BELFAST BRIEFING:A downturn in Northern Ireland suggests the region needs investment now more than ever
RECENT FIGURES from the largest car dealership in the North have revealed that new car sales have slumped, providing further proof that Northern Ireland's brief glimpse of economic prosperity is temporarily over.
Lookers, which operates the Ferrari and Maserati dealerships among others, has reported that new car sales fell by 8 per cent in the first quarter of this year.
The Manchester-based motor retail group owns Charles Hurst - which has a wide range of brands, from Aston Martin to Renault and Nissan - in Northern Ireland.
According to Lookers, used-car sales also fell in the first quarter in Northern Ireland, which is unusual because the North traditionally is one of the company's best performers.
Lookers has blamed the tough market conditions in the North on the downturn in the local property market. This time last year car sales were strong, according to the motor industry's trade body.
The Society of Motor Manufacturers and Traders reported that, in 2007, Northern Ireland had the biggest year-on-year growth in car sales in the UK. New registrations rose last year by 5.7 per with the Renault Megane topping the polls as best-selling model in the North.
This year, however, fewer people are splashing out on a new car and there are reasons for this.
First, the short-lived property boom has come to an abrupt end. The credit crunch is also having a big impact on spending patterns. Third, there is general anxiety about where the economy is headed. Unemployment has been rising steadily in the North - it now stands at 4.6 per cent. Last month, the Department of Enterprise, Trade and Investment was officially notified of 186 proposed redundancies.
But more worrying is the growing number of redundancies which the department does not have to be informed about. Construction companies, for example, which employ workers on a subcontract basis are laying off substantial numbers across the North as the building trade grinds to a halt.
Private sector developments are the worst hit by the slowdown in the North's housing market. Latest research from the University of Ulster suggests house sales have dropped to their lowest level in nearly 25 years.
According to Nationwide Building Society, house prices in the North fell by at least 10 per cent in the first quarter of the year and not one economic expert is predicting that the housing market is going to improve any time soon.
So where does this leave the Northern Ireland economy in the short term? Obviously in a very difficult position.
The public sector in Northern Ireland will keep the economy afloat, but purse strings are being tightened both by consumers and businesses. Overall, the general consensus is that a downturn is well and truly in place.
It is against this backdrop that the North's regional economic development agency is trying to lay the foundations for a more prosperous future. Invest Northern Ireland is currently in the process of following up potential leads from the US/NI investment conference which was held in Belfast earlier this month.
According to Stephen Kingon, the chairman of Invest NI, timing - despite the current turmoil taking place in the American economy - is critical. "We've got to build on what we achieved during the conference. We've got to follow up on a one-to-one basis and get an opening into companies.
"This is a war of attrition to attract new foreign direct investment to Northern Ireland and we have to keep following up on all the contacts that we have made.
"We created a feelgood factor at the conference. We got the message across that Northern Ireland is a good place to invest. Now we have got to make it happen," Mr Kingon said.
The former managing partner of PricewaterhouseCoopers believes the North can now write the blueprint for a brighter economic future, but it has to be ruthless about creating the right environment to help businesses flourish. "Every business is looking at its value chain at the moment. They are looking at cost containment in the current economic climate and that is actually an opening for Northern Ireland. Our corporate costs here are much lower than they are for example in Dublin or London and we have a great, available pool of talent.
"There are critical success factors which are definitely in Northern Ireland's favour but we have got to make them work for us," he says.
There has never been any doubt in the North that Mr Kingon is a realist and a man who can strike a deal. His appointment as chair of Invest NI was widely applauded. He is a man who deals in facts and figures and, on paper, Northern Ireland poses a good investment opportunity. The question is whether corporate America will see things like him.
