SHANNON FOYNES PORT COMPANY ECONOMIC IMPACT ASSESSMENT Economic Impact Assessment – Shannon Foynes Port Company

SHANNON FOYNES PORT COMPANY

ECONOMIC IMPACT ASSESSMENT

AUGUST 2016

Economic Impact Assessment – Shannon Foynes Port Company

Table of Contents

List of Tables

Executive Summary 4

Section One Introduction & Methodology 12 1.0 Introduction & methodology 13 1.1 Port supported maritime and other logistics 13 1.2 Survey of direct impacts 14 1.3 Study timeframe 14 1.4 Secondary research 15 1.5 Economic impact 15

Section Two Overview 16 2.0 Overview 17 2.1 Policy framework 18 2.2 A growth environment 20 2.3 National port summary 24

Section Three Economic Impact Assessment 26 3.0 Introduction 27 3.1 Economic impact of Shannon Foynes Port Company 27 3.2 Shannon Foynes Port Company & Service Providers 28 3.3 Shannon Foynes Port Company Port Users 30 3.4 Shannon Foynes Port – Overall Economic Impact 32 3.5 Capital Expenditure 36

Section Four Conclusions 39

Economic Impact Assessment – Shannon Foynes Port Company

LIST OF TABLES

Table Title Page

Table 1 Volume of European Ports with depths in excess of 10 metres 20 Table 2 Shipping, Cargo & Tonnage Growth 2008-2014 21 Table 3 Shipping, Cargo & Tonnage Percentage Change 2008-2014 22 Table 4 Tonnage of Dry bulk, Liquid bulk and Break bulk through SFPC in 2014 22 Table 5 World Seaborne Trade Average Growth % – Dry Bulk 23 Table 6 Volume of Trade through all Ports (Ireland) 2009-2014 24 Table 7 Tonnage of Dry bulk, Liquid bulk and Break bulk through major ports (Ireland) in 25 2014 Table 8 Economic Impact of Shannon Foynes Port Company - Operating Expenditures 27 (2014) Table 9 Economic Impact of Shannon Foynes Port Company 2014 Operations 27 Table 10 Economic Impact of Shannon Foynes Port Company & Service Providers 28 Operational Expenditure Table 11 Economic Impact of Shannon Foynes Port Company & Service Providers (2014) 29 Table 12 Economic Impact of Shannon Foynes Port Customers Operational Expenditure 30 (2014) Table 13 Economic Impact of Shannon Foynes Port Customers 31 Table 14 Economic Impact of Shannon Foynes Port Company – Operating Expenditures 32 (2014) Table 15 Value of Trade through SFPC (Ports) 32 Table 16 Economic Impact of Shannon Foynes Port Company 33 Table 17 Employment Impact of SFPC on Regional Economy – 2014 Payroll Impact 34 Table 18 Regional spend resulting from Shannon Foynes Trade Activity 34 Table 19 Impact of regional spend by SFPC & Port Companies – 2014 34 Table 20 Transport & Logistics Expenditure & Employment supported directly by 35 Shannon Foynes Port Activity Table 21 SFPC Traffic by Vessel Size 35 Table 22 Past Capital Expenditure and projected Capital Expenditure among companies 36 reliant on Shannon Foynes Port Table 23 Projected Long Term Capital Expenditure – Masterplan and Port Activity 37 Table 24 Potential Impact of Attracting Major New Industry Based on Improved Regional 40 Connectivity Table 25 Potential Impact of Developing New Industry Cluster Based on Improved 41 Regional Connectivity

Economic Impact Assessment – Shannon Foynes Port Company

EXECUTIVE SUMMARY

Economic Impact Assessment – Shannon Foynes Port Company

Shannon Foynes Port Company (SFPC) is Ireland’s second largest port operation currently handling in excess of 10 million tonnes per annum. The company has statutory jurisdiction over all marine activities and port management on the Shannon Estuary covering 500km2 of navigable water from Kerry and Loop Head in Clare to Limerick City. The estuary is Ireland’s main deepwater facility with a channel depth of in excess of 16 meters and a handling capacity for large vessels up to 200,000 deadweight tonnes (dwt). The port is designated as a Core Network Port (TEN-T) by the European Union and a Tier 1 Port in the National Ports Policy.

Shannon Foynes Ports handled over 10.2 million tonnes of goods in 2014. It remains the largest dry bulk port in Ireland, handling 9,013,491 tonnes of dry bulk in 2014 representing 88% of the total tonnage handled by SFPC. Liquid bulk accounts for 10% of tonnage through the ports with break bulk comprising 2% of total tonnage.

SFPC commissioned W2 Consulting to conduct an independent economic impact assessment examining the activities of the Port Company and wider impact of the commercial trading activity of the port. A programme of primary research was undertaken to generate the source data employed in the development of the economic impact study for SFPC and its associated businesses1. A total of 31 companies who currently use Shannon Foynes ports for import / export business and port service providers were included in the research sample. The response rate represented 94% of SFPC customers and service providers who supplied the requested data for analysis in the compilation of the economic impact data.

The terms of reference for the assessment focused the analysis of the following;  Economic impact of SFPC operations;  Overall impact of SFPC and service providers;  Economic impact of entities reliant on port facilities for commercial activities;  Total impact of all commercial activity generated by SFPC and associated facilities;  Trade handled by the Port;  Estimation of overall economic impacts to include output, employment, expenditure, GVA, value of trade using direct and multiplier impacts to calculate economy wide impacts.

Economic Impact Headlines  The economic impact of all SFPC port related activity was €1.9 billion in 2014.  A total of 3,648 FTE’s are supported generating €192.7 million in employment income among companies engaged with SFPC.  The regional economic impact of SFPC and associated service providers is €95.8 million,  The trade activity of SFPC and service providers supports 534 FTEs annually.  The value of trade handled through SFPC for 2014 was €7.6 billion  SFPC operations is responsible for 65 FTE’s in addition to an employment income effect of €9.4 million for the regional economy.  The commercial activity of customers of SFPC resulted in €347.2 million of expenditure in the regional economy on non labour goods and services.  Projected capital expenditure over the course of Vision 2041 is calculated at €1.8 billion that will support over 22,000 FTE’s in the region and stimulate a further €1.09 billion between indirect and induced expenditure.

1 All companies with commercial engagement with SFPC through service provision or reliance on the ports for import / export activity. 5

Economic Impact Assessment – Shannon Foynes Port Company

Value of Trade Handled through SFPC Primary research conducted among customers of SFPC examined the value per tonne handled through SFPC ports. The estimated value of trade handled through SFPC for 2014 was €7.6 billion. This is based on the value per tonne of goods traded by each respective customer of SFPC. This value also incorporates labour and non labour impacts which has the additional consequence of indirect and induced impacts resulting in additional demand for intermediate goods and employment in the various sectors SFPC customers engage with.

Economic Impact of Shannon Foynes Port Company operations Analysis of 2014 Shannon Foynes Port Company operational budgets reveal a direct expenditure of €11.6 million into the regional economy. This direct economic impact is comprised of labour and non labour expenditure in relation to capital expenditure in 2014. Furthermore, a total of 35 full time equivalent employees (FTE) are directly engaged by Shannon Foynes Port Company.

Based on SFPC revenues of €11.3 million and business related expenditure across the areas of employment and non labour business expenditure in addition to capital expenditure, the Gross Value Added (GVA) is €7.6 million for SFPC. In addition to the direct impacts based on the modelling of the indirect and induced multiplier impacts of these operational activities by SFPC, the economy wide impact is estimated at €15.65 million GVA. SFPC is responsible for 65 FTE’s in addition to an employment income effect of €9.4 million for the regional economy.

Economic Impact of Shannon Foynes Port Company 2014 Operations (2014) Categorisation of Impact Direct Impact Multiplier Economy Wide Impacts Impacts (€ Million) Output – Revenue Revenues €11.3 €4.95 €16.2 Employment & Employment Income Employment (FTE’s) 35 30 65 Employment Incomes (€m’s) €5.0 €4.4 €9.4 Non Labour Business Expenditure Non Labour Business Expenditure €5.2 €4.4 €9.6 Gross Value Added / GDP Contribution Estimated GVA / GDP Contribution €7.6 €8.1 €15.65 Capital Expenditures Capital Expenditures – 2014 €1.3 €0.81 €2.1

Economic Impact of Shannon Foynes Port Company and service suppliers The delivery of maritime and port services is effectively a conglomerate of service providers delivering an integrated approach to shipping on the estuary. The assessment of the economic impact of direct service providers highlights the wider value generated for the area as a result of the variety of local services required to support port activity. The analysis includes a range of constituent service providers integral to the delivery of all maritime and logistical services required. These include Sea and coastal water transport, Cargo handling and stevedoring, Freight and logistics, Storage and warehousing, Specialist maritime services.

