Home Limerick Business John Moran Speech to Business Strategy Conference 28th Jan 2016

John Moran Speech to Business Strategy Conference 28th Jan 2016

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Former Secretary General at the Department of Finance, John Moran, gave the welcome address the recent Business Strategy Conference which was organised by Limerick Chamber. John is a member of Limerick Economic Forum and also a board member of the European Investment Bank,


His speech is one anyone in Limerick thinking about the future should read. I am therefore putting his entire speech here in print as well as an audio version from his presentation.


Speech of John Moran
Limerick Chamber Conference 28
January 2016


It is a great pleasure every time I come back to Limerick
and so I thank James and Edwina for the invitation to speak to you today.
I have been asked to provoke your thought process before the
rest of today’s discussion and unaccustomed as I am to doing so, I shall try
and put out for you today some perhaps contrarian views of the future of this
region, being deliberatively provocative at times.
Earlier this week for my work on the board of the EIB and to
prepare for the French ambassador’s upcoming visit to Limerick, I spent a
couple of days in what is a nervous France, still reeling from terrorism in the
heart of Paris before Christmas and also with an economy struggling to
restart. 
Being in Paris, one is reminded whether we like it or not
that Ireland is a marginal part of the European economy.  That means that at that level Limerick and
the Mid-west is even more marginal, if they even know we exist at all.  In order to succeed and see continuation of
growth in the region then, we need first to be noticed.  We need to be clear what our differentiator
is, play to our strengths and tell the world about it.  The more exciting and innovative that is, the
more the world will just come themselves, ask about it and want to be part of
that success.  This is the challenge!
There were naturally a lot of questions for me about the
seemingly miraculous recovery of the Irish economy when compared with the
difficulties France has to see lift off in its economy.   The irony was that some of my meetings were
to examine tools French companies are exporting to the world to manage change
for more sustainable cities, on the day that France itself was beset with
strikes (one could even say social unrest) resisting their own change and the
introduction of disruptive technology which might harm protected industries.
What struck me so vividly though was how easy outsiders like
myself can be conditioned by a media which guides our perceptions, in this
case, saying France is not reforming despite actual change happening on the
ground. 
No place, more than Limerick and the Mid-West, realises how
hard it can be to shake off a negative image. 
But like we found in post bailout Ireland, once sentiment turns
positively it can turn much faster outside than inside and it often the
insiders if I can use that expression who need more time to catch up with the
change that is happening around them. 
Limerick and the mid-west region is undergoing a mini renaissance. 
·        
Unemployment
has fallen to under 10% and nearly 6000 jobs have been created in 3 years
·        
29
major construction/infrastructure projects with 1,151m of investment are taking
place across city and county with €133m injection to the local economy.
·        
IDA
site visits and the level of actual FDI investment have increased as well as
the growth of indigenous companies, none less so that the Kirby Group winner of
the overall Chamber award at last year’s dinner.
·        
Tourism
is on the increase with the recent investment in King John’s Castle reaping
rewards. Our airport is seeing continuous growth since independence and Foynes
Port is witnessing an investment €50m.
Let us be
ready for what that might mean in terms of future success if we continue to get
it right.
The city is embracing new forms of governance, new ideas
about urban planning, listening to external points of view, speaking with one
voice with a single plan in ways I who grew up in Limerick have never
seen.  Rome was not built in a day but
already the signs of recovery are tangibly there for all to see.  Full credit to Conn Murray and his team, the
elected politicians and to the other stakeholders and citizens of the region.
Expect people to write about this recovery in the future and
wonder how did they do it!
Global Backdrop

But before we get carried away with optimism, let me briefly
discuss the global economic backdrop. 
It is clear that Ireland’s recovery has benefitted at a key
time from some very useful realigning of external factors – cheap Troika
funding, low general interest rates in the Euro area helping keeping mortgage
costs down for many and low fuel prices which have helped put money back in
people’s pockets and reignited consumer spending, ECB QE which has brought
sovereign borrowing costs to historical lows and devalued the Euro helping very
considerably our exporting firms and of course recovery starting earlier in the
US and UK. 
But the warning signs are there that the global markets will
also be a source of much uncertainty especially in the short term.   Since the beginning of 2016, we have seen considerable
nervousness in the markets and a lot of risk-off trading which in turn is
creating some liquidity problems as people push for the exit door in certain
markets.  The list of issues is long.

