Address by Mr. Noel Treacy T.D., Minister for Science, Technology and Commerce

At the Court of Experts of Supply Chain Professionals in the Board Room of the Dublin Institute of Technology, Aungier Street, Dublin 2 on Friday 9^th November 2001 at 9a.m.

I am pleased to have been invited here this morning to address this meeting of the Court of Experts of Supply Chain Professionals on a topic, which is recognised as a key element in business competitiveness. I would like to congratulate you all on your initiative in establishing this network of professionals and commend your aim of sharing information on best practice and identifying emerging trends in this critical area.

Effective and efficient logistics and supply chain management is already a prerequisite to success in the global marketplace.

Over the past twenty years, this area has grown from a fragmented discipline, which looked at transportation, warehousing and materials handling in isolation, to a management philosophy that integrates the total supply chain.

There are a number of factors, which make logistics and supply chain management particularly important in this country. As an island economy, Ireland is a disadvantaged location relative to the main European markets. The significance of our geographical location as a factor in the competitiveness of Irish business has long been recognised and highlighted. The ability of Irish exporters to supply markets, with increasingly demanding requirements, is, more and more, dependent on a much greater level of logistics expertise and skills. In a time of slower growth, it is critical that business costs are kept to a minimum so that employment levels can be maintained, also.

The establishment of the National Institute for Transport and Logistics in 1998, was an initiative of our Department of Enterprise, Trade and Employment to support companies in Ireland in achieving competitive advantage and to help Ireland become a centre of logistics excellence. Its main purpose is to provide a resource to industry here by supporting the development of logistics and supply chain management expertise. It is doing this through its education and training programmes, the advice and consultancy that it offers, and the provision of world-class best practice knowledge and information. The Institute works with companies of all sizes, from small to medium to multinational.

Management training is another key element in providing an efficient and cost effective supply chain structure. People development is one of the key drivers of business success. Companies are increasingly looking to human resource capability development as a means of sharpening competitiveness and are investing heavily in the upgrading the skills of management and employees. This is especially true for knowledge-based industries where the quality of personnel represents the core asset of a company.

In Irish enterprise generally, human resource investment is low. Irish-owned companies provide less training than Irish-based multinational companies and action to address this gap is being vigorously pursued by us. As we are well aware, an educated and skilled workforce is a major source of productivity growth. It is also an essential prerequisite of positioning companies for enhanced growth - moving up the high added value chain and adopting world class manufacturing techniques.

This approach requires from companies a focused strategy of continuous investment in sophisticated management practices, new skill sets for management and staff upskilling. As a result of such investment, a company will not only gain in productivity improvements but it will also be better able to recruit people of the right calibre - and retain them.

Management training and development should no longer be looked upon as an ‘external' activity disconnected from the business activities of the organisation. It should be considered a strategic investment in the professionalisation of the organisation. This will be critical if Ireland is to maintain dynamic business growth and where the perceived managerial wisdom of the past may no longer be relevant to the ever changing nature of our business environment.

Discussion on business costs is particularly relevant now, given the global economic slowdown that had been under way prior to the events of 11 September last. That tragic event clearly, compounded its effects, and Ireland has lost approximately 4,000 jobs in the high-tech sector this year. To put that in context, globally 500,000 jobs were lost in the sector and 200,000 of these losses came in the United States of America. During the summer period in particular a number of announcements were made with regard to job losses.

In the aftermath of September 11^th tourism in particular will be badly affected in the short-term. However, I wish to reassure you that unemployment remains low at 3.6%. The number of applications for job permits is still running at approximately 200 per week. We have had a very liberal regime in place in relation to work permit applications where circa 95% of these were granted. Obviously we must be vigilant in light of the possibility that unemployment might rise and we must adopt a somewhat more conservative approach to granting work permit applications. We must be sure companies cannot find workers from the indigenous population before employing foreign nationals, because our first priority is to employ our own people. Today there are 60,000 foreign nationals working in Ireland. More than half of these are from outside the European Economic Area (EEA) and require work permits or working visas, while the remainder are from within the EEA. It is clear that a safety valve exists in this regard. It is clear that the High-tech sector is undergoing its most difficult period in 40 years.

A number of different factors have arisen in recent months, which have caused this, but it will remain a strong sector in Ireland where it employs more than 100,000 people. It is clear this is an industry for the future and not one that will collapse. Ireland will be a key player in this sector and that is the reason that it is important that we remain competitive and deal with the issues, which affect the competitiveness of our national economy. This Government is vigilant in that matter.

Some commentators are extremely pessimistic and are saying that the Celtic Tiger is coming to an end. In my view, this is neither accurate or indeed helpful. The glass is still more than half full and it is important to remember that. The Australians are celebrating the fact that this year their growth figure will reach 4%. Notwithstanding the global difficulties, our growth rate will be in excess of 5%. We must, therefore, put matters in context. Ireland still has one of the fastest growing and most successful economies in the entire world.

This Government has to lead by example. We must be responsible and cautious and we cannot engage in any spendthrift policies and return to some of the policies that caused problems in the past.

Similarly, I would urge business to adopt the supply chain management practice so as to minimise their costs and thereby maintain their competitiveness. The IDA have forecast from that, this year, there would probably be a net increase of only 400 jobs in the FDI sector as opposed to increases of between 10,000 to 12,000 jobs in recent years. We must not forget the indigenous sector. Many Irish companies are focused on the United States and are experiencing considerable difficulties. There is considerable industrial development support for companies in Ireland by way of grant aid and a very favourable taxation system. Our education system and our training regime remain crucial in assisting companies to develop the kind of skills base that they need to compete. I am confident we will see our way through this global economic slowdown and that the Irish economy will emerge from it in good shape.

In conclusion, I wish to congratulate the Court of Experts for your development of this important forum for discussing Supply Chain Management issues. No doubt you will have an interesting and rewarding time ahead. I wish this Forum and all of its participants every success in the exciting years ahead.