Economic Impact Assessment – Shannon Foynes Port Company

Economic Impact of Shannon Foynes Port Company & Service Providers (2014) Categorisation of Impact Direct Impact Multiplier Economy Wide Impacts Impacts (€ Million) Output – Revenue Revenues €63.0 €90.7 €153.6 Employment & Employment Income Employment (FTE’s) 289 245 534 Employment Incomes (€m’s) €13.0 €11.6 €24.5 Non Labour Business Expenditure Non Labour Business Expenditure €35.8 €30.4 €66.2 Gross Value Added / GDP Contribution Estimated GVA / GDP Contribution €38.2 €57.6 €95.8 Capital Expenditures Capital Expenditures – 2014 €2.35 €1.4 €3.8

A total of 289 FTEs are supported as a result of all port activity resulting in an overall employment impact of 534 FTE’s. The estimated Gross Value Added for SFPC and service providers is €95.8 million based on a direct impact of €38.2 million and multiplier impacts of €57.6 million.

Economic Impact of Shannon Foynes Port Company customers Based on the trading activities of the customers of SFPC, the GVA generated as a result of direct economic activity is €1.36 billion. After accounting for the multiplier impacts of this direct level of activity the economy wide GVA impact is estimated to be €1.86 billion.

Economic Impact of Shannon Foynes Port Customers (2014) Categorisation of Impact Direct Impact Multiplier Economy Wide Impacts Impacts (€ Million) Output – Revenue Revenues €2,758 €1,213.5 €3,971.5 Employment & Employment Income Employment (FTE’s) 1,565 2,004 3,568 Employment Incomes (€m’s) €97.1 €86.4 €183.4 Non Labour Business Expenditure Non Labour Business Expenditure €187.7 €159.5 €347.2 Gross Value Added / GDP Contribution Estimated GVA / GDP Contribution €1,357.5 €497.6 €1,855 Capital Expenditures Capital Expenditures – 2014 €40.0 €24.0 €64.0

Economic Impact Assessment – Shannon Foynes Port Company

Non labour business expenditure by companies in the area was €187.7 million for 2014, stimulating indirect and induced impacts of €159.5 million. A total of €347.2 million was stimulated through non labour expenditure by the companies dealing with SFPC in 2014. This is the level of non-employment related expenditure by the companies on goods and services in the regional economy to sustain their annual commercial activities.

Overall Economic Impact of Shannon Foynes Port Company and Port Activity The overall economic impact of SFPC is estimated by analysing the impact of SFPC company activities and port service providers in addition to economic activity of customers of SFPC who are reliant on the port for its trading activities.

The cumulative employment impact of all SFPC activities and the associated commercial entities on the estuary is 1,600 FTEs in direct employment. A total of 3,648 FTE’s are supported generating €192.7 million in employment income with an indirect labour impact of 1,120 indirect FTE’s and 928 FTE’s supported by induced activity resulting from direct employment and overall employment impact of 3,648 FTE’s.

Overall Economic Impact of Shannon Foynes Port Company & Port Activity Categorisation of Impact Direct Impact Multiplier Economy Wide Impacts Impacts ( € Million) Output – Revenue Revenues €2,769.3 €1,218.5 €3,987.7 Employment & Employment Income Employment (FTE’s) 1,600 2,048 3,648 Employment Incomes €102.0 €90.8 €192.7 Non Labour Business Expenditure Non Labour Business Expenditure €192.9 €163.9 €356.0 Gross Value Added / GDP Contribution Estimated GVA / GDP Contribution €1,365.1 €547.8 €1,912.8 Capital Expenditures Capital Expenditures – 2014 €41.3 €24.8 €66.2

Capital Expenditure among companies reliant on Shannon Foynes Port (€ millions) Capital Expenditure Employment Numbers (FTE’s) CAPEX in past five years €200.6 2,446 Projected CAPEX – 5 Years2 €277.1 3,372 Source: SFPC Customer Data

2 Figure inclusive of projected capital expenditure by SFPC 8

Economic Impact Assessment – Shannon Foynes Port Company

Capital expenditure in the region over the period 2010 – 2014 was €200.6 million among customers of SFPC. This level of capital expenditure is estimated to support 2,446 FTE’s. Projected capital expenditure levels among customers of SFPC and SFPC reveal an estimated investment of €277.1 million. This is based on committed expenditure to support capital projects by companies in the region over the coming five years and does not reflect any speculative projects. This level of investment over the coming 5 years will support 3,372 FTE’s in the regional economy.

Projected Long Term Capital Expenditure – Masterplan and Port Activity Projected Direct Expenditure Impact (€ Millions) Port Infrastructure Development3 €123.0 Deepwater Berth Jetty Development Capital Investment Programme

Land Transport Development4 €325.0 Projected road and rail investment

Third Party Investment5 €1,000.0 Projected Capex by Port Customers 340.1 Total projected Capital expenditure €1,813.1 Multiplier Impacts €1,087.8 Projected FTE’s 22,065

Economy Wide Impact €2,900.88

Subject to the successful completion of public and private sector developments proceeding during the timeframe of the SFPC Masterplan, the projected capital expenditure in the region is estimated at €1.8 billion.

Cautious projections among SFPC customers and Third Party Investment limited to a number of major projects in the energy sector would result in €1.34 billion of private capital expenditure. The employment impact of this level of investment has the capacity to support over 22,000 FTE’s in the region and stimulate a further €1.09 billion between indirect and induced expenditure.

The overall economic wide impact from this level of infrastructural investment and project capital expenditure is estimated to be €2.9 billion over the course of the masterplan.

In addition to the economic impact analysis, customers of SFPC highlighted a number of areas for further development. The economic assessment reveals the scale of impacts directly resulting from SFPC port activity. Estuary businesses highlighted the degree to which economic capacity and regional competitiveness is being hindered by the lack of appropriate road and communications infrastructure. The Tier 1 Port represents

3 Source: SFPC 2015 Capital Development Plan 4 Source: SFPC consultation and indicative budgets based on NRA modelling 5 Source: Consultation with port customers. Figure includes projected capital costs based on feasibility studies confidentially provided by prospective estuary tenants. 9

Economic Impact Assessment – Shannon Foynes Port Company

Ireland’s second largest port but is serviced by an inadequate road system identified in the consultation as affecting investment confidence while also resulting in increased business costs across all sectors.

Potential Impact of Attracting Major New Industry - Based on Improved Regional Connectivity Direct 450 €30,100,000 Indirect 315 €15,652,000 Induced 86 €9,933,000 Total 851 €55,685,000 Five Year Employment Income €278,425,000

A number of regional impact scenarios based on improved road connectivity reveal the scale of impacts associated with improved transport infrastructure. Based on attracting one major multinational comparable to existing tenants and operational patterns, a company with direct employment levels of 450 personnel would have an overall employment impact of 851 FTE’s stimulating over €55 million annually in employment income. This is comprised of indirect and induced FTE’s and employment income that result from attracting a major new employer on the estuary.

Potential Impact of Attracting Major New Industry Cluster – Based on Improved Regional Connectivity Direct 1,000 € 66,888,889 Indirect 700 € 34,782,222 Induced 190 € 22,073,333 Total 1,890 € 123,744,444 Five Year Employment Income € 618,722,220

The 2041 Vision for SFPC has outlined its strategic ambition focused on a number of sectors at the core of the estuary’s economic development. The ability to attract a number of new industries based on an industry cluster approach can provide in excess of €123 million in employment income supporting 1,890 FTE’s. Notwithstanding the opportunity to develop direct employment on the estuary through a targeted industry strategy, further regional development will be stimulated through the level of indirect and induced employment generating 890 FTE’s across the region. Critically, this wider dispersion of benefits can only be maximised through extending the reach into the region through improved connectivity from an industry operations and commuter perspective.

In conclusion, the scale of economic impacts in the region is considerable based on the trading performance of customers of SFPC. It also magnifies the opportunity that exists for the region based on its Tier 1 status and position as the second busiest port in Ireland. The activity within the SFPC ports represents a major catalyst for economic prosperity across the region. However, more significantly, it highlights the scale of opportunity the ports provide with the appropriate level of strategic investment. This is further supported by the creation of the Strategic Integrated Framework Plan (SIFP) which represents the first inter-jurisdictional land and marine based framework plan for future development and management of the Shannon Estuary. The plan which outlines the critical role played by the Shannon Estuary in facilitating economic development within the national context was formally adopted by Local Authorities in Clare and Limerick City & County by means of a Variation to the respective County Development Plans. Kerry Co Council has committed to adopting the SIFP in its upcoming County Development Plan.

Economic Impact Assessment – Shannon Foynes Port Company

The ports at Foynes and Limerick are highlighted as being hugely important for employment and trade offering significant growth opportunity. In addition, the identification of SDL’s at Cahercon, Ballylongford, Moneypoint and Askeaton for maritime related industry and large scale industrial development at these locations highlights the potential capacity to increase the current rate of utilisation and reinforces the SFPC Vision 2041 for expansion, promotion and management of the estuary and its assets.

Vision 2041 has recognised the role of SFPC in supporting future regional growth with a focus on a number of key sectors. An overall integrated approach with Shannon Airport offers the complete regional solution. However, the issue of connectivity continues to restrict the region’s ability to capitalise on the opportunity these transport resources provide. The sample of industries contained within this review highlights the economic value generated through the support of SFPC activity and resources. Next phase economic development for the region must include infrastructure investment that adopts a strategic outlook in facilitating economic growth. Future key road and rail investment decisions must adopt a longer term view in terms of its ability to leverage further FDI and assist existing industry in meeting their growth ambitions.

