First of all, I want to thank the Senators who put down this motion. I agree totally with their sentiments. It is not good enough just to talk about this matter and to highlight it here and in the other House. We must follow it through and make suggestions which will produce some better results at the end of the day.
I followed with interest much of the discussion and I am surprised that such a negative note was apparently introduced by Senator Murphy who said we are closing the door after the horse has bolted. This is not and never has been an easy problem to tackle irrespective of which party were in Government. A fair measure of success has been achieved over the past few years. We should try to build on that success and not just fall back into the old trap of saying we are bolting the door after the horse has gone. If we adopt that attitude across the whole spectrum of public life in Ireland we might as well float back into the Commonwealth as was suggested at a different time.
I do not share the air of pessimism that permeates certain sections of Irish society. I can never understand why people can even think of uttering things such as that especially when we look at the success Irish people have achieved all over the world in whatever facet of business or in whatever walk of life they chose. When they go abroad they achieve great heights in whatever profession or area they go into. We are all pleased with the spectacular success of Irish exports to the most sophisticated markets around the world. They created an all-time record this year of between £10.5 billion and £11 billion for a small country. If we can do that on the export market why can we not do it at home? This is exactly what this motion focuses on. I should like to thank the Senators who contributed to the debate and I will take up any worthwhile suggestions.
I agree with Senator McGowan that we need continuous activity and perseverance by myself, as Minister for Industry and Commerce, and, indeed, by the Minister of State for Trade and Marketing, Deputy Séamus Brennan. The Minister of State took another initiative today, with the Taoiseach, in launching a new national marketing group consisting of real practitioners in the business. He wants to bring them together and let them have their input into how the State can play a more effective role in giving Irish industry an opportunity to sell more goods. We have to be very realistic about where the weaknesses are, identify them and go after them.
Senator McKenna referred to the role of the primary school sector and I will take that suggestion up with my constituency colleague, the Minister for Education, Deputy O'Rourke, to see how it can be tackled. In regard to young people — Senator McGowan placed a lot of emphasis on this — it is important to get across to them. We need to stress the importance for them that more Irish products are bought because that will mean more jobs at home. It is as simple as that. One of the more effective messages I saw over the Christmas period was that of Guaranteed Irish, a voluntary organisation run by industry, who put a slip in the pay packet of everybody going out for Christmas with a short, clear and distinct message that a small amount of the wage packet spent every week on Irish goods could create a job for their brother, their sister, their cousin, their uncle or whatever. That is the type of message we want to get home and it is gaining more emphasis. There is a greater awareness but we have to build on that and keep the message before the people.
The Minister of State, Deputy Brennan and I are fully committed to that. We have taken many initiatives since we took office. It is important that we should continue to go abroad seeking investment to create jobs here but, in my view, there is even greater scope for creating more jobs out of what is sold in Ireland whether it is in supplying industry or consumer goods. It is slower, it is not as flashy as making an announcement about 200 jobs for a particular town but those jobs will be there longer and after the market has changed for some industries that are being brought into this country.
The Seanad has already been given some very important figures in relation to the level of imports into this country. Let me give the Seanad a few more just to put the matter into perspective. In the European Community imports of goods and services as a percentage of GDP is 28.5 per cent. The figure for Ireland is 53 per cent. Overall, imported goods now hold a bigger share of the market — 57 per cent — than Irish goods, 43 per cent. That puts the whole scene into perspective. There we are lagging behind our partners in the EC. To put it another way: every year Ireland imports an estimated £1.2 billion worth of products which could be produced by Irish manufacturers and Irish employees. We lose out in two ways: first, by failing to channel a proportion of this spending into Irish enterprise and, secondly, by losing out on dramatic opportunities for establishing strong indigenous manufacturing firms which can use their home sales base to expand into the virtually limitless potential of exports.
Between 1979 and 1984, the value of manufactured imports increased from £3.4 billion to £6.4 billion and the overall import penetration of the Irish market increased from 50.3 per cent to 57 per cent. This high level of import penetration exists in virtually every sector of the Irish market: clothing is 68 per cent, leather and footwear is 73 per cent, textiles is 70 per cent, plastics is 73 per cent, office and data processing is 81 per cent.
