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Business Strategy Review, 2000, Volume 11 Issue 3, pp 51-60

Case History

Irish Ports: Commercialisation


and Strategic Change
John Mangan and James Cunningham

become the only EU member without a land-link to


For many countries, ports are critical to the Continent. It is totally dependent on air and
trade flows. If they operate efficiently, the maritime transport for external access and egress.
whole economy benefits – and if not it (Note: The island of Ireland comprises both the
Republic of Ireland and Northern Ireland, the latter
suffers. Worldwide, they have recently been being part of the UK. For reasons of brevity, the
candidates for commercialisation or even Republic of Ireland, established initially as a Free State
privatisation. This case history describes the under a treaty with the UK in 1921, is called “Ireland”
throughout the rest of this article.)
commercialisation process in the Irish
Republic, which gave leading ports freedom Ireland’s Maritime Past and Present
to manage their own affairs as separate, Ireland has been influenced by maritime trade since
the arrival of the Celts from Central Europe in the
independent, publicly-owned companies.
period up to 150 BC. Viking warriors arrived by sea
The country’s unprecedented economic (mostly from Scandinavia) in the ninth and tenth
growth, which was export-led, increased the centuries and built fortified settlements, including the
pressure on the ports sector and may even one at the mouth of the River Liffey which became
Dublin, now Ireland’s capital. The arrival of the
have masked continuing inefficiencies and Normans from 1169 began some 800 years of
difficulties at individual ports. The Irish association between England and Ireland. This link
Government is now pressing ahead with defined the development of Ireland’s maritime trade
which revolved largely around shipping between
reform of the remaining, smaller ports, using England/Wales and Ireland. Unlike the great maritime
the experience of the first phase of nations such as England, France, Spain, Portugal and
commercialisation. the Netherlands, Ireland did not have a large fleet.
The domination of maritime trade by flows between
Ireland and England was to continue up to and even
Ports are of special importance for the Republic of beyond Ireland’s independence from the British Empire
Ireland, particularly compared with its main trading in the last century. The twentieth century saw Ireland
partners in the European Union. Since the opening of increasingly engage in international trade, particularly
the Channel tunnel in the mid-1990s and now the since joining the EEC in 1973, and with it came growth
Scanlink bridge between Denmark and Sweden, it has in maritime transportation.

© London Business School


52 John Mangan and James Cunningham

Ireland’s “Celtic Tiger” Economy essential node in their global value chains.
Ireland, a member of the European Union (EU) According to IDA Ireland, the government agency
since 1973, is an island economy in north-west responsible for attracting overseas companies,
Europe with a population of 3.75 million people. over 1,200 companies have chosen Ireland as
Recent economic conditions been so positive that their base to serve the European market and
it has been dubbed the “Celtic Tiger”. beyond. There is a misconception that MNCs
do not optimise their contribution to the Irish
Ireland’s recent economic success includes growth economy: Barry et al (1999) have shown that
in both manufacturing and services and is a foreign-owned firms have higher backward
consequence of, inter alia, a combination of careful linkages per job than indigenous firms, that
economic planning, investment in infrastructure R&D expenditure and skill levels are much
and education, inward investment, and, not least, higher in the MNCs and that job turnover is
EU grant aid. Ireland was one of the first qualifiers lower than for indigenous firms. They estimate a
for European Monetary Union (EMU) and is now lifetime of 13 years for employment in foreign-
a member of the single currency (IR£= + 1.27). owned manufacturing firms and ten years for
Ireland has experienced sustained high rates of indigenous ones.
economic growth in the 1990s (table 1 and figure1).
In 1994-2000, GNP increased by 62% in real terms. Table 1
This growth rate is expected to slow somewhat in Economic Trends 1994-2000
the future because of supply side constraints, % increase
particularly a much tighter labour market and
1994 1995 1996 1997 1998 1999 2000
infrastructure bottlenecks, but is still expected to (e) (f)
average 5.2%pa in 2000-2005. The only other
GDP 5.8 9.5 7.7 10.7 8.9 9.5 8.8
cloud on the horizon is an increasing and high rate
GNP 6.3 8.0 7.2 9.0 8.1 7.7 7.0
of inflation, which reached over 6% (some three
Consumption 4.3 3.7 6.5 7.3 7.4 8.5 7.9
times the EU average) by September 2000.
Investment 12.0 22.9 15.9 18.9 16.7 13.1 10.9

