The Irish Hardware & Building Materials Association (IHBMA) represents 585 member businesses in the hardware, DIY, builders' supply, and related industries. These members employ over 21,500 people across Ireland. In this presentation to the Houses of the Oireachtas Joint Committee on Enterprise, Trade & Employment, the IHBMA raises concerns about two issues negatively impacting their members: 1) the potential implementation of a carbon tax on solid fuels like coal and peat briquettes, which they say could lead to over 1,200 job losses in their industry; and 2) lack of enforcement of prompt payment legislation, which is exacerbating cash flow problems for small and medium businesses in their sector. The I

1. Irish Hardware & Building Materials Association
Elmville, Upper Kilmacud Road, Dundrum, Dublin 14.
Tel – 01 2980969 Fax – 01 2986103
Email – info@ihbma.ie www.ihbma.ie
PRESENTATION BY THE
IRISH HARDWARE & BUILDING
MATERIALS ASSOCIATION
TO
HOUSES OF THE OIREACHTAS
JOINT COMMITTEE ON ENTERPRISE
TRADE & EMPLOYMENT
SUBJECT
TRADE AND EMPLOYMENT
IN THE HARDWARE AND
BUILDING MATERIALS INDUSTRY
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2. 25
th
MAY 2010
About IHBMA
Chairman and members of the Committee - good afternoon and thank you for
receiving our delegation and submission today. My name is Jim Copeland, Chief
Executive, IHBMA. My colleagues are John Murphy, President IHBMA; and
Director John Murphy Castlerea Limited; and Brendan Maher, Vice President
IHBMA, General Manager, McDonogh Trade Home DIY, Ballybane, Galway.
The Irish Hardware and Building Materials Association (IHBMA) is the national
representative body for hardware, DIY, homewares, home décor outlets, builders’
merchants, electrical stores, and garden and agricultural suppliers, at retail, wholesale
and manufacturing level.
We currently represent 585 members who, between them, employ 21,500 people in
790 retail outlets located throughout the entire country. We are an inclusive body,
representing the interests of both independent single-store outlets, as well as those of
the larger national retailers.
In addition to representing members' interests at all levels to Government, semi-state
and regulatory bodies, we in turn are a reliable source of industry information for
government, consumers, media and other interested parties. We are also a nominating
body for elections to Seanad Éireann, are affiliated to the International Federation of
Hardware & Housewares Associations (IHA), and are members of the European
Association of National Builders Merchants Associations (Ufemat).
Employment Figures
In Ireland the retail and wholesale sector is a dynamic, innovative and vital part of our
economy. Nationally it employs over 14% of all those employed in Ireland, and
accounts for 11% of the value added in the economy.1
In line with the latest ESRI
figures for the sector, we agree that employment will bottom out at approximately
260,000 for 2010 (down 53,000 from its peak in 2008), before gradually rising to
reach in the region of 290,000 at the end of 2016.
As these figures confirm, the retail and wholesale sectors we represent are an
attractive proposition for employment for the foreseeable future. Even with the job
losses occurring at the moment, there is a replacement demand of almost 70,000 in the
retail sector each year1
. Obviously, some of these positions will be filled by people
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3. who have lost their jobs elsewhere in the sector, but first-time industry entrants will
also be taken in.
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Progressive & Self-Motivating
Being innovative and progressive, our retail employers very often recruit people
without previous experience of the industry and train them up themselves. So, a
labour market initiative targeting this sector has the potential to be more effective than
for most other sectors of the economy.
Retail/trade counter assistants account for more than half of those employed in the
sector with many positions requiring significant skills in areas such as sales, customer
service, staff supervision, product knowledge, administration and retail finance. As an
organisation we are very pro-active in this regard and run a whole programme of
educational seminars and workshops, not just for our members but also for their
employees.
We also encourage members to devise their own in-house staff development
programmes and our objective going forward is for all training modules to be
FETAC-accredited where appropriate.
While members are finding it increasingly difficult to allocate resources to training
because of reduced sales, pressure on margins and cut backs in staff numbers, they are
still persevering. We also acknowledge the support of the Skillnets programme and
the Irish Hardware Skillnet has been of great benefit to members.
As the foregoing illustrates, we in the IHBMA are progressive, professional and self-
motivated. However, there are adverse trading conditions that are very much
affecting our retailers and suppliers currently, including great difficulty in securing
bank finance, upwardly only rent reviews, regulatory and local authority costs. But
today we will focus on just two critical issues. One which potentially will have a
major adverse effect and one which is currently causing our members considerable
financial hardship.
The former is the disruption to our supply chain due to a proposed imposition of
Carbon Tax on solid fuels and secondly the lack of enforcement in relation to Prompt
Payment Legislation.
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4. MORE
Supply Chain Disruption
If the Government decide on an implementation of Carbon Tax on solid fuels (coal
and peat briquettes) as is our information, for the coming Winter season, this would
present a clear and present danger in terms of probable and significant job losses
within our membership and industry and would have very serious implications for our
chain of distribution.
