Ireland is a high-cost location in which to do business

‘Ireland is a high-cost location in which to do business and those costs are still rising’ – Ireland’s National Competitiveness Council

The Council’s latest survey, Cost of Doing Business in Ireland 2016, reports that  ‘Ireland remains a relatively high cost location and addressing cost competitiveness must remain a key priority… a series of upward cost pressures have emerged … There is a role for both the public and private sectors alike to manage proactively their cost base and drive efficiency’.

The survey noted that:

  • Electricity is the most expensive for both large and small users in the EU.
  • Fixed Voice charges are 13.5% more expensive than in Germany and 54.3% higher than in Denmark.
  • Insurance prices have increased by 29.6 per cent since 2011. These increases are well in excess of EU trends.
  • Gas prices were almost 5% above the average euro area price.
  • Business Services showed an upward trend since 2011.
  • Business rates as a proportion of revenue grew from 24% in 2002 to 38% in 2015.

Auditel is the UK and Ireland’s foremost strategic cost management consultancy and over the past 20 years has worked with more than 5,000 businesses.  Managing Director Chris Allison, comments: “Our own research, through leading business publication Management Today, confirmed that 70% of organisations do not have a cost management strategy in place. There is also a genuine lack of understanding between simple cost cutting exercises and strategic cost management

“Most companies do not have the sophisticated analytical tools to benchmark costs accurately and monitor them after implementing cost savings.  As suggested in a recent KMPG survey, 95% of cost reduction exercises fail and costs come flooding back. We can say with some certainty that strategic cost management driven by the right people, with the right tools and knowledge, can deliver much greater returns than in-house resources alone.”

Case Study:

indexReagecon, in Shannon, Co. Clare, is one of the largest producers of Physical and Chemical Standards and Reagents.

Auditel were engaged by Commercial Director, Don Foynes, to examine certain areas of their business expenditure to consider whether any improvements could be achieved. One of Auditel’s strengths is the ability to tap into the expertise of colleagues in specific cost areas and sector specialists were brought in as required.

Mr. Foynes was delighted with the results.  “I would describe the Auditel service as a process that lifts the lid on your cost base, provides detailed proposals on what can be achieved and then presents and manages the implementation of the solution. You are kept up-to-date and remain in control at all times. The staff are highly professional and the knowledge they can bring to your business is huge. Our net savings and bottom line impact will be in excess of €250k over the next three years.”

Savings Breakdown:

Electricity 17%
Gas 8%
Industrial Gas 14%
Logistics 12%
Mobile & Fixed telecoms 15%
Packaging 55%
Stationery 40%

In fact, Reagecon are so impressed with Auditel that they are recommending them to their key suppliers, service partners and clients – the ultimate accolade!

Ongoing management

A key part of Auditel’s role is to ensure that savings and best value continue to be achieved and are examined on a regular basis. The supply of management information, review of invoices, contracts, industry changes and maintenance of strong supplier relationships are essential for the client’s peace of mind.

Chris Allison adds: “So, if like Reagecon, you believe some improvements are possible, Auditel can offer everything you need to put your cost management strategy in place. This will lead to improved efficiencies and accelerated performance. It will help you to gain a competitive advantage in your field. Book one of our Strategic Cost Review s and enjoy the tangible benefits and peace of mind that Auditel’s highly effective cost management services can deliver.”

ISME calls for business cost reductions

ISME, the Irish Small & Medium Enterprises Association, welcomed the increase in employment measured by the CSO, Quarterly National Household Survey (QNHS) for the 3rd quarter, but once again called on Government to focus on business cost reduction. The Association warned that anomalies in social welfare continue to hamper job creation.

Commenting on the QNHS figures, ISME Chief Executive, Mark Fielding said, “The main task of this Government is to foster an environment in which real employment can be created. Job creation and job retention is being hampered by high business costs, an inept social welfare system and more recently, pronouncements from Labour ministers fuelling uneconomic wage expectations. Government must back and support the job creators; they must reduce government imposed business costs and introduce pro-business policies”.

