Inside The World Of Business
A case of 'oh yes it is' and 'oh no it's not' for Mazars
IT WAS hard to know which side to believe when accountancy firm Mazars first reported a widely varying difference of opinion between the banks and small businesses on the scale of credit application refusals last summer.
The issue is a huge bugbear for the small and medium-sized enterprise (SME) sector. Business lobby groups reported that their credit-starved members were up in arms over the shortage of new lending, while the banks repeatedly insisted they were open for business.
At last we are getting a better sense of what’s going on out there.
Mazars has just submitted a second report on the level of SME credit application refusals to the Department of Finance for the period from March to September 2009.
This stands beside the first report, which covered the June 2008 to February 2009 period.
In both reports, five participating banks, including the State’s three largest SME lenders – AIB, Bank of Ireland and Ulster Bank – said the refusal rate was about 14 per cent.
Not so, said the 1,052 SMEs surveyed by Mazars. The first time, the companies said the refusal rate was 24 per cent. In Mazars’ second report, they said it was 28 per cent.
Most significantly, this time Mazars has disputed the banks’ figures, saying there are “limitations” in existing credit application processes within the banks, and that a refusal rate of 18 per cent “may be more representative”.
The small-business lobby groups will argue that they knew it was higher than the banks had been letting on, while the banks will face pressure to improve transparency on the issue.
Putting on a brave face
IDA IRELAND put a brave face on things when it released its end-of-year statement yesterday. Given the global economic turmoil last year, there was little point in trying to put too much spin on the figures.
Globally, foreign direct investment was down by 30 per cent in 2009 and the average size of investment was also down significantly. Against that backdrop, a fall of 4 per cent in the number of overseas investments here to 125 could be considered a good result.
The new companies attracted to these shores, such as Bentley Systems, Maxim Integrated Products, Big Fish Games, Lumension Security, Hovione, Everest Reinsurance, Gerson Lehrman and SuccessFactors, weren’t exactly household names.
But this is not necessarily a bad thing. In the last 15 years, Ireland Inc has punched above its weight in attracting the top names in sectors such as technology, pharmaceuticals and medical devices. Yesterday’s report highlighted that major players that are already here committed to expansion in 2010, including HP, PayPal, Abbott, Merck, Facebook and Bank of New York Mellon.
One area of concern is that IDA-backed firms shed 13,400 staff or about 10 per cent of their total this year, compared to the 7 to 8 per cent expected in a normal year.
IDA chief executive Barry O’Leary and his team are clearly concerned that the key threat to a rebound is the erosion of our competitiveness. They note that “a continuing focus on improving competitiveness throughout the economy is critical”.
The IDA’s board last week received a draft strategy document for the State development agency. The Strategy 2020 document will outline the priority areas that it will focus on for the next 10 years and is expected to be published towards the end of February.
After a year of steadying the ship in turbulent waters, it will be a key document for charting our future course.
One man’s waste . . .
NO DOUBT there will be lots of the usual posturing and fulminating following yesterday’s High Court ruling preventing Dublin City Council from attempting to oust private-sector players from household waste collection in the capital.
Reports yesterday said the ruling would raise questions about the council’s ability to feed the proposed Poolbeg incinerator, which the private players say they are unlikely to use, but which the authority says is needed.
But it just illustrates a bigger question for most of the Republic’s business community: the cost and inefficiencies of our waste management system(s), a problem that’s been highlighted by two Forfás reports over the last two years. The 1999 National Development Plan (NDP) – remember that? – had included a waste management strategy that has not really been implemented. Instead, there’s been a more ad-hoc transfer of the job from local authorities to private operators.
The costs remain high, partly, but not solely, because local authorities and other State agencies play a role in determining what they are through landfill charges and other mechanisms.
Whatever the reason, if you are trying to run a business, the net result is that waste is one of a slew of fixed costs, including local authority charges themselves, that probably increased while your takings shrank.
Budget 2010 included a half-hearted commitment to do something about this: Minister for Finance’s Brian Lenihan’s “local authority efficiency review”, which will report midway through the year.
Presumably, you’ll be waiting for budget 2011 before there is a concrete attempt to deal with those problems.
Today
As the debate rages over which sectors are taking the greatest pain, the Central Statistics Office will this morning publish data on earnings and labour costs across all sectors of the economy from the start of 2008 to the middle of this year.
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