It has been suggested that a major part of the problem is that Irish manufacturers face competition from countries where low wages enable products to be produced at prices well below what Irish firms could meet. In some segments of the market, there is evidence of this and there are indications that, in these instances, the Irish consumer will sacrifice quality for a very low price.
However, it would be misleading to see this as a principal reason for the high level of imports. It is important to note that over 86 per cent of our imports originate in highly developed countries with a sophisticated manufacturing base and with a strong reputation for excellence. In most cases, Irish manufacturers are competing in the Irish market with the best in the world. Five areas alone — the United Kingdom, the United States, Germany, France and the Netherlands — between them account for over 75 per cent of our total imports.
Such a level of import penetration is not in our national interest. There is a gross imbalance in the situation and as a nation we must strive to mirror the EC average. The Government are fully committed to developing our indigenous enterprise so that we can contribute in a significant way to get a greater share of these imports.
We must recognise, of course, that we live in an open economy. Our membership of the EC and of GATT requires us to operate in a fair and competitive way. That is not to say that we are hamstrung in every way we turn and that we cannot do a lot about the situation as we see it. We can no longer hide behind artificial barriers to trade and expect second-rate goods to be accepted in the domestic market. We must acknowledge the tough, highly competitive market situation that exists and operate within that scenario.
Given the level of import penetration that exists, there are a number of questions that need addressing. Why does Ireland import such a high percentage of manufactured goods which Irish industry is capable of producing? Why are we far behind most European countries in using a strong domestic market as a base for export expansion by a dynamic indigenous marketing sector?
It is easy to criticise Irish buyers for failing to give adequate support for Irish manufactured products and for using their spending power to build up industry and help create jobs in other countries but that is too simplistic a response and overlooks the fact that on the evidence many Irish buyers are supportive of Irish products and are fully alive to the fact that their spending can contribute to economic growth and job creation. If we want to tackle the problem at the roots, we need to examine a number of related problem areas which, in combination, are responsible for the high volume of imports in the Irish market today.
"Buy Irish" is a strong, simple, unmistakable message that evokes a very positive response from most Irish people and provides them with a means to make a personal patriotic contribution to the good of the nation. So much seems to happen in the economic world that is outside the control of the average man or woman that there is an instinctive welcome for an opportunity to take action in an area where people can make a difference, where one does not have to be an entrepreneur to help to create additional employment. The "Buy Irish" theme has been with us since the foundation of the State and, indeed, one finds echoes of it in Irish history, back to Dean Jonathan Swift and beyond.
However, there is a sense in which "Buy Irish" has become something of a smokescreen, obscuring fundamental problems and offering a slogan instead of a solution. Prior to our membership of the EC, when high tariffs and low quotas effectively protected much of Irish industry from open competition, manufacturing was production rather than market-led and the Irish consumer was often given the "Buy Irish" message as a substitute for quality and value.
There was almost an unfortunate connotation of charity in the "Buy Irish" appeal, an implication that, were it not for the Irish origin of products, the consumer would not ordinarily buy them in preference to imports. With this in mind, there was a major shift in emphasis in the seventies. The "Guaranteed Irish" campaign, launched initially by the Irish Goods Council and now run by Irish industry, put the focus on product quality, value and service and specifically urged Irish shoppers to purchase Irish products only where they compared favourably with imports.
This campaign has been successful in a number of respects. Consumer research over the years has shown that the great majority of Irish shoppers believe that, in general, Irish products are as good as, or are better than, imports.
This research also suggests, incidentally, that for most shoppers, quality rates higher than price in purchasing criteria. This confirms the only realistic direction for Irish manufacturing industry. In the main, Irish firms will not find their market niche at the bottom end of the market, where the competition is fiercest and where profit margins are tight but must build an image, a reputation, for Irish products in quality, service and all-round value. Not only does this give Irish firms the best chance to win sales in the Irish market but it is the only way for them to develop a product line-up that will enable expansion into export markets.
Ireland's commitment to an international policy of fair and open markets is in our own self-interest because it frees Irish industry from the limitations of a tiny home-market consumer base and gives access to the virtually limitless potential of export-led growth. But one country's import is another country's export and, in order to gain greater export access, we also have to open the Irish market to greater competition from the products of other countries and provide Irish consumers with more choice and variety.