Gross National Product is substantially lower than Exports 14.7 19.6 11.8 17.0 20.5 14.5 12.0
Gross Domestic Product (GDP) in Ireland because Imports 15.1 16.1 12.0 16.1 23.2 10.8 10.5
of profit repatriations by foreign firms and interest e=estimate
payments on the national debt. GDP for 1999 was f=forecast
IR£69bn and GNP IR£59bn. However, with GNP
Source: ESRI (2000)
per capita converging towards EU levels, Irish living
standards are rapidly moving closer to those of its
EU partners. In 1999, exports from Ireland were Figure 1
IR£60bn and imports IR£51bn, yielding a trade Inflation-adjusted GDP Growth
surplus of IR£9bn. Very high unemployment had
Real GDP Growth in Ireland and the EU 1990-9
been the major problem in the Irish economy for
12
many years. However, although slow to respond
10 Ireland
initially, sustained economic growth has
substantially reduced it. 8 EU

6
The most dramatic economic growth, sustained 4
over many years, was in the foreign traded sector.
2
Sectors contributing to export growth have been
responsible for the remarkable recent economic 0
performance. In the 1990s, many multinational
90 91 92 93 94 95 96 97 98 99
companies (MNCs) located high-tech manufacturing
and other facilities in Ireland, which today is an Source: Central Statistics Office (2000)

Business Strategy Review


Irish Ports: Commercialisation and Strategic Change 53

The Irish Ports along the eastern and southern seaboards, reflecting
Over 39m tonnes of goods were handled at Irish ports their proximity to England and Wales, the current
in 1998 (table 2 and figure 2), up 50% on 1990. Over direction of trade, and the concentration of economic
90% of the volume handled in 1998 was at the nine activity in Ireland.
corporatised ports with the remainder spread over
some sixteen smaller ports. Over two thirds of the Between 1994 and 1999 there was total EU-cofinanced
goods handled at Irish ports in 1998 was ‘bulk’ freight investment of IR£163m ( + 207m) in Irish ports. One
(ie coal, oil, livestock etc.) while under one third was aim was to reduce combined port and shipping costs
unitised. The unitised freight typically comprises to users over the period 1994 to 1999 by a cumulative
higher value commodities such as electronics and is 15% or more in real terms. EU cofinancing arose
held in twenty or forty foot long containers which are largely because of Ireland’s classification as an
either lifted on and off vessels (‘LoLo’) or driven onto “Objective 1 region” by the European Commission
vessels (‘RoRo’). Over two thirds of the volume of (ie a region whose GDP per capita is 75% of the EU
sea freight to and from Ireland goes through ports average or less). However, given the improvements in

Figure 2
Major Ports in Ireland and the Types of Traffic They Handle

EUROPE

* Vested as Commercial Harbour Company


Multipurpose Port
RORO only Port

Larne
N.IRL.
Belfast

Warrenpoint RoRo to the


REPUBLIC UK, LoLo and
OF IRELAND Bulk to various
destinations
Drogheda*
Galway*
Dublin*
Dun Laoghaire* RoRo to UK
Shannon
Bulk to various Estuary* GREAT
destinations BRITAIN
New Ross*
Foynes* Rosslare RoRo to UK
Waterford*
and France
Cork*
LoLo and Bulk
to various
destinations
RoRo to UK and
France; LoLo and Bulk
to various destinations Channel Tunnel

