Production of food hit hard in May by closures
FOOD production nationwide slumped by nearly a third amid disrupted supply chains for restaurants, pubs, live events and other customers shut by Covid-19.
Industrial production and turnover figures for May reveal that food producers suffered some of the sharpest declines from a year ago.
By contrast, production of timber products and other construction materials surged that month as building sites reopened on May 18. Production of plastics goods also rose as thousands of firms erected anti-virus screens in their premises and vehicles.
But the Central Statistics Office (CSO) report identified May production drop-offs in virtually all other manufacturing sectors, most sharply among indigenous firms.
Overall, industrial production was 11.6pc lower than the previous year and 10.5pc below that recorded in April.
It was 27.1pc lower than in May 2019 for ‘traditional’ industries where Irish firms are concentrated, including a 29.9pc drop in the volume of food production.
A closer look at the food figures showed that – while beef and dairy production was down in annual terms by 6.6pc and 5.6pc respectively – other other food producers made 38.4pc fewer goods than the year before.
“These figures show how the Irish supply chain is disrupted when hospitality shuts down,” said Ibec’s chief economist, Gerard Brady.
“It also shows how much these firms sell into consumer-facing sectors in the UK and Europe,” he said. “Everyone in the prepared food space and in their supply chains is hurting. Demand for firms making pre-packaged meals like sandwiches disappeared when people were off the roads.”
Conversely, production of plastics and rubber products was 41.4pc higher in May than a year before, and 34.5pc higher than the month before.
Mr Brady said this growth was more likely driven by medtech firms’ use of complex polymers in manufacturing medical equipment than in Covid-19 protection screening, though this also was a factor.
Yet the overall figures for ‘modern’ firms – the label used for production mainly by the 1,500-plus multinational firms based here – showed a 4.7pc production decline from May 2019 and a monthly drop of 10.9pc.
Mr Brady attributed the multinationals’ lower production numbers, again, partly to medtech firms.
“We may intuitively assume that in a health crisis, demand for all medtech products is higher – but this is absolutely not the case,” he said, noting that demand is down for such Irish-made products as artificial joints and pacemakers. “Globally most countries have suspended elective surgeries, so for a lot of medtech companies, their demand has temporarily disappeared.”
The effect of the May 18 reopening of construction sites is clearly shown in the CSO figures.
Demand versus April leaped by 62pc for wood products, and 69pc for a range of construction materials including sand, gravel, cement and concrete.
Mr Brady said he expects production figures for June and July to rise in line with the reopening of key sectors – but doubts they will return to the pre-crisis levels of February.
“We’re starting to see the momentum shift in the monthly figures. The key question is where they settle in the next six to eight weeks,” he said. “Demand is extremely uncertain as firms reopen with no idea, really, how consumer behaviour will respond.”