·        
The Chinese economy is slowing as it tries to
reposition its economy away from exporting and investment and is seeing
significant capital outflows, depreciation of the yuan and lower Chinese demand
for products from other countries.

·        
Emerging market countries have problems too,
especially in Brazil and oil producing countries like Nigeria and Venezuela.

·        
Earnings slow-down in the United States towards
the end of last year just when the Feb was starting to re-tighten monetary
policy.

·        
Fall in US consumer spending although some
recovery this week

·        
Global terrorism has been spreading.  Not just the high profile events in Paris but
also similar attacks in Turkey, Jalalabad and Indonesia

·        
Remember, there has been real value
destruction.  400 of the world’s richest
people lost $305bn (76 of whom lost more than $1bn)

·        
Brent oil looks like remaining in low territory
for some time

·        
Liquidity issues in markets with particular
pressure on alternative investment funds whom you remember were among the
earlier investors in Ireland

·        
Ukraine crisis not over

·        
Nor is the Greek situation resolved either.

·        
The refugee crisis (which itself also creates more
problems in Greece) has created domestic popularity issues especially for
Angela Merkel in Germany notwithstanding all of the success of Germany under
her leadership

·        
We have ever increasing strife in North African
and the Middle East with the rise of Daesch (or ISIL)
·        
We have a worrying break down in relationships
between Saudi Arabia and Iran

·        
Currency devaluations suggest perhaps
unwittingly a new currency war?

·        
Despite its efforts, the ECB is not succeeding
in getting inflation rates up towards its “% target
·        
The UK will need to decide on its future within
Europe, and
·        
Nationalist and populist views are emerging even
more so now in Poland and Hungary

I could probably even add more but I’ll stop there because
while these are worrying, I do not believe that there is a reason for immediate
panic – many of the fundamentals have not changed since Jan 1 – but let’s not
forget one thing above all.  As a very
open economy Ireland is exposed to many of these issues and needs to protect
itself against them this time.
And over and above that, there are also more broad range
changes, some of which are evolutionary and not market driven, but all of which
will have major impact on the way the world works into the future and how we
need to think in positioning Ireland and this region.
·        Technology is changing everything.  For example, retailers are struggling to deal
with eCommerce and discount stock resellers – just look for example how far
brands like Macy’s are going to redesign their business models.
·        The car industry is being transformed – oil
prices, the fallout in Volkswagan, and impact of driverless cars and Uber type
sharing economy all need to be absorbed.
·        
We need to change the way we live to deal better
with climate change not just flood protections but making fundamental ways to
how our world works.  The heating and
insulation requirements of a three bedroom apartment are very different from
those of a three bedroom detached house, and we have too many of the latter and
not enough of the former.  I need hardly
remind an audience of thinkers like you also that the use of space and energy
consumed by someone walking to work are completely different to those of
someone driving on their own in a car to work.
·    Economic growth is moving away from Advanced
Economies like Europe.
·     At the same time, urbanisation of populations and
urbanisation of the engines of growth is taking place on a massive scale as the
world’s population moves more and more into mega cities across the world with
very few of those engines of growth likely to exist in EuropeWe have fundamental shifting population sands in
Europe with aging populations and with the refugee crisis
·        
The progressive shift in many governments from
fiscal austerity to fiscal stimulus will have an impact for example on construction
and health industry spending etc. and suppliers to those industries.
·        
Iran has re-opened officially Jan 17th and nearly
80 million consumers await the world.
No more than it can
be insulated from the economic risks above, Ireland and of course the Mid-west also
needs to plan for these other fundamental changes.

