Economies of Scope: Clusters

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Economies of Scope Clusters Competitiveness

• Jim Power
• May 19th 2005

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Issues to be Discussed

• Emerging trends in Irish economy
• Identifying the Challenge
• Addressing the Challenge
• What needs to be done

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What is Ireland Today?

• Very young growing population
• Immense prosperity created in short period of
  time
• Post-agrarian increasingly post-manufacturing
  economy
• Health issues coming to the fore obesity now a
  key policy challenge
• Growth of urban over rural

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Changing Face of Irish Employment
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Irelands Aging Population
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Irelands Changing Age Structure
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Health Social Issues

• Increased affluencemore cars, more foreign
  travel, less time and little exercise
• Obesity
• 39 of Irish adults overweight
• 300,000 Irish Children overweight
• Cost of obesity 500 mln per year
• Exercise diet clear priorities

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The Challenges

• Create a diversified, competitive sustainable
  economy
• FDI no longer the panacea
• Indigenous manufacturing in deline
• Agriculture in decline
• Rural areas must not be denuded of people,
  economic activity life
• Alternatives must be created for a proper spatial
  strategy

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What is Needed?

• Sustainable indigenous economy
• Strong focus on SME sector
• Training, IT skills, Labour supply
• Product innovation marketing skills essential
• State agencies have a clear and important role to
  play.

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TOURISM

• Key role to play in achieving more balanced
  regional economic development!

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SOME IRISH TOURISM FACTS (2003)

• 231,716 employed in Tourism Catering Industry
• Out of state earnings 4.1 bln, domestic earnings
  0.98 bln
• 2.3 bln tax revenues

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Total Tourism Breakdown
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Irish Tourism

• 6,574 incoming tourists 2004
• 52 holidays, 27 family, 14 business
• 56 GB, 24 other Europe, 15 North America
• Value 4,073 mln
• Urban v Rural Tourism

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Tourism Issues

• Competitiveness value for money
• The product
• The staff
• The Infrastructure / Access
• Marketing Promotion

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Competitiveness Value for Money

• Ireland now perceived as high cost location
• Perception is the reality, but industry is
  responding
• Input costs high
• Government Services, Insurance, Labour,
  Construction Costs, Rents, VAT etc.
• Quality more important than cost
• Value for money the imperative

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The Product

• Ireland has to develop higher value added product
• Exploit potential for activity holidays such as
  cycling, hill walking, equestrian, water sports
  fishing etc.
• Product needs to be developed to match changing
  tastes affluence
• Ireland is not visited for its weather!

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The Staff

• Tourism is a people focused business
• High standards need to be maintained
• Highly trained, friendly efficient staff a
  basic requirement
• Productivity gains can increase margins
• If peanuts are paid, monkies will emerge!

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Infrastructure Access

• Deregulation of airline industry has given a
  major boost to tourism
• Breakup of airports will increase competition
  ultimately benefit tourism
• Road, Rail Water access also important
• Needs to be a strong focus on investment in
  infrastructure, while bearing in mind the
  importance of the environment.

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Marketing Promotion

• Ireland has a good tourism product, but it needs
  to be marketed more effectively
• Marketing effort should focus on high value added
  activities that target changing consumer
  tastes/health issues

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Clustering (1)

• Need to integrate market different facilities
  such as cultural, heritage sporting
• Get agri, forestry, tourism, retail interests to
  work together with a common goal
• Food production tourism EG Farmers Market
• Crafts Tourism
• Forestry Tourism

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Forestry Tourism

• Multiple-use forestry
• Commercial, educational, accomodation, tourism,
  recreation, markets sport
• Grouse, Horse Riding, Cross Country, Treasure
  Hunt, Camping/Log Cabins,Archery, Fishing,
  Hiking, Wild Life, Orienteeering, Cycling, Field
  Studies, Painting etc.
• Huge potential to be exploited

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Potential for Clustering

• Networking
• Training
• Cross selling
• Complementary activities
• Win Win situation can be engineered

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What is Needed?

• Joined up thinking from state agencies various
  interest groups
• REPS 3 should be contingent on reasonable access
  recognisable routes
• Insurance issues need to be sorted
• Co-operation from all interested parties

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Conclusions

• Irish tourism product needs to adapt to changing
  requirements
• Value of activity holidays not recognised
• Joined up thinking focused support from state
  agencies essential
• Urban v Rural
• Clustering of activities can maximise capacity
  make industry more competitive
• Tourism offers huge scope for rural
  diversification development

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• THANK
• YOU !