Stormont inertia blocking future FDI to the NI economy?

Francess McDonnell argues that it is the political inertia surrounding the institutions in Stormont that’s giving investors pause for thought at a time of huge global flux. In particular she hones in on the lack of productivity from that quarter in advance of what could otherwise be an useful opportunity to spotlight Northern Ireland’s potential in Washingon at the US-NI Economic Conference on October 19th:

Perhaps, before the conference, a few self-help classes might be in order. Among the first to attend should be the Executive’s subcommittee on the economy.

Set up in May, with a remit to “develop an economic strategy for the North” and chaired by Arlene Foster, the Northern Ireland Minister for Enterprise, it boasts the Ministers for Finance, Regional Development, and Education as members.

Foster says the committee has “made good progress” in agreeing a framework for an economic strategy but against the backdrop of a deteriorating local economy, there appears to be little urgency to confront the key problems facing the North.

Foster says it intends to have a new economic strategy “significantly developed by the end of this year and published by March 2011”. But in the meantime what is going to happen to the local economy? What measures will be put in place to safeguard jobs? Who will lead the charge in securing the economic recovery which the region so desperately needs and who is directing the response to the recession which is crippling local firms?

There have been plenty of talking shops convened by politicians to try and find solutions. But there have been few if any really helpful suggestions or decisions taken which have had any real impact on the ground.

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  • slug

    “it boasts the Ministers for Finance, Regional Development, and Education as members.”

    Not sure all of these are things to be boastful of.

  • William Markfelt

    ‘Among the first to attend should be the Executive’s subcommittee on the economy…chaired by Arlene Foster, the Northern Ireland Minister for Enterprise, it boasts the Ministers for Finance, Regional Development, and Education as members.’

    Solicitor, teacher, Lord knows what and tennis player seems to be the depth of business and enterprised knowledge being applied here. Hardly something that inspires confidence. Of course, they can always appoint a few NEDs with a civil service background to finger-wag at those out there, breaking a back to earn a crust.

    So none of the above have ever been in business and probably aren’t best placed to have any in-depth knowledge of how tough the private sector actually is in which to survive.

    As the mot du jour appears to be ‘a very limited knowledge that needs explaining to them’, I think we can be fairly safe in assuming that the same phrase may be applied here.

    So Frances is correct. It’s the blind leading the…well, no one, actually.

    Nail. On. Head.

    Talking shop.

    Pointless.

    Fruitless.

  • Cynic

    …and all focused on FDI not development from within of companies who have a bigger chance of staying here for the long term

  • Cynic

    I think you are being unfair. Perhaps, with the Education Minister on the Committee everyone just has to speak very very slowly

  • William Markfelt

    ‘The US-NI Economic Conference, scheduled to take place on October 19th in Washington, aims to showcase the business case for investing in the North.’ (quoted in the article)

    Investing in what, exactly? Call centres? I think we’re away past the time when, as in the past, US companies stuck their CD player production lines in NI. That’s gone. China has that sown up for the rest of any of our lifetimes.

    As usual, the eye is on this ‘international investment’ nonsense which, to my ears, always reads like ‘reinforcement of an almost feudal system of doffing the cap to Lord Tesco for a wage marginally more than minimum;.

    Realistically, what is required more -and is in the NIA’s gift- is to make the process of being in and remaining in business much simpler.

    Rate rises (year on year) in times of recession? Insane. Hikes in electricity and gas prices? A labyrinthine tax gathering system (allegedly going to be simplified UK wide)?

    No. The way to ‘investment’ is to think local. To offer protectionist policies to local traders, to make sure they remain in business and can invest in a local workforce.

    One problem is that stalling rates, thereby freeing cash for investment in local people, or improved local services, can’t really be quantified and isn’t sexy. Much better, the politicians imagine, to boast of ‘up to 200 jobs!’ being created in one announcement, in one factory, in one location. There’s probably not much mileage in saying that ‘rates being held will probably ensure that 200 jobs, province wide, have been secured in each calendar year.

    All investment is to be welcomed, but there’s something nauseating about imagining the US is the sole source of investment.

