Doing business with Dick Roche
It's good to do business with Environment Minister Dick Roche, at least if the other party is a big multi-national company.
Two major companies who stand to benefit greatly from Dick Roche's recent decisions are IKEA, the giant Swedish home furnishings retailer, and Wrigleys, the massive American gum manufacturer.
Despite the building boom, IKEA has delayed its entry to the Irish market on the basis that the planning laws did not allow for the construction of a sufficiently large out-of-town store to satisfy its economic model. It threatened that if it did not get the scale it demanded it would open in Northern Ireland instead, insisting that the island is not big enough to accommodate two IKEAs. Bargain hungry Irish home furnishers would have to continue taking pick-up trucks and estate cars to Britain and returning on the boat with the flat-pack containers.
Scared by the prospect of an IKEA even closer to our doorstep, Dick Roche changed the planning rules to allow for one-off exceptions in circumstances such as defined urban regeneration. But he denied that the change was to help secure the arrival of IKEA. Nobody believed his bluster at the time and they were shown to be right. Last week IKEA announced its plans for a superstore in Ballymun – a designated area. But here's the rub: it is even closer to opening a smaller unit in Belfast. (Recent planning changes in Britain have forced it back closer to town centres and in smaller sizes).
If, when, planning permission is obtained in Ballymun the shop itself will be the size of six football pitches and on two floors. The car park will have room for 1,500 cars. The extra volume on the M50 will greatly increase traffic congestion, particularly at weekends. Existing retailers are going to find their profit margins greatly squeezed. Smaller outlets, already struggling in many cases, will be unable to compete on prices or offer a similar range of products. Competition will be eroded greatly and the temptation for IKEA to then raise its prices will be strong. The consumer benefits may be short-lived.
Ikea, meanwhile, will finally benefit directly from selling to the owners of all of those 80,000 housing units constructed each year and if it opens in early 2007 as hoped will benefit from DIY spending fuelled by the SSIA payouts.
Wrigleys is an even bigger company with annual turnover of nearly €12 billion and annual profits of about €600 million. Last week a deal was announced whereby Wrigleys would contribute to an advertising fund worth €6 million over three years in an attempt to educate people to dispose of their used gum into bins, rather than onto the street. It will give another €1 million to Irish third level research into inventing a less sticky gum.Which sounds reasonable until the compromise involved becomes clear. The Government had received a public recommendation that it should introduce a special tax on the sale of chewing gum, akin to the plastic bag levy, the proceeds of which would be used to clean the streets of Ireland from the damaging effects of disposed gum. And it's needed because the cost has been estimated at €20 million. Instead, there's going to be a campaign to ask people to be more responsible. As if that'll succeed.
Wrigleys fought hard to ensure the tax would not be introduced, so much so that the American ambassador to Ireland joined the lobbying effort. At first it seems difficult to understand why Wrigleys got so exercised: would an extra five cent per packet have hit sales badly? It seems, however, that Wrigleys feared that other countries would follow the Irish example, as happened following the imaginative plastic shopping bag levy and the ban on cigarette smoking in the workplace. Convincing Dick Roche that it had a better way was some coup but clearly he was a man with whom they could do business.