sell some of its range under retailer brands at lower margins.

    Some of the best Irish food companies are in fact specialised in relatively ‘hi-tech’ ingredients and flavourings for sale to food processors and manufacturers. These products would never be seen by a consumer who would therefore not be moved to appreciate the ‘Irishness’ of the ingredient or flavouring.

    None of this is a secret and nor is it new.

    Kerry has adapted its approach to these realities including deciding to establish production and distribution facilities close to its customers.

    Given that the market for food products world-wide is, in Irish terms, limitless, all we really need to do is decide what products we can produce for what markets and organise our agricultural production accordingly.

    Growing our global market share significantly would mean radically changing the way we produce food today from land zoning all the way through to what type of agencies should be in charge of the re-organisation, production and marketing. So why don’t we do it if we want to instead of pretending we’ve done it?

  32. Any idea why I am getting a 404

    Not Acceptable

    An appropriate representation of the requested resource /wp-comments-post.php could not be found on this server.

    Additionally, a 404 Not Found error was encountered while trying to use an ErrorDocument to handle the request.

  33. @ Conor O’Brien

    The system is a little oversensitive and primitive in its reaction to some character you’ve included in the text.

    Even if you find the character, you would have to rejig the content as it will assume that you’re making a duplicate posting.

    @ Richard Fedigan

    Richard,

    Change comes ever so slowly in the conservative society; business response to the Internet has been a slow process (in 2011, it was claimed at a Google event in Dublin that 40% of SMEs didn’t even have a brochure website); broadband implementation was shambolic at a time of too much money. Of course there were excuses – a legacy state telco and blah blah as if other countries did not start with similar systems.

    Last April, Wolfgang Schauble, German finance minister, said in Washington DC that an ageing society and the time needed to work through its debt crisis will keep growth in Europe subdued for years to come. “No one should expect that Europe will deliver high growth rates for years,” he said. So in its medium-term review published this week, the ESRI’s stagnation scenario based on a lost decade in Europe, is likelier than a robust recovery.

    There is no obvious jobs engine and in this situation, even the fairy tales will lose their potency.

    http://www.finfacts.ie/irishfinancenews/article_1026262.shtml

    Nestlé remains the most significant food company in the home country with 35% of its 5,000 R&D staff based there and 10,000 of its almost 330,000 global staff there.

  34. @ Tony Owens

    ‘It may be that any strategic advice received from ( global, presumably? – my parenthesis) would be sterile simply because there is insufficient ability to plan, manage, coordinate and deliver programs of scale.’

    Haven’t they made you Minister for Indigenous Enterprise yet, Tony? Can’t figure out why not. Unless it’s because you’re an entrepreneurial ‘combatant’ overly addicted to reality! Courage et bonne continuation.

  35. @ Richard/Mickey

    ‘Given that the market for food products world-wide is, in Irish terms, limitless, all we really need to do is decide what products we can produce for what markets and organise our agricultural production accordingly.’

    Given everything which has been said by you both, I would be inclined to put the dilemma this way:

    ‘Given that the market for food products is so thoroughly dominated by monopsonist enterprises, the fact that major producers like Kerry Group have had to accommodate themselves to that realty, and the chronic failure of institutional or political stakeholders to challenge the existing market order, choices for smaller producers are likely to remain very limited’

  36. The thing about supermarket food globally is that a lot of it is shite (and there Nestle leads the field).

    The point above about young mothers not buying coloured cheese is interesting because more and more people are looking for quality. Bio or organic is very big on the Continent. Ireland has a lot of natural advantages that densely populated countries like the Benelux don’t.

    And if Ireland could carve out a quality niche and figure out the distribution the business would be infinite. But first of all the boxwallahs would need to understand their customers.

