Categories of industry

Learning Targets
What are the factors of production?

Primary, Secondary and Tertiary sectors

Changes and Trends in these sectors

C O' Brien Chanel College

You can’t have it all!


Factors of production

Land Labour

Capital Enterprise


Land
• Anything provided by
nature that helps us
produce G&S
• E.G. Sea
Soil
Gas
• Payment: Rent

Labour
• Any human effort
that helps to produce
G&S
• E.G. Doctor
Accountant
Factory worker
• Payment: Wages

Capital
• Anything that is
made by humans that
is used to help
produce G&S
• E.G. Machinery
Computers
• Payment: Interest

Enterprise
• Organises land labour
and capital by setting up a
business and bears the
risk of success or failure

• E.G.
Entrepreneur

• Payment: Profits

The Primary Sector
 Also known as the ‘Extractive Industry’
 Based on natural resources
 Non- Renewable: Limited supply. They
must be used sparingly
e.g. Oil / Gas
 Renewable: If carefully managed they
can last indefinitely e.g. Solar power/
crops/ Wind power


Agriculture
Facts:
 It accounts for 7.7% employment in Ireland

 It makes up 10.5% of Ireland’s total
exports

 80% of agriculture produce is exported


Composition of Employment in the Agri-Food sector, 2011


Problems:
 Decline in EU Grants/payments:
Instead of receiving many different grants and
payments farmers just receive one single farm
payment regardless of how much output is
produced in a year
 Consumer confidence:
Has declined in recent years due to excessive
use of pesticides/ development of diseases e.g.
Mad cow disease. We need to protect ‘Green’
image.

 Weather:
The IFA estimated that the bad weather
this year cost farmers about €160m in
extra animal farm feed and lost output.
 Competition:
Small farmers find it difficult to remain
competitive and need to cease
opportunities of taking over new farms or
diversifying their product range.


Trends:
 Beef & milk are increasing in price as demand
is increasing due global population growth
 Continued growth in organic food production.
Positive effect on Ireland’s ‘Green’ image
 Food product traceability is necessary to
reassure customers of quality


Fishing
 Small industry in Ireland contributes to €700
million annually to national income
 Provides employment for coastal
communities, 11,000 people.
 As part of the EU other EU countries fish here
– Increased competition
 Intro of quotas limits amount that can be
caught


Problems/ Trends:
 Restrictions: EU has imposed fishing
quotas on the size of fish catches which
restricts development in the industry

 Size of boats: Most of the fishing fleet in
Ireland is comprised of small boats. They are
not equipped to travel long distances to find
big catches
 Overfishing: Stocks of some fish species
is very low

Forestry
 Small industry in Ireland
 Ideal climate conditions for the production of
trees
 Grants provided to farmers to develop forests
 Slow return on investment


Problems/ Trends

 Slow return on investment

 Grants available to farmers to plant forests

Coillte, state company own and run most of
the forests in Ireland


The Secondary Sector
Construction
• Involved in building houses factories,
offices & infrastructure e.g. roads
• Uses a high % of home produced raw
materials
• Is labour intensive – creates employment

2007 Employment: 300,000
Output = €40 billion.
2011 Employment: 100,000
Output = €10 billion.

Problems/ Trends:

• Economic fluctuations: Low economic activity
resulting in decrease in demand for construction
industry – decrease in employment
• Regulations: New laws have been introduced
which places increased responsibility on the
construction industry with regards to their builds


Manufacturing

• Converts raw materials into finished goods
• Important industry creating direct and
indirect employment
• E.G. Manufacturing industries:
1. Agri – businesses
2. TNCs
3. Indigenous businesses College
C O' Brien Chanel

Problems/ Trends:

• Employment: Decreasing significantly in
this industry. Cheaper labour abroad.
• Knowledge economy: Increased focus on
marketing Ireland as a knowledge based
highly technical workforce to encourage
foreign investment
• New Technology: Move towards ICT and
robotics for production


1. Agribusiness
• Supply products to farmers & manufacture farm
produce into saleable products
Problems
• Competition: These businesses are small.
Difficult to compete with larger foreign companies
• R&D: Low investment in research and
development. Lack of new product development


Trends:
•.Mergers: Agribusinesses have merged
which allows them to compete more
effectively. e.g. Glanbia


TNCs:
• Multinational company
• Head office in one country but operate in a
number of countries (subsidiary)
• Employs over 100,000 in Ireland
• IDA responsible for attracting TNCs to Ireland


What attracts TNCs to Ireland?

 Educated workforce
 Location within the EU – Access to EU
markets
 Grants provided by IDA
 Low corporation tax
 High levels of productivity achieved by Irish
businesses


Benefits:
• Employment: Large amount of job
creation due to establishment in Ireland
• Corporation Tax: Contribute to National
budget as they pay 12.5% tax on profits
• Training: Employees get world class
training and skill development
• Spin off industries: These are created
locally which contributes to indirect
employment

Problems:

•Loyalty: As they are developed in another country if
the economy is doing badly they have no issue with
leaving and moving their subsidiary to another
country.

•Profits: The profits made by the TNC are sent back
to the headquarters.

•Closure: As an economy we are over reliant on
TNCs. If they close it has a huge negative impact on
local communities as jobs are lost and spin off
industries lose business. Chanel College
C O' Brien

Indigenous Firms:

•Businesses that are Irish owned and produce G&S
in Ireland

•Enterprise Ireland* government agency that
supports and encourages development of Irish
businesses

•Most indigenous firms are SMEs – Small medium
Enterprises


• They provide assistance and capital to firms at
start up stage

• They provide advice & support to start up
businesses

• They assist firms with product and process
development

• Support and encourage firms to export their G&S


Benefits:

•Loyalty: Irish firms are loyal, unlikely to relocate
somewhere else.
E.G. Group opening new science &
innovation centre in Kildare. This will create 900
jobs.

•Support: Purchase raw materials and supplies
from local businesses

•Profits: Reinvested back into Ireland & contribute
to revenue for the government

Problems:

•Export market: Only a small no. of Irish brands are
recognised abroad reducing their selling power in
foreign markets

•Wages: High wages expectations in Ireland result in
some manufacturing firms to locate abroad to avail of
lower costs of production

•R&D: Not enough investment compared to
competitors

Trends:
• World class manufacturing: Has developed
in Ireland as valuable training is provided.
• R&D: Investment is growing. Required for
growth and expansion of product range of
business
• Technology: Big emphasis on technological
based industries in the future


Tertiary Sector
The largest and fastest growing sector in the Irish
economy.
Examples include:
Financial services - Medical services - Transport services
- Leisure services.
Most service industries are labour-intensive and this
has a very positive impact on job creation.
Improvements in IT have also led to growth.
Tourism is a significant service sector in Ireland.


Trends:

• ICT: Increase in investment in broadband and
social media

• Telecentres: Opened to deal with after sales
services

• Childcare: Increase in childcare services in line
with population growth


Question:

Explain using examples the impact of TNCs in Ireland.
(20 Marks)

Solution:

1.Explain acronym. Define TNC
2.Name: Employment
Explain: Explain
Name: Spin off industries Link E.G.S
Explain:
Name: Government Revenue
Explain
Name: WCM – Training
Explain:

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