What this all means
is that there is an even greater need to be nimble, to continue to adapt and strive
to be best in class to survive in an even more difficult market.

If no one knows you
have a good product then no one wants to buy it and especially will not be
ready to pay a premium for it.  To
produce a good product requires investment and focus.  Get the product and market it well and with a
very large market, soon you’ll be worrying about capacity.

This region is small
in a global context so it is clear that by working well and cleverly, we can
really start to punch above our weight and doing so can have a growth far in
excess of global average growth rates. 

18th Century
description of Limerick

I know that for those of you who have known the decline or
at best stagnation of Limerick in recent years will find that hard to believe
but let’s not forget Limerick has experienced very significant growth before.
The period 1691 to 1747 in
Limerick city was one of stagnation punctuated by periods of acute distress.
The city’s economic performance during these decades was very poor compared to
Dublin and Cork.
After fifty years of stagnation,
the country experienced the ‘Georgian Tiger’ boom (1750-1815), during which it
grew by a total of 400 percent and in 1815 was five times bigger than it had
been in 1730. As a result, population grew rapidly, vast wealth was created and
a huge building boom transformed both urban and rural areas.
The country’s infrastructure was
also revolutionised with the building of roads, bridges and canals. Limerick
fully shared in these trends. The tonnage of shipping that used the port
increased by nearly 75 percent between 1751 and 1775 and almost doubled again
between 1776 and 1800.  The city was
literally bursting out of its walls and its medieval constitution, making major
social change and dislocation inevitable. The results were impressive, with the
creation of a whole new city which by 1822 contained 2,000 houses and 16,000
inhabitants.
Against that background – National

But significant global imbalances exist now and mean there
is certainly no good reason to be complacent about the future despite 7% growth
in the Irish economy and to simply assume that the good times and revenues will
continue as they have been in recent years. 
Unless the economy is very carefully managed the good times (and
associated revenues) may not just continue. 
Now is the time to work hard to reduce vulnerabilities in our system
especially still high government debt and use resources carefully to build a
sustainable Ireland for the future. 
It is important that
both the electors and the politicians remain realistic about promises in the
throes of an election campaign.

This is all the more important as we also know that Ireland still
has considerable infrastructure deficits.  
This will require additional capital spending.  Finding
capacity to do that should mean less current spending (the easy promises) not
more.
  
All these choices
will require greater political courage.  If we need that courage, imagine what might
happen if we see the types of post-election uncertainty we now see in Spain and
Portugal. 
These are not
immaterial choices in terms of the Ireland we leave to future generations.

