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Manufacturing Still Matters

Northern Ireland has a proud tradition of manufacturing excellence. Over 100 years ago, Belfast was the third busiest port in the British Isles, and had huge international reputations in ship‐building, rope‐making, linen milling and engineering.

By 1900 the list of world‐firsts born in NI was growing. Samuel Davidson’s Sirocco Works developed air conditioning and ventilation. Three innovative ship yards ‐ Workman Clark & Co, J Rowan & Sons and Harland and Wolff ‐ invented freezer ships that could import and export food around the globe, iron vessels which could sail faster and further, and steam engines which could carry them as far as Australia. Mackies and Combe Barbour made the best flax machinery in the world.

 

Manufacturing excellence

This manufacturing excellence continued into the 20th century with Dunlop and his pneumatic tyre, Ferguson and his feather bed motorcycle, and Shorts and the vertical take‐off and landing jet. But since the 1970s, the relative importance of NI’s manufacturing sector has been waning. In 1971, almost 180,000 people were employed in the sector, which was one third of total employment. Fast forward 40 years and manufacturing employment has shrunk from more than 1 in 3 of all jobs to less than 1 in 9. Meanwhile, manufacturing output now accounts for less than 15% of NI’s total annual economic output – half the level relative to the early 1970s.

These headline figures, however, conceal significant growth and opportunities within. Textiles and ship building are no longer the powerhouses they once were, but other industries have been on the rise, and offer huge growth potential. Overall manufacturing output remains over 13% below its peak and employment has fallen by 12% since Q2 2007, but two sectors within manufacturing stick out as recession busters.

 

Higher levels of output

Food, Drink & Tobacco (FDT) and Chemicals & Chemical Products (which includes pharmaceuticals) are the only two manufacturing sectors experiencing higher levels of output now than they did before the recession began. Indeed, output within the chemicals sector has never been higher. Not only have NI’s FDT and pharmaceuticals sectors surpassed their manufacturing peers, they have also outperformed their counterparts within the UK. At first glance, one could be forgiven for thinking NI has been eating, drinking, smoking and taking drugs to get through the recession.

Indeed, the same conclusion might be drawn about consumers across the water, given NI FDT sales to GB, which soared by almost 14% in 2009/10. This resulted from a marked appreciation in the euro against sterling which made Irish exports to GB less competitive and helped local manufacturers successfully displaced their RoI counterparts as suppliers to the GB market. Notably, the combination of a collapse in manufacturing exports alongside growth in the FDT sector has seen the latter’s share of total manufacturing sales outside of NI rise to 53% in 2009/10. The FDT category also accounts for almost one fifth of all exports, which represents the highest share of all the manufacturing sub‐sectors.

 

Pharma

Whilst the FDT sector continues to grow, it is from a high base. The pharmaceuticals sector, on the other hand, is experiencing rapid growth from a low base. As a result, exports surged by over one third in 2009/10 ‐ some 10 times the rate within the FDT sector. Products like Wormazole and Betamox (not to be confused with a 1980s video recorder) may not be as well known as food and drink brands like Punjana, Tayto, Dale Farm and Bushmills, but they are key products of Norbrook Laboratories which, alongside other local flagship pharmaceuticals companies like Almac and Randox, has helped propel pharmaceuticals output to record levels.

Whilst the FDT and pharmaceuticals sectors have much in common in terms of growth during the recession, in other respects, they are like chalk and cheese. FDT is the largest sector within local manufacturing, accounting for one third of output, more than twice the size of its UK equivalent. Conversely, NI’s Chemical & Chemical Products sector is one of local manufacturing’s smallest sectors, accounting for less than 5% of manufacturing output ‐ the corresponding sector within UK manufacturing is 2.5 times larger.

 

Manufacturing employment

These differences in scale are also apparent in terms of employment, with the FDT sector accounting for one quarter of NI’s total manufacturing employment (19,000). This is five times the size of the Chemical Products sector (3,700). Combining farming and food production, there are 49,000 jobs directly and potentially another 43,000 jobs indirectly within ‘agri‐food’. This equates to approximately 20% of total private sector employment.

Looking ahead, the future for both sectors is extremely positive, with global demand for food and pharmaceuticals set to rise well into the future. So while the nature of NI’s manufacturing successes may have changed since the heady days of ship building and rope making, it is clear that the sector is not necessarily in decline. In food and drink and pharmaceuticals, as well as other sub‐sectors, NI’s proud tradition of manufacturing excellence can certainly live on.

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