Extended Christmas breaks for some Northern firms as recession bites

BELFAST BRIEFING:IT MAY be early days, but it has already been a bad start to the new year for many Northern Ireland companies, particularly manufacturing and construction firms. Factories and plants which should be noisy and busy lie empty and silent this week.

Worried workers who should be lamenting the return to the daily grind after the Christmas holiday today are instead contemplating just how secure their jobs may be in the long term.

French car part maker Montupet and tyre maker Michelin, two of the largest manufacturers in the North, both enforced longer-than-usual shutdowns over the Christmas period this year.

The Tyrone engineering firm Powerscreen, which is owned by the US-based Terex Corporation, has introduced temporary layoffs in January and February and brought forward its Easter holiday week shutdown.

It could in theory be a time of opportunity for manufacturers in the North, given the current state of sterling to the euro.

Companies who export from Northern Ireland have a good advantage in Europe at this time.

However the weak pound also causes major headaches for any business which has to import raw materials from Europe.

The North’s Economy Minister has previously urged Northern Ireland companies to look at new opportunities in markets they might not previously have considered. Arlene Foster believes regions such as the Arabian Gulf, India and China could provide an important new business market for companies and help sustain jobs in the North.

The question is though, how many firms, particularly smaller ones, still have the financial capability to explore new markets.

Richard Ramsey, Northern Ireland economist with Ulster Bank, says the sharp decline in global economic activity has hit exporters the world over and global trade is set to fall in 2009 for the first time in 26 years.

Ramsey believes that Northern Ireland companies that do achieve export growth in 2009 “will clearly be the exception and not the rule”.

“Some of Northern Ireland’s most prolific exporters, such as Seagate Limavady, have either closed or announced extended Christmas shutdowns or reduced working weeks.”

Ramsey says sterling’s current relationship with the euro makes Northern Ireland exports more price-competitive than ever before, but he warns that it is not going to enough to prevent “significant job losses” among the North’s exporters.

Companies who are struggling have been urged by at least one professional business body to consider redundancies as “a last resort” for cutting costs. The Chartered Institute of Personnel and Development conservatively estimates that the real cost of redundancy can total £16,375 for each employee laid off.

That is before hidden costs such as higher labour turnover and a fall in staff productivity are factored in. The institute is urging companies to “hold their nerve” and focus on retaining staff and investing in the skills of their people. However the rising number of redundancies and the pace of job losses which have taken place across the North would suggest that few companies are actually holding their nerve at this moment.

Perhaps they should heed the advice of the inspirational Hong Kong born entrepreneur David Tang. In a recent opinion piece for the BBC, multi-millionaire Tang said it was time for businesses and individuals to “shed our sense of pessimism”.

“Pessimism has an uncanny knack of being self-fulfilling. No wonder almost every single quoted share in the world has gone down significantly, mostly by half, if not much more.”

What the North needs now is the type of action taken by Cemex NI this week. The building products company has just unveiled a £2 million investment in a new Belfast plant – a sure sign that the spirit of optimism is still alive and well in some circles.