I thank the Chairman. I will set the context for some questions the committee can pose later on. It is stated Government policy to reinvigorate the economy by exports. It is my belief, as president of the Irish Exporters Association, that the only way to achieve economic recovery is via exports and every resource we have nationally, in the public and private sector, has to be diverted to what is the economic war we have to undertake. There is no other way; every job in Ireland depends on exports, one way or the other.
To set the context in terms of statistics, there are €147 billion worth of exports every year, 80% of which is undertaken by multinationals and 12% by indigenous Irish companies. The implication of that number is that the IDA, heretofore, has been exceptionally successful in attracting foreign direct investment and the companies concerned then use Ireland as a cost base, as a base for talent and as a base within Europe to re-export. It has done a great job so far.
A smaller section of our exports is undertaken by indigenous Irish companies, most of which are SMEs, but the 12% figure belies the fact that 50% of people involved in exports out of Ireland come from that sector, a sector which currently needs particular attention. The large multinationals do not rely so much on the international support of the State agencies, but the indigenous Irish exporter should and could rely heavily on the Irish State apparatus, be it the Department of Foreign Affairs or the agencies which undertake those exports. Of the 300,000 jobs dependent on exports, 50% are dependent on the indigenous sector. It is that sector which relies heavily on the Department of Foreign Affairs, Enterprise Ireland, Bord Bia, Bord Iascaigh Mhara and so on for support.
Approximately two thirds of those jobs in the indigenous sector are food related. If the Government wants to focus efforts and prioritise support, it should concentrate on the food sector. That sector is undergoing extraordinary difficulty, with the effective devaluation of sterling and an inability to replace the sterling based market rapidly with a euro based market. That is one area where the Department of Foreign Affairs or any other State agency could immediately get involved.
To prompt a discussion I will begin with a conclusion. Several vehicles are available to those who wish to export from Ireland. These include the Department of Foreign Affairs, Enterprise Ireland, Bord Bia, BIM and Teagasc. My first conclusion is that the effort is unco-ordinated. If the effort is to work it must be co-ordinated. The argument for co-ordination is completely separate from the argument for rationalisation. Let us leave budgetary considerations aside. It must be co-ordinated simply to make it work. That needs political will.
For those who are not marketeers, I can analyse how to go about doing that. I use the sales chain, which any first year commerce student knows is the way to analyse a business. The first step is to establish what the marketplace wants. The nation must adapt the goods and services we export to what the marketplace wants. We need to improve our market research capability. Business undertakes its own market research at the multinational level. My feeling is that the SME sector is poor at market research. At that level we are also poor at understanding how to obtain market research inexpensively. Those elements in Ireland who understand market research do not communicate it to the SME sector. Even though people in Enterprise Ireland offices overseas or a talented Department of Foreign Affairs official might have a capability in market research, they are operating in a vacuum. On the Department side there is a vacuum between what is going on in the marketplace and how the people producing the goods and services are reacting to that marketplace. That connection needs to be made.
Market research is undertaken by business itself and by Enterprise Ireland, which is an excellent vehicle to energise exports and one which needs to be nurtured and supported throughout the process of rationalisation which we will go through soon. This is the second recession which the business I run has seen. During the first recession, in the 1980s, we had to go overseas in 1983. In the past 15 years, 99% of our business was export related. We did not have to depend on the domestic market and we do not do so today. We had to live the story the nation must go through all over again. What kick-started things for us was a talented man in the IDA who spoke to a talented man in Enterprise Ireland and gave us a lead. Both of those leads originated overseas. We must support and enhance the foreign presence of the Department of Foreign Affairs and Enterprise Ireland personnel in the marketplace. It is no use having that capability in Ireland. The action is overseas and not at home.
We must then develop the goods and services we need to export. We need to mould what we do and build to what the marketplace wants. We need to build a very sophisticated listening mechanism to understand what the marketplace wants. For those who cannot afford their own listening mechanism, the State needs to step in and support them. Once again, we must look at the vehicles which are available to us.
If the food sector were a private business market, research and product development would be tied under the same roof and not operating in separate silos where something can get dropped in translation. There may be an argument for the research and development aspect of Teagasc being linked with the Bord Bia capability. There is no point in Teagasc researching and developing products in a vacuum. They must develop products which Bord Bia, Enterprise Ireland or the Department of Foreign Affairs says the marketplace wants. There is an argument for immediate connection there.
Once we have developed those goods and services we have to sell them. I am not aware of a depth of capability in the Department of Foreign Affairs in communicating what it is we have to offer. That is not to say it does not exist, and I will come back to that comment. I am aware of an excellent capability in Enterprise Ireland. That is not to say Enterprise Ireland is excellent all around the world. Like any organisation, it has its highs and its mediums. I have never come across a low. That has been my experience over 25 years. Each time an exporter, whether my own business or one of those I represent, engages with Enterprise Ireland which then couples with the Department of Foreign Affairs it wins business. The results are direct and immediate. It is not long-term strategy, but we must get our people out into the marketplace doing that. At water-coolers in businesses throughout the country people are asking, "How do we get out into the marketplace?" I will pick that point up a little later.
