Shanghai on Shannon: Will it happen?

We first posted on possibility of a Chinese trading hub in Athlone in Nov 2010, noting how the idea for the development managed to achieve some momentum through political networks.  Interestingly, those networks were predominately Fianna Fail-centric and reeked of the ‘Galway tent’ mode of doing business, but are now a lot of less potent.  Yesterday An Bord Pleanala gave planning permission for the first phase of the development – to include three major exhibition halls, nine minor ones and other facilities totalling 102,348sq m (1.1 million sq ft), as well as underground parking for more than 1,300 cars.  There are a number of questions that the proposed development raises.

How big is the development?

Very big.  The site is 337 acres.  An Taisce estimates that development once complete will be 14 times the combined size of Liffey Valley and Blanchardstown shopping centres.  It aims to attract 1.5 million international buyers and visitors annually when fully completed and employ up to 9,000 people.  It would be one of the largest exhibition spaces in Europe.  The main issue with regards to this size will be servicing – adequate utility and transport infrastructure to ensure smooth running; this is feasible with good planning though there are some site issues as discussed below.

Does it align with spatial planning policy?

Yes.  Athlone is a gateway town in the National Spatial Strategy.  This means it is designated as a preferred site for population growth and economic investment.

Will it happen?

The key issues here are finance, political and state backing, other local development, and external competition.  If the project is going to be backed purely by Chinese capital looking for a spatial fix in Europe then the project is solely dependent on that finance being made available to fund the development.  This seems, however, to be unlikely.  Private investment is going to want to leverage finance and resources from the local and national state through in-kind provision of infrastructure and state aid to companies via IDA and others as with other FDI-backed ventures.  The state, and its various agencies then, is going to need to decide whether it wants to provide matching monies to help seed the larger investment.  Clearly local agencies are already backing the project with some resourcing.  The developers are also likely to need other private investors to spread the risk and its not clear if such investors have already signed up or will need to be found.

Beyond the project site itself, as an international trading hub transport infrastructure is going to be key.  Athlone is some distance from the two main international airports, Dublin and Shannon, and the travel to the site by coach/rail is a hindering factor for both the visitors and goods.  The solution proposed locally, as we posted about previously, is the development of an airport near to Athlone.  This has already been granted ‘strategic infrastructure’ status by An Bord Pleanala in Sept 2010.  The same questions about finance and state backing arise with respect to this project, but the two developments do seem co-dependent.

There are other competing locations for such a Chinese trading hub, with other sites being explored in Britain and continental Europe.  It is unlikely that there will be multiple such dedicated sites, so the consortium is going to have to convince investors that Athlone is the best location.

Is it the right location?

Athlone is a gateway town and it would be a fantastic development for the area if it happens.  However, location and particularly transport connections are an issue.  In a European context, Ireland is on the periphery of the continent and is dependent on air/sea for travel.  Whilst other FDI has been able to thrive here with such dependencies, these companies are not solely reliant on massive, daily international flows of visitors and goods.  That’s one of the reasons we do not already have a large, thriving, international exhibition sector. In an Irish context, it would make sense to locate the site nearer to already existing air/sea infrastructure.  The obvious location would be Limerick/Shannon/Ennis where there is already an established international airport and sea port for container shipping.  Clearly this will not suit the Athlone backers, but might be a determinate as to whether investors think the scheme is viable.

In my opinion, the Athlone project is largely a Field of Dreams idea that has managed to gain some momentum.  Whether it materialises into the development envisaged is certainly not assured and there is a long way to go to make the dream a reality.

Rob Kitchin

 

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The Irony of Terminal 2

Terminal 2 at night (Taken from Dublin Airport Authority website)

Dublin Airport’s Terminal 2 will open tomorrow, Friday, November 19^th.  Its unveiling will act as the last major infrastructural project established during the boom years.  Undoubtedly, the Dublin Airport Authority, as well as the political advocates of the project never envisaged that the terminal would eventually open amidst decreasing passenger numbers at Dublin Airport brought about by a deep economic recession.  However, this is where the irony of Terminal 2 only begins.