“While these issues have been well flagged for a considerable period, little has been done to address these obvious employment constraints. We need more flexibility in our labour market to reflect economic conditions and be in line with other indicators of growth. Increased flexibility will give SMEs the confidence to invest and employ.”

The Government must address the concerns of smaller businesses, the main job creators by;
• Focussing on cost competitiveness, with a concerted effort to tackle business costs.
• Tackling the Social Welfare Trap and the surge in the black economy.
• Ensuring flexibility in the labour market through reasonable regulations.
• Carrying out the promised reform of the public sector including a pay freeze until 2017.
• Addressing the lack of bank credit available in the economy.

“While the government cannot create jobs its responsibility is to foster an environment in which jobs can be created. Now is the time to kick-start the indigenous economy with improved flexibility and an initiative that subsidises employers for each additional job created. That action will instil confidence, assist the creation of jobs and stimulate consumer spend, driving the recovery process,” concluded Fielding.

The Impact of US Oil Independence

Gas StationThe US focus on increasing it’s energy self sufficiency due to the rising level of production of gas, from sources such as shale, existing field tight gas, blended ethanol and other renewable sources will in turn impact on world oil and gas prices, commodities and the value of the US Dollar and other currencies.

The EIA reports on the US dependence on imported petroleum liquids declining by more than 1 million barrels per day by 2020, with the fracking production of gas to increase US reserves to around the 100 year level.

It is anticipated that Australia will become the largest energy exporter in the major industrialised economies with the potential to ship LNG, coal uranium and oil to the Asian economies

With the US not as dependent on Middle Eastern crude, China and Europe, along with Japan, Korea and India could become major users. But with the value of the Dollar on the increase, oil prices will not necessarily rise as many projections forecast, while renewables are therefore likely to remain uncompetitive and need subsidies for longer.

Article source: British Investment Digest
Photo courtesy of FLICKR user: Jurijus Azanovas

Energy – A Burning Issue

How Financial Directors can Regain Power Over Rising Energy Costs Impacting Their Organisations’ Profits

Wholesale energy prices have soared in the last six months as high oil prices continue, the Middle East is uncertain and the nuclear disaster in Japan causes concern. The major energy providers have passed these price increases on to their business customers. Many face energy bills which could be 50% higher than they were paying only two years ago.

In June 2011, the FT and The Economist Business Barometer Research found that leaders foresee the biggest risks to their businesses to be rising costs of oil, commodities prices and interest rates. This prompts greater scrutiny of their profit margins and higher expectation for financial directors to perform in challenging times.

In July, after a second major British energy supplier announced double-digit tariff increases, RWE npower reported: ‘Three hundred major and small energy user companies counted energy as a top risk concern, next to sales and legislation, in their Business Energy Index 2011. Only 66 percent said they had a strategy to manage it.’

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EU cap data roaming charges

New EU legislation came into force today to cap data wholesale roaming charges within Europe.  The new cap limits the amount operators can charge each other to carry customer’s data traffic while abroad, lowering the price from €1 to €0.80 per megabyte. In addition, all carriers will now have to stop providing data roaming services when users have racked up a total of €50 in charges, the idea being to protect customers from ‘bill shock’ when they return home.

The EU’s digital agenda commissioner, Neelie Kroes, is keen to promote more competition in EU roaming charges, which operators tend to set very close to the legal permitted maximums. These maximum charges are currently under review and the Commission will provide more information about how it intends to ensure increased competition when the results of this review are published in mid-2011.


Why it pays to engage management consultants

Divorce lawyers aside, it’s difficult to think of a group of professionals viewed with more world-weary cynicism than management consultants. Steal your watch and then charge though the nose to tell you the time, that’s how it goes, isn’t it? An unnecessary luxury and first thing to cut back on when times get tough? Well, turns out it might be time to re-assess; cost management consultancy actually adds value to UK businesses and delivers an impressive return on investment. Continue reading