Context

The regional, national and global economic climate will influence the economic growth of County Waterford.  In addition, the competitiveness of Ireland and the South East Region will strongly influence the ability of County Waterford to attract and sustain investment.  This section provides a brief overview of the economic climate along with the competitiveness of the Ireland and the South East.

• Global Recession
• The Irish Economy
• Economic Recovery
• County Waterford 
• Socio Economic Profile - Continued Focus
• Challenges
• Competitiveness
• Conclusion - Need for Prioritisation

Global Recession

The Economic Plan is prepared at a time of one of the worst global recessions since World War II.  Output in Europe is expected to decline by 4% in 2009¹.  Stimulus packages and commitments to reform of global financial regulation have been put in place by all major global economies.  According to the International Monetary Fund (IMF), after contracting by about 1% in 2009, global activity is forecast to expand by about 3% in 2010.  The global economic recovery will be led by India and China.  The Euro Area is expected to grow by 0.6% in 2010².

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The Irish Economy

Ireland emerged from a prolonged period of significant economic growth and is in the midst of a severe economic recession :

• In one year, GDP in Ireland contracted by 7.4% while GNP declined by 11.6%.
  
  
• The unemployment rate in September 2009 was 12.6% an increase from 7.1% in September 2008. 
  
  
• There was an annual decrease in Retail Sales of 15%.  The value of retail sales decreased by 19.2%.
  
  
• Ireland is experiencing a period of deflation, with the annual Consumer Price Index of -6.5% by August 2009.

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Economic Recovery

According to economic forecasts made by a range of bodies including the Economic and Social Research Institute, the Department of Finance and the Central Bank, Ireland is expected to continue to experience economic decline in 2010, with a return to growth in 2011.  This stated, at the time of preparation of this Economic Plan, a number of indicators illustrate some positive results for the Irish economy⁴:

• For the first six months of 2009, exports increased by 2%, with most robust growth experienced in medical and pharmaceutical products, transport equipment and professional, scientific and controlling apparatus.
  
  
• Production in the manufacturing sector increased by 8.9%.  Output in high-technology and chemical sectors increased by 27% which contrasts with a decrease in output from traditional sectors of 17.9%. 
  

These trends highlight the need for outward looking, export driven recovery, particularly in the high value added productive sectors.

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County Waterford

The economy of County Waterford traditionally depended on strong agricultural and manufacturing sectors.  While building on these strengths, the County is in the process of restructuring its economy to higher value-added activities in the pharmaceutical, life science, engineering and international business services sectors.  Of note are:

• Pharmaceuticals & Science: Expansion of GSK, Lancaster Laboratories (Microchem), Microbrush International Limited in Dungarvan and Pinewood (Wockhardt) Laboratories in Ballymacarbury;
  
  
• International Business Services: Investment by Glanbia in the Shared Services Centre in Dungarvan; and announcement of Citi Hedge Fund Services (formerly Bysis) to locate in Butlerstown.
  
  
• Food: Dawn Meats, Cappoquin Poultry, Flahavans Mills and Meadow Fresh Foods combine with smaller artisan food producers and high profile restaurants to raise the profile of County Waterford as a ‘food’ county.  This strength is promoted through the Waterford Festival of Food.
  
  
• Entrepreneurship: Telecommunications Systems Software Group and the Arc Labs Innovation Centre at the Waterford Institute of Technology campus in Carriganore along with a network of enterprise centres provide an excellent foundation for entrepreneurship and innovation in County Waterford.
  
  
• Retail & Local Services: Investment in the retail offer of the County particularly in Dungarvan, Tramore and Butlerstown.

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Socio Economic Profile - Continued Focus

As a result of the prolonged period of economic growth the socio-economic profile of County Waterford improved in the period 2000 – 2006 with residents of the County achieving; higher levels of disposable income; improved levels of education attainment; and improved socio-economic profile⁵ .  By 2006 Disposable Income per person in Waterford was €20,121, which was the highest for any county in the South East (€19,265), but was slightly below the average for the State (€20,678)⁶ . 

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Challenges

Despite these positive results, County Waterford faces significant economic challenges.  The County experienced profile job losses since 2000 with closure of Glanbia Creameries and Waterford Crystal in Dungarvan and Glanbia Cheese Production Facility in Kilmeaden.   County Waterford has not been immune to the economic down turn.  Unemployment in the South East Region is 14.7% in the second quarter of 2009 .  Between September 2008 and September 2009 the Live Register in Waterford County and City increased by 61% to 14,615.