·        
The wrong choices in urbanisation trends and
transport patterns may cause a huge problem for our society.
·        
The right choices may not only be climate change
friendly they should also be the key to a successful model for 21th Century
economic growth.
·        
Future economic growth in advanced economies
like Ireland depends on innovation, ideas and creativity.
·        
Successful cities, old and young, will be those
that attract smart, innovative entrepreneurial people, in part by becoming
urban theme parks embracing diversity;
·        
Ireland therefore may need to give up facilitating
and encouraging rural living patterns and concentrate on at least one
metropolitan area (or two) reputed to be a world class urban theme park cities.
·        
This is the formula to both help contain our own
carbon emissions footprint and generate economic growth in the 21st century
·        
When it comes to other Ireland’s secondary
cities and towns, to be successful they will either have to do the same in a
smaller way with a more affordable cost of living to attract their own entrepreneurial
cohorts or as an alternative remodel themselves so that they will economically
be able to “live” off these other national growth cities and towns by better
upselling new services, like intra-country tourism, food etc.
It is somewhat difficult for those of us who grew up on
dreams with suburban lives like those of the Brady Bunch or the Flintsones or
the ideal of working from home in a rural location to realise that today’s
millennials are turning their backs on the suburbs and countryside and want to live
like those in Sex in the City in fun downtown areas where everything is walking
distance away.  
Are we going to be brave enough to drive to meet their
demands that even if it means restricted subsidies for rural Ireland?  Is the Mid-West ready to embrace all of what
that might mean?   Does it want to expand
to be an important urban engine of growth or fade away as a rural regional
town?  If we do not strive and succeed to
be known globally as one of the world’s best places for the world’s talented
entrepreneurs and creative talent to live and flourish they will locate
elsewhere and we will be left to compete on price with other low income
economies to be their back offices or the places they go on holidays.
We’ve already got good publicity this week in terms of
affordability of housing.  That and other
such announcements will make people think and look about locating or investing
in Limerick.   Of course, many of us know
that our housing is cheap because we have a lot of infrastructure to fix in the
city.  But with the right will that can
be fixed.  It is the easy part.   But we already have the surfing, we already
have parklands running right into the city, a majestic river around which to
build an outdoor urban living experience and unlike cities who have tried to do
this, we start from a low cost base.
That is the challenge and it will mean tough decisions in
terms of reduction of commuting traffic in our main streets, greater population
density housing, prioritisation of services for those living in the city itself
to reverse the decline of the city before we focus on solving the problems for
those living outside it. 
If we try to look into the future (not unreasonably) for an
Ireland with 8 million people where would they be living – 6-7 million in
Dublin or alternatively Dublin growing to 3-4 million and another metropolitan
region (call that a Western Corridor encompassing Galway to Cork) growing to
2-3 million?    Looked at from Beijing, Ireland looks like
just one big city (without a good public urban transport system and density of
housing)
How much do we need to move first to make sure we get the
optimum result and not just leave it to private developers to guess what is
right or to leave small local authorities continue competing with each other?
This raises many questions for your discussions later. 
·        
In the United States about 20% of the country’s
carbon dioxide emissions are related to residential energy use, and almost another
20% with motor vehicle use. If people live in denser areas, they travel fewer
miles, even if they drive to work, and they may better still walk or use public
transport.  Are we ready to support
dumping our 1830’s patchwork quilt of rural villages and spending on
infrastructure to support it and certainly outlaw any more commuter housing
estates in small towns in planning decisions? 
·        
Are we willing to put a stop on current
expenditure increases and tax cuts or even reduce spending and public sector
wages to allow for greater targeted capital expenditure on capital
deficiencies, ideally to make us more productive in education, childcare, urban
infrastructure, office space and transport, but also to protect the most
vulnerable with targeted spending in housing and health.
·        
Are we ready to charge a real premium for people
who continue to want to live in individual housing or in fashions unsuited to
the 21st Century?  Do we need
a better carrot and stick approach to encourage people to move to new modern
sustainable living – for example a reduced local property tax for
multi-dwelling living or a premium for detached rural housing? 
·        
Are we ready to prioritise spending towards
having the best multilingual school and IT facilities firstly or perhaps only
for inner city communities who can walk everywhere? 
·        
Are we ready to make it really uncomfortable for
people to want to own a car and really comfortable for those who don’t?  One of the best ways to get to Limerick from
Dublin has to be on the train with wifi (which of course could be
improved).  Just over two hours later, no
traffic, no Barack Obama Plaza, the capacity to work all the way, even on a
mobile phone, one arrives in the other city. 
  But last night when I arrived
from Paris at Dublin airport, there were no trains left?  Why have we decided to pay for extra lanes on
the road network rather than a proper heated comfortable shelter at Limerick
Junction, faster trains and a better wifi? 
·        
Are we mature enough to stop wanting want to
give something to everyone in the crowd where they live?  Right now, it seems we struggle to pay for an
infrastructure catch up in Dublin and its commuter citizens, trying to add
infrastructure after the fact to deal with population growth and then we let
the others share somewhat equally whatever is left.
·        
Applying that maturity, which model should we
have for Dublin’s growth?  The
alternatives may each be valid choices but as we have major decisions to make
on the capital infrastructure front, it is important someone decides this first
and thereafter plans holistically across all services, education, health,
housing, transport, cultural and the rest. 
·        
Urban planning in Cork, Galway and Limerick and
in Dublin would be very different depending on the answer so why have we not
reached this conclusion first and ruled out the alternative?  Should we be prioritising an attractive
Western Economic Corridor involving Cork, Limerick and Galway?   Look at how differently it works in the
Netherlands, where a great inter-city public transport network supports very
different results. 
But if this is the way to go, we
need to be serious about it.  To make a Western
Corridor a reality would mean re thinking decisions about where we put hospital
care, better adult health care, a wider range of educational offerings,
primary, secondary and tertiary – all best in class on a European or global
scale.  We need must better transport
links and more attractive urban housing. 
We need to be a leader in embracing disruptive technology to achieve
this.   Locating all of those services first
to an alternative central location outside of Dublin would be a major element in
reversing the Dublin bias for returning emigrants, the new Irish or students
leaving our universities.   And before
asking Dublin’s citizens to do this, we along that corridor might first want to
reach a consensus and answer the question for ourselves, into which city should
they be put?  There are scenarios in
which Cork, Tralee and Galway may be better served by a centrally located
Limerick growing at the rate of the Georgian Boom than Dublin doing so but they
need to understand and support that too. 
And is the Mid-West ready for what that could mean?
Urban Areas as
Drivers of Creativity

