Energy costs singled out as top issue for manufacturing sector

Ireland’s manufacturing environment has “deteriorated considerably” since last year with issues including inflation, energy costs and labour hampering the sector.

ut the results of a survey by business group Ibec, published this morning, show that despite the challenges, 53pc of manufacturers are still positive about the external environment and 65pc confident about the prospects for their own business.

“Having successfully emerged from the pandemic, our manufacturing businesses now face into the energy cost crisis, the highest inflation in many years, and continued supply chain issues, all playing out against the backdrop of war in Ukraine,” said Sharon Higgins, executive director of membership and sectors at Ibec.

“They also have to deal with the more constant challenges; climate change, changes to the global tax regime and Brexit.”

Energy costs were cited in the survey as the single biggest challenge for manufacturers. Still, 47pc of manufacturing chief executives intend to increase capital investment in the next six months.

Ireland’s manufacturing sector employs 260,000 people, or 12pc of the total workforce. It pays €12.5 billion in wages and employment taxes every year, and €4.4bn in corporation tax.

“We know international competition for investment never stays still and competitor countries are constantly nipping at our heels,” Ms Higgins said. “Ireland must anticipate this by never staying still.

“As well as nurturing our business-friendly environment, we also need to take care of the social infrastructure that is key to being a great place to live and work.”

A separate report this morning from PwC shows that Ireland has zoomed up the rankings among EMEA countries as a place for private business to thrive. PwC’s latest EMEA Private Business Attractiveness Index ranks Ireland in seventh place, up from number 14 a year earlier.

Switzerland, the UK and Sweden rank first, second and third respectively as the best places for private businesses and entrepreneurship.

Ireland’s high personal tax rate and indirect tax, including Vat, still weigh on the country’s overall attractiveness, according to the PwC report.

The index also suggests that more needs to be spent on education. Ireland ranked 31 out of 33 EMEA countries for such government expenditure.

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