Columnist Richard Robinson, Corporate Banking Manager, Danske Bank
Manufacturing has big role to play in NI’s export economy
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anufacturing is an industry that is very much part of Northern Ireland’s DNA, but commentators are often heard downplaying it as a sunset industry rather than one on which our future economy is likely to be based. It’s true that parts of the industry are facing challenges, but the statistics show that manufacturing remains a key sector in Northern Ireland with respect to output, employment, exports and R&D. Manufacturers account for 58% of Northern Ireland exports through export sales worth £6.5bn, over 15% of NI output and 55% of overall R&D spend. They directly employ 88,000 people, or 11% of the workforce at salaries 8% above the NI average. The numbers don’t lie.
Smiley Monroe’s success has been born out of a philosophy of staying close to its customers and with a growing customer base in the region, increasing political uncertainty and potential export restrictions, manufacturing ‘in America for America’ was a natural strategic move. It’s a move that demonstrates the innovation and resilience that can be found right across the more than 5,000 companies in the sector, only 1% of whom are the large companies employing over 250 people that most of us have heard of. In fact, 94% of manufacturers currently employ fewer than 50 people, but together form the backbone of the sector in Northern Ireland. Within these firms will no doubt sit the next Almac or Norbrook. Looking forward, we appreciate that significant investment will be required by the sector over the coming years to remain competitive. This will include investment in R&D as businesses continue to drive innovation and new product development; investment in automation as firms seek to address rising labour costs and reduced availability; and investment in new technology as they incorporate Big Data, the Internet of Things and Artificial Intelligence. It is imperative that our manufacturers look at these challenges as opportunities to differentiate themselves from international competition. Northern Ireland’s manufacturers have a supportive policy and funding environment at the moment and I would be hopeful we will see more firms step out into new markets and investing in the skills and technology needed to showcase Northern Ireland’s talents on the global stage. Danske Bank’s Chief Economist Conor Lambe forecasts manufacturing output growth of 1.1% in 2020, broadly in line with the expected growth in the wider economy. But given the size of the manufacturing sector in NI, that growth will still contribute one of the largest nominal increases to Northern Ireland’s economy this year. There are clear opportunities to boost our manufacturing base in the year ahead and as new trade deals are negotiated it is to be hoped that NI companies in this important sector will continue to seize the opportunities presented.
“statistics show that manufacturing remains a key sector in Northern Ireland with respect to output, employment, exports and R&D. ” Yet, with uncertainty around future trading arrangements following Brexit debated for the past three years, it hasn’t been a wholly positive story. In fact, business confidence slipped in the second half of last year amid weaker orders, which in turn led to reduced business investment and output dropping, as well as a number of high profile lay-offs and site closures. However, despite the Brexit confusion, many manufacturing businesses have continued to perform well. Danske Bank is a strong supporter of the sector and we have continued to see a number of success stories coming through for businesses who have an appetite for growth. For example, we have just agreed a comprehensive suite of facilities to support Lisburn-based conveyor belt experts Smiley Monroe. The business currently exports to 60 countries and despite political uncertainty, it has taken the bold move to protect its export sales and safeguard jobs by opening a new manufacturing facility in Franklin, Kentucky – a $2m investment assisted by Danske Bank and the Commonwealth of Kentucky.
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