Economic Impact Assessment – Shannon Foynes Port Company

SECTION ONE

INTRODUCTION & METHODOLOGY

Economic Impact Assessment – Shannon Foynes Port Company

1.0 INTRODUCTION & METHODOLOGY Shannon Foynes Port Company (SFPC) commissioned W2 Consulting to conduct an independent economic impact assessment examining the activities of the Port Company and subsequent impact of the commercial trading activity of the port.

A programme of primary research was undertaken to generate the source data employed in the development of the economic impact study for SFPC and its associated businesses6. A total of 31 companies who currently use Shannon Foynes ports for import / export business and port service providers were included in the research sample. The response rate represented 94% of SFPC customers and service providers who supplied the requested data for analysis in the compilation of the economic impact data.

Interviews were only conducted with companies and businesses with a direct relationship with Shannon Foynes Port Company to estimate the overall impact of the Ports in terms of their catalytic impact on trade.

Figure 1: Economic Impact Assessment Model

The terms of reference for the assessment focused on the analysis of the following;  Economic impact of SFPC Operations;  Overall impact of SFPC and Service Providers;  Economic impact of entities reliant on port facilities for commercial activities;  Total impact of all commercial activity generated by SFPC and associated facilities;  Trade handled by the Port;  Estimation of overall Economic Impacts to include output, employment, expenditure, GVA, value of trade using Direct and Multiplier impacts to calculate economy wide impacts.

1.1 PORT SUPPORTED MARITIME AND OTHER LOGISTICS Within the analysis, a range of maritime and supporting logistics activities were included in the service provider review to demonstrate the wider impact of Shannon Foynes Port Company activity. For the purposes of the research and inclusion in the data represented by Shannon Foynes Port Company and service providers, the following were included;  Sea and coastal water transport  Cargo handling and stevedoring  Freight and logistics  Storage and warehousing

6 All companies with commercial engagement with SFPC through service provision or reliance on the ports for import / export activity. 13

Economic Impact Assessment – Shannon Foynes Port Company

1.2 SURVEY OF DIRECT IMPACTS The economic impact of Shannon Foynes Port Company was estimated using primary research data gathered through face to face and telephone interviews. All survey respondents were provided with the survey questions in advance of the interviews with follow up research undertaken to augment the data supplied through a range of secondary research resources.

Face to face interviews were conducted with senior management and representatives of the respondent companies after a letter of introduction was sent to all port users from SFPC. A number of telephone interviews were also conducted for data collection and further clarification relating to submitted data. The data collected related to 2014 trading activity.

These businesses included direct and indirect service suppliers to Shannon Foynes Port Company and customers of the SFPC ports who imported or exported during 2014.

The research collected information on the following performance indicators:-

 Employment levels broken down between full time, part time and contract  Annual payroll or average salary per employee  Annual expenditure on goods, services and the geographic location of expenditure  Level of turnover achieved in the calendar year 2014  Specific expenditure on logistics and transport directly related to port activity  Details of past capital expenditure and projected capital expenditure for the coming 5 years

The process also included qualitative research to gather inputs of senior industry figures in relation to future requirements for future business growth and an assessment of perceived barriers to growth within the region. In cases where data was not available through non participation in the survey, employment was inferred for those businesses through the use of other information sources such as annual reports or comparable information from similar firms that had participated in the survey. Due to the high level of survey participation and completeness of information provided, the level of inference for direct impacts data was minimal.

The primary research phase provided key economic indicators across the areas of direct employment, income salary and regional expenditure. In order to estimate the broader economic impact of each company’s contribution to the regional economy, indirect and induced effects were estimated using economic multipliers, as is common practice for economic impact studies. In addition, the direct value added (GVA) impacts were also estimated using economic multipliers. The indirect and induced impacts are represented by economic multipliers, normally expressed as a ratio of total impacts (i.e. direct plus indirect plus induced) to direct impacts. Using this model, multipliers were produced for employment, remuneration, value added and economic output. The multipliers applied were based on the input output model of the Irish economy maintained by the Central Statistics Office (CSO) Ireland.

1.3 STUDY TIMEFRAME The economic data survey was conducted between March and July 2015 and the results reflect the employment and financial information for the calendar year 2014.

Economic Impact Assessment – Shannon Foynes Port Company

1.4 SECONDARY RESEARCH Supplementary data and information resources were incorporated into the economic impact study to provide the context for the operations of Shannon Foynes Port Company. These included a range of economic indicators in addition to shipping statistics and global shipping trends. Among the secondary data sources incorporated in the study, include:-  Shannon Foynes Port Company data in relation to operations and strategic planning;  CSO and IMDO data on national port trade trends;  CSO Data;  UNCTAD data on international trends in addition to secondary resources such as Clarkson Research Services, Shipping Review & Outlook.

1.5 ECONOMIC IMPACT The economic impact of SFPC is measured in a number of ways. The analysis focused on the economic impact of the SFPC port operation incorporating all service providers in addition to analysing the impact on the regional economy of companies who rely on the port for import and export of goods. The analysis is based on 1. Economic Impact of Shannon Foynes Port Company operations 2. Economic Impact of Shannon Foynes Port Company and service suppliers 3. Economic Impact of Shannon Foynes Port Company customers 4. Overall Economic Impact of Shannon Foynes Port Company and associated companies

The analysis is based on measuring impact adopting the following approach; Employment – the number of people employed by businesses involved in activity that relates to the ports of SFPC. Employment Income / Wages – the wages and salaries earned by people employed by businesses involved in activity that relates to the ports of SFPC. Gross Value Added (GVA) – GVA is broadly equivalent to Gross Domestic Product; the added value of each industry is equal to the GDP of an economy. Direct Impacts – economic impacts that are directly generated from the employment and expenditures employed by businesses involved in activity that relates to the ports of SFPC. Indirect Impacts – economic impacts that are generated as a result of the purchase of goods and services by suppliers who receive expenditure from SFPC and businesses involved in activity that relates to the ports of SFPC. Induced Impacts – economic impacts that result from additional consumer spending on the basis of consumer expenditure generated from the above mentioned direct and indirect economic impacts.

Economic Impact Assessment – Shannon Foynes Port Company

SECTION TWO

OVERVIEW

Economic Impact Assessment – Shannon Foynes Port Company

2.0 OVERVIEW Shannon Foynes Port Company (SFPC) is Ireland’s second largest port operation currently handling in excess of 10 million tonnes per annum. The company has statutory jurisdiction over all marine activities and port management on the Shannon Estuary covering 500km2 of navigable water from Kerry and Loop Head in Clare to Limerick City.

SFPC is a limited company formed in 2000 as a result of the merger of the former Shannon Estuary Ports and Foynes Port companies as part of a policy of rationalisation and modernisation of Irish ports undertaken by the Irish Government at the time. The port specialises in bulk cargo and is the largest dry bulk port in Ireland with 60% share of the market. Typical cargoes include liquid fuels and chemicals, ores, coal and other energy products, agri-business produce such as animal feedstuffs and fertilisers, recyclable materials and various project cargoes, including wind turbines for wind energy projects.

The port is designated as a Core Network Port (TEN-T) at European Level and a Tier 1 Port in the National Ports Policy (2013). It is acknowledged by Local Authorities in the region as a key transport hub. Existing access to Foynes port is via a secondary road network (N69) with proposals for road and rail upgrade subject to ongoing assessment and feasibility. The requirement for improved connectivity remains a strategic economic development priority for the area and more importantly for the economic impact it will have on the west of Ireland. Recent Government Policy7 focusing on strategic investment in the future of transport emphasises efficient and sustainable transport networks as being fundamental to economic growth and maintaining competiveness. The evidence of the research that follows highlights a competitiveness issue among customers of SFPC due to current road infrastructure. Within the Strategic Investment Framework for Land Transport, port infrastructure, aviation, regional development and tourism are highlighted as areas for investment focus within this policy8.

7 Department of Transport, Tourism and Sport (2015) Investing in our Transport Future – Strategic Investment Framework for Land Transport 8 Department of Transport, Tourism and Sport (2015) Investing in our Transport Future – Strategic Investment Framework for Land Transport 17

Economic Impact Assessment – Shannon Foynes Port Company

2.1 POLICY FRAMEWORK The operational context for SFPC and its own strategic ambition through Vision 2041is aligned with a range of European, National and Regional policies reflecting the significance of the ports’ resources and their immediate to longer term role as a socio-economic catalyst for Ireland. The following highlights a range of policy documents that will inform international and national policy with operational and strategic implications for SFPC.

European Trans European Transport Network (TEN-T) Programme The European TEN-T Programme is designed to promote and strengthen transport chains across Europe, building core network corridors which represent the strategic heart of the TEN-T. The Ten-T programme is focussed on connecting member states through transport networks, and removing bottle necks that hamper the smooth functioning of the internal market while overcoming technical barriers such as incompatible standards for railway traffic. Work plans for 11 European Corridors were approved in June 2015 and have established the basis for action until 2030. Shannon Foynes is designated as a Core Network Port (TEN-T) within the North Sea- Mediterranean Corridor where the disused rail-link to Foynes port has been designated a core rail freight network. SFPC received €2.2 million for its Jetty Infill Programme at Foynes Port with a further €800,000 made available for the feasibility study on the regeneration of the rail link between Limerick and the port.

