AT first glance, the purveyors of gloom could have a field day. A financial deficit of just under €11,991,000 and a net loss of just under 200 jobs on the Free Zone are the stand-out headlines in Shannon Development’s Annual Report for 2011.

 

But behind every headline is a story and in Shannon Development’s case, all is not what it seems.
While 406 new jobs were created at the Shannon Free Zone during the year, there was a net loss of 174 jobs. Overall, employment at the Zone fell by 3% year on year. Furthermore, Shannon Development recorded the highest cost per job created last year among enterprise agencies under the aegis of the Department of Jobs, Enterprise and Innovation.

Figures provided by the Minister for Jobs, Enterprise and Innovation, Richard Bruton, confirmed the cost per job created by Shannon Development equalled €16,139 last year.  This compared to the €14,202 cost per job created by the IDA and the €12,024 cost per job created by Enterprise Ireland.
However, Shannon Development chief executive, Dr Vincent Cunnane, remains upbeat pointing to the fact that almost 90% of the job losses were the result of downsizing and not closures, enabling Shannon Development to continue working with these companies to identify new market opportunities.

“The company is encouraged by the slowdown in job losses, reporting a net loss of 174 jobs during the year. Over the past two years, indigenous jobs at the Free Zone have increased by over 10% from 949 to 1,046,” he outlined.

Considerable progress was made on marketing the zone, which employs 7,700 people, to potential overseas investors in 2011. During the year, Shannon Development succeeded in securing 19 itineraries from prospective new clients for the Shannon Free Zone, seven of which were generated in partnership with IDA Ireland.

In relation to its finances, Shannon Development’s losses were in the order of €11,991,000 but depreciation of property assets accounted for over €10m. This deficit is coloured by the fact the agency has a large property portfolio, while the current contraction in the property market has resulted in the impairment of its newer buildings.

“We had a small operating deficit. Over €10m of it is a paper loss in terms of depreciation and impairment. Because of what’s happening in the property market, all our new properties have had to be impaired as well. When you take all that out of it, and look at the operation and expenditure, we ran a small deficit but a manageable deficit as such,” Dr Cunnane acknowledged.

On a more positive note, Shannon Heritage, the tourism and heritage subsidiary of the company, recorded an increase of 5% in visitor numbers. A total of 436,300 people visited their network of tourist attractions in the region and while the company employs 280 people in peak season, it indirectly supports many more jobs in the wider region in terms of spin-off businesses in the accommodation and tourism services sectors.

What is also significant is that the Shannon Heritage operation contributes an estimated €15m in revenue to the local economy.

Shannon Development is a self-financing company, making all of its income off property and rents. While other agencies benefit from exchequer income, Shannon Development does not.

“We see 2011 and 2012 as stabilisation years and that whatever happens to the company, this region will continue to prosper beyond that because a lot of hard work has gone into making it that way,” Dr Cunnane explained.

As part of the overhaul of Shannon Airport, Shannon Development is to form part of the new structure but is to lose its job-creation function. A great deal of uncertainty surrounds its future remit but, for now, it’s business as usual.

Carry on regardless

CLARE County Council has decided to adhere to its budgets and run the risk of being dissolved by not bringing in a balanced budget, as required under the Local Government Act.

Environment Minister Phil Hogan has notified the local authority that their General Purpose Grant Allocation of the Local Government Fund for 2012 will be adjusted in the order of €974,524, money that the local authority had factored into their annual spend.

Clare County Council is being held to ransom and made paid the price for compliance in household charge payments of 62.8% by the people of Clare which, ironically, is above the national average.
At a specially convened meeting last Friday, councillors were just as stubborn on the issue as Minister Hogan, who delegated responsibility for collection of the charge to the Local Government Management Agency (LGMA).

Aware of the implications of going into overdraft and returning a deficit budget, councillors agreed to carry on regardless.

However, the waters have been muddied as regards what compliance levels the local authority needs to achieve in order to be able to draw down the funding Minister Hogan has withheld.

Mayor of Clare, Pat Daly issued a formal statement welcoming the commitment received by Clare County Council’s elected members that the local authority will receive its entire General Purpose Grant Allocation when the household charge compliancy rate in the county reaches 70%. He attributed that breaking news to Clare Fine Gael deputies, Pat Breen and Joe Carey, on foot of discussions they had with Minister Hogan before the Dáil recess.

Mayor Daly said, “I welcome the outcome of Friday’s specially convened meeting on the Local Government Fund adjustments. Deputies Breen and Carey, on foot of a discussion with Minister Hogan, assured the members of Clare County Council that the funding that is being withheld will be restored once the compliancy rate for household charge payments in County Clare reaches 70%. This news will be particularly welcomed by the public, who have expressed concerns that frontline services would be hit by any withholding of funding.”

Other sources say the compliance rate will have to come in much higher before Minister Hogan relaxes his stance and loosens the purse strings. However, what the bottom line is remains a mystery.
Minister Hogan’s department declined to confirm the content of any conversation between the minister and the Clare deputies but added, “We’re not aware that any indicative collection rates have been suggested to local authorities”.