During the seventies two factors came into play. First, many Irish firms were slow to adapt to the changing marketplace and the more intensive level of competition from abroad. Second, Irish shoppers were attracted by the novelty of the wider choice and the new products coming into Ireland at highly competitive prices for the first time. The inevitable result was a huge growth in manufactured imports. In sectors like clothing, footwear, furniture and foods, competing imports doubled and trebled their markets share. This import growth rate had mostly levelled off in the early eighties as Irish industry got its act together and began to fight back, but over the past two years there are disturbing signs that competing imports are on the rise again.
In a situation where Irish products are failing to enjoy a reasonable share of the Irish market, any one or all of three factors must be considered: Irish people are not buying the products; Irish stores are not supporting them; or Irish firms are not producing them. At present, all three factors are highly relevant.
"Guaranteed Irish" addressed one element. Despite the strong evidence of consumer preference for Irish merchandise and recognition that Irish goods are fully competitive, this attitude often fails to translate into purchasing decisions. There is a need for people to think a little more before they buy; to make a determined effort to seek out and ask for Irish products; to buy imported goods only after they have consciously checked if there is an Irish equivalent; and to make their views known to retailers, whose business depends on responding to customer demand.
Senator Daly made an interesting point about Maguire & Patersons and the affect that message has had. It is that type of message that has to be driven home every day into the shoppers' minds, whether through the kids at school, to the parents and everybody else, that buying foreign products is exporting our money to create jobs abroad when we need them so badly at home.
There can be no doubt that a much more determined consumer attitude in giving Irish products a fair chance to prove themselves would in itself, shift millions of pounds of purchasing power from imports to Irish goods and give Irish industry the kind of support that European industry generally receives from its home market consumers. A point made forcibly by many Senators who contributed here is that in Germany the people buy German and in France they buy French. In Ireland for far too long, although it is changing but we will have to change it much more forcibly, supporting Irish and keeping our money at home is the best way the parents in spending their wage packets can contribute to the possibility of jobs for their young people.
A bit more pride in Irish products by Irish people is not only needed but is fully justified. It is ironic, for example, to observe the growing sales and popularity of Irish fashion garments in highly sophisticated world markets, while here at home we import over £1 million worth of clothing every single day.
The second area to be examined is what has been termed "sell Irish"— the attitude of retail outlets to Irish firms and Irish products. Obviously, this is a crucial area because, if Irish shoppers continually find that they cannot get Irish products when they shop, they are likely eventually to give up in frustration.
Until fairly recently, it must be said that there was justification for the very serious concern about the high level of imports stocked by many department stores, supermarkets and speciality outlets. Irish manufacturers complained about the difficulties in getting their products on to the shelves or even getting an appointment with store buyers. Small Irish manufacturers and new companies in particular found major barriers in the way of getting their products introduced on to the shelves. I want to thank the Senators who mentioned the abolition of "hello-money" and below cost selling. It was an initiative that I felt was long overdue. The small manufacturers were being put to the wall by the completely discriminatory and unfair practices that existed in the minds of buyers in the way they carried on their businesses. Some action was called for, action was taken and I intend to follow up that action in whatever way possible. Senator McGowan drew attention to the real problems in the potato industry at the moment. In the last week or so the Irish Farmers' Organisation have been calling on me in relation to taking action in an area that they deem to be below cost selling. I want to tell the Seanad here tonight that we have fully investigated it and, far from the existence of any below cost selling at all, it is a different problem. I would have expected the IFA as representing the producers to know exactly what the problem was and to point the finger in the right direction and have the real facts brought to the attention of the consumers. In the interests of their own members I thought they would have done their homework before just glibly calling on the Minister to step in and take action. When I investigated it no action was called for on my part.