EU White Paper ‘Roadmap to a Single European Transport Area’ The EU published White Paper advocates a nodal shift in transporting freight via waterborne transport in an effort to reduce greenhouse emissions and the promotion of connections via rail to improve connectivity9.

National Ports Policy10 The National Ports Policy sets out the policy framework for the future development of ports in Ireland. Shannon Foynes Port Company is categorised as a Tier 1 Port of National Significance under national policy with clear potential to lead the development of future port capacity in the medium and long term, when and as required. The Policy clearly identifies as a matter of reasonable priority the improvement of the road and rail freight connections to Shannon Foynes Port and in particular, it supports the re-opening of the rail freight connection, provided it is commercially viable. The continued commercial development of Shannon Foynes Port Company is a key strategic objective of National Ports Policy.

Harbours Bill11 In June 2015, the Government approved the progression of the Harbours Bill 2015 through the Oireachtas. The proposed policy provides primarily for the future transfer of Ports of Regional Significance to local authority led governance structures. However, it will also provide for further enhancements in the corporate governance structures of all port companies including SFPC.

Competition in the Irish Ports Sector The report, published as part of the Government’s Action Plan for Jobs acknowledges the dependency of Ireland as an island nation on its ports and their significant contribution to economic growth in recent years. The study evaluates inter-port competition and intra-port competition for different cargo, making six recommendations for improvement. Specifically, in relation to SFPC, the study outlines the limited scope for inter-port competition as

9 European Commission (2011) White Paper Roadmap to a Single European Transport Area – Towards a competitive and resource efficient transport system, Brussels 10 Department of Transport, Tourism, & Sport (2013) National Ports Policy 11 Department of Transport, Tourism, & Sport (2015) Harbours Bill 18

Economic Impact Assessment – Shannon Foynes Port Company the concentration of dry bulk at Shannon Foynes is heavily influenced by nearby industries that seek to use the nearest port to minimise haulage costs.

Investing in our Transport Future – Strategic Investment Framework for Land Transport The ‘Investing in our Transport Future’ framework focuses on the strategic actions required for the development of transport into the future. The report emphasises efficient and sustainable transport networks as fundamental to economic growth and maintaining competiveness whereby port infrastructure, aviation, regional development and tourism are all noted as future areas for investment12.

The regional network infrastructure is composed predominantly of motorway and national primary and national secondary roads. Connectivity to Foynes port from the core road network in Limerick is via the N69 with alternative corridor options via the N21, N20 and M20. Subject to ongoing progress of the Foynes to Limerick Road Improvement Scheme, monitoring of the regional road network by the NRA Traffic Monitoring Units (TMU) indicates an annual average daily traffic (AADT) of 5,500 vehicles between Askeaton and Foynes with 7.4% of these categorised as Heavy Good Vehicles (HGV)13. The level of AADT increased in the vicinity of Limerick Port with 17,900 vehicles of which 3.2% were HGV.

Strategic Integrated Framework Plan for the Shannon Estuary14 The Strategic Integrated Framework Plan (SIFP) is the first inter-jurisdictional land and marine based framework plan for future development and management of the Shannon Estuary. The plan which outlines the critical role played by the Shannon Estuary in facilitating economic development within the national context was formally adopted by Local Authorities in Clare, Limerick City & County by means of a Variation to the respective County Development Plans. Kerry Co Council has committed to adopting the SIFP in its upcoming County Development Plan. The inter-jurisdictional approach to maximising the economic, social and environmental potential of the natural assets within the estuary is strengthened by the zoning of over 345ha of land as Strategic Development Locations (SDL) specifically for Marine Related Industry.

The ports at Foynes and Limerick are highlighted as being hugely important for employment and trade offering significant growth opportunity. In addition the identification of SDL’s at Cahercon, Ballylongford, Moneypoint and Askeaton for maritime related industry and large scale industrial development at these locations highlights the potential capacity to increase the current rate of utilisation and reinforces the SFPC Vision 2041 for expansion, promotion and management of the estuary and its assets. Areas for development include linkages with the Shannon Estuary as an ocean energy hub, tidal energy, renewables, biomass importation and tourism.

Limerick 2030 – An Economic and Spatial Plan for Limerick15 The Limerick 2030 plan is the guiding plan for the economic development for Limerick City and immediate hinterland. The plan sets out its vision for Limerick in becoming a major economic force in the Irish and European Economy which includes key economic development objectives that would benefit the logistics infrastructure provided through SFPC. The Plan acknowledges the complimentary role of the city with economic development investment at Foynes and the delivery of improved economic infrastructure as part of an overall €750m investment in the city which includes new port facilities along the Shannon Estuary.

12 Department of Transport, Tourism and Sport (2015) Investing in out Transport Future – Strategic Investment Framework for Land Transport 13 NRA (2014) Askeaton and Foynes AADT 14 Clare County Council et al, (2013) Strategic Integrated Framework Plan for the Shannon Estuary 2013-2020 15 Limerick City & County Councils (2013) Limerick 2030 – An Economic and Spatial Plan for Limerick 19

Economic Impact Assessment – Shannon Foynes Port Company

SFPC Limerick Docklands Development Framework Plan

Shannon Foynes Port Company is undertaking a master-planning exercise for Limerick Docklands with a view to outlining its development potential consisting of a series of short, medium and long term objectives. The framework will focus on the development of non-core assets to support existing port activities designed to reduce the risk of Limerick Port’s dependency on local market and services. The overall objective of the framework plan is to demonstrate to potential investors that other potential uses can operate on non-core assets in synergy with a working port.

The framework plan will examine a number of themes including marine renewable research, tourism and leisure with an increased focus on employment generation. Existing port activity will remain in operation. Support from the local authority and integration into the Development Plan is critical to this development. One of the key challenges will be to address access and movement within and outside of the port for existing port uses and future operators in the non-core assets.

Shannon Foynes Port Company (2013) Vision 2041 The SFPC Master Plan focuses on the continued growth and expansion of Limerick and Foynes terminals in addition to promoting the economic development opportunities which the deep waters of the Shannon Estuary offer. In addition to driving more added value activities across the Port, a number of key strategic business drivers have been identified. These are focused around three key objectives including expansion, promotion and management;  Significant expansion and infrastructural development in the deepwater Port of Foynes;  Promoting non-core assets in Limerick Docks for alternative port / non-port related activities;  Managing the natural attributes of the Estuary and promoting an economic destination for regional development, managing a global resource as a transhipment resource and focusing on sectors such as renewables and ocean energy.

Vision 2041 outlines the establishment of a Capital Investment Program in excess of €50m set out in a three phased programme between 2015 - 2025. The programme includes capital works of €10.8m towards new quay infrastructure and the expansion of existing deep water facilities at Foynes. This expansion of the deepwater facilities is designed to support more efficient handling of cargoes and meet SFPC long term targets for additional berthing facilities and accommodation of Panamax vessels in and adjoining the existing Port to be met. Further proposals include the upgrade and replacement of 5,109 sqm of existing warehousing while also creating an additional 9,290 sqm of new warehousing. Potential development of 127 hectares of land for port activities are also proposed.

2.2 A GROWTH ENVIRONMENT Shannon Estuary is Ireland’s main deepwater facility with a channel depth of in excess of 16 meters and a handling capacity for large vessels up to 200,000 deadweight tonnes (dwt). This is significantly larger than the majority of European ports who possess a limited number of ports with channel depths in excess of 10 meters16.

16 Martin Associates (2009) Pre-Feasibility of the Establishment of a Trans-shipment Port on the Shannon Estuary. Available at: http://www.atlanticway.com/tasks/sites/default/assets/File/Dr.%20John%20Martin%20-%20Shannon%20Transhipment.pdf

Economic Impact Assessment – Shannon Foynes Port Company

Table 1: Volume of European Ports with depths in excess of 10 metres Country No. of Ports Reviewed No. of Ports depth in excess of 10m UK 80 7 Spain 38 13 Germany 18 3 France 28 3 Belgium 42 3

Foynes Port accommodates vessel capacity of <10,000dwt (minibulkers), vessels between 15,000 and 35,000dwt (handysize) and <60,000dwt (handymax) ships. The larger 80,000dwt Panamax ships regularly dock at Aughinish Port while Moneypoint is the only jetty in Ireland that facilitates Capesize vessels; ultra large cargo vessels with a capacity over 150,000dwt.

The trend in international shipping has been towards larger vessels to exploit economies of scale. CS0 data indicates that the number of smaller vessels (up to 5,000gt) calling at Irish ports has declined in recent years while larger vessels (40-80,000gt) increased by a factor of eight between 1999 and 2010 from 200 vessels to 1600 vessels per annum.

Globally, average vessel sizes have been steadily increasing as shipping companies continually seek to improve efficiency and lower costs17. In 2013, the average size of a Lo-Lo vessel deployed between Asia and North Europe exceeded 10,000 TEUs18, and orders for such vessels continue to grow19. The average container vessel used for Lo-Lo feeder services in Ireland is currently about 750-850 TEUs20 with forecasts predicting that a new generation of feeder vessels of 1,800-2,000 TEUs and larger will become the norm21.