So what could this future look like?
Younger millennials, the young adults leaving our third
level institutions here in the region are demanding a downtown urban lifestyle
and rejecting the desire to live in the suburbs even if that is where the jobs
are.  Good companies are recognising that
moving downtown too presents a more attractive alternative to attract the best
talent.  Limerick could be that
solution. 
It is harder to get idea-hopping and innovation where
workforces do not mix with one another. 
It is harder to get sustainable growth where single industries dominate
activity in a city so the more entrepreneurial we can make our environment the
better.  Open conversation gives rise to
new ideas.  Limerick’s streets and cafes
could be where that conversation happens.
How many creative people do you know who live for years on a
shoe string in New York or London to be surrounded by other creative people and
share ideas?   
It is into the mindsets of these transients, into the
mindsets of the newest generation of kids we must step as we think out the
design of our cities and plan new housing and living quarters, not into preconceived
notions built on years of watching the Brady bunch.
Against this backdrop, when I think about what this region
should do, I am brought right back to the speech some of you may have heard me
give to the Chamber dinner in November
2013.
Where we should
                                      L – Love our City and be proud of
Limerick
                                      I – Foster
Innovation, culture and the
creative sciences
                                     M – Develop
interesting vibrant urban spaces like the Milk
Market
                         E – Spruce up the entranceways to the city like
the Station and hope now that                          this is underway we can begin to refurb the Dock
Road as a new gateway to                              the city
                                     R – Work
in tandem with other towns and cities in a greater Region
                                     I –
encourage Investment in
modern city living
                                    C – Let
the edgy Character of the
city flow out
                                    K – And
above all develop the place for Kids
(younger and older) both                                                   playgrounds like the castle and having the best
education possible     
This is similar advice to that we give Conn Murray and his
team at Limerick Economic Forum.   It is
the type of thinking underlying the Multiplicity structure of Limerick’s 2020
bid.
That is
the future which lies before us if we continue to push the renewal of Limerick
along post 21 century sustainable city ideas and take advantage of the fact
that we missed some of the worst of the Celtic Tiger redevelopment ideas.
That is
the future though which risks creating the challenges of a fast growing city
like those faced by the governors of this city in the 18th Century
as it grew four times larger.
I hope
that by setting out these global trends with a little local flavour, I have
helped to set the discussion for you this morning in a new context as you
listen for the answers to the questions for this new Limerick and Mid-west
which will show the way for Europe to recover too.

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