We are also convinced that, far from having a positive impact on the environment and
the rebalancing of the tax base, it would have seriously negative implications across a
range of categories in the distribution and sales areas. These include:—
- Job losses of up to 1,200 gainfully employed personnel. Clearly this is a
potentially seismic event which will have dire consequences across our industry. As
indicated already, our membership is broadly based and our members employ people
throughout the 26 counties. This would be very similar in scale to the loss of a
multinational.
- Obviously such losses will also mean very significant lost contributions by
way of direct and indirect taxes and an increase on the burden to the state as a
consequence of increased unemployment.
- The sale of domestic solid fuels between the key period of September to
March is a critical footfall driver for our industry, which anchors and sustains many
businesses during a difficult trading period.
- We are already seeing severe disruption to the legitimate supply chain and a
decrease in sales as a consequence of the increase in non-compliant fuel imports from
Northern Ireland and further afield.
- These fuel imports from Northern Ireland, which already enjoy a reduced
VAT rate (Ire. 13.5% - UK 5%) — also enjoy a regime where their sulphur levels are
allowed to trade at 2% where we are constrained at .7%, they will now have a
significant carbon tax rate advantage as well.
- This is a significant advantage when you consider that Northern Ireland/UK
do not pay any Carbon Tax on domestic solid fuel as an exemption was granted on
these products in 2000. A fact not generally known in the South, this was also
adopted by France in March of this year.
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5. - Security of supply: The currently dependable supply of solid fuel sourced
nationally will be adversely impacted, and will have the result of driving people back
into the untraded sector and undoing the progress made in phasing out imported solid
fuels with higher sulphur content.
We appeal to the Minister for Finance for a common sense approach to maintain the
current status quo on carbon tax regarding domestic solid fuels, at least until the
“Robust Mechanism” he suggested last year be clearly outlined and implemented. We
have seen what has happened in the oil/cigarette and alcohol industries with cross
border smuggling over the years, and do not want to see the same thing happening
with solid fuel. If it is to be implemented at some future date, we suggest that it
would be over a period of years, allowing for its smooth transition, both locally and
nationally.
Even as the situation currently stands, large quantities of higher sulphur content solid
fuel are avoiding VAT and being brought across the Border daily. We also have
evidence from our members, which proves that some merchants in Northern Ireland
are accepting legitimate VAT numbers from customers for other products including
timber for roofing houses, bathroom suites and other large value items without
substantiating that customer’s right to use that VAT number. We are currently in
discussions with Revenue on both of these matters.
We also ask the Minister for Finance to introduce a winter fuel smart card, or voucher
scheme, so those who are entitled to use them, can purchase solid fuel products only,
and from registered tax compliant companies. Currently the allowance is paid by way
of a top-up on the recipients current payment and can be spent on anything, not
exclusively on solid fuel.
We would be happy to engage with Government in relation to exploring avenues
around the practicalities and mechanics of building a “robust mechanism” as we will
after all, be the industry which will be called upon to drive it.
To reiterate, we are gravely concerned in terms of the implications for our industry if
the Carbon Tax is to be introduced on domestic solid fuels and the potential impact it
will have in relation to up to 1,200 people being made redundant as a direct
consequence. Let no one say they were unaware of this consequence after the event,
as these facts are now laid before your committee.
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6. MORE
Prompt Payment Legislation
Despite the introduction of the Late Payment in Commercial Transactions Regulations
2002, the legislation is not working in favour of small and medium-sized enterprises.
Numerous surveys have highlighted this fact, indicating that small and medium
enterprises are having to wait an average of 76 days2
for payment.
The indisputable evidence is that large business organisations, along with some
Government agencies, are delaying payments to cash-strapped small companies in all
sectors, including ours. Unfortunately, the Department for Enterprise Trade &
Employment has failed to take action in this regard.
With the deterioration in late payments across the board, cash-flow across our entire
sector is drying up. This, coupled with a lack of availability and credit terms from
Irish banks, is placing many of our members in both the retail and wholesale sector at
severe risk. Unless addressed immediately it will result in inevitable closures and job
losses.
We urge the Minister to review the Prompt Payment Legislation as a matter of
urgency with a view to amending and enforcing it to assist small and medium
enterprises. Currently it is optional rather than mandatory, with an ability to “contract
out” being availed of by some. This is unacceptable.
We are aware of a previously-drafted, but not used, national survey being available to
the Department of Enterprise Trade & Innovation. This could serve to benchmark and
quantify the scale of the current problem within all sectors.
We would like to see a corporate social responsibility charter on prompt payment
championed by Government, and introduced across Government departments and
semi-state organisations. This could also be advocated to multi-nationals and large
companies, and then cascaded down the supply chain to medium-sized businesses and
small to micro organisations.
We ask the committee’s assistance in progressing these two very important areas to
the Irish Hardware & Building Materials Association and we are very pleased to take
questions on these, or any other issues, you may have.
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7. 1
Source – Expert group on future Skills needs – Forfas – April 2010
2
Source – ISME Credit Watch, Spring 2010
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