February 25, 2009
“Good job, we got these new trains before all this struck,” said the stationmaster as he threw his eyes up to heaven at Killarney yesterday afternoon. Good job indeed.
I was down in the Kingdom to speak at an event organised by Centra, the convenience shops people, about trends in the economy. Some 15,000 people are employed in Centras around the country, so these people are at the coalface.
And having spoken to a few shopkeepers, it struck me that if you gave them keys to the Department of Finance for a few weeks, they’d have the place sorted out in no time.
The same goes for the staff at the Malton Hotel in Killarney. They were wonderful and on the ball. Again, they were not waiting around for something to turn up. The sense you get from their resolute attitude was that whatever else, Killarney and its tourist industry was not going to take this recession lying down. They are cutting costs, working harder and marketing as best they can.
These people, of all ages and from all parts of the country, underlined the fact that there are plenty of things we do well here in Ireland; among them tourism, food and hospitality.
As we hurtled though the Cork countryside past Millstreet and Rathmore on decent new trains, it’s hard not to agree with the stationmaster. It looks like it’s going to be a long time before CIE place more orders for trains the way its finances and those of the State, in general, are headed.
But maybe one of the reasons for this is the general fatalistic attitude towards our plight. I have yet to hear an innovative idea from the Department of Finance since this crisis began. In fact, I heard more creativity from Suzanne and Cathriona who run the Centra in Dundalk about the plight of the country than any of the people that are supposed to be getting us out of this mess.
Suzanne and Cathriona are both clever, young women with a no-nonsense approach to business. They are trading in Dundalk.
Can you imagine a more difficult place to run a convenience store at the moment?
Dundalk has been decimated by the fall of sterling and the flight of shoppers to the North. Yet they were cautiously upbeat.
The reason convenience stores like Centra are interesting for Ireland is that, like us, they are more expensive than the competition. We have to compete with other larger countries while they, too, are threatened by bigger supermarket chains.
In addition, unlike Centra owners elsewhere in the country, these two women are competing in euros against a weakened sterling 10 miles away. Let’s not stretch the analogy, but the underlying message from Ireland’s shopkeepers is good housekeeping. Yes they concluded, it’s difficult but you just have to be smarter, work harder and get noticed.
When the conversation switched to the economy their answers were pure business common sense.
They both saw our problems first as a “cashflow” issue. Both women agreed that we were running out of cash and this could only be solved by getting in more money either by increasing turnover and cutting costs, selling assets or borrowing to tide us over.
They agreed that borrowing wouldn’t be a problem if you were sure that the problem was short-term and you had a plan in place that could envisage paying back the borrowed cash. They were discussing this as if it were the most straightforward thing in the world.
Imagine such clarity from our politicians?
They agreed the most important thing was to act quickly. If it was their shop and they allowed cash to haemorrhage, they’d be closed.
Suzanne said you had to trade through the difficulties. Cathriona said they’d figure out which part of the shop was not working, where they were losing most money and either they’d try to change it or shut it down.
This process would start with examining the balance sheet every day, down to the minutiae. They’d then try to fix the problems by cutting costs and hoping to attract in more business, but if that failed they’d have to close it down.
Can you think of our politicians or, more pointedly, the highly paid bosses of our semi-state companies, being so matter of fact about loss-making state assets?
At the same time, Suzanne said they would sell anything they could because they’d have to raise the cash to keep the shop open. This is the smalltime shopkeeper’s equivalent of privatisation.
Yet no-one is talking about privatisation on a larger scale. What is the State doing running all these fine trains from Killarney to Dublin? Or what business does the State have owning 30pc of Aer Lingus?
The way to financing a fairer society and spreading the pain, is selling assets that cost you money, where you could raise revenue and invest this in places where the State works well, such as the school system.
Both Cathriona and Suzanne were adamant that while you were doing all this behind the scenes, it was crucial to remain open for business and give your customers every possible reason to come into the shop and not go elsewhere. Similarly, we need to be sending signals that Ireland is open for business.
The longer we wait, the more the competition in Europe will have caught up with us. We have the advantage of being small and nimble in theory, but that’s no good if we are slow and lugubrious in practice.
The moral of the story is more Centra less Central Bank; more corner shop less Cabinet. Our state needs to learn the discipline of good housekeeping before we have to shut up shop completely.