FRANCE

© John Mangan, Irish Management Institute

Autumn 2000
54 John Mangan and James Cunningham

Table 2 and in 1989 the National Dock Labour Scheme and


Trade Handled by Ports in Ireland (‘000 tonnes) its associated restrictive working practices were
abolished. There were mixed views of the efficacy of
1990 1998
the port reform process in the UK. Some believed that
Arklow 275 219 a number of ports were undervalued, that former
Cork* 5,857 8,895 public servants benefited personally from the
Drogheda* 1,004 958 privatisation process, and that the abolition of
Dublin* 6,383 13,240 restrictive working practices, as opposed to
Dundalk 320 233 privatisation, was the main factor in the later success
Dun Laoghaire* 261 240 of many ports. Others argued strongly that the
Foynes* 1,084 1,037 benefits of privatisation far outweighed the
Galway * 429 599 disbenefits and that ports became much more efficient
Greenore 491 456 and commercially oriented. Many other countries (eg
Shannon Estuary* 5,933 8,832 Canada and Poland) subsequently reformed their ports
New Ross* 1,021 1,020 systems with varying degrees of success.
Rosslare 806 1,693
Waterford* 1,327 1,592 Ports are critical nodes which facilitate trade and,
Wicklow 205 158 to a lesser extent, tourism. Their operational
Others 676 0 efficiency can have a considerable impact on the
Total 26,072 39,172
wider economy. The four different models of port
administration in different countries (Baird 1995) are
* corporatised ports shown in table 3.
Data from the Central Statistics Office ‘Statistics of Port Traffic in 1998’
Table 3
Four Models of Port Administration
domestic economic conditions, the Irish Government
and the Commission discontinued grant aid for port Models Port Functions
infrastructure from 2000. Land Regulation Cargo
ownership handling
Many of the ferry companies in the Irish market which 1. Pure public
carry unitised RoRo freight also carry passengers. sector Public public public
Between four and five million passengers travel on 2. Public/private Public public private
RoRo ferries between Britain and Ireland each year
3. Private/public Private public private
and over eight million by air. A further 300,000
travel on ferries between Ireland and France. 4. Pure private
Deregulation of air transport has led to considerable sector Private private private
growth in this sector and the ferry companies now
face stiff competition from the air mode. The As can be seen from table 3, ports can have any
abolition of duty free sales in June 1999 has also combination of three different functions. Land
had an (as yet unquantified) impact on the ferry ownership concerns the physical assets such as vessel
passenger market. berths, terminals, parking areas etc. Regulation
concerns vessel navigation and ensuring compliance
Triggers for Reform on matters like waste disposal and crew safety. Cargo
The tendency to reform the operational and handling concerns the loading and unloading of
institutional structures of ports is a matter of strategic vessels, storage of freight, provision of value-added
interest within the maritime sector worldwide. One services etc.
of the first programmes of port reform occurred in
the UK following the return to power of a Conservative Much debate surrounded the question of what
Government in 1979 which was committed to combinations of these functions should be
privatisation and removal of obstacles to the free controlled by the Irish state and what combinations
operation of market forces. Over the following ten should be left to the free market to be controlled by
years many (though not all) UK ports were privatised the private sector.

