Mr. Stephen Kelly:

I thank the Chair. I am chief executive of Manufacturing Northern Ireland. We take the largest definition of manufacturing in the North. We cover anything from aeroplane wings to chicken wings and everything in between. That gives a little insight into the type of products our members make.

Manufacturing NI represents approximately 4,500 manufacturing businesses, the vast majority of which are SMEs, as is the case in most economies. These businesses are located across every constituency in Northern Ireland and are particularly strong in our rural communities, where manufacturing represents the largest part of that rural economy. The sector represents approximately 15% of the North’s GDP, which is equivalent to about 11% of total jobs directly. That is about 90,000 people who are directly employed in our manufacturing community. Despite the perception that manufacturing is perhaps the sunset part of our economy, it is quite the opposite. Since 2010, we have seen that 21% more people are now employed in our manufacturing than were in 2010. Manufacturers continue to employ more people, creating wealth and work across Northern Ireland.

Approximately 70% of those manufacturing jobs are outside of Belfast. As I said, it is a big contributor to the rural and regional economy. The impact becomes particularly pronounced in council areas such as Mid Ulster, Mid and East Antrim, and Armagh City, Banbridge and Craigavon. In Mid Ulster, approximately one in four jobs are direct manufacturing jobs; it is about one in five in the other two councils. However, when the additional jobs that are 100% supported by the manufacturing community are included, it means that in a place such as Mid Ulster more than half the people are directly or indirectly dependent on a manufacturing wage. The figure for the areas of Armagh City, Banbridge and Craigavon, and Mid and East Antrim, is approximately 40%. Overall, this means that across the North approximately one in four families are dependent upon that manufacturing wage to run their homes and households.

The manufacturing sector’s impact goes much wider and well beyond that immediate core economic impact as regards jobs. Wide-ranging benefits are created for the Northern Ireland economy as a result of our manufacturing activities. I will give some examples. Just last week, a report from the Department for the Economy, which we shared with the committee, showed that exports of manufactured goods, which are a critical part of a small regional economy's wealth, for the year to June 2023 stood at £9.9 billion. That is about £3 billion more than it was in 2016. In the year to June 2023, exports to the EU were up by 19% and exports to the rest of the world were up by 20%. There is a slight health check on those figures in that these are nominal figures that have not been adjusted for inflation.

Ireland continues to be our largest export market, which is not surprising given our proximity. In addition to that £9.9 billion in good, clean, external cash we bring in from the goods that we make and sell across the EU and the world, we also have the benefit of selling into the UK market. In 2021, the goods element alone for the UK market was worth a total of £6.7 billion in 2021, which was the last reported year. In addition to almost £10 billion in export sales, we have almost £7 billion in external sales to the UK. If we treated that like an income into a family, we are bringing in and spreading a very significant chunk of money across communities in Northern Ireland.

Manufacturing also accounts for approximately 60% of total business investment in the North. It not only supports the development of quality products but keeps our sector competitive. Manufacturers contribute about 50% of the North's R and D spend. When government and academia are excluded, however, it means about two thirds of all business spend on R and D is from our manufacturing community alone. Today, our manufacturing economy is about 5% larger than it was pre-pandemic. We came back quicker, stronger, and employing more people and making a larger economic contribution. We know that the forecasts we have had done, and forecasts from the Department of the Economy and others, show that our manufacturing community is set to grow faster than elsewhere in the UK. That is partly driven by the unique market access we have as a result of the post-Brexit arrangements. We know that where that market access comes and where we are able to bring additional cash in, people are investing it in people and products. That investment in R and D I mentioned will continue to have a greater impact, not just now but into the future.

In a short paper I provided in advance to the committee, I suggested potential areas it may be interested in exploring. These include the experience in Northern Ireland post Brexit, since January 2021, and the engagement and structures in place to manage issues that may materialise, the practical experience of the Windsor Framework, which was agreed earlier this year between the UK and the EU, and the structures in place for the North’s production sector to deal with issues resulting from that framework.

It would be interesting to explore both passive and deliberate acts of divergence, either by the EU or the UK, which result in issues that may materialise in Northern Ireland, perhaps looking at the performance of the all-island economy since 2021 and the benefits we have begun to see in terms of dual market access. Since Brexit there have been new or returning barriers to the all-island economy which may be of interest to the committee. On the cost of doing business, which is common across the island, and particularly the issue of the all-island electricity market, we have some insight into that if the committee is interested. There is the availability of labour and the barriers to free movement that exist post-Brexit across the island of Ireland.