Confidence in the manufacturing sector remains steady, with 70% of firms expressing a positive outlook at both national and enterprise level.
That’s according to this year’s Manufacturing in Ireland report by Ibec, entitled,”Facing Forward: Manufacturing Confidence Amidst Evolving Challenges”.
Challenges persist, however, particularly rising operational costs related to wages, raw materials, and energy.
Despite these hurdles, many manufacturers expect improvements in productivity and profitability.
“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,” said Sharon Higgins, Executive Director of Membership and Sectors at Ibec.
“With the rapid evolution of new technologies, the sector is undergoing significant change, and it is essential to adapt to these developments.”
In terms of cost challenges, 76% of all respondents expect increases in wage growth while just over half (52%) expect increases in raw materials costs, with the same figure expecting increases in transport costs.
Ms Higgins said, 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.
She said this includes building a robust talent pipeline to drive the sector forward.
Beyond cost increases, 65% expressed concern about attracting and retaining talent, while 53% noted the availability of housing for employees 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,” Ms Higgins said.
“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.”
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.
Ibec is urging 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,” Ms Higgins said.
“Expanding industry supports for renewables and energy efficiency is key to a secure, sustainable, and competitively priced energy system that fosters business growth.”
Article Source – Manufacturing sector performing strongly despite rising costs – RTE