Confidence in the manufacturing sector is high, with around 70% of companies surveyed by employers group Ibec expressing a positive outlook.

Ibec's Facing Forward: Manufacturing Confidence Amidst Evolving Challenges report spotlights obstacles to manufacturers such as rising operational costs related to wages, raw materials, and energy.

However, many manufacturing firms expect improvements in productivity and profitability over the next year.

Seven in 10 respondents express positivity at both national and enterprise level, effectively unchanged from last year.

In terms of cost challenges, over three-quarters of respondents expect increases in wage growth (76%) while just over half (52%) expect increases in raw materials costs, with the same figure (52%) expecting increases in transport costs.

Beyond cost increases, almost-two thirds of respondents (65%) expressed concern about attracting and retaining talent, while half of respondents (53%) noted the availability of housing for employees as a major challenge.

The report also shows that productivity is the top priority for a third (33%) of respondents, while AI was cited by 39% as a majority priority for their business, primarily with a view to improving efficiency and productivity.

AI was a priority for a greater number of pharmaceutical businesses (54%), with three-quarters (75%) planning to adopt AI initiatives over the next one or two years.

This stands in contrast to Engineering firms, where only 25% have identified AI as a priority, with 50% of planning to adopt AI over the next 1-2 years.

Sharon Higgins, executive director of membership and sectors at Ibec, said that manufacturing contributes 44% or more than €10bn in corporation tax receipts annually.

"With the rapid evolution of new technologies, the sector is undergoing significant change, and it is essential to adapt to these developments," she continued.

"As deliberations for the Programme for Government begin, it is crucial to address the competitiveness challenges facing the manufacturing sector to ensure its continued success during this transformative period. This includes building a robust talent pipeline to drive the sector forward."

Referencing the finding that 65% of companies are finding recruitment challenging, Higgins said that Ibec welcomed the recent allocation of the €1.5bn National Training Fund.

"However, greater industry engagement with the education sector is now necessary. Additionally, streamlining work permit and visa processes is vital for attracting the talent needed to sustain the industry's growth," she added.

"Manufacturers, like many facets of Irish business, are concerned with rising costs. To help alleviate this concern, we urge the government to adopt a new national energy and industrial strategy that accelerates the roll-out of low-cost renewable generation and storage technologies, invests in the national grid, and supports the electrification of homes and businesses.

"In the short term, a subvention to offset system charges and the PSO levy would reduce costs and align Ireland with European norms. Expanding industry supports for renewables and energy efficiency is key to a secure, sustainable, and competitively priced energy system that fosters business growth.”

Photo: Sharon Higgins. (Pic: Supplied)