    Is this just some historical thing? Why persist with it? China and India are the future, so if there’s international investment to be wooed, start there. That they all cling to the US as the cure for all ills speaks volumes about these politicians’ comprehension of business.

    My message to potential US investors is, ‘forget it, we’d prefer our politicians actually legislated on matters they can legislate on to protect and secure local jobs for local people in local business’. Short sighted? Maybe, but it’s a solid foundation stone on which to build an economy in difficult times.

  • William Markfelt

    ‘Perhaps, with the Education Minister on the Committee everyone just has to speak very very slowly’

    I see nothing wrong with that, Cynic. It will allow the others’ brains to catch up and process the data at a speed commensurate to their intellects.

  • William Markfelt

    See my 10.39am post, Cynic.

  • William Markfelt

    A random example: FG Wilson.

    Local company, with deep local roots. Despite being owned by Caterpillar, FGW is a local company who are actually setting up manufacturing plants in the likes of Taiwan. So excellence can be achieved, locally, talent tapped, locally and a thriving business established, locally. It’s the likes of these sorts of companies who need to be encouraged and nourished, and the NIA can do something practical about that, by encouraging FGW, and others (Northbrook is another locally based world leader in its field) to themselves invest in local people, creating local jobs who spend their wages in local shops, thereby protecting other local business.

    And there can be a geographical spread through this policy. As things stand, huge grants to relocate to a factory in ‘x’ location may bring 200 jobs (and the reality never meets the public relations hyperbole) in one place. But, as we all know, when economics change so does international companies’ commitment to NI, or the Republic, or GB.

  • wild turkey

    although contentious, there is a lot of evidence over the past 25 years to suggest that new and small firms are the engine of durable job creation

    the emphasis is on ‘durable’ . Jobs created by FDI tend to be mobile and of limited duration. international capital is highly mobile.

    the new and small firm sector may not be particularly sexy. a new manufacturing firm opening in Ballynabackofbeyond obviates the need for politicians and their ,uh, advisors to book business class to Wash DC and accomodation in 5 star hotel.

    on a seperate if related note. has anyone seen or read an evaluation of the actual outcomes arising from that inspirational document of some years ago? i refer of course, to the DEDs, impressive 2010 strategy, published about 10 or so years ago.

  • William Markfelt

    ‘a new manufacturing firm opening in Ballynabackofbeyond obviates the need for politicians and their ,uh, advisors to book business class to Wash DC and accomodation in 5 star hotel.’

    I need to get in voice for the new football season, so….’Are you Cynic in disguise, are you Cynic in disguise?’

    I agree with what you’ve said, WT. They can merely hope that a meeting in Washington can deliver, whereas positive, imaginative policy within NI can definitely deliver breaks to the local economy.

    To begin with, why on earth are they going to Washington? If there’s interest, surely the thing to do is bring potential investors HERE, so they can see life on the ground for themselves, talk to locals (I mean, real locals, potential employees from the Falls or Shankill or Creggan or Craigavon, not a bunch of suits), get a feel for the place, see whatever potential they imagine it would have.

    Make the bus stop at the Bee Hive on the Falls. Make it stop at the Berlin Arms on the Shankill, and gauge local thinking, rather than another of these bun-fests that includes the usual suspects.

    It makes more sense, surely?

    For those of us following the NIW story, and allegations of ‘poor value for money’, perhaps the PAC needs to address whether or not these junkets to the US can be economically justified, or if they’ve been historically successful.

    In the meantime, first item of business when Stormont reconvenes could theoretically be a rate rise ban, or even a cap at 0.5% below inflation, and float it for a period of 4-5 years. THERE, instantly, is something local business can take on board and plan for. THERE, instantly, is an issue that can be quantified in the number crunching to plan for where the shortfall may be taken up.

    It’s not rocket science. Unfortunately, our local political class (who lack class) aren’t rocket scientists. Or even Wilbur and Orville Wright.

  • barnshee

    “FGW is a local company who are actually setting up manufacturing plants in the likes of Taiwan.”