In the past fifty years sea trade has grown faster than world GDP. Between 1950 and 2015 world GDP grew by 3.7% while sea trade grew by 4.7%. Trade is now almost 11 billion tonnes per annum representing a trebling of imports per capita globally. Currently, OECD countries import approximately four tonnes per capita while non OECD imports are estimated to be one tonne per capita with an overall global average of 1.5 tonnes. Based on the growth in sea trade in the past half century per capita imports are estimated to reach 2.2 tonnes and 22 billion tonnes overall with the next 50 years.

The Eurozone is one of the largest maritime trading regions in the world with an increase of 4% on imports to 120mt (metric tonne) in 2014. Industrial output projections for 2014 estimated a global growth of 4% with OECD Countries (Organisation for Economic Co-operation and Development) forecasting a growth of 3.8% pa. (January 2014).

17 Irrespective of ship type, as the ship size increases, costs at sea per tonne decreases. Ref: Pearson, R. (1988), Container Ships and Shipping. London, Fairplay Publications. 18 TEU (Twenty Foot Equivalent Unit) is a measure used for capacity in container transportation. 19 Drewry Consultants (2013) Drewry Container Insight, Week 17, 2013. Available at http://ciw.drewry.co.uk/. 20 The Competition Authority, (2013) Competition in the Irish Ports Sector 21 Ocean Shipping Consultants (2012), Bigger Container Ships – Port Implications. Available at www.pianc.org.uk. 21

Economic Impact Assessment – Shannon Foynes Port Company

Table 2: Shipping, Cargo & Tonnage Growth 2008-2014

2008 2009 2010 2011 2012 2013 2014

Shipping 622 586 690 675 706 721 722 Movements Average Cargo 41,739 39,330 29,761 30,767 30,081 31,950 32,644 (per vessel) Tonnage 11,071,436 10,663,535 7,578,972 9,356,477 10,106,524 10,288,700 10,510,715 Growth

The performance of SFPC continues to reflect these international growth patterns through Shannon Foynes Ports. SFPC experienced growth of 16% from 2008 to 2014 figures with 722 annual ship movements. Average cargo output per vessel was 32,644t. The average cargo output increased significantly in 2014 by 21.8% from 2008 performance, while tonnage growth has grown 39% since 2010.

Table 3: Shipping, Cargo & Tonnage Percentage Change 2008-2014 % Change 2008-2014 % Change 2010-2014 Shipping Movements +16% +4.6% Average Cargo per vessel -21.8% +9.7% Tonnage Growth -5% +39%

The Shannon Foynes Ports managed over 10.2 million tonnes of dry, break and liquid goods in 20114. As the largest dry bulk port in Ireland, Shannon Foynes handled 9,013,491 tonnes of dry bulk in 2014 representing 88% of the total tonnage handled by the company. Liquid bulk accounts for 10% of tonnage through the ports with break bulk comprising 2% of total tonnage.

Table 4: Tonnage of Dry bulk, Liquid bulk and Break bulk through SFPC in 201422 2014 - Tonnes/ % Shannon Foynes Dry Bulk 9,013,491 (88%) Liquid Bulk 1,017,925 (10%) Break Bulk 195,447 (2%) Total 10,226,863

22 IMDO (2014) Irish Market Review, Volume 12, April 2015, P26-29 22

Economic Impact Assessment – Shannon Foynes Port Company

Figure 2: Market Share of Dry bulk, Liquid bulk and Break bulk through SFPC 2004 - 2014

The analysis highlights the reliance of SFPC on dry bulk trade. Global seaborne trade of traditional dry bulk, including steam coal, nickel ore, bauxite, aluminium and grain, all showed a reduction in demand and trade growth in 2014. However, trading of iron ore increased globally by 12%, resulting in seaborne dry bulk trade growth of 4% and in excess of 4 billion tonnes of cargo23. Iron ore and coal form almost two-thirds of the global dry bulk market with China being the largest customer with imports increasing by 15% in 2014. Coking coal imports have also grown significantly reaching 265mt in 2013, which increased by 40%24. This is also largely attributed to Chinese imports increasing from 31mt to 60 mt.

Table 5: World Seaborne Trade Average Growth % – Dry Bulk25 Iron Coking Steam Grain Baux/ Phos. Minor Contain Other Total Ore Coal Coal Alum Rock Bulk 2000-2013 7.7% 3.4% 7.4% 2.9% 7.5% -0.6% 3.9% 7.3% 0.4% 4.7% 2013-2014 9.2% 5.4 4.2% 2.3% -13.5 1.0% 2.4% 6.5% 5.8% 5.0%

Global predictions suggest dry bulk trade levels will continue in an upward growth pattern. Despite this, the market has been sensitive to demand fluctuations and is predominantly supply-driven. While strong trade growth and fleet development are expected to lead to a recovery in dry bulk shipping rates, the market is not expected to return to profitability until 201726. Similarly, heightened concerns on deteriorating air quality in China has motivated the Chinese government to shift its focus from coal-fired power plants to renewables and cleaner sources of energy. This is casting a shadow over the thermal coal market and will ultimately affect bulk shipping demand.

23 IMDO (2015) Irish Market Review, Volume 12, April 2015, p38-39 24 Clarkson Research Services (2014), Shipping Review & Outlook, p16 25 Clarkson Research Services (2014), Shipping Review & Outlook, World Seaborne Trade Average Growth % – Dry Bulk, P99 26 Drewry, (2015) Dry Bulk Forecaster, 1st Quarter 2015 23

Economic Impact Assessment – Shannon Foynes Port Company

2.3 NATIONAL PORT SUMMARY Dublin Port, Shannon Foynes and Port of Cork represent the three principal ports in the State. Dublin Port accounts for 44% of total volume handled while Shannon Foynes is responsible for 21% with Port of Cork handling 18% of overall volumes.

The total volume of trade through all Irish ports in 2014 was 47,480,000t, an increase of 1.65% on 2013 figures.

Table 6: Volume of Trade through all Ports (Ireland) 2009-2014 (‘000t) 2009 2010 2011 2012 2013 2014

Dublin 18606 19548 19467 19898 19,865 21,078 Shannon Foynes 7577 9134 9899 10094 10,290 10,294 Cork 7968 8466 8434 8708 8,983 8714 Rosslare 2328 2502 2192 1864 1,940 1,977 Waterford 1631 1451 1383 1174 1,348 1,373 Bantry 933 1224 1403 3261 1,469 1,311 Galway 723 671 554 501 521 563 New Ross 515 444 357 268 343 331 Drogheda 512 499 489 959 1,044 1,220 Greenore 390 503 362 373 383 505 Dundalk 222 140 107 67 97 83 Kinsale 143 159 111 115 9

Killybegs 87 82 37 127 68 52 Wicklow 73 89 99 74 142 94 Sligo 53 54 46 34 34 19 Youghal 26 63 82 73 108 93 Castletownbere 17 26 26 31 33 38 Tralee Fenit 17 12 19 24 26 30 Dun Laoghire 14 2 12 1 4 10 Kilrush 3 2

All ROI Ports 41836 45071 45078 47646 46,709 47,480

The dry bulk market continues to be the largest market segment (non unitised segment) in the Republic of Ireland at 54% compared to 41% for liquid bulk and 4% for break bulk. While total bulk volumes through Irish ports decreased by 2% to 27.8 million tonnes in 2014, Shannon Foynes Port continues to handle the largest volumes with 37% compared to 25% through Cork and 20% in Dublin27.

The main dry bulk commodities exported and imported to Ireland include animal feed, coal, fertilizer and bauxite. Both coal and animal feed experienced a decrease in volume in 2014 by -15% and -9% respectively. The

27 IMDO (2014) Irish Market Review, Volume 12, April 2015, P26-29 24

Economic Impact Assessment – Shannon Foynes Port Company volume of bulk cement through Irish ports increased by 11% while bauxite and alumina represented the largest element of dry bulk volumes at 42%.

The national dry bulk market recorded a reduction in volumes of 4% in 2014, with liquid bulk also experiencing a decrease in volumes of 1%. Break bulk was the only category that recorded growth, increasing by 29%28. Shannon Foynes accounts for 73% of dry bulk tonnage in Ireland compared to 12% through Cork and 15% in Dublin29.

Table 7: Tonnage of Dry bulk, Liquid bulk and Break bulk through Major Ports (Ireland) in 201430 2014 – tonnes / % Dublin Shannon Foynes Cork

Dry Bulk 1,885,105 (15%) 9,013,491 (73%) 1,499,511 (12%) Liquid Bulk 3,624,218 (37.4%) 1,017,925 (10.5%) 5,036,929 (52%) Break Bulk 43,069 (8%) 195,447 (37%) 296,446 (55%)

Total 5,552,492 (25%) 10,226,863 (45%) 6,832,886 (30%)

The market share for the liquid bulk segment in Ireland remained relatively unchanged during 2014 with the Port of Cork handling 43% of total volume and Dublin 32%. Shannon Foynes accounted for 10.5% of total volumes.

Break bulk remains the smallest component at 5% of total volumes handled at Irish ports. This has however increased by a rate of 29% nationally to 1.2m tonnes in 2014. The Port of Cork (24%), Shannon Foynes (16%) and Drogheda (26%) handled the majority of break bulk imported into Ireland.

