Houses of the Oireachtas

All parliamentary debates are now being published on our new website. The publication of debates on this website will cease in December 2018.

Go to oireachtas.ie

Written Answers. - Grant-aided Companies Sales.

Wednesday, 28 February 1996

Dáil Éireann Debate
Vol. 462 No. 3

First Page Previous Page Page of 137 Next Page Last Page

 101. Mr. B. O'Keeffe Information on Batt O'Keeffe Zoom on Batt O'Keeffe  asked the Minister for Enterprise and Employment Information on Richard Bruton Zoom on Richard Bruton  his views on the fact that the average return on sales by companies which have been grant-aided by Forbairt is only 4 per cent as against 6 per cent for small businesses in the United States. [18404/95]

Minister for Enterprise and Employment (Mr. R. Bruton): Information on Richard Bruton Zoom on Richard Bruton An annual survey of Irish economy expenditures by manufacturers in Ireland is carried out by Forfás. The most recently published results of the survey are for the year 1993. The survey showed that, in the case of Forbairt-assisted Irish owned manufacturing companies employing 20 or more persons, the average rate of profitability as a percentage of sales was 4 per cent. In the case of slightly larger [798] companies employing more than 29 persons, the figure was 4.5 per cent. Preliminary data from the 1994 survey indicates that profitability in companies employing 20 or more persons is stable at 4 per cent.

Forbairt also assists the indigenous internationally traded services sector. The survey found that companies in this sector employing 20 or more people had profits as a percentage of sales of 10.1 per cent in 1993.

The survey also showed that there are substantial variations in profitability as a percentage of sales as between different sectors of Irish-owned industry, and these different levels of profitability must be viewed against the background of the different levels of capital employed in each sector in order to make any meaningful comparison. It could be hazardous, therefore, to compare an average figure for all Forbairt-assisted Irish companies with an average figure for all small businesses in the United States without any analysis of the respective industrial structures of both countries. Account would also have to be taken of any differences in the methodologies employed in arriving at both figures, including both the categories and sizes of business included in each case. In this regard it is important to bear in mind that “small businesses” in an American context may include quite large companies by Irish standards, in terms of sales, numbers of employees and capital employed.

There are of course many reasons why businesses in one country may be more profitable than in another. For example, American firms have ready access to much larger domestic markets than Irish firms, and this may facilitate economies of scale which Irish firms may only achieve through exports. American firms also appear to invest a greater proportion of their income in research and development, which is initially costly but yields long-term benefits in terms of sales and profitability.

[799] I am very conscious of the importance of increasing profitability in Forbairt-assisted firms. We need strong profitable Irish firms in order to provide secure employment, compete in domestic and foreign markets, generate investment capital, and contribute to Exchequer income. In real terms, the profitability of all Forbairt-assisted manufacturing industry, including overseas firms in the food, drink and tobacco sectors, has increased by 131 per cent in the period 1987-1993 — admittedly starting from a very low base. Over the period of the current industry operational programme, Forbairt, through its sophisticated and comprehensive range of industrial supports, including grants for research and development, is aiming to assist Irish industry further to improve its performance and generate the increased employment we so badly need. The operational programme also includes export promotion measures operated by An Bord Tráchtála. The Government as a whole is also conscious of the need to strengthen Irish industry in whatever way it can through its fiscal and economic policies.


Last Updated: 13/05/2015 09:16:38 First Page Previous Page Page of 137 Next Page Last Page