    Bit of a journey for the workers travelling to the new assembly plant?? FGW assembling generators in Tiawan rather than Larne or Belfast is hardly good news for Belfast workers might be good news for the shareholders though

  • Ultonian

    At a recent event the assembled masses were informed – “the Executive in 2007 put the economy at the centre of their agenda!”

    Can you image what a disaster would have befallen us if they hadn’t!!

    Is it not ironic that the last First Minister bowed out following a bloodless coup after a NI US investment conference. Will we see the same again?

    As for this forthcoming event – same old, same old, when the politics of NI gets into s**t some shortsighted, but kindly American rings up and dangles a bauble in front of our politicians – same one everytime – pics with the President and off we all go – yet another investment conference – outcome zilch, costs thousands, jobs secured? – to be fair hundeds of civil servants acting as travel agents, a few pilots and the odd air hostess saved but new jobs – big fat zero.

    A lot of running about, nice pics, some nice wine and a few bottles from the duty free. Arlene becomes first minister – sucess

  • Local Government Officer

    “In the meantime, first item of business when Stormont reconvenes could theoretically be a rate rise ban, or even a cap at 0.5% below inflation”

    Excellent, but I want it to go further. I want it reduced, for no reason other than it is illogical and counterproductive. I want it reduced to zero for new starts beneath certain thresholds – the one or two man band brigade – for three years.

    I want all the efforts and money spent on FDI reduced to 10% of its current value for a three year period, and if we can’t find anything useful to do with it, then use it to help implement those rates reductions.

    I also want to see some sort of comparative exercise on business rents. I am hearing shocking stories in rural areas of three or four landlords corralling properties in rural business districts and charging extortionate rents.

    Someone used the word “protectionist” further up – I’d like to see more of that, especially in terms of retail development.

    Small should be the watchword. Let’s help the garage starts, the kids recording or programming on home computers, the potential online traders. Let’s get back to local. Not one mention of local enterprise agencies and councils in the fancy-dancy IREP report. Remember that…?

    Let’s really put proper support into organisations like the Prince’s Trust and Advantage NI. Let’s get it into the schools properly, and if we can’t find useful curriculum time (I would suggest a little more on reading and writing might actually be more useful that business skills, to be fair), then let’s make it an afterschool activity.

    This stuff is so simple. We talk about an enterprise culture, and yet pooh-pooh someone who wants to wash windows or cut the grass. We talk about an enterprise culture, and nationally, we don’t hammer the banks into being obligated to lend small business hassle-free cash. We talk about an enterprise culture, and make EU funding programmes impossible to access.

    We talk about an enterprise culture, and then we talk of with respect of the “safe pair of hands” that Arlene Foster is. Rubbish. We need a risk-taker, and someone with vision. And she ain’t it.

  • Cynic

    At heart she’s a country lawyer and perhaps the Robinson debacle showed she doesn’t have the bottle for a fight for the top job

  • William Markfelt

    ‘I want it reduced to zero for new starts beneath certain thresholds – the one or two man band brigade – for three years.’

    I can buy into that, LGO. But would the Assembly? I think we’re sort of singing off the same hymnsheet here, but the devil’s in the detail. A reduction is, I’m guessing, a more realistic proposition than zero rating.

    Absolutely agreed. We need to think local, for existing companies or start ups. Aren’t we being constantly told that the NI economy is too reliant on public sector jobs? Well, in a time of dead High Streets, let us fill a few shops with start ups. T shirt shops. Record shops. Some job experience girl manning the phones for a local PLUMBER, who now has a higher profile in the centre of town. Let us support them with low, low rents (these empty buildings are earning zero anyway). Stick the Skills Learning apprentices in there to paint them out. £20 a week rent for the first year? Zero rates? In a way, we could have craft villages in every town, be it knitwear, butter, cheese, T shirts, plumbers, whatever.

    I’m enough of an old fart to remember Belfast as a series of city centre family businesses, Smyths Records, McMullans bookshop, that each had unique markets, selling points, feel and smell, as opposed to what it is now, practically a xerox of Ipswich or Dundee or Galway. Same shops, same shit. No sense of individuality.

