Business needs fresh ideas

Smart economy? Ireland’s has been closer to crackpot for years, writes Niall McGarry in his first Business & Money column for JOE.ie.

 

Right now, if people are to succeed in business they have to find some way of getting over arguably the toughest set of circumstances they’ve ever had to face.

Because of what happened with the banks over the last number of years, a lot of the fundamental tools of business have been stripped away.

If you require new equipment or technology or machinery you should always lease it, because it becomes obsolete so soon and you have to upgrade it every year. But that option isn’t available because the banks don’t want to lease to anyone, so if you want equipment or machinery, you have to buy it outright, which immediately is the wrong thing to do.

Business is all about making the right decisions, taking the right steps to succeed, but because the banks have become so difficult to deal with, an awful lot of the fundamental tools are gone.

Surviving on credit

It’s true that too many businesses during the boom survived purely on credit as opposed to profit. So many businesses were sustained by pumping in more and more credit from the banks, and that was never sustainable. Over the last five or ten years lending policies were way too lenient but it really has gone the opposite way now and that’s crippling people.

It’s also the case that so many businesses nowadays are struggling to stay afloat because they’re involved in boom-type business – the kitchen industry, the furniture industry, anyone who supplies to the residential market sector is going to struggle right now because very few new houses are being built, and of the ones that are built a lot of them are lying unoccupied. Everyone talks about the collapse of the construction sector but from a retail perspective, the “froth” from the boom has created a lot more casualties.

What must happen now is for the country to find a state of normality, but normality is something that has barely existed in this country, probably at any stage since its birth, because we’ve always been either downtrodden or running away with ourselves. And we cannot find that state of normality without a change of Government. I’m not political in any way, but at this stage we would be better off with a Fine Gael-Labour coalition because as much as anything we need a change of focus.

The fall-out from the Celtic Tiger years is down to a complete lack of management from the Government. Bertie Ahern stepped down at the right time but his legacy will be forever stained because of what has happened. If it was in any other country the party that got us into this mess would have been overthrown, but we’re still listening to some of the same people who are directly responsible.

Time for change

So provided you have a change of Government, what can be done?

It’s difficult, because without being overly depressing, we have to be aware that the current situation is unique to Ireland. This is not a normal recession. This is something completely unique, because combined with a massive global recession, the worst since the 1930s, and as a consequence the lack of credit from the main financial institutions, you had a completely overheated housing market which leaves Ireland in a deep state.

It’s not incumbent upon Dell to help us out by staying. We’ve had an over-reliance on investment from our brothers and cousins and friends in America

The major European countries will start to emerge from the recession, and are starting to do so, because they’re industry-driven. Their processing plants and factories aren’t going to move but Ireland is different. Here, you have a large company like Dell, which is the main employer in the country’s third biggest city, make a decision in America to leave Limerick and go to Poland, because Poland stumped up the cash.

It’s not incumbent upon Dell to help us out by staying, because it’s not owned and run by Limerick people. That’s symptomatic of our problem: we’ve had an over-reliance on investment from our brothers and cousins and friends in America, and there’s never been a case where we’ve looked at developing Irish industry.

Crackpot economy

They’re trying to do it now, with constant talk of the ‘smart economy’, and in ten or 20 or 50 years time, it may pay dividends, but we are going to have to wait a long time because there has been no such thing as a smart economy in Ireland. In fact, it’s been a crackpot economy for the last ten years, and we can’t rely on America or other countries to bail us out.

In fact, American multinationals and other major corporations are going to be targeted by economies like Singapore, Japan, China, India, where there’s a literate, educated workforce offering to work for next to nothing – in much the same way we did back in the ‘70s and ‘80s – and we just can’t compete with that.

We need to help ourselves, and we need the Government to lead that, but the most worrying thing about the Government is that there’s a complete lack of inspiration. If the recession started in 2007, why is it that as recently as three, four months ago we’re still dealing with someone like Mary Coughlan in such an important role in Enterprise and Employment? Still making cock-ups, and still no-one is held accountable. They try to refresh the Cabinet but they bring in a couple of guys in their 50s and 60s who have no background in business, so nothing’s changed. Sadly, the man who appears to be most able, Brian Lenihan, has had well-documented health issues. But everyone else is a complete waste of space.

We shouldn’t be totally despondent. Ireland has shown an ability to produce people who can compete on a global stage. We’ve had successes like Roy Keane, Sonia O’Sullivan, Ruby Walsh or Padraig Harrington on a sporting stage. In music, U2 are still one of the biggest bands in the world.

And that applies to business too, where we have a reputation of generating entrepreneurs. Ryanair has been a real success story for Ireland and between them and Willie Walsh in British Airways, the main players in the aviation industry now are Irish.

But we shouldn’t have to place all our hopes on individual talent. We have to cleanse ourselves of the sins of the past, and that needs to be done with a new group of people at the helm. We just cannot put any more effort into this current Government, where we’re still dealing with the same buffoons that got us here in the first place.

Niall McGarry is the founder of Impact Media and JOE.ie. He set up his first business at the age of nine, led Impact Media to a position of dominance in the West of Ireland since its establishment in 2003 and created JOE.ie in April 2010.