Business Strategy Review


Irish Ports: Commercialisation and Strategic Change 55

Government Policy in Ireland Table 4


Irish ports used to be governed by relatively old and Key Environmental Stakeholders
restrictive legislation, namely the Harbours Acts 1946- in the Irish Ports Sector
1976. There were many calls for a review. Efficient Stakeholder Power to Level of
maritime transport, comprising ports and ship influence interest in
operators, was regarded as an essential link in strategy activities
Ireland’s economy and a consensus emerged that an Government:
inefficient ports sector could constrain Ireland’s Dept of the Marine
economic development. & Nat. Resources High High
Department of
the Environment Medium High
A government-appointed Review Group was
Department of Finance High Medium
established in 1991 to consider policy and legislation
governing commercial ports in Ireland. The Group Department of Defence Medium Low
was chaired by Patrick Murphy, a highly-respected Local authorities Low High
and successful Irish industrialist, and comprised Port Users (ferry companies,
shipping agents, hauliers, etc) High High
eight other members who represented the various
Lending Institutions High Medium
stakeholders’ interests. The Review Group’s report
noted that “Ireland’s ports have been severely Port Employees/Unions High High
constrained in their ability to respond commercially Local Residents Low High
because of the restricted legislation under which Local politicians High Medium
they operate”. Prior Ministerial approval was, for Taxpayers Low Low
example, required for matters such as setting rates Local Organisations
and charges, borrowing money, carrying out (Tourism etc) Low Low
harbour improvements, and acquiring and disposing Environmental Lobbyists Low High
of property. Fisheries Organisations Low Medium
Marine Leisure Low Medium
Strategy Analysis and Choice by the Key Utilities Low Medium
Stakeholders
Table 4 lists the key environmental stakeholders in The diverse range and activities of suppliers to the
the Irish ports sector whose opinions the Review Irish ports (utilities etc) meant their power to influence
Group had to consider. This diverse group ranged from strategy was moderate. The power of buyers (ferry
local politicians (most ports had very large boards with companies) was high as they were powerful catalysts
some places reserved for local politicians) to large ferry for continuous port development. For example, Stena
companies and other ship operators. One of the was the sole ferry company operating from Dun
principal stakeholders was the Department of the Laoghaire Port, and chose to operate one of the world’s
Marine and Natural Resources, particularly in terms first HSS (high speed service) ferries between that port
of influencing strategy and in shaping the competitive and Holyhead, necessitating a multi-million pound
landscape for the sector. It was that Department which development at the port.
triggered the review process.
The Review Group had to consider a wide range of
The likelihood of a new port being developed was environmental forces affecting the Irish ports sector
low as the barriers to entry were and are high. They and these are detailed in table 5.
include lack of suitable land, water depth, sea and
land access. The main threat of competition in the The Review Group considered four alternative
ports sector comes from Ireland’s three main structures for Irish ports in order to bring about greater
airports (Dublin, Shannon and Cork) which have the commercialisation:
capacity to handle large volumes of passenger and
cargo traffic. Although deregulation of air transport ● Privatisation
has sharply affected the number of passengers
● Amalgamation/regionalisation of ports
travelling to and from Ireland by ferry, it has not been
particularly significant for freight. ● A national sea ports company, on the model of

Autumn 2000
56 John Mangan and James Cunningham

Table 5
PESTLE Analysis of the Irish Ports Sector

Political Factors Technological Factors

● Increasing trend towards lessening Government ● New vessel technologies.


interference in markets.
● Introduction of Vessel Traffic Information
● Increasing deregulation of utilities, transport, Management Systems (VTIMS) (ie navigation
telecommunications, etc. systems) at ports.

● European Union harmonisation such as the ● Increased use of information and communications
abolition of duty free sales. technologies by port users (eg goods tracking and
tracing, yield management, automated booking
● The development of Public Private Partnerships as systems, etc).
a mechanism to raise capital for infrastructure
investment. ● Competition between high speed ferries and
traditional conventional ferries with added capacity
Economic Factors and facilities on board.

● Increasing economic activity and growth in Ireland. Environmental Factors

● Increasing international trade. ● Noise pollution and other environmental


externalities such as vibration from ship loading and
● Ireland moving towards economic and monetary unloading.
union with the UK and NI staying out of the Euro
zone. ● Air pollution from truck movements in the vicinity of
ports.
● Increasing emphasis on the speed and reliability of
transport services, especially in the context of the ● Increased awareness of the marine ecosystem in
growing importance of logistics and supply chain the vicinity of ports – ensuring, for example, that
management practices as drivers of competitive dredging does not impact the marine ecobalance
advantage and firm success. and, in turn, fishing yields.

Social Factors ● Increased demands for anti-pollution plans,


reception facilities for vessel waste, etc.
● Globalisation, demographic factors and changing
lifestyles all conspiring to lead to an increased Legal Factors
demand for transport services.
● Dated legislation restricting the commercial
● EU Social legislation leading to improved working
freedom of ports.
conditions for port employees and users.
● State encumbered with ports’ liabilities (eg
insurance claims, financial deficits, etc).

Aer Rianta (the Irish state-owned company which member submitted a minority report about EU grant
operated Ireland’s three main airports) aid for port investment. The Review Group’s report,
published in June 1992, led to the Harbours Act 1996,
● Separate state companies to operate individual
which aimed at “freeing Ireland’s key ports from direct
ports on a commercial footing (ie the state remains
Departmental control and giving them the commercial
the sole shareholder).
freedom they need to be able to operate as modern,
In developing a structure to ensure greater customer-oriented service industries”. In March 1997
commercialisation of Irish ports, the Review Group the first eight ports (see figure 2) out of a planned
had to consider various possible scenarios centred on twelve were corporatised and vested as commercial
issues as diverse as abolition of duty free sales, the harbour companies (previously they were known as
economic climate, changing transport patterns, etc. harbour authorities). Waterford was corporatised later,
The Review Group recommended that commercial in January 1999 – the reasons for the delay included
state-owned companies should be set up to manage the port’s largest customer going out of business, storm
twelve key (in effect the largest) Irish ports (ie the damage to two cranes (key assets in any ports
fourth option above). Opinion on all issues considered infrastructure and which are not possible to replace
by the Review Group was not unanimous – one over a short period), and an outstanding loan from

