A perfect storm

TRADES UNION desk 

Northern Ireland’s labour market is in crisis following further job losses in the manufacturing industry,

John O’Farrell claims.

What is the Executive’s problem with manufacturing? For all of the waffle spouted about ‘rebalancing’ the economy, there seems relatively little excitement about the number and quality of jobs Northern Ireland is losing.

First let’s discuss quantity. The only active decision made by Secretary of State Theresa Villiers prior to the ‘Fresh Start’ agreement, was to get HM Treasury to advance the cash to pay for redundancies in the civil service, part of the Stormont House Agreement’s plan to transform 20,000 public servants into private entrepreneurs, emigrants or unemployed.

Then the private sector showed that ‘confidence’ that policymakers fret about by a series of layoffs in manufacturing. It started with Michelin in Ballymena announcing that all 860 staff were going to be made redundant, a decision which will also impact on over 500 jobs in its supply chain. This is on the back of the ongoing decline of JTI Tobacco and the closure of Patton construction.

The following week, more redundancies were announced at Caterpillar, Schrader Electronics and Invista. All told, about 2,500 high-value manufacturing jobs have been lost in Northern Ireland in the past year.

At the same time, I was listening to a presentation by an official at DETI about targets for the incoming EU ERDF (Structural Funds). DETI wants to see “75 per cent of 20-64 year olds in employment,” thus addressing our dismally high level of economic inactivity by “increasing the number of ‘high-growth SMEs’ from 695 in 2013 to between 1,300 and 1,500 by 2023.”

But what is DETI’s idea of a ‘high-growth SME’? A business that either exports or has the potential, plus one that expands its employees or turnover by 20 per cent per annum. This definition is vague. Among the sectors of our economy which have grown at those levels in recent years are pound shops and domiciliary care.

Quality matters, as hundreds of former skilled workers in manufacturing are finding out, as they compete with ex-public servants for low-wage, low-skill and low-status jobs. Equally worrying was the reaction of the DETI minister Jonathan Bell, telling Michelin employees via the BBC that everything will be OK when we cut corporation tax and 30,000 new jobs will materialise, just like that.

Aside from this ‘jam tomorrow’ promise to people who have just lost their daily bread, this magic formula really deserves to be questioned. The 30,000 jobs figure was conjured years ago, under radically different economic circumstances when the UK corporation tax rate was far higher. The trade unions’ stance on the folly of cutting corporation tax is well known, but we are not alone in pointing out the sheer uselessness of lower corporation tax for manufacturing. Lobbyists Manufacturing NI agrees with us that the real issues afflicting manufacturing are investment, cost and distance. 

Ireland Secretary for Unite, Jimmy Kelly did not mince his words: “The threat posed to Northern Ireland is very serious. The changed realities of the global economy in the aftermath of the 2007 downturn are combining with local challenges faced by manufacturers such as the high cost of energy, geographical disadvantages and inadequate capital supports to create a potential perfect storm for the Northern Ireland economy. In facing this threat, Unite will not be found wanting but we need our political leaders to be similarly proactive. The Executive needs to bring forward proposals to deal with the crisis in manufacturing.

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