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Competitiveness

As a result of increasing costs, Ireland’s competitive position has deteriorated in recent years.  That stated, Ireland still retain a wide range of competitive strengths.  The competitiveness of Ireland in 2009 is presented by Forfás in its Annual Competitiveness Report ⁸ .  This report highlights the following sustained strengths in Ireland’s competiveness:

• Young and Comparatively well Educated Workforce: The percentage of the population between 25 – 34 years with third level education exceeds the averages for OECD, EU, the UK and the US.  In County Waterford, 23% of the population over 15 years have obtained a third or fourth level education⁹.
  
  
• Growing Levels of Research and Development Activity: There is an average of 6 researchers per 1,000 population in Ireland, which, while below the OECD average, is ahead of UK, Spain and the Netherlands.  Ireland has set a target of 9.3 researchers per 1,000 population by 2010.  A total of almost €1.6billion is spent by all businesses in Ireland on Research and Development.  A key component of this Economic Plan is to improve on the level of research undertaken by academia and business by building on the success of the Telecommunications Systems, Software Group and by fostering the knowledge economy.
  
  
• Modern Internationally Trading Enterprise Base: Ireland ranks 3rd in the OECD for attracting Foreign Direct Investment.   Foreign companies in Ireland employ over 150,000 people. Ireland continues to rank 2nd in the world for attracting large number of greenfield investments per capita.  Due to the prevailing economic climate, whilst the pipeline for Ireland is relatively strong, it is increasingly difficult to persuade clients to invest in Ireland.   County Waterford has attracted new and continued foreign direct investment with profile companies such as GSK, Lancaster Laboratories Europe (Microchem), Microbrush International Limited, Pinewood (Wockhardt) and Citi Hedge Fund Services continuing to in the County. Through the strategic site initiative, Waterford County Council has significantly improved the County’s capacity to attract greenfield investment.
  
  
• Improved Cost Competitiveness: The fall in demand for goods and services has resulted in a fall in the price level in Ireland.  As previously stated, the annual rate of inflation fell by 5.9%, the sharpest fall in Ireland since 1933.  Housing and utilities inflation experienced a dramatic fall of -4.5% by Q1 of 2009. Ireland is also experiencing a decline in house prices and a decline in wage growth.  These combine to reduce business costs in Ireland.  Salaries in County Waterford are lower than the national average.  In addition, business costs in County Waterford are relatively low.  Rate on Valuation of County Waterford is 69.92 which is below that of Cork City, Limerick City, Cork County and Kerry.  The Rate on Valuation in Dungarvan at 60.36 is below those of Youghal, Midleton, Cobh, Waterford City, Kilkenny and Wexford.
  
  
• Knowledge Infrastructure including Third and Fourth Level Academia:  County Waterford is in close proximity to three of Ireland’s main fourth level institutions, WIT, CIT and UCC with a total student population of 43,000.  This economic plan prioritises the development of academia in the County, specifically through Waterford Knowledge Campus and by providing third and fourth level programmes at an outreach basis. 
  
  
• Physical Infrastructure:  The physical infrastructure of County Waterford has been greatly enhanced over recent years, providing improved access, water and waste services.  Highlights include €160million Waterford City Bypass, Investment of €95million in Water Treatment and €13million on improving the Airport Road.  Plans are in place to extend the Waterford Regional Airport. Investments in the rest of the region include the development of Gas Fired Electricity at Great Island and at Cork Harbour. 
  
  
• Labour Supply: The population of County Waterford is 62,213 and that of the one hour catchment area of the County is c500,000¹⁰.  According to our survey of internationally mobile companies, as a result of excellent quality of life, companies in County Waterford enjoy good staff retention, which supports investment in training and education. 

In April 2009 the Department of the Environment, Heritage and Local Government published the National Spatial Strategy, State of the Regions Report.  This report highlighted the need to improve the value adding potential of industry in the South East.  This is a priority of this Economic Plan.  

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Conclusion - Need for Prioritisation

In addition to the short term priority of recovering from the global recession, there is a need to continue to implement a cohesive focus on economic development of County Waterford and the South East Region.  The region is characterised by excellent and improving infrastructure, a good skills base and a commitment to the knowledge economy.  The focus of the Economic Plan is to drive the restructure of the local economy to higher added value activities, by fostering entrepreneurship, improving innovation and building on the natural strengths of the County, such as its rich natural amenities. The remainder of this Economic Plan presents the detailed work plan to achieve these goals.   

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1   Organisation for Co-operation and Economic Development, Economic Survey of the European Union, September 2009
2   International Monetary Fund, October 2009
3   CSO September 2009
4    CSO September 2009
5   CSO Census of Population 2002 - 2006
6   The period for which the most recent results on a Regional/County Basis, Published by CSO in February 2009
7   Unemployment figures are only available at regional level. The figure is for Q2 of 2009
8    Annual Competitiveness Report 2009
9   CSO Census of Population 2006
10 CSO Census of Population 2006