ANALYSIS:THE GOVERNMENT is "totally fixated" on trying to resolve the banking crisis and is ignoring the crisis hitting exporting companies, according to the chief executive of the Irish Exporters Association, John Whelan.
Otherwise viable companies are going to the wall because of the extraordinary conditions that exist. If the export sector is “decimated” during 2009, he asks, then how is the economy going to benefit from increased growth in global activity that might come in 2010?
Governments worldwide have been stepping in with substantial packages to shore up their industries during this downturn in international trade. According to Whelan, the average package is the equivalent to 4.5 to 5.5 per cent of gross national product over a two-year period. If such an effort were made here, it would be the equivalent of about €6 billion.
In contrast, Whelan says, the Government here is doing next to nothing. Approaches to Minister for Enterprise, Trade and Employment Mary Coughlan have met with a simple response: “There’s no money.” The association identified advisers involved in the creation and operation of schemes in the UK and Germany and brought them to the department’s attention, but the response remained the same.
Multi-billion euro packages in the 2009 to 2013 National Development Plan for stimulating industry and investing in product and process improvements appear to have gone by the board, the money being swallowed up by extra welfare payments and the black hole of the banking sector.
Instead, the Government has created a €100 million sustainability fund that, spread over two years, allows Enterprise Ireland to invest up to €500,000 in firms by way of preference shares. At the maximum level, that allows for investments to be made in 100 companies.
“The scheme scratches the surface,” Whelan says.
The vast majority of OECD countries operate an export credit scheme, but no such scheme has operated here since concerns surrounding the operation of them were created by the beef tribunal in the early 1990s.
Other European states have been beefing up their credit guarantee schemes, but Ms Coughlan’s department appears to be against reintroducing such a scheme.
Meanwhile, export companies are finding it difficult to access credit from the banks, and are charged a premium when they do. Companies under pressure from relatively higher costs here and disadvantageous changes in the sterling-euro exchange rate are finding it impossible to survive, Whelan says. The association’s dire prediction of a loss of up to 91,000 jobs this year – out of total employment in the sector of more than 365,000 – illustrates the scale of what could happen.
The exporters’ association is of the view that Ms Coughlan and her department should be doing more to protect companies and jobs. Other countries are ratcheting up their foreign debt. The association believes Ireland’s debt levels would allow it to do the same and that Ms Coughlan and the Government should change their view. It’s a judgement call in which the stakes are very high.
