Irish manufacturing sector performing strongly despite rising costs
Ibec, the group representing Irish business, has released its 2024 Manufacturing in Ireland Report, “Facing Forward: Manufacturing Confidence Amidst Evolving Challenges”, revealing a steady confidence among manufacturers, with approximately 70% expressing a positive outlook. However, challenges persist, particularly rising operational costs related to wages, raw materials, and energy. Despite these hurdles, many manufacturers expect improvements in productivity and profitability.
According to “Facing Forward: Manufacturing Confidence Amidst Evolving Challenges”, confidence in the manufacturing sector shows little or no change from 2023 survey, with. 7 in 10 expressing positivity at both national and enterprise level. In terms of cost challenges, over three quarters of all respondents expect increases in wage growth (76%) while just over half (52%) expect increases in raw materials costs, with the same figure (52%) expecting increases in transport costs. Beyond cost increases, almost two thirds of respondents (65%) expressed concern about attracting and retaining talent, while over half of respondents (53%) noted the availability of housing for employees as a major challenge.
The report also reveals that one third of respondents (33%) cite increased productivity as a top priority for the coming year. This focus on productivity is coupled with over one third (39%) of respondents noting AI as a priority for their business, primarily with a view to improving efficiency and productivity. AI proved a higher priority for pharmaceutical businesses, with over 54% highlighting it as a priority for their business and 75% planning to adopt AI initiatives over the next 1-2 years. This stands in contrast to Engineering firms, where only 25% have identified AI as a priority, with 50% of planning to adopt AI over the next 1-2 years.
Sharon Higgins, Executive Director of Membership and Sectors at Ibec, commented: “Manufacturing plays a critical role in the Irish economy, employing a significant portion of the workforce and contributing 44% — over €10 billion — of corporation tax revenue. With the rapid evolution of new technologies, the sector is undergoing significant change, and it is essential to adapt to these developments.
“As deliberations for the Programme for Government begin, it is crucial to address the competitiveness challenges facing the manufacturing sector to ensure its continued success during this transformative period. This includes building a robust talent pipeline to drive the sector forward.
Sharon Higgins, Executive Director, Membership and Sectors at Ibec.
“Currently, 65% of companies cite talent availability as a major challenge. We welcome the recent allocation of €1.5 billion from the National Training Fund, a move we have long advocated for, as part of a multi-annual strategy for capital investment in research and innovation. However, greater industry engagement with the education sector is now necessary. Additionally, streamlining work permit and visa processes is vital for attracting the talent needed to sustain the industry’s growth.
“Manufacturers, like many facets of Irish business, are concerned with rising costs. To help alleviate this concern, we urge the government to adopt a new national energy and industrial strategy that accelerates the roll-out of low-cost renewable generation and storage technologies, invests in the national grid, and supports the electrification of homes and businesses. In the short term, a subvention to offset system charges and the PSO levy would reduce costs and align Ireland with European norms. Expanding industry supports for renewables and energy efficiency is key to a secure, sustainable, and competitively priced energy system that fosters business growth.”