As I said, until fairly recently there was justification for the very serious concern about the high level of imports stocked by many department stores but I can say that this situation has been significantly reversed in recent years. For the most part, the Irish retail trade is now highly supportive of Irish firms and committed to increasing its stocks of Irish products. I would mention the Irish grocery sector as a case in point. Orders placed with Irish companies as a result of marketing initiatives organised by the Irish Goods Council have increased from £2.2 million in 1984 to £8 million in 1985, £13.6 million in 1986 and £15.4 million in 1987. The graph is certainly going in the right direction and we should keep it going stronger in that direction. The major cash and carries, multiples and symbol groups have undertaken their own promotional support programmes for Irish food and grocery products and have organised seminars for small Irish companies to help them identify new product opportunities. There has been a coming together of the buyers through the efforts of the Irish Goods Council to relate back to manufacturers what the requirements are going to be and where we see the market going. That type of close liaison, close co-operation and exchange of market information can help small companies to avail themselves of opportunities they have not been aware of in many instances up to now.
There has been a similar pattern of support activity by the trade in other consumer product sectors. It is worth noting that last year saw the largest number of promotions ever undertaken by the retail trade to boost sales of Irish giftware, toys, food and other merchandise and already this pattern is continuing in the New Year.
The third area may be the kernel of the problem: Consumers cannot buy, nor can retailers stock, Irish products that do not exist. So are Irish products meeting the demand for more Irish products?
From time to time, Irish industry comes under fire for some of its shortcomings, so the fact should be recorded that hundreds of Irish manufacturing firms are aggressively exploiting opportunities in the Irish market. Particularly welcome are the growing signs that Irish manufacturing industry as a whole has become more marketing-conscious. More Irish companies are investing in marketing for the first time. New and innovative Irish products are filling gaps in the market which have been almost exclusively represented by imports. More new business orders are being vigorously pursued, both with the wholesale and retail trade and with industrial buyers.
At the same time, however, many Irish firms are not effectively responding to the challenge of market opportunites. The most important single reason for import growth is not the failure of the consumer to buy or the trade to sell but the failure of manufacturers to upgrade their marketing performance. Poor marketing, as the Sectoral Development Committee's Report on Marketing noted, is the area in Irish industry most in need of improvement.
A major upgrading in the marketing skills of indigenous industry is needed if the competitive performance of indigenous industry is to be improved and if Irish firms are to win back market share lost over the past decade or so. Survival and growth will depend on a two-stage drive to first establish consumer loyalty with Irish shoppers and develop from this into exports. Few indigenous firms are likely to make an impact in export markets unless they first win their share and their spurs in the Irish market.
I think that there were some unfair criticisms made during the debate on this motion of the involvement of the State and its agencies in this area. I would in particular like to refer to the work of the Irish Goods Council. As the State agency with responsibility for increasing sales of Irish goods in the home market, the Irish Goods Council have in place a number of programmes to provide Irish manufacturers with the ability to strengthen their marketing capabilities and win new business sales.
In addition to providing companies with individual marketing services in areas like market information, buyer introductions, product testing and marketing planning, the council operate a highly successful sectoral marketing strategy which brings together small and medium firms within the same sector for joint marketing and promotional programmes on a very cost-effective basis. By pooling resources, Irish firms are able to make a combined impact that would not be possible by any single one of them. Last year, over 600 Irish firms participated in sectoral marketing activities.
Industrial purchasing has new business opportunities for Irish firms at least as significant as in the consumer product sectors. Indeed, the potential for winning sales may be greater, given that Irish suppliers at present meet less than 20 per cent of the purchasing needs of Irish industry. This was referred to by Senator Vivian O'Callaghan in his contribution. The Irish Goods Council's sub-contract opportunities programme has, in the eighties, diverted more than £500 million in new and repeat orders from overseas sources to Irish suppliers and the potential for further gains is enormous.
To build up marketing power within companies, the marketplace programme has, to date, placed almost 300 young marketing graduates in Irish companies which have not previously had in-house marketing personnel. This has enabled these companies to identify scope in the market and exploit it with new products and marketing programmes. The Irish Goods Council estimate that, over the next three years, there are realistic opportunities for Irish firms to increase their share of the Irish market and win an additional £400 million in new business sales.
In addition to the valuable work on import substitution being carried out by the Irish Goods Council, I would also like to point out that I recently obtained the agreement of the Government to a series of proposals which I made on the matter. The proposals are aimed at ensuring that Irish companies get a fair crack of the whip when attempting to supply the public sector, which, after all, is the largest single purchaser in the country. I intend to see to it that the ability of Irish firms to compete in terms of quality and price is fully appreciated by the decision-makers in public purchasing.
