January 30, 2014
It was a morning only a taxi driver could love. Yesterday, walking down the Western Road, past the Pres’ Cork lads shuffling towards school, the River Lee was swollen and moving rapidly. It only took seconds for a large fallen branch to be swept along from one bridge to the next, which is hardly surprising after the biblical deluges we’ve been experiencing.
At Washington Street, just ahead of the impressive Cork courthouse, the river splits and you get the feeling of being on an island.
Down at the English Market, just after eight, the various traders are setting up. Fruit and veg floggers are roaring at no one in particular, while the clink of cafe cutlery rattles over the fishmonger’s chatter. We are getting ready for the trading day. The wares are set out, the display cases polished and the nuts and bolts of everyday commerce, the true engine of the economy, are put in place for the day ahead.
From the perfect vantage point of the lovely Farmgate Cafe overlooking the market, we see that the English Market is a great example of local produce being sold by local businesses to local people. This type of commerce is what makes cities; they are living places with bars, cafes, shops and markets, where people mingle with each other, hook up for a natter and a gossip.
This human fact is what makes cities so special and why living cities, where people live and work, are so crucial for society. Cork is a perfect size to be such a living, manageable city.
It is still a bit early on a damp morning. Bar the office workers grabbing the odd takeaway coffee, Patrick’s Street is pretty empty, but even on this dank day, Cork city looks proud and defiant – at least at first glance.
Having many cousins, aunts and uncles in Cork, I was made aware at a very young age just how great Cork was and how lucky I was to be allowed to spend time down there.
When I was a kid, my Cork cousins constantly bragged to this visiting “Jackeen” about having the “longest building” in Ireland, the “tallest building” in Ireland and, most comically, the “straightest road” in Ireland.
But, in fairness, Cork has a lot to be proud of. The city, although sometimes not appreciated, has loads of interesting architecture. The river, island, wonderful hills and bridges all make it a lovely city to walk around.
Interestingly, Cork also has two distinct economies. There is the vibrant economy, the industrial, largely foreign-owned and the local, domestic economy, which is still struggling.
Although many Cork locals will complain about power being centralised in Dublin, Cork and the south-west in general is actually the industrial powerhouse of Ireland.
According to the IDA, it is not Dublin that is the industrial heart of Ireland, but Cork. In 2011, the south-west region accounted for 36.2pc, or €36.7bn, of Irish industrial output. Dublin as a region produced 18.9pc, or €19.2bn, worth of industrial gross output in 2011. Dublin as a region had the lowest proportion of Irish-owned industrial units in 2011 at 14.5pc. The south-west region, with a much, much smaller population, accounted for 15pc of Irish-owned industry.
The Cork region has the highest industrial wages in Ireland. This may come as a surprise to some but average industrial wages in the Cork region are €44,800, while the Dublin region is next highest at €44,700.
Because Cork is the centre of the pharmaceutical industry in Ireland, the clusters of multinationals in this area have driven up industrial wages. This is good for everyone, but a quick glance at the figures shows it’s a much better deal for the shareholders of the companies who get the dividends from the profits than for the workers.
But just look at the bargain the multinationals are getting in Cork. In 2011, Co Cork had the highest value of gross output per person engaged in Ireland at €1.18m. So the multinationals are making on average €1,180,000 per employee and they are paying each employee €44,800. This is a phenomenal deal for multinationals.
Back in the domestic economy, although Cork city looks superficially prosperous, it faces the same challenges that the main streets of all Irish cities and towns face. Rates and the cost of doing business are high and the footfall is falling as the key spending population of late-twenty-somethings has fallen due to emigration.
You can see how this hollowing out of the normal renting population is affecting the Cork economy in other ways. According to daft.ie in 2013 Q4, house prices had fallen by 6.9pc in Cork and 6.1cp in Cork city from the same period in 2012. House prices are down just over 50pc in Cork county and city since the boom. If you look a bit closer, plenty of shopfronts are closed up and overhead much of the upper storeys’ real estate looks empty – 11pc of the commercial retail space in Cork is empty.
Like any retail business, online shopping is eating away at retail Cork. According to the ‘Southern Star’, Cork consumers are spending €350m online ever year on purchases from companies outside Ireland. This figure is only likely to rise in the years ahead.
All the while the local economy, the real human economy that we can see in the English Market, is struggling and is being lumbered with the sort of bills that should be shared between the local businesses and the foreign businesses such as pharmaceuticals. In Cork these companies are making over €1.1m profit per employee.
This time last year, in Cork courthouse, Judge Olann Kelleher had 170 rates cases on his list. He would see more than 200 more in the fortnight before Christmas. Judge Kelleher asked if anyone was looking at the connection between high rates and the closure of shops and offices:
“As I walk down South Mall, half the place is empty, and Oliver Plunkett Street is the same. At what stage do you look at it and say: ‘What are we going to do about the rates?’”
Cork is a microcosm of what is happening in Ireland: multinationals and locals are treated totally differently. If multinationals were asked to pay a bit towards the upkeep of the area in which they are based, rates could be shared and the crippling bill to local business could be reduced.
After all, the multinationals are part of the community. It is in their interests that cities and towns are vibrant places that attract employees. In this way everyone gains. The alternative is for garrison industries, like military garrisons cut off from the community. No one wants that.
DAVID MCWILLIAMS WRITES DAILY ON FINANCIAL MARKETS AT WWW.GLOBALMACRO.COM