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Sustainability focus could help Irish firms meet competitiveness challenge

Competitors have raised the stakes for Irish exporters but green energy could put the wind at our backs

Neal Johnston, EY Ireland, notes an increase in sophistication among exporters from traditionally lower-cost countries in recent years
Neal Johnston, EY Ireland, notes an increase in sophistication among exporters from traditionally lower-cost countries in recent years

Greater internal investment from Ireland’s competitors has increased the challenges for Irish exporters, says Neal Johnston, business consulting partner at EY Ireland.

“Over the past few years, there has been an increase in sophistication among exporters from traditionally lower-cost countries such as China, Vietnam, India and Malaysia,” says Johnston. “An increase in technology adoption, global integration, policy reforms for trade facilitation and increased foreign direct investment have played an important role in this sophistication to date.”

Added to that sophistication is greater motivation for governments to provide more support for local businesses.

“Friendly countries are doing more to help their own indigenous businesses. That has a knock-on effect,” says Donal Leahy, head of strategic policy at Enterprise Ireland.

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In addition to the increased competitiveness from other exporters, Irish businesses are facing cost pressures from within, but there are means to adapt to these.

“Many companies are investing in automation, artificial intelligence and advanced technologies to enhance efficiency and reduce operational expenses,” says Johnston. “Diversification of markets and product lines is also a key strategy, allowing businesses to spread risk and access new revenue streams. Additionally, there is a growing emphasis on sustainability, with firms adopting energy-efficient practices and renewable energy sources to mitigate energy costs.”

That focus on sustainability should benefit Irish exporters in years to come, says Leahy, with energy advantages potentially benefiting businesses here.

“Energy is an opportunity because of the wind out there,” he says. “There’s a solution there. Germany and England became industrial powerhouses because of coal. We have wind. From 2030 on, it’ll be good news. The transitional period is the problem where energy is still expensive in Ireland.”

The biggest positive from the budget was that the Apple money will be used to address infrastructure concerns

Leahy says companies aren’t embracing sustainability just to save money, several are going beyond what is necessary to be more environmentally conscious.

“Irish companies are quick to exploit opportunities,” he says. “Freight shipping costs have changed to create advantages. The costs of exporting from China to mainland Europe have increased to a point where Irish companies have been quick to hop on even slim advantages.”

That willingness to seek opportunities in the face of challenges is why Johnston is confident in the ability of Irish exporters to adapt.

“A significant number of Irish exporters are planning to enter new international markets, which indicates a proactive approach to growth and diversification. There is a strong focus on sustainability and digitisation, which are key drivers of enhanced competitiveness,” he says.

That being said, he remains concerned by the challenges Irish businesses face in meeting staffing needs.

“Talent shortages and the need for ongoing investment in infrastructure and technology are critical issues that need further focus to maintain competitiveness,” he says.

Leahy concurs, noting that more work is required in infrastructure to ensure the health of the export sector.

“There are huge gaps that need to be filled across electricity, housing and water. Those are concerns. I’m optimistic because we’ve diagnosed the problem even though we haven’t got the solution yet. The biggest positive from the budget was that the Apple money will be used to address infrastructure concerns.”