Waterford Crystal has disclosed that it employs 1,300 staff in Indonesia for the same wage cost as 90 staff in Britain, itself a cheaper labour market than Ireland. Arthur Beesley, Senior Business Correspondent in Druid's Glen, reports.
Chief executive John Foley said manufacturing and export groups such as Waterford had not seen a boom in Ireland due to higher costs and a deteriorating competitive situation.
"While you could be tempted to slash your wrists in this environment, what the situation does is ensure that you ruthlessly focus on the cost base of the company to ensure that, even though there are outside pressures, you control what you can control," said Mr Foley.
He was speaking at the Irish Management Institute (IMI) annual conference in Druid's Glen, Co Wicklow, at which rising business costs and low productivity loomed large in a wide-ranging discussion on business conditions "beyond the boom".
Stating that Waterford faced "soul-destroying" increases in electricity and gas tariffs at a time when it was making great efforts to contain its cost base, Mr Foley said the business would not have a future in Ireland without technology.
But while Mr Foley said it was not easy to add value, innovate and create premium-price propositions when costs were rising "everywhere you look", he was relatively confident that manufacturing had a future in Ireland.
"The implementation of cutting edge technology is essential. In Waterford we will always have a craft element to our business, but it is technology that will drive the volume and value and will ensure that we have a sustainable future in manufacturing."
The adoption of new technology gave the company's operation in Co Waterford an opportunity to compete with cheaper economies in Asia, he said.
Addressing the same session, IMI chairman Dr Phil Nolan said productivity was a cause for concern for Ireland as indigenous productivity growth was only 1.3 per cent when the performance of foreign-owned industry was excluded from the figure.
"Wealth improvement and increases in the standard of living are only brought about through enhanced productivity," said Dr Nolan, former chief executive at Eircom.
Microsoft Ireland human resources director Anna Pringle made similar points. Asking "how do we claim our future?", she said the answer lay in cost containment, increased productivity and investment in continuous learning and development.
Citing the weak value of the dollar, Aer Lingus chief executive Dermot Mannion told the conference that the transatlantic market was a "challenge" for the airline.
The Open-Skies agreement to increase competition in the international airline business meant that Aer Lingus could not be complacent about its own cost base.
Mr Mannion said the airline was probably still 10 per cent behind other international carriers in terms of cost base. Wage increases under the Towards 2016 social partnership deal would have to be exchanged for productivity gains.
"We desperately need new airport facilities in Dublin," he said, adding that such facilities should be delivered in the shortest possible timeframe and would benefit all airlines and passengers.