  37. Based on what I have seen in Europe and North and South America the most successful small business processed food operations are in Quebec (La Belle Province). It starts with Caisse de Depot and Caisse Populaire (Co-Ops) which are strongly supported by the provincial government with a mandate to make Quebec businesses competitive in Canada. The home (local) market is paramount and is supported at every turn by local and regional governments. Shopping Plazas are pressured into providing booth space for local producers. Chains operating within the province are told to put their purchasing power where they get their bread and butter. Towns provide booth space in or close to public buildings. The towns and province provide space, funds and advertising for specialised exhibitions for small (less than industrial scale) producers. Most of the low cost public space is available Saturdays and one other weekday which is suitable for small producers.

    You can see the incubator nature of what they are trying to achieve. Out of the small scale operations a few medium scale operators emerge. These are supported by the Provincial Government and the Caisses. This results in operations that sell out of province products such as cheese, jams, honeys, maple syrup, maple sugar, frozen ducks, frozen or fresh geese (they have a lock on good quality Xmas geese) frozen vegetables, Creme Brulee, a few specialised cream filled pastries (Joe Louis) with reasonable shelf life, Montreal Bagels, Madeleines, Foie Gras.

    The mindset that allows this is Quebecers are a 6 million French minority in an overwhelmingly Anglo-Saxon area. Those foreigners are eating our lunch, we have to do something about it. We cannot lie down and be rolled over. In Ireland every piece of turf is fought over and those feckers trying to break in have to be stopped. More energy goes into stopping the locals trying to make a living than in trying to stop Tesco opening up. The flow of campaign contributions to local and regional councillors becomes very generous when the incumbents want to put the kibosh on a new entrant.

    Success is always a cooperative affair. Remember, united we stand divided we fall. My tax Euros are subsidising them good for nothings. A truly British classic of class prejudice we inherited and have now perfected. We live in a parish where one man’s gain is seen as another man’s loss.

    The talent, energy and ingenuity is there to be harnessed. We have to overcome our self crippling tendencies. Of utmost importance we have to get over the idea that the Dail consists of a Head Waiter and Waiters put there by us to provide us with comparative advantage over our fellow citizens. That is not a winning formula. We also have to recognise that not all solutions emanate from Dublin.

  38. I should have brought attention to the fact Quebec is one of ten Canadian Provinces operating within a single fixed currency the Canadian Dollar. There is no valid reason why Ireland cannot prosper within the Euro. I should also add that they have the highest social supports in Canada. One support in particular is all day subsidised child care. This was introduced to increase the very low birth rate and to allow mothers of young children to continue contributing to the Quebec economy. It has worked very well for Quebecers.

    It is estimated that 40% of Quebecers have Irish blood in them. The Quebec Irish speak French and in many cases have modified their surnames e.g. O’Donnell becomes Donnell, Connell, Conner, totally immersed in French culture although they are quick to let you know they came from Tipperary in 1848, and have intermarried with the locals 4 times since. We can cooperate and blend in where we find acceptance, we should start doing that at home.

  39. @Mickey Hickey

    What is the chemical composition of ‘Irish’ blood? As opposed to ‘other’ blood?

    Not ‘green’, obviously, but is it bio? ‘Natural’? Sustainable? Can we scale up production?

    Does it produce ‘healthy’ behaviour? A marketing opportunity to dramatically increase sales of Kerrygold White Cheddar. As opposed to the nasty ‘coloured cheese’?

  40. @Ferdigan

    What it means on the ground abroad is that you are known and accepted. I have been in many places where the most people know is that Ireland or the foreign language equivalent is something they vaguely remember, an island in the Caribbean perhaps. Do you think your chances of success would be better in Quebec where you are a known quantity and well accepted or Romania where you are seen as a country north of Moldavia.

    Ethnic markets are lucrative markets for example the German exodus post war ended around 1959-63 yet Brandt Meats with 140 employees is bigger today than it ever was. It has morphed from German to German plus Eastern European (Poland + Ukraine) with a market of 600,000 Germans (shrinking) + Eastern Europeans (growing) within 100 Km. In the same area as Brandt is Dimplmeier Bakeries which ships German style bread and pastries as far away as Los Angeles. Bought out by a major but still operating in the same plant producing the same product. I see a jam company revered by Germans and exporting to the German market worldwide Schwartau has been taken over by Cargill. It is just a matter of time until the US MBAs’ will squeeze out enough profit to kill the Schwartau cachet which is what made the company desirable in the first place.