I have enlisted the help of my colleagues in each Government Department to ensure that this takes place. I first saw this possible opportunity in the development of the telecommunications programme in 1980 where the State set out to spend £1 billion in modernising the telecommunications industry and yet the input from Irish manufacturers was extremely low. It was only by going out around the country, having seminars in various large provincial towns, getting small suppliers in and producing the opportunities, identifying the product that was needed and the quantity that was needed, when it was needed over a five year period, that created the opportunity for many small firms to take on additional lines and for new product opportunities to be exploited by new firms. In that regard, it was amazing the number of jobs that could be created and the amount of money that was kept at home.
I have no doubt that in various other Departments of State and in the semi-State sector similar opportunities exist that have not been exploited. It is too easy for people in the State sector to continue with their old habit of buying from suppliers who come in from abroad because they have no hassle and problems. That must stop. If there are competitive Irish suppliers in the marketplace they have to be given a fair crack of the whip. I can assure them that under this Government they will be given a fair crack of the whip and initiatives in that respect have commenced in recent times.
I am also well aware that in major building projects, both in the health area and many other areas, consultants seem, for whatever reason — and I do not know what is the real reason — to specify products made in the UK and continental Europe in preference to availing of similar products made in this country. With the various State agencies I am bringing together a product identification unit that will feed into one data base and have the same information available so that everybody will be able to tune into it and find out exactly what products are made in Ireland and what is available. If they do not buy, they are going to have to explain to somebody why Irish firms were not given the opportunity. This is the type of action I think Senator McGowan was talking about. It is no good talking about something if you do not have a follow-up action programme. I can assure the Seanad that there is an action programme being pursued by myself and the Minister of State, Deputy Séamus Brennan, in that regard and he is taking initiatives in various areas as well, not alone in the export field but in the home market also which can be the export market for many small Irish firms. I intend to give Irish industry the ability to compete in terms of quality and price with everything that is bought in the public purchasing area and I have every confidence that Irish producers will be able to prove themselves in this regard when given a fair crack of the whip.
I have noted Senator Fitzsimon's comments in relation to the payment practices of State agencies. I do not know what specific ones he had in mind, but if he has specific cases in mind I will be only too glad to follow them up for him or maybe he could direct them to whatever Minister is responsible. Suppliers should bring attention to instances of abuse, if there is abuse. However, sometimes suppliers offer products on very long credit terms and then complain when they do not get paid. That is not to say that State Departments are the quickest to pay, but where there is clearly an abuse it should be brought to the notice of the Minister concerned and it should be followed up. Cash flow can be vitally important especially to small firms because it keeps them in business. In relation to any complaints that are handed to my Department, I can assure the Seanad that I will actively pursue them and report back on the individual complaints that are handed to me.
I also obtained the agreement of the Government to proposals on the development of the concept of countertrade in our overseas purchases. It is my intention to see that benefits accrue to this economy as a result of purchases necessarily made abroad. Many times the State purchasing areas, whether they are State or semi-State, purchase large amounts abroad. There is a growing trend worldwide in countertrade which is now becoming a real factor in doing business. We have been very slow and reticent in the past to even think or talk about it. If anyone thinks I am talking against EC and GATT Regulations here, I am not. There was a very long and informative discussion in the European Parliament not so long ago about countertrade and in many countries countertrade now represents approximately 25 per cent of business. That is the level it has gone to in international terms.
Recently I introduced countertrade in investment and purchasing being made abroad by some of our large State agencies. I found that the suppliers were forthcoming and half expected it and were surprised they had not been asked about it up to now. They do not expect to spend millions of Irish money abroad without getting something in return and I can assure Senators that so far as I am concerned it is a facet that will be developed to the largest extent possible. By engaging in countertrade arrangements, the State will be in a position to attract additional business opportunities for Irish firms in return for making overseas purchases. As this countertrade, or offset trading as it is called in other countries, develops, Irish exporters will probably find themselves in the position of being asked for it if they are doing substantial business abroad.