In the longer term it is worth noting international shipping trends that are resulting in an increase in vessel size. The capacity of ports such as Shannon Foynes and Port of Cork may benefit from their ability to handle larger vessels, particularly for heavy bulk vessels that require comparatively more water depth compared to Lo-Lo and Ro-Ro vessels.

28 IMDO (2014) Irish Market Review, Volume 12, April 2015, P26-27 29 IMDO (2014) Irish Market Review, Volume 12, April 2015, P26-29 30 IMDO (2014) Irish Market Review, Volume 12, April 2015, P26-29 25

Economic Impact Assessment – Shannon Foynes Port Company

SECTION THREE

ECONOMIC IMPACT ASSESSMENT

Economic Impact Assessment – Shannon Foynes Port Company

3.0 INTRODUCTION The economic impact of Shannon Foynes Port Company and its associated operations is analysed under the following categories:- 1. Economic Impact of Shannon Foynes Port Company operations 2. Economic Impact of Shannon Foynes Port Company and service suppliers 3. Economic Impact of Shannon Foynes Port Company customers 4. Overall Economic Impact of Shannon Foynes Port Company and associated companies

3.1 ECONOMIC IMPACT OF SHANNON FOYNES PORT COMPANY Analysis of 2014 Shannon Foynes Port Company operational budgets reveal a direct expenditure of €11.6 million into the regional economy. This direct economic impact is comprised of labour and non labour expenditure in relation to capital expenditure in 2014. Furthermore, a total of 35 full time equivalent employees are directly engaged by Shannon Foynes Port Company.

The impact of the direct expenditure is estimated to have generated downstream expenditure of €6.9 million with a further €2.7 million spent by the consumers as a direct result of the incomes accruing from the Port’s direct and indirect activities. This level of expenditure combined with associated labour and non labour economic activity results in a total of 65 FTEs supported by Shannon Foynes Port Company.

Table 8: Economic Impact of Shannon Foynes Port Company – Operating Expenditures (2014) Expenditure Impact (€ millions) Employment Impact (FTE’s) Direct Expenditure €11.4 35 Indirect Expenditure €6.9 18 Induced Expenditure €2.6 12 Overall Expenditure €21.0 65 Impact

Table 9: Economic Impact of Shannon Foynes Port Company 2014 Operations (2014) Categorisation of Impact Direct Impact Multiplier Economy Wide Impacts Impacts (€ Million) Output – Revenue Revenues €11.3 €4.95 €16.2 Employment & Employment Income Employment (FTE’s) 35 30 65 Employment Incomes (€m’s) €5.0 €4.4 €9.4 Non Labour Business Expenditure Non Labour Business Expenditure €5.2 €4.4 €9.6 Gross Value Added / GDP Contribution Estimated GVA / GDP Contribution €7.6 €8.1 €15.65 Capital Expenditures Capital Expenditures – 2014 €1.3 €0.81 €2.1

Economic Impact Assessment – Shannon Foynes Port Company

Table 9 details the overall economic impact of SFPC’s operations in 2014. Based on SFPC revenues of €11.3 million and business related expenditure across the areas of employment and non labour business expenditure in addition to capital expenditure, it is estimated that the gross value added (GVA) is €7.6 million. In addition to the direct impacts based on the modelling of the indirect and induced multiplier impacts of these operational activities by SFPC, the economy wide impact is estimated at €15.65 million GVA.

SFPC is responsible for 65 FTE’s in addition to an employment income effect of €9.4 million for the regional economy. The operational impact of SFPC is significant in its own right. However, further analysis of the wider economic activity it stimulates with service providers and port customer activity reveals a considerable impact on the region.

3.2 SHANNON FOYNES PORT COMPANY & SERVICE PROVIDERS The delivery of maritime and port services is effectively a conglomerate of service providers delivering an integrated approach to shipping on the estuary. The assessment of the economic impact of direct service providers highlights the wider value generated for the area as a result of the variety of local services required to support port activity. The analysis includes a range of constituent service providers integral to the delivery of all maritime and logistical services required. These include;  Sea and coastal water transport;  Cargo handling and stevedoring;  Freight and logistics;  Storage and warehousing;  Specialist maritime services e.g. divers and trades.

Table 10: Economic Impact of Shannon Foynes Port Company & Service Providers Operational Expenditures (2014) Expenditure Impact (€ millions) Employment Impact (FTE’s) Direct Expenditure €51.1 289 Indirect Expenditure €29.1 150 Induced Expenditure €14.3 95 Overall Expenditure Impact €94.4 534

The expansion of the analysis to include all SFPC service providers reveals the scale of impact the SFPC has on the wider region. A total of 289 FTEs are supported as a result of all port activity resulting in an overall employment impact of 534 FTE’s. The downstream value of SFPC and service providers is further demonstrated by the €94 million impact as a result of operational expenditures of €51.1 million. This includes indirect expenditure of €29.1 in addition to €14.3 of induced expenditure in the economy as a result of the trading activities of SFPC and service providers.

Economic Impact Assessment – Shannon Foynes Port Company

Table 11: Economic Impact of Shannon Foynes Port Company & Service Providers (2014) Categorisation of Impact Direct Impact Multiplier Economy Wide Impacts Impacts (€ Million) Output – Revenue Revenues €63.0 €90.7 €153.6 Employment & Employment Income Employment (FTE’s) 289 245 534 Employment Incomes (€m’s) €13.0 €11.6 €24.5 Non Labour Business Expenditure Non Labour Business Expenditure €35.8 €30.4 €66.2 Gross Value Added / GDP Contribution Estimated GVA / GDP Contribution €38.2 €57.6 €95.8 Capital Expenditures Capital Expenditures – 2014 €2.35 €1.4 €3.8

Table 11 details the overall economic impact of SFPC and its associated service providers. Direct employment income of €13 million results in an economy wide impact of €24.5 million after indirect and induced impacts are accounted for. The level of direct expenditure of €35.8 million by SFPC and service providers resulted in a subsequent economy wide impact of €66.2 million. Based on the information provided, the average expenditure by large vessels entering Shannon Foynes ports is estimated to be €67,000.00 per vessel, accounting for a considerable proportion of the non labour business expenditure incurred.

The estimated Gross Value Added for SFPC and service providers is €95.8 million based on a direct impact of €38.2 million and multiplier impacts of €57.6 million. The scale of impacts as a result of the trading operations of SFPC and various service providers is also significant in terms of its regional reach. The previously highlighted core service areas including coastal water transport, cargo handling, stevedoring and logistics represent a significant proportion of the economic activity generated. However, SFPC’s trading activities also generate a significant dividend for local businesses and service providers from accommodation, medical to local transport, demonstrating the broad spectrum of local services impacted from SFPC operations.

Economic Impact Assessment – Shannon Foynes Port Company

3.3 SHANNON FOYNES PORT COMPANY PORT USERS SFPC performs an important role for the Irish economy in supporting the export of goods and the importation of raw materials for nationally important industries e.g. agriculture, energy. The analysis examined the impact of Port customers on the regional economy in terms of their ability to trade as a direct result of the service provided through Shannon Foynes ports and their economic value to the regional economy.

Notwithstanding the ability to import goods through other Irish ports, SFPC’s ports inherent resources play a critical role in the importation of key goods that support long standing estuary based companies reliant on sea transport.

Table 12: Economic Impact of Shannon Foynes Port Customers Operational Expenditures (2014) Expenditure Impact (€ millions) Employment Impact (FTE’s) Direct Expenditure €324.8 1,565 Indirect Expenditure €189.5 1,096 Induced Expenditure €80.4 908 Overall Expenditure Impact €594.6 3,568

The primary research revealed direct expenditure of €324.8 million among the trading customers of SFPC who participated in the research. Direct expenditure which includes employment costs, non labour expenditure and capital expenditure stimulated a further indirect expenditure impact of €189.5 million with induced expenditure of €80.4 million.

The overall expenditure impact of the companies that rely on SFPC ports was €594.6 million in 2014. The total number of FTEs supported by customers of SFPC was 3,568 which included 1,565 direct FTE’s employed in the regional economy.

Economic Impact Assessment – Shannon Foynes Port Company

Table 13: Economic Impact of Shannon Foynes Port Customers (€ Million) Categorisation of Impact Direct Impact Multiplier Economy Wide Impacts Impacts (€ Million) Output – Revenue Revenues €2,758 €1,213.5 €3,971.5 Employment & Employment Income Employment (FTE’s) 1,565 2,004 3,568 Employment Incomes (€m’s) €97.1 €86.4 €183.4 Non Labour Business Expenditure Non Labour Business Expenditure €187.7 €159.5 €347.2 Gross Value Added / GDP Contribution Estimated GVA / GDP Contribution €1,357.5 €497.6 €1,855 Capital Expenditures Capital Expenditures – 2014 €40.0 €24.0 €64.0

Based on the trading activities of the customers of SFPC, the GVA generated as a result of direct economic activity is €1.36 billion. After accounting for the multiplier impacts of this direct level of activity the economy wide GVA impact is estimated to be €1.86 billion.

Employment by these companies generated €97.1 million in employment income in 2014 which had an additional multiplier impact of €86.4 million and economy wide employment income impact of €183.4 million. While analysis of the exchequer returns based on this level of economic activity is outside the scope of this study, it is evident based on this sample of industry that the SFPC facilities are a major catalyst for economic activity with sizeable returns to the national exchequer. A considerable employment investment results from the contracted labour required on an ongoing basis by companies located on the estuary. The scale of operations within a number of industries results in significant job creation through contracted labour contributing to the volume of indirect employment supported in the regional economy.