Business Strategy Review


Irish Ports: Commercialisation and Strategic Change 57

Table 6
Financial Position of Corporatised Ports in 1997 *
Port Company Turnover Net Profit Profit/ Fixed Share- Borrowings Borrowings/
IR £ Turnover assets holders’ Fixed
Funds Assets
£m £m £ £m £m £m £

Dublin Port 1
Company 26.9 5.5 20.27 92.5 11.5 16.9 18.22

Port of Cork
Company 8.7 3.82 43.27 48.2 49.1 5.6 11.65

Dun Laoghaire
Harbour Company 4.9 2.02 41.12 26.5 10.7 7.7 29.20

Foynes Port
Company 1.4 0.3 24.64 14.9 10.9 2.7 17.90

Galway Harbour
Company 0.6 0.06 8.78 5.8 7.0 0 0.00

Drogheda Port
Company 0.8 -0.016 -2.09 3.8 4.3 0.4 11.15

Shannon Estuary
Ports Company 1.9 0.5 23.39 1.7 0.91 0.5 31.46

New Ross
Port Company 0.8 0.07 9.23 3.2 3.8 0 0.00

All port
companies 46.1 12.2 26.40 196.6 98.1 33.8 17.21

1
Company has taken pension fund deficit into balance sheet
2
Includes extraordinary receipts

* Data obtained from the Department of the Marine and Natural Resources, Dublin.

the European Investment Bank (EIB). It was intended modern, customer-oriented service industries, while
to corporatise a further three ports (Arklow, Dundalk tightening up accountability for operational and
and Wicklow) but this did not happen. Table 6 financial procedures”. Dr Woods is a noted scientist
illustrates the financial position of the corporatised as well as a long-serving politician (he also served as
ports in 1997. Minister for the Marine in a previous Government)
and was aided by a new breed of astute and
Implementation of the Strategy commercially-focused civil servant.
The Government Department responsible for the ports
sector in Ireland, the Department of the Marine and Emerging benefits
Natural Resources, was committed to enhancing the By mid-1999 the corporatised ports were enjoying
effectiveness of Irish maritime transport infrastructure significant successes, buoyed up by very healthy
and services, especially in the context of the critical domestic economic conditions. Many of the ports had
role which maritime transport plays in Ireland’s made strides to becoming much more commercially
geographically-peripheral island economy. In its focused and began to explore other value-adding and
strategy statement for the period 1998–2000, the non-core commercial activities. Areas of business being
Department stressed that sea transport and port developed included the development of marinas,
services must be efficient, adequate, responsive and industrial parks, transhipment facilities, car parks, and
competitive. Dr Michael Woods TD, Minister for the the cruise liner business. A number of ports also
Marine and Natural Resources, stated in late 1998 introduced leading-edge navigation technologies for
that “freeing up our key ports from direct State control vessels using their ports and also introduced quality
gave them the commercial freedom to operate as standards. In addition, the corporatised ports

