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Our Director General, Tom Parlon, discusses the critical role played by the construction sector in attracting FDI to Ireland. However, our global competitiveness will be jeopardised if we do not invest in infrastructure urgently.
The Irish construction industry is growing strongly and currently reshaping the Irish economy in two key ways:
1. Building the strategic infrastructure that drive economic growth
2. Attracting significant FDI in high tech sectors
The sector is playing a central role in attracting FDI into the country by building strategic infrastructure and through its global competence in building highly specialised buildings and manufacturing facilities. CIF members, through their expertise and capacity, have helped ensure that:
• Ireland has 9 out of 10 global pharma companies and 17 out of 25 med tech
• Half of the world’s leading financial services firms
• 10 out of 10 of the global tech companies are headquartered here
• 9 out of the 10 of the biggest online companies have a presence in Ireland
• We produce 15% of global infant formula output in specialist units built by Irish construction firms and 10 of the world’s leading health care drugs.
• Ireland ranked 8th in Europe for FDI with 178 projects last year which in absolute terms is impressive.
Increasingly, global multinationals seeking to locate in Ireland or increase their footprint are looking to the construction industry to provide high spec buildings and the infrastructure required to support their presence here. Earlier this week, we heard that JCD were building €200 million in data centres in Cork. This morning, Friday 17th June, Google announced that it would build its second data centre in Dublin at €150million, bringing their total spend on physical assets in Ireland to €750million. In addition, Facebook recently began construction of a huge €200m data centre in Clonee, Co Meath and Apple is planning to build an €850m complex in Athenry, Co Galway. Amazon is currently building at least two data centres in Dublin to add to its existing facilities here. CIF members deserve special credit as the IDA acknowledge these global companies would not invest in Ireland without our capacity to deliver on their specialist requirements.
Increasingly, this capacity to build is more important in sourcing, securing and expanding existing FDI here in Ireland. Upcoming changes to global taxation, means Ireland’s attractiveness to FDI will increasingly depend on the capacity of the construction industry. The CIF’s message to any CEO/country managers in a global company here or abroad is: The Irish construction industry has the capacity to deliver any level of activity required to facilitate your businesses growth in Ireland and the EU.
However, more ambition is required amongst policy-makers to match this capacity when it comes to national infrastructure. Our recent ranking in the IMD competitiveness ranking to 6th in the world is to be welcomed. However, digging into the figures, you see that Ireland was only 23 out of 60 in infrastructure investment and was 41st out of 60 in terms of road transport investment. We have seen the benefits of infrastructure spending in the past, in twenty years, Ireland built a world-class motorway network, whereas it took other EU countries over 80 years. This week, we heard that Dublin airport is securing huge amounts of UK air traffic volumes and it is now more connected to the UK with 23 flights than Heathrow itself. This is another example of how infrastructure can make Ireland globally competitive.
Ireland is undergoing a well-publicised housing supply shortage. The house-building sector of the industry has the capacity to deliver the required 25,000 homes considered suitable for the growing Irish population and economy recovery. This shortage has the potential to damage our ability to attract FDI as employees find it too costly to find accommodation. A number of country managers of CEOs have commented to this effect recently. The other manifestations of the housing supply shortage are of course, homelessness, spiralling rent, waiting lists on social housing and a bill for the State for keeping families in hotel rooms.
Today’s housing committee report outlined a number of recommendations; with a significant focus on social housing. The answer is simple, stimulating private sector housebuilding means more supply which alleviates all the above problems. You cannot solve homelessness and reduce social housing lists without private sector housebuilding. To do that the cost of building must be reduced. A recent survey by the Chartered Surveyors showed that 55% of the costs of a house placed on the market are down to taxes, land prices, development levies and other charges. This means that housebuilders who want to build can’t produce a new home at below the asking price of existing stock. This means that outside the Dublin area, there is little housebuilding activity. Inside Dublin, these soft costs mean that asking prices for new homes are beyond most first-time buyers. As a result, last year, only 12,300 houses were completed nationally. More worryingly, only 8000 homes were started in 2015. In Q1 2016, commencements are up significantly year on year but still nowhere near a sustainable level.
The construction industry will continue to meet these challenges and make a real contribution to Ireland’s economic and social fabric. If you want to get involved, please get in touch. You can find more information about our policy asks here https://cif.ie/images/pdfs/CIF-main-manifesto-final.pdf and information about our activities encouraging more apprenticeships in Ireland on www.apprentices.ie