For the purpose of analysis, research was restricted to current users of the Shannon Foynes ports and does not include other regional businesses located on or adjacent to the estuary.

Economic Impact Assessment – Shannon Foynes Port Company

3.4 SHANNON FOYNES PORT – OVERALL ECONOMIC IMPACT The overall economic impact of SFPC is estimated by analysing the impact of SFPC company activities and port service providers in addition to economic activity of customers of SFPC who are reliant on the port for its trading activities.

Table 14: Economic Impact of Shannon Foynes Port Company – Operating Expenditures (2014) Expenditure Impact (€ millions) Employment Impact (FTE’s) Direct Expenditure €336.1 1,600 Indirect Expenditure €196.4 1,120 Induced Expenditure €83.0 928 Overall Expenditure Impact €615.5 3,648

The cumulative employment impact of all SFPC activities and the associated commercial entities on the estuary is 1,600 FTEs in direct employment. This resulted in an indirect labour impact of 1,120 indirect FTE’s and 928 FTE’s supported by induced activity resulting from direct employment. This results in an overall employment impact of 3,648 FTE’s.

The annual direct expenditure in the regional economy is €336.1 million comprised of labour, non labour and capital expenditure. This resulted in indirect expenditure of €196.4 million and induced expenditure of €83 million with an overall expenditure impact of €615.5 million in 2014.

Table 15: Value of Trade through SFPC Ports (€ millions) Value of Trade Medium €7,608 Value of Trade Low €6,140 Value of Trade High €11,511

Primary research conducted among customers of SFPC examined the value per tonne handled through SFPC ports. The estimated value of trade handled through SFPC for 2014 was €7.6 billion. This is based on the value per tonne of goods traded by each respective customer of SFPC. This value also incorporates labour and non labour impacts which has the additional consequence of indirect and induced impacts resulting in additional demand for intermediate goods and employment in the various sectors SFPC customers engage with.

Table 15 also provides a level of sensitivity analysis on the value of trade handled through SFPC based on higher and lower value per tonne. The value per tonne was adjusted based on applying varying multiplier impacts based on the average price per tonne obtained from SFPC customers. This analysis reveals a minimum value of €6.14 billion rising to a maximum of €11.5 billion. Based on the analysis undertaken and examination of the stated prices of goods handled at SFPC, the medium value of €7.6 billion reflects the 2014 value of trade.

Economic Impact Assessment – Shannon Foynes Port Company

Table 16: Overall Economic Impact of Shannon Foynes Port Company Categorisation of Impact Direct Impact Multiplier Economy Wide Impacts Impacts ( € Million) Output – Revenue Revenues €2,769.3 €1,218.5 €3,987.7 Employment & Employment Income Employment (FTE’s) 1,600 2,048 3,648 Employment Incomes €102.0 €90.8 €192.7 Non Labour Business Expenditure Non Labour Business Expenditure €192.9 €163.9 €356.0 Gross Value Added / GDP Contribution Estimated GVA / GDP Contribution €1,365.1 €547.8 €1,912.8 Capital Expenditures Capital Expenditures – 2014 €41.3 €24.8 €66.2

The economic importance of SFPC and its role in stimulating economic activity is reflected in the €1.9 billion contributed to Gross Domestic Product. The estimated GVA of all SFPC port related activity is €1.9 billion resulting from a direct GVA of €1.37 billion. This accounts for a further €547.8 million in multiplier impacts as a result of the economic activity stimulated by SFPC and associated activities. Combined with the overall employment impact, the scale of value generated for the region is very significant as a direct consequence of port related activities. A total of 3,648 FTE’s are supported generating €192.7 million in employment income with a further €356 million generated for the economy as a result of non labour expenditure into the regional economy.

Table 17: Employment Impact of SFPC on Regional Economy – 2014 Payroll Impact31 Income Impact (€ Millions) Employment (FTE’s) Direct Impacts €101.9 1,600 Indirect Impacts €71.4 1,120 Induced Impacts €19.4 928 Overall contribution €192.7 3,648

The overall employment levels supported by the economic activity of SFPC and customers is 3,648 FTEs resulting in an overall contribution of €192.7 million in employment income for the region. Direct income

31 All companies with commercial involvement with SFPC through service provision or reliance on the Port for import / export activity. 33

Economic Impact Assessment – Shannon Foynes Port Company expenditure in the regional economy in 2014 was €101.9 million supporting 1600 FTEs. This has a further impact of supporting an additional 1,120 jobs through indirect employment while a further 928 jobs are supported through the induced impacts of the overall employment expenditure in the region.

Table 18: Regional spend resulting from Shannon Foynes Trade Activity Annual Regional Expenditure (€ Millions)

SFP Related Companies32 €187.7 SFPC Spend € 5.2 Total Spend on regional goods and services €192.9 Source: SFPC Customer Expenditure Data & SFPC data.

Total spend on regional goods and services by SFPC and customers in 2014 was €192.9 million. This equates to expenditure by companies on non labour goods and services to support their commercial operations. The wider impact of this regional spend is illustrated in Table 19. The direct expenditure of €192.9 million resulted in an overall contribution of €356.9 million.

Table 19: Impact of regional spend by SFPC & Port Companies - 2014 Income Impact (€ Millions) Direct Impacts €192.9 Indirect Impacts €100.3 Induced Impacts €63.7 Overall contribution €356.9

One of the key industries supporting the activities of SFPC is the transport and logistics industry. The nature of port operations relies heavily on haulage as one of its key service suppliers. The evidence from the expenditure levels provided by the customers of SFPC reveals the scale of importance of the transport industry for the wider region. The total expenditure on transport and haulage by customers of SFPC was €18.5 million. This supports a total 225 FTE roles in the transport industry.

Table 20: Transport Expenditure & Employment supported directly by Shannon Foynes Port Activity (2014) Transport Expenditure Employment Numbers (FTE’s) Transport Expenditure €18.5 225 Source: SFPC Customer Expenditure Data

32 Companies who have a direct relationship with the Port as either a service provider or Importer / Exporter of goods. 34

Economic Impact Assessment – Shannon Foynes Port Company

Table 21: SFPC Traffic by Vessel Size (2014) Minibulkers (<10,000 dwt) Aughnish 179 Foynes 216 Limerick 125 Moneypoint 2 Shannon 17 539 Handymax (>10,000dwt less than 60,000 dwt) Aughnish 92 Foynes 59 Moneypoint 4 Tarbert 2 157 Aframax (between 80,000 and 119,000) Moneypoint 9

The strategic ambition of SFPC revolves around the development of additional port capacity to attract larger vessels. The analysis of port traffic by vessel size (Table 21) highlights the opportunity for growth in the larger vessel size with immediate economic returns for the local economic supplying goods and services. Primary research data values the revenues for the region at €67,000 for mid to larger vessels (Handymax). This is based on all ships costs and expenditures in the local port and immediate area providing the goods and services required. The estimated expenditure on local goods, services and costs by shipping traffic on Shannon Foynes Estuary is €27.7 million for 2014, generated by 722 shipping movements.

Economic Impact Assessment – Shannon Foynes Port Company

3.5 CAPITAL EXPENDITURE SFPC continues to invest in port development while similarly the outlook for capital investment among customers of the port and tenants of the estuary has improved. A total of €277.1 million of capital expenditure is projected over the next five years which represents an increase of €76.5 million.

Table 22: Past Capital Expenditure and projected Capital Expenditure among companies reliant on Shannon Foynes Port (€ millions) Capital Expenditure Employment Numbers (FTE’s) CAPEX in past five years €200.6 2,446

33 Projected CAPEX – 5 Years €277.1 3,372 2015 - 2019 Source: SFPC Customer Data

Capital expenditure in the region in the period 2010 – 2014 was €200.6 million among customers of SFPC. This level of capital expenditure is estimated to support 2,446 FTE’s. Projected capital expenditure levels among customers of SFPC and SFPC reveal an estimated investment of €277.1 million. This is based on committed expenditure to support capital projects by companies in the region over the coming five years and does not reflect any speculative projects. This level of investment over the coming 5 years will support 3,372 FTE’s in the regional economy.

A number of longer term projects will have a major economic impact on the region based on projected infrastructural development and foreign direct investment projects currently in planning. The Port Infrastructure Development (Table 23) investment reflects scheduled works by SFPC in the fulfilment of their longer term strategic objectives to leverage off the local natural resources and capitalise on the wider operating environment opportunities that will see a requirement to support larger vessels. This infrastructural requirement will also be supported by supply and demand conditions. Internationally, vessels are becoming larger while on the demand side, importers are looking to benefit from greater efficiencies and economies of scale through the utilisation of these larger ships.