Autumn 2000
58 John Mangan and James Cunningham

submitted five-year development plans to the Foreshore Act. Finally, difficulties with surface
Department of the Marine and Natural Resources. transport access (primarily congestion) also affected
Inevitably, it would take some time for matters to settle some ports.
and for the ports to further develop and prosper under
their new status. Strategic options for other ports
It had been intended to corporatise a further three
Under the 1946–1976 Acts, individual ports were ports (Arklow, Dundalk and Wicklow) and the
overseen by boards of 25 harbour commissioners. The question arose in the late 1990s as to what should be
boards of the corporatised ports, however, now had done with the thirteen other smaller ports. This
12 members (typically a Chairman, the Chief combined group of sixteen ports, which handled very
Executive, two worker directors and eight others). In low volumes (table 2), continued to operate under the
principle, directors were appointed on the basis of their 1946-1976 Harbours Acts. In effect, policy makers
ability to have a strategic and commercial input into had six options, which were not mutually exclusive:
the running of the corporatised ports. However, in
● Keep the status quo, making small legislative
practice some were also appointed on the basis of their
changes as necessary to the 1946–1976 Acts (this
political connections – perhaps one of the disbenefits
would of course involve these ports remaining
arising from government involvement in the sector.
dependent upon the Department of the Marine and
Conflict sometimes arose between the management
Natural Resources).
of corporatised ports pursuing a wholly commercial
mandate and directors pursuing a more socio-political ● Corporatise the ports under the 1996 Harbours
mandate. Typical examples of this were the question Act, as with the nine larger ports. (One practical
of whether to develop areas of a port for commercial problem here was Board remuneration: the
or community uses or whether to provide berths for Chairman of a corporatised port received an annual
military vessels (which in practice did not have to pay fee of IR£4,000 and each director received
harbour dues). One benefit which accrued to the IR£2,500; some of the smaller ports had annual
Department of the Marine and Natural Resources was revenues below IR£100,000 and could not afford
that the corporatised ports could now get on with their a similar structure. Fees payable to Directors under
job and did not have to bother the Minister and his the 1946–1976 Acts were insignificant in
Department with mundane matters, as happened comparison.)
under the 1946–1976 Acts.
● Transfer ownership of ports to local authorities.
Emerging difficulties ● Sell ports to the largest customer (in some instances
The corporatised ports inherited certain difficulties most of the traffic through a port came from one
with their change of status, which did not necessarily large customer).
help. Many port employees had been guaranteed that
● Develop the ports jointly with the private sector
there would be no threat to their jobs. Pensions
on a public private partnership basis (PPP) – there
provisions were complex and in some cases absent.
were precedents elsewhere in Ireland for this (eg
The new corporatised ports had to deal with
toll roads).
restrictive work practices and issues like the effect
of a previous lack of investment in staff training. In ● Stipulate that mergers or alliances were made
addition, the corporatised ports were expected to between different combinations of ports.
take account of various externalities which might
affect the many varied stakeholder groups. Issues Key aspects of any potential strategy included ensuring
which arose here included noise pollution from that public expenditure was kept to a minimum and
cargo handling (which disturbed local communities), that traffic would not merely be displaced from one
marine engineering works (which affected small port to another, but bring real growth to the
aquaculture and fishing interests), and the introduction port hinterland and the wider economy. In 1999, a
of new services (which disturbed marine leisure users). review of the strategic options for these ports was
Confusion also arose over ownership of the foreshore conducted by KPMG Consulting together with Posford
(ie the shore between the high- and low-tide marks) Duvivier, Fitzpatrick Associates, Brady Shipman
which was governed by very dated legislation, the 1933 Martin, and MDS Transmodal. The review concluded