It must be understood that the Government cannot run a Buy Irish campaign along the lines some commentators would suggest. You may all recall the European Court judgment of 1982 under which the Irish Government were taken to task for financially assisting the Guaranteed Irish and the Buy Irish campaigns. Since that case, the Government have withdrawn financial support and the Guaranteed Irish organisation have established themselves as a private sector body funded by their members. I met members of that organisation shortly after coming to office and they asked me to take certain lines of action and initiatives on their behalf. I did that and at a Christmas luncheon to say thanks, I was highly impressed by the amount of time and effort that is put in by those people on a voluntary basis to try to promote the purchase of Irish goods.
RTE have come in for a certain amount of stick and criticism but I want to put it on record that, when asked, they made available any spare time they had in advertising to encourage the purchase of Irish goods rather than using some unnecessary fillers. I want to put on record also my sincere thanks to CIE for making space available on their buses free of charge to the Guaranteed Irish campaign. They were also helping the economy. The same goes for many other areas also. In this regard, An Post are responding with a symbol on their franking machine for 1988. That is the type of action programme the Members of the Seanad who contributed here would like to see me take in relation to keeping the message in front of people and pushing it ahead as much as possible.
Guaranteed Irish can indeed play a very important role in bringing home to consumers the message that quality Irish goods are available. Since its establishment Guaranteed Irish has concentrated in bringing home its message to as broad a cross section of people as possible and it has also been working very closely with retail outlets. Among the many national organisations with which it has co-operated have been Junior Chamber, ICA and Macra na Feirme. I applaud the efforts of all these private sector bodies and hold them up as an example for all of us to follow in order to encourage the development of a strong indigenous sector, well positioned in the home market.
Here I might add that young political organisations have taken up this theme and indeed have done their bit in relation to the Buy Irish campaign over the Christmas period. The money that has been kept in this country as a result of their efforts, and all our efforts, amounts to a significant contribution at the end of the day. I took the opportunity on two occasions, both on radio and television, of promoting the buying of Irish records at Christmas. Now that we have attained such heights in the international field, why should we buy foreign records when all our Irish groups have made the grade internationally? Why not keep our money at home? I have heard since the Christmas period that there has been an improvement in that regard. The game is far from lost. If every one of us and every sector of this community continue to make that effort it will have a major impact on the size of the bills we have to pay.
The Government's commitment to providing the right climate for industry cannot be questioned. There have already been positive signs of an improvement in the situation. Falling interest rates, lower inflation and curbing of Exchequer borrowing levels have all led to a greater degree of optimism among industrialists. Indeed the results of the Small Firms Association's Fourth Quarter Survey of Trends issued before Christmas have shown a significant surge in small business confidence. In the survey 41 per cent of firms stated that they were “more optimistic” for the forthcoming year — an increase of 29 per cent over the February figure. Indeed, the same message has come from the quarterly meeting of the Council of CII held in the last week or so.
It is up to industrialists to build this confidence into firm orders, a task that will benefit greatly by any increase in our rate of purchase of Irish goods.
I will conclude on a more topical note. This year, the city of Dublin celebrates its millennium. It is already evident that the millennium has given the citizens of Dublin a welcome opportunity for an enthusiastic expression of civic pride and sense of community. It is an opportune time for a vigorous promotion of local industry.
During the year, Dublin is expecting record tourist numbers, with thousands of visitors from all over Ireland as well as abroad, representing a major boost in shopping expenditure. There is huge potential here for manufacturers and the retail trade to work closely together to ensure that Irish-made products are effectively displayed and promoted, As well as civic pride, there is every reason also to celebrate stories of local industry — both the long established firms and the newer companies which are beginning to build up a reputation.
For the consumer, there is no more practical way of showing a community spirit than in supporting the quality products of Irish industry. Greater support for Irish products by Irish shoppers will have a stimulative effect on retailers and industry. It will encourage the retail trade to continue its policies of commitment to Irish goods and will be a further incentive to Irish manufacturers to fully exploit market opportunities. A millennium sales boost for Irish goods in Ireland's biggest marketplace would give us more to celebrate in terms of prospects for producers, increases in employment and a contribution to our national well-being.
I thank the Senators for contributing to this debate. It is a very important motion. I certainly will do everything I can in my capacity as Minister or Industry and Commerce to help to boost the purchase of Irish goods. In this regard there is, as I have said earlier, a very significant opportunity to increase job prospects here at home.
