Ireland Industry Outlook – 2017
In this article we aim to present a quick and easy to digest run-down of the main trends and developments in the process manufacturing industries in one of our covered regions. For more information on the areas we cover, click here.
Continued positivity for Irish process industry capex amid global political turbulence
In our previous Irish industry outlook, we reported that the buoyant Irish economic outlook was delivering a promising impact on the capex project landscape. However, there was some trepidation as this positivity was seen to be largely at the mercy of the global economic picture.
As we move further into 2017, the Irish economy is still booming. Investment levels remain buoyant overall with many project schemes emerging. Job creation from the process industries is still significant – with 5000 jobs in Ireland predicted to be created in the coming years in biotech alone.
However, the picture is not unreservedly positive. There is greater uncertainty than in the previous period, in the wake of major global developments such as the election of Trump to The White House, and the decision of the UK (Ireland’s biggest international market) to exit the European Union.
In Q1 2017 we saw fewer new projects coming on stream as uncertainty stemming from political developments dampened the investment picture. As we move further into Q2 2017 the picture is much more buoyant, with a larger number of varied project schemes moving into concept stages and implementation phases across the pharmaceutical, biotech, food and drink industries.
One of the most significant issues facing the Irish processing industries is Brexit. As Ireland’s biggest trading partner, the UK leaving the single market complicates the future outlook for companies across the process industry sectors in Ireland. One immediate impact is being felt due to the reduced buying power of Sterling, making Irish exports more expensive to British consumers. This is of particular relevance in the Irish food & beverage markets, where we are seeing a definite slow down on project delivery.
One example to illustrate this is the plight of mushroom processors, with 7 of 9 major sites stopping production for good. Nestle, Glanbia & DairyGold are all organisations currently altering project investment plans that we’ve previously reported on due to market forces.
One of the main engines behind the buoyancy was the US-led pharmaceutical, biotech & medtech investment in Ireland, which we discussed in our last post. With major uncertainty around Trump’s industrial strategy and the subsequent impact on Ireland’s ability to keep courting major US investors due to potential tax changes, many project investment plans are being reviewed.
To some extent, the hurdle of validation is expected to keep many extant sites in Ireland, as companies do not wish to move and go through expensive validation processes. This may mean that we see fewer new build projects as companies start up new sites for new drugs/processes elsewhere, and Irish investment shifts toward upgrades and improvements at site. For example, Pfizer is still investing a large amount in their Irish facilities, but they have also cancelled nearly €450m of planned new investment.
The medical device industry is a strong performer. Despite no major new entrants to the Irish med device market, we are seeing very strong levels of investment from organisations such as Abbott and Mylan.
Pharmaceutical/biotech & laboratories, Ireland – Our coverage
On our MyProtel project search engine we are currently tracking:
• 146 active pharma & process related laboratory investment projects;
• totalling a potential value of €8bn.
Food & drink, Ireland – Our coverage
On our MyProtel project search engine we are currently tracking:
• 64 active food & beverage investment projects;
• totalling a potential value of €1bn.
Summary
The overall outlook is still positive. After Q4 2016/Q1 2017 planned investment levels began to climb and we saw many new project schemes of all sizes under consideration by major and minor investors. There remains significant jumpiness in the Irish processing industries but the outlook remains strong – providing the fairly significant economic and political risks remain under wraps and Irish economic performance remains buoyant.
For suppliers of capital equipment and project services there is significant potential in the Irish market. Seeking to establish long term relationships with end-users must remain the priority, particularly if we start to see the investment landscape move more toward rolling investment at extant processing sites.
To gain information on specific projects or gain more insight into this sector, including all the contact details you need to start your sales process at the right time, get in touch.