Business Strategy Review


Irish Ports: Commercialisation and Strategic Change 59

that a mix of strategies should be pursued: that some Lessons and Implications of the Strategic
ports should be corporatised, some should merge with Change Programme
other ports, and some should transfer to local authority All things considered, the programme of reform
ownership. appears to have been successful. The corporatisation
of the nine key ports also helped policy makers
Policy makers also decided that they would review subsequently decide the correct path for the reform of
progress under the 1996 Harbours Act with regard to the remaining smaller ports. The timescale over which
the nine corporatised ports by completing statutory the reform took place was, however, unnecessarily
audits on these ports in 2000. long. The Review Group was established in 1991
and reported in 1992. Yet the first eight ports were
Box 2 illustrates a Lewin’s Force Field Analysis of not corporatised until 1997, despite the fact that
changes in Irish port management port reform was regarded as a priority by Government.
One of the key obstacles was the necessity to engage
in a wide-ranging and detailed programme of
Lewin’s Force Field Analysis of legislative reform. This reflects the stasis which,
Changes in Irish Port Management despite the best will in the world, can be associated
The Unfreezing Phase 1991-1996 with public sector reform. While various issues did
● Government set up the Review Group in arise after corporatisation (for example the abolition
1991 of duty free) no major external factors arose to throw
the ports off course.
● International trends towards reduction in
government involvement in port The choice of strategy for port reform (ie
management commercialisation without privatisation) appears to
● Rising capital investment needs of individual have been a good one, apart from the delays. For
ports instance, the various questions which arose after the
reform of UK ports did not arise in Ireland.
● Need for efficient and effective port Maintaining the status quo, given the key role of ports
infrastructure for national competitiveness in aiding subsequent economic growth, would have
reasons been very irresponsible, while choosing privatisation
would probably not have had had any greater benefits
The Changing Phase: 1997- 2000 on top of those associated with commercialisation.
● Development of nine vested commercial
ports However, the Irish Government has to decide if some
● Realignment of management structures ports should now move towards privatisation.
Specifically, under the current model, are there any
● Increasing efficiencies at operational level constraints which inhibit the further development of
● Increased investment under EU Operational these ports? Table 2 charted the remarkable growth
Programme for Transport. of traffic through Ireland’s ports. Whether these ports
would have been as successful had economic
● Development of 5 year plans conditions not been so good is doubtful. The Review
Group could not have forecast the rapid and
The Refreezing Phase: 2000-2003 remarkable economic growth that Ireland was to
● Statutory review in 2000 which will produce
enjoy – it met only a few years after the IMF and
a league of ports and their commercial other institutions had threatened to downgrade
success Ireland’s debt rating: this certainly illustrates the
● Changes in operating procedures will be joy of strategy making in an uncertain world! It is
achieved apparent that the ports sector has not, as yet, held
back Ireland’s economic progress. However, if
● Focus on the challenges of diversification of economic growth continues at current rates then the
activities for further capital investment sector will have to respond through the provision of
more capacity.

Autumn 2000
60 John Mangan and James Cunningham

Are there lessons here for other programmes of reform, ● The benefits which can accrue by engaging
both in the public and private sectors? One surely representatives of various and diverse stakeholders'
concerns the delays which can often occur with interests in a focused, well-led strategic review
government directed, public sector reform, not least process (in this case the group was established,
because of the need for legislative change and the undertook extensive and wide-ranging analysis,
variety of stakeholders. Other key lessons which and made its final report, all within a year, which
emerged include: is very fast considering the subsequent delays in
implementing its recommendations).
● The usefulness of strategic reform in untapping the
potential of the institutions being reviewed (the ● The benefits of integrating project management
strategic reform led the ports to exploit additional into the strategy-making process – if this had been
value-adding opportunities). done in the Irish ports case, some of the
implementation delays might have been prevented.
● Following from this, the importance of putting in
place a commercially-oriented management
structure to exploit the benefits of reform as quickly
as possible. John Mangan is a lecturer in logistics at the Irish
● The difficulty in predicting the scale of factors Management Institute (IMI), Dublin, Ireland.
affecting the sector or organisation under review James Cunningham is a lecturer in strategic
(it was clearly felt that ports would have to be management at the Department of Management,
reformed to facilitate economic growth, but the National University of Ireland, Galway, Ireland.
level of growth which occurred could not have been
expected).

References
Baird, A. (1995) Privatisation of trust ports in the UK: The following websites are recommended for further
review and analysis of the first sales. Transport Policy, information on the Irish economy:
2 (2) 135-143. Irish Government (with links to Government
Barry, F., Bradley, J. and O’Malley, E. (1999) departments) www.irlgov.ie
Indigenous and foreign industry: characteristics and The Irish Times (daily newspaper with various links)
performance, in Understanding Ireland’s Economic www.ireland.com
Growth, Basingstoke: Macmillan Press. Irish Economic and Social Research Institute
Mangan, J. and Cunningham J. (1999) Government www.esri.ie
Reform and Change Management in Irish Port Irish Central Statistics Office www.cso.ie
Administration, European Case Clearing House Irish Industrial Development Authority
(ECCH 399-124-1). www.idaireland.com
Mangan, J. and Hannigan, K. (eds), (2000) Logistics Economic Review and Outlook 2000,
and Transport in a Fast Growing Economy, Blackhall Department of Finance, Dublin, available at
Publishing, Dublin. www.irlgov.ie/finance/econ2000.pdf

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