    Plastic cheese from various high street (or more accurately, out of high street and into the suburbs) multiples? No thanks. Someone making their own ‘Meigh Mature Cheddar’ or ‘Hilltown Malted Bread’? It might be worth going to buy, or seeing if someone local can do a reciprocal distribution deal. It’ll taste better, guaranteed. The US can’t deliver that. The NIA can.

    As you say, we need a risk-taker to create the circumstances wherein such enterprises thrive or at least survive. And while some of these micro-cheese makers or T shirt printers will inevitably fail, perhaps the smell of ‘entrepreneur’ will remain in their nostrils.

    We keep hearing a lot of rubbish about globalisation and doing what GB or the RoI do. No, we don’t have to match the Republic’s corporation tax strategies. We need to have our own ministers creating their own initiatives, regardless of what our neighbours, or anyone else, is doing.

    ‘Wee country’?

    Well, certainly of a size where everything is possible, given the will and intellectual skills to get a whole new economic model going.

    Will it happen? Not while there’s free plonk in Washington.

  • DerTer

    Mick – I feel some pedantry coming on: maybe it’s a typo, but shouldn’t that in your opener be “she homes (rather than hones) in on”? Wm M is at it too: “a speed commensurate to” ought surely to be “a speed commensurate with”. And I’m sorry to say there are other errors of this kind on this thread.
    Having got that off my chest, I will also observe that Francess McDonnell’s piece provides more evidence of serious dysfunction in the system; not only are ministers dysfunctional but so too are the committees ostensibly tracking them. Arlene Foster’s indecisiveness is a real surprise – I thought she packed punch.

  • Local Government Officer

    Belfast has fallen very badly to the xerox copy model you mention – and now that model stretches all the way from Omagh to Coleraine to Enniskillen. There are very few instances of independent-led retail areas now – Ards, (if I recall correctly), was one. But not many others.

    But following on your point, ALL of them have empty spaces just begging to be used. And you’re absolutely right – why can’t a plumber have an office upstairs from the record shop?

    I’d agree that a reduction in rates is more likely – but why can’t it be a zero-rating? Payback time comes in three years, when a greater number of workspaces are filled with businesses that make the leap and survive. I see the loopholes already – “yes, I closed that business down and started another” – but a little imagination is all it takes.

    Some squaring up to the landlords. A few less capital expenditures in the councils (though in fairness to them, they pretty much have stopped in the lead-up to non-RPA.) A bit more local buy-in from people who want to shop for goods AND services locally. A little more imagination in the marketing. A little more flexibility in government tendering.

    Can I just add, I’m not against attracting foreign investment. But there has to be a mix. We’re so far off being a knowledge economy – and I just don’t think INI ever really had a strategy to skew FDI towards the competencies in the local economy and workforce.

    But I’m sure with 600 staff, one of them could tell me differently…

  • Local Government Officer

    DerTer – the only thing Arlene ever packed was an extra pair of shoes for the next junket or photo opp.

  • So commentators said the parties had to go into this system of government for a number of reasons including to be in a position to get FDI and now apparently the reason we aren’t getting FDI is the system they told us we had to join.

  • William Markfelt

    “yes, I closed that business down and started another”

    That happens anyway. I remember reading that of every 100 coffee shops set up, 90% fail in the first year. Of those that survive, 90% fail in the second year. And many will fail in one cafe, and start another. Fail as a hairdresser in one location (and due to location) before succeeding in another.

    But that’s irrelevant. The fact that people TRY to set up an independent business should be the focus of attention. Also, for many, they open businesses because they like the are of operation they’re involved in, rather than labouring for the government by simply shovelling paper from one side of the desk to the other. So a much simpler tax collection system, of VAT, of paperwork in general, to allow people to focus on their chosen field, would be immensely helpful, both to new and existng business.

    I have, in the past received an enormous amount of literature from the likes of HSE. If I’d read it all, I’d have had no time to do any work. If I were to have an accident, the lawyers will make great play of the fact that I admit, maybe in court, that I never read the damned stuff. It always burns well, though.

  • William Markfelt

    Point take, DerTer.

    But you’re still going to give me 4.2 for style, aren’t you? Aren’t you?

  • DerTer

    Oh, all right!