33 Figure inclusive of projected capital expenditure by SFPC 36

Economic Impact Assessment – Shannon Foynes Port Company

Table 23: Projected Long Term Capital Expenditure – Masterplan and Port Activity Projected Direct Expenditure Impact (€ Millions) Port Infrastructure Development34 €123.0 Deepwater Berth Jetty Development Capital Investment Programme

Land Transport Development35 €325.0 Projected road and rail investment

Third Party Investment36 €1,000.0 Projected Capex by Port Customers 340.1 Total projected Capital expenditure €1,813.1 Multiplier Impacts €1,087.8 Projected FTE’s 22,065

Economy Wide Impact €2,900.88

The analysis of secondary and primary data also reveals expenditure projections of €325 million based on the road and rail infrastructure. Subject to these developments proceeding during the timeframe of the SFPC Masterplan (Vision 2041), the projected public and private capital expenditure in the region is estimated at €1.8 billion. Cautious projections among SFPC customers and Third Party Investment limited to a number of major projects in the energy sector would result in €1.34 billion of private capital expenditure. The employment impact of this level of investment has the capacity to support over 22,000 FTE’s in the region and stimulate a further €1.09 billion between indirect and induced expenditure.

The overall economic wide impact from this level of infrastructural investment and project capital expenditure is estimated to be €2.9 billion over the course of the masterplan. While this figure is contingent on a level of public investment in road and rail projects, it remains very cautious in valuing the level of private sector investment supported by the activities of SFPC.

34 Source: SFPC 2015 Capital Development Plan 35 Source: SFPC consultation and indicative budgets based on NRA modelling 36 Source: Consultation with port customers. Figure includes projected capital costs based on feasibility studies confidentially provided by prospective estuary tenants. 37

Economic Impact Assessment – Shannon Foynes Port Company

SECTION FOUR

CONCLUSIONS

Economic Impact Assessment – Shannon Foynes Port Company

- The estuary has an established tenant base from those operating globally through to indigenous industry that support critical national industrial sectors from agriculture to fuel and energy. The strategic role the estuary plays in storing National Oil Reserves to supplying the fuel for all airport activity at Shannon and Cork Airports reflects the significance of economic activity within the region. The economic analysis demonstrates the catalytic role SFPC plays in supporting over €7 billion worth of trade activity. It is its ability to stimulate and support a greater level of economic activity in the region that must be harnessed. The economic impact analysis reveals the cumulative effect of an estuary customer base trading at existing levels. Global shipping trends and requirements can provide new opportunities for Foreign Direct Investment. At a minimum, the ability to attract a major industry providing 450 new jobs would provide a significant boost for the region through the local sub-supply chain and the subsequent multiplier impacts that would be generated.

- A number of regional impact scenarios based on improved road connectivity reveal the scale of impacts associated with improved transport infrastructure. Based on attracting one major multinational comparable to existing tenants and operational patterns, a company with direct employment levels of 450 personnel would have an overall employment impact of 851 FTE’s stimulating over €55 million annually in employment income. This is comprised of indirect and induced FTE’s and employment income that can result from attracting a major new employer on the estuary. Examining the medium term impacts (five year period of operation) of such an investment reveals in excess of €278 million in employment income for the region based on a no growth in FTE’s scenario.

Table 24: Potential Impact of Attracting Major New Industry - Based on Improved Regional Connectivity

Direct 450 €30,100,000 Indirect 315 €15,652,000 Induced 86 €9,933,000 Total 851 €55,685,000 Five Year Employment Income €278,425,000

- The 2041 Vision for SFPC has outlined its strategic ambition focused on a number of sectors at the core of the estuary’s economic development. The ability to attract a number of new industries based on an industry cluster approach can provide in excess of €123 million in employment income supporting 1,890 FTE’s. Notwithstanding the opportunity to develop direct employment on the estuary through a targeted industry strategy, further regional development will be stimulated through the level of indirect and induced employment generating 890 FTE’s across the region. Critically, this wider dispersion of benefits can only be maximised through extending the reach into the region through improved connectivity from an industry operations and commuter perspective.

Table 25: Potential Impact of Developing a New Industry Cluster – Based on Improved Regional Connectivity Direct 1,000 € 66,888,889 Indirect 700 € 34,782,222 Induced 190 € 22,073,333

Economic Impact Assessment – Shannon Foynes Port Company

Total 1,890 € 123,744,444 Five Year Employment Income € 618,722,220

- Attracting such a level of FDI and stimulating indigenous industry is contingent on appropriate local operating conditions. Based on the current road infrastructure and industry perceptions of the cost base that exists, an enhanced economic destination offering needs to be considered. The current issues with connectivity to Ireland’s second largest port are hampering the ability to attract new industry or instil future investment confidence among current estuary tenants. A ‘do nothing’ scenario in terms of nil enhancement of road and rail connectivity will impact on the region’s growth opportunities and confidence among existing industry tenants. The failure to create an integrated regional transport hub would not only limit Mid West economic growth but also impact considerably on the West of Ireland and the Midlands. Based on the facilities and capacity of all SFPC resources, no other transport and logistics base has the scope for the scale of growth that can act as a major catalyst for the Atlantic Corridor region. The projection of 1,890 new FTE roles combined with the employment generated by capital expenditure highlight the opportunity presented by improving access and linking all elements of the transport system. Strategically, the estuary can become the economic stimulus for the region leveraging off the global opportunity the shipping industry can provide for an open economy such as Ireland.

- In addition to the economic impact analysis customers of SFPC highlighted a number of areas for further development. The economic assessment reveals the scale of impacts directly resulting from SFPC port activity. Estuary businesses highlighted the degree to which economic capacity and regional competitiveness is being hindered by the lack of appropriate road and communications infrastructure. The Tier 1 Port represents Ireland’s second largest port. However, it is serviced by an inappropriate road network identified throughout the consultation phase as impacting investment confidence while also resulting in increased business costs across all sectors.

- A number of customers of SFPC have identified the lack of connectivity between the airport and seaport as a major regional development issue. The ambition of the region needs to be matched by the appropriate local infrastructure. Economic development planning at City and regional level is dependent on functional and cost effective ports as a means of stimulating inward investment. Regional economic planning has identified the agri, discrete manufacturing and the energy sectors as areas of focus in the medium to longer term. However, based on the current additional costs of business incurred due to infrastructure, a significant competiveness issue needs to be addressed.

- The region has a long heritage of manufacturing resulting in the creation of a strong local sub-supply network and innovation in service provision. The future focus on becoming a national discrete manufacturing base and development of the agri-tech sector will demand that the appropriate infrastructure is in place to support the region’s economic ambitions. Current niche service providers located on the estuary are operating with competitive restrictions due to the connectivity issues. The transportation of large turbines and the delivery of abnormal loads manufactured in Foynes are consistently more expensive to transport. The perception of the area as an expensive location to conduct business is a risk factor for local operators with regional implications that need to be addressed. The facilities and resources provided by SFPC can prosper from the global shipping environment. However, there is a reality that must be addressed in terms of the inadequate connectivity structures that exist. This is resulting in a perception issue of a region not suitable for attracting or

Economic Impact Assessment – Shannon Foynes Port Company

conducting business matched by the economic reality faced by SFPC customers of additional costs and operational inefficiencies.

- In conclusion, the scale of economic impacts in the region is considerable based on the trading performance of customers of SFPC. It also magnifies the opportunity that exists for the region based on its Tier 1 status and position as the second busiest port in Ireland. The activity within the SFPC ports represents a major catalyst for economic prosperity across the region. However, more significantly, it highlights the scale of opportunity the Shannon Foynes ports provide with the appropriate level of strategic investment.

- The speed of sea trade growth is surpassing world GDP. Against this background of continued growth and projected upward trends in global shipping volumes, SFPC is well positioned to capitalise on this opportunity. Realistically, future trade growth within SFPC ports can only capitalise on this global opportunity subject to a number of key strategic enablers being put in place. An international port with global ambitions will only prosper if international standard operating conditions are in place to support future development. Industry stakeholders have highlighted the additional cost of conducting business through SFPC ports while future private sector investment will be contingent on improved connectivity. The evidence of lost business demonstrates the need to address this infrastructure gap. The opportunity to attract FDI and increase estuary trade activity with subsequent impacts for indigenous industry can only be realised by providing the level of connectivity required to provide a cost and time effective solution for port users.

- The creation of the Strategic Integrated Framework Plan (SIFP) provides additional context to the opportunity to for regional economic growth leveraging off the maritime assets that exist through SFPC. The inter-jurisdictional approach to maximising the economic, social and environmental potential of the natural assets within the estuary is strengthened by the zoning of over 345ha of land as Strategic Development Locations (SDL) specifically for Marine Related Industry. In addition the identification of SDL’s at Cahercon, Ballylongford, Moneypoint and Askeaton for maritime related industry and large scale industrial development at these locations highlights the potential capacity to increase the current rate of utilisation and reinforces the SFPC Vision 2041 for expansion, promotion and management of the estuary and its assets

- Vision 2041 has recognised the role of SFPC in supporting future regional growth with a focus on a number of key sectors. An overall integrated approach with Shannon Airport offers the complete regional solution. However, the issue of connectivity continues to restrict the region’s ability to capitalise on the opportunity these transport resources provide. The sample of industries contained within this review highlights the economic value generated through the support of SFPC activity and resources. Next phase economic development for the region must include an infrastructure investment focus that adopts a long term strategic outlook in facilitating economic growth. Key road and rail investment decisions must adopt a longer term view in order to leverage further FDI and assist existing industry meet its future growth ambitions.