Analysis: Manufacturing is dead. Long live manufacturing. Some 1,000 jobs are being lost in the sector every month. But although it declined by 31,000 from the peak levels it attained in 2000, employment in the sector is still higher than 1995 levels.
The other good news is that in recent months employment in the sector has started to trend upwards, following a Darwinian shake-out that has seen many firms in low value-added sectors go to the wall in the face of competition from the Far East.
As the Minister for Enterprise, Trade and Employment, Micheál Martin put it yesterday launching the latest Forfás report on the sector, it has become more productive.
Despite 13 per cent (31,000) fewer staff, the sector produces 28 per cent more output now than it did in 2000. That's good news for productivity. Initially, it wasn't great news for around 31,000 workers who lost their jobs. And, as Forfás notes, that productivity is concentrated in a few sectors, mainly pharmaceuticals, microchip processing and medical devices.
The divergence between the different sectors of manufacturing is striking. Employment in the medical devices sector is up 79 per cent since 1995, while the chemical sector has seen employment rise by 27 per cent.
Textiles and electrical machinery - two sectors which are particularly exposed to international competition from low-cost economies - have seen their job counts fall by 74 per cent and 28 per cent respectively.
Mercifully, other sectors have come to the rescue. During the period of downturn in manufacturing (2000-2005), employment in our services sector has increased by 21 per cent.
The caveat is that 67 per cent of exporting service companies are based in Dublin.
Manufacturing still packs a punch in the economy, spending €25 billion annually on wages and accounting for just under one-third of the Government's entire tax take.
In the short run our growing tastes for the good life and the imported goods required to experience it can be funded by growing debt.
In the long run, we must pay our way through anything that creates exportable value, ie manufacturing and traded services. It is a sector we cannot do without.
The latest report follows on from several others relevant to industry. The National Competitiveness Council report of last year, last May's report of the Small Business Forum and more recently the Government's science and technology initiative are all dots waiting to be joined. This latest report is more informative and less policy focused. But that is no criticism, rather an observation: achieving a better understanding of a policy area should always inform policy action.
The main action needed from Government now is to contain inflation.
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