Confidence within Ireland’s manufacturing sector remains strong, with 70% of firms expressing a positive outlook for the future, according to the latest Manufacturing in Ireland report by Ibec. The report, titled Facing Forward: Manufacturing Confidence Amidst Evolving Challenges, highlights the ongoing optimism at both the national and enterprise levels, despite facing significant challenges.
One of the primary concerns for manufacturers is rising operational costs, particularly in relation to wages, raw materials, and energy. Despite these pressures, many firms are optimistic about the potential for improvements in productivity and profitability over the coming year.
Sharon Higgins, Executive Director of Membership and Sectors at Ibec, emphasized the vital role manufacturing plays in Ireland’s economy. “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,” she said. “With the rapid evolution of new technologies, the sector is undergoing significant change, and it is essential to adapt to these developments.”
The report revealed that 76% of respondents expect wage growth to increase, while over half (52%) anticipate higher raw material costs, and the same proportion expect transport costs to rise. Higgins stressed that addressing the competitiveness challenges within the sector will be crucial to ensuring continued success, particularly as the Programme for Government deliberations begin.
A key challenge for manufacturers is attracting and retaining talent. Sixty-five percent of respondents expressed concern about this issue, with 53% citing the availability of housing for employees as a major obstacle. To help alleviate these issues, Ibec welcomed the recent allocation of €1.5 billion from the National Training Fund to support research and innovation, but emphasized the need for greater industry engagement with the education sector and streamlined work permit and visa processes.
Productivity improvements are a priority for 33% of respondents, with many looking to adopt new technologies to achieve this goal. Notably, 39% of firms cited artificial intelligence (AI) as a priority for their business. AI adoption was particularly pronounced in the pharmaceutical sector, with over 54% identifying it as a key focus, while only 25% of engineering firms have prioritized AI.
Looking ahead, Ibec is calling for the government to develop a new national energy and industrial strategy that accelerates the rollout of low-cost renewable generation and storage technologies. The strategy would also focus on improving the national grid and supporting the electrification of homes and businesses.
In the short term, Ibec advocates for a subvention to offset rising energy costs, including system charges and the PSO levy, to help businesses remain competitive in a challenging environment. Expanding support for renewable energy and energy efficiency is seen as crucial for fostering sustainable and cost-effective business growth.