Enterprise Ireland works. It creates jobs and revenue for the country. It couples very well with the Department of Foreign Affairs in certain aspects. The headlines on the slide I have shown are: find out what the market wants; develop the goods or service; and sell it. That chain is dispersed all around the various State organisations. The approach is not unified and co-ordinated. Were this a business — and we are talking about business — one would have single point responsibility for what it is we want to achieve, which is overseas sales which will create jobs and tax revenue and bail us out of our deficit problems. At present, the effort is somewhat unco-ordinated. Steps one, two and three need to be co-ordinated, managed and accountable as a single chain.
To reflect the experiences of the members of the Irish Exporters Association and my experience, I have listed what works well. I do not say what does not work. Enterprise Ireland's overseas offices work incredibly well and generate sales. Enterprise Ireland training also generates sales. I took part in a programme it promoted, Leadership for Growth, which attempted quickly to re-orient the construction industry, which is a large employer here, to the international markets. This was no mean feat. I am aware of immediate successes where much capability is being diverted. I can speak to my own company's success in that programme. Those programmes must be maintained. In a time of business slow-down one must spend money and resource on sales and marketing. Otherwise one will end up closing the shop in two years time. We need to emphasise that.
Other support programmes, financial or otherwise, are an important, but less important, part of what Enterprise Ireland does. Its presence and capability are more important and we have found its local market research to be effective. Its people on the ground have developed contacts and networks which Irish companies can immediately use and without them its work would be ineffective. They are an absolute necessity if we are serious about exporting, and we have no choice but to be serious about exporting.
In the context of what is going on politically it is important to recognise that ministerial trade missions are vital to develop sales internationally. Small companies — those with a turnover of less than €250 million per year or in some cases less than €50 million per year — need theimprimatur of the State and its officials. The Department of Foreign Affairs and Enterprise Ireland do an excellent job in ensuring the people with that imprimatur do not let the State down in the markets which will be most important for us in the future, such as Asia and eastern Europe. Despite our political difficulties, I urge that we do not lose sight of the importance of Ministers getting on airplanes and flying the flag.
I am a representative of business and when everyone steps out on St. Patrick's Day and flies the flag for business, it leads to enormous success. We do not go overseas with Government and officials to party but to do business and it has been an enormously successful part of what we do.
The Stateimprimatur is very relevant from the point of view of the Department of Foreign Affairs. The calibre of our diplomatic corps is excellent and strong traditions of service are evident in the Department. The status of our embassies needs to be maintained because they are our shop window. People do not come here to buy; we have to go to their country. We need, however, to reorientate the second layer within the Department of Foreign Affairs towards business. That could happen through training to give exposure at an earlier stage to business and its requirements. The process of selection of the people in question could also be looked at. I trained in France and Germany and they use systems in which people who are ambitious in business are put through the diplomatic corps and vice versa. They recognise that business exports and internationalism go hand in hand. Typically they have a system of internships that allows cross-fertilisation. Many of my colleagues in business school in France went overseas and worked in embassies without pay for between three and six months promoting sales as part of the business school programme. Those people who were chosen for the various political schools had to serve time in business to progress their careers. That system was driven by political leadership which insisted on cross-fertilisation between the diplomatic corps and business at training stage.
We have an issue with branding overseas. This is not just as a result of our financial difficulties. We need to rebrand our country away from drink, bars and pubs because that aspect of our brand is a constant source of difficulty for me as I try to sell a high-tech country with high-tech capability. The last thing anyone wants is to entrust their business to someone who has a hangover. Financial rebranding is under way and I will not comment on that today.
We should use the arts for our brand and the IEA encourages its people to use them. The arts are a serious but enjoyable part of our brand and one we should emphasise. We are already a green brand, despite some of our domestic performance. We need to rebrand and the embassies and their staff will be central to conveying the message, not just officially but unofficially. I believe the nation is ready for branding as an area of technical excellence, green capability, food technology and the biosciences. Our financial services sector is large enough to deal with its own branding.
On the last page of the slide I make a few points to prompt a discussion, one of which concerns training. The Department of Foreign Affairs should be used as a resource to support and emphasise business and this should be one of its central functions. Enterprise Ireland does an excellent job overseas and needs to be supported and nurtured. We need people to be on the ground because Ireland will not do business unless it has a presence. There is much talk about budget cuts but when an overseas office is cut, so are eventual sales to the country concerned. This cuts the tax revenue which would be generated by those sales so while it might be of benefit in the short term, in the longer term we will reap the consequences.
I am not familiar with the other State agencies such as Bord Iascaigh Mhara, Bord Bia and Teagasc but the research and development functions of Teagasc should be tied to the promotion side of the equation. How can one side promote something when it does not even understand if it meets the needs of the marketplace?
There is no better time for availing of cheap or free talent to generate export sales. We can recruit from the very best business schools in the world. We cannot be politic about it but need to be aggressive to turn this country around. I hope there will be an open discussion between the Department of Education and Science and the universities which will then be linked back into business and the Department of Foreign Affairs through programmes such as those used by the French and the Germans. The system works, the networks are very strong and, having been through both the French and German systems, I have benefitted enormously in running my business.