he IEA, the export industry body, today ( Thursday 5th Feb '09 ) stated, that Irish exporters strongly welcome the Government's response to Public sector expenditure control, but it must now take radical decisions to prevent a collapse of the export sector .

John Whelan, CEO of the Irish Exporters Association (IEA) stated today;

"Given the severity of the short-term pricing crisis facing exporters to the UK, a range of measures will have to be undertaken to stabilise this major export sector and minimise the impact on jobs losses. These measures are now urgently needed to give a major stimulus to the marketing efforts of exporters to the UK , to enable them to hold onto their current market share , which is being eroded daily by fresh buy British campaigns, as well as lost price competitiveness due to the heavy depreciation of Sterling."

He then went on to say;

"A life line has been thrown to the Government by the European Commission who has responded to the economy crises across the EU by raising the State-Aid Grants limits to 500, 000 euro per company.

The Government agencies must now move rapidly to release the application documentation for this new grant aid fund, to those most affected by the market distortion effect of the exceptional fall in the value of sterling."

The IEA statement indicated the need for the Government to approve the transfer of approx one billion of funds from the transport infrastructure allocation under the NDP, into the enterprise support budgets of Enterprise Ireland, Bord BIA and BIM to fully fund these enterprise stimulus proposals.

Moving onto the issue of Banking and trade finance, John Whelan stated;

"It is clear that the market alone is unable to provide sufficient and appropriately priced finance for the vast majority of exporters, and in particular the high growth innovative businesses. Cash-flow is one of the key engines to survival of export business and their ability to trade out of the recession."

The IEA statement went on to outline the measures the Government must now take to address these gaps in the market by;

  • Without delay introducing an Export Credit Insurance trade facilitation scheme, much the same as that introduced in recent weeks by the French and UK governments.
  • Devising with the Banks a new Working capital guarantee scheme to address the severe shortage which is restricting normal export sales activity. Access to additional European Investment Bank (EIB) funds must be secured to ensure the cost of the working capital is highly competitive.
  • Implementing a new Code of Bank lending for business. It should be noted that the EIB in 2008 broadened it's banking support to facilitate business activity such as building up distribution networks.This new dimension should be brought into the new Bank lending Code as a immediate measure to support exporters who must now face lengthy working capital exposure as they try to diversify into newer markets .
  • Venture Capital funding, is an essential part of stimulating the export sector to create new products efficiently for the next season's range of products. The venture capital and banking sector are now too risk averse and must be pump primed by a government investment injection.

The IEA chief executive then drew attention to the cost base issues which have damaged the export sectors competitiveness in recent years and stated;

"Urgent action to reduce the cost of doing business in Ireland must now be introduced , both to support existing exporters of goods and services but also to continue to attract new investment into the sector from abroad."

The IEA statement outlines the key priorities to be tackled by Government in restoring competitiveness to our cost base as follows;

  • Electricity costs, which on the last Eurostat analysis showed Ireland's industrial electricity costs are 30% above the EU average, must be brought down on an aggressive basis.
  • Employers PRSI should be suspended for a period of 12 months to enable employers to reduce immediate costs of retaining staff, and bottoms out.
"Transport and logistics operators provide the vital links to enable our goods to get to market. It is essential that any new Grant aids are made available to this sector to enable them to invest in new energy systems and equipment, as well as facilitate them to enter overseas markets with their service range ."

In conclusion the Irish Exporters Association CEO pointed to the need for urgency in the introduction of the above stimulus package, as most of our competitor countries have already moved to support their export sector.

END

For more information, please contact John Whelan:

Tel: 01 661 2182

Mob: 087-927-1243

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