    In the industrial market I see Kraft and Campbell are losing their ability to steam roller onto shelf space. One size fits all at moderate prices peaked with Henry Ford we are now in a world of flanker brands and independents trying to identify profitable niches. Nestle grew out of Switzerland with the ZIR money cost advantage. Given ZIR money Ireland can produce a Nestle within 100 years. On the other hand look at what we did with our near ZIR money. We have to face facts we are not Swiss and we are not German, we are more like post WW1 Hungarians.

    Industrial scale world wide advantage is not in our cards. What is possible is a nimble home market served by SME, supported and encouraged to branch out to niche markets that are larger than the whole Irish market.
    When you are in business you sit down at the kitchen table after a 72 hour week and you put pen to paper as you work out scenarios that might lead to more profit. Your first hurdle becomes how to fund the expansion in order to become profitable, always a sobering experience. It helps enormously if you are already profitable and have a sizable cash buffer.

    The first order of business for any government is to have a healthy SME environment. The second is to have a banking system with a mandate from government to fund SME expansion into enterprises that export unemployment either by import substitution or exports.

    Irish governments have latched on to narrow ideas such as Dev’s “Self sufficient standing alone.”, “Low corporate taxes 12.5%.”, “Lower Corporate Taxes 2%.”, “Unregulated or pretence regulation of Financial Operations.”. There is an enormous chasm between that kind of mindset and what goes on in Germany and Japan. Therefore we should not have sugar plum fairies dancing in our heads when we envisage any Irish government coming up with a workable industrial policy.

    Our ace in the hole for decades was low wages and low taxes. Selling that advantage to foreign companies was very easy. We did not develop large Irish owned, managed and operated businesses with the exception of Ryanair and Kerry Group both of which grew out of profitable domestic roots. To get back to Quebec they grew Bombardier a world wide heavyweight in Air and Ground Transport with over 70,000 employees. I have a son who works for them, typically they operate in three languages English, French and German on projects that require input from employees in a half dozen countries. Ireland has to start looking at how other small countries have built large, lasting, and profitable businesses.

    The EU and Canada have been in “Free Trade” negotiations for over two years. Has the Irish government looked at anything except protection for Irish beef farmers. A good example of our parish pump policies.

  41. @ Mickey Hickey

    Thanks for the spirited reply. Heartfelt too, it’s clear, even if you were, perhaps unfairly, provoked! No harm intended.

    I think this thread is over and you’re not alone in concluding no Irish government is going to come up with a game-changing industrial/enterprise policy ( what Michael Hennigan called a ‘Whitaker moment’), certainly one that that will put identifiably ‘Irish’ consumer products on the world’s leading retailers’ shelves in the forseeable!

    I think you’re right that the priority must be to ( stop the b-s! and) focus government resources on fostering a healthy SME environment including credit availability.

    Indeed, I can’t even really see this happening unless attention is paid to what Tony Owens has forcefully and convincingly argued here and elsewhere i.e. the replacment by experienced entrepreneurial ‘combatants’ of the bulk of those currently sitting on government and agency boards and task forces.

    Good luck to you.

  42. I ‘posted’ a comment on the TASC website (they censor inconvenient comments over there) on Ó Riain’s paper. Lets see if it appears. If not, I’ll post a copy here and sent an e-mail to the good Prof.

    The paper is unctious nonsense. Nice stuff, but nonsense. Am I to understand that gifting more taxpayers monies to really ‘undeserving’ researching causes will promote economic recovery and sustainability?

    “Pull the other leg – its got a bell on it!” 😎

  43. Michael, Thanks for the advice, but the filter is still there.

    Suffice to say that I agree completely with Richards recent post.
    Tony’s proposals are like a canary in the coal-mine. Until I hear that he has been contacted I will be safe in assuming that the system is dead.

Comments are closed.