The TV advertising campaign beginning the week prior to the terminal’s opening features actor David Murray making his way through the new terminal, musing on Ireland’s contribution to the world. This “small island in a big ocean” is responsible for the Beaufort scale, literary greats such as Yeats and Swift, and in the world of sport we have sent “champion horses” to all corners of the globe.  The inference in this being that when people come to Ireland full of expectations about this influential little country, Terminal 2 will be their first indication that yes, indeed, it is great.  A second inference is that when we send the best of what we have out to the world in the future, this ultra-modern facility will make that endeavour a more pleasant one.  It is the latter inference that hints at the second irony of Terminal 2.

Announcing the latest round of budgetary cuts and savings to be included in Budget 2011, the Irish government indicated that their expectation that 40,000 people will emigrate in that year was factored into their calculation.  In effect, for the government’s budgetary strategy for 2011 to be successful, they now need at least 40,000 to leave the country.  Previous posts to this blog by Rob Kitchin and Cian O’Callaghan point out that it is the young, highly educated cohort that are most likely to leave first.  So, heralded as a necessity brought about by a passenger boom which reflected the growing personal wealth of the Irish, and Ireland’s increasing popularity as a tourist destination, the reality of terminal 2’s early years at least, will be the manner in which it becomes the physical site where we export those highly educated, high skilled people who were produced by, and helped fuel the economic boom that brought that very site into existence.  How ironic.

Today, the day prior to the terminal’s official opening, representatives of the IMF, the ECB and the European Commission are in Dublin to discuss a financial ‘bail-out’ in the guise of a ‘substantial loan’ to the State.  Of course, it was the pursuance of imprudent policies within the banking sector and within the Department of Finance – partially manifested through the construction of many costly ‘monuments to prosperity’ such as the Dublin Port Tunnel, the IFSC, the Convention Centre Dublin, and of course Terminal 2 – that has ultimately resulted in that visit.  Wouldn’t it be ironic if these ‘bail-out chiefs’ were the first to pass through the airport terminal that owes much of its origins to the fiscal flippancy and short-sighted government expenditure programmes that made their visit necessary in the first place?

John Watters

 

Do we need another airport?

I originally missed this article in the Irish Times from earlier in the month – ‘Offaly airport plan passes first hurdle.’  “A plan to build an international airport in Co Offaly has cleared the first hurdle after a decision by An Bord Pleanála to grant it ‘strategic infrastructure’ status.  The decision means the developers of the proposed airport at Tubber will be able to apply directly to the planning board and will not have to submit an initial application to the local authorities.”

As reported in the Midland Tribune: “In making its decision the Board said the Airport ‘would be of strategic economic importance to the region and the state, in that it is aiming to provide a reliever airport to Dublin airport and increase competition within the aviation market’.  Furthermore the Board said ‘it would contribute to the realisation of the objectives of the National Spatial Strategy by improving accessibility and connectivity in the midlands region, which could assist in the improvement in the economic performance within the gateway’.”

My initial reaction is to wonder whether Ireland really does need another airport?  The argument being forwarded by those driving the project is clearly ‘yes’.  The rationale seems to be that the Midlands gateway requires an airport to support local and regional development and attract inward investment.  And there is a literature that does support the argument that airports can act as catalysts for local entrepreneurship and investment, as well as being sizable employers in their own right.  From a midland’s perspective, the proposal seems quite attractive.

Ireland, however, already has a large number of airports  servicing international routes given its population base, some of which are not a great distance from the proposed site at Tubber, Offaly – Dublin (113 km, 1 hr and 8 mins), Galway (97 km, 1 hr 20 mins), Knock (96 km, 1 hr 40 mins), Shannon (146 km, 2 hrs), Cork, Waterford, Sligo, Kerry, Derry, Belfast (*2) (all distances and times from Google Maps), and the local population base is relatively small (and could not sustain the projected 2 million passengers by 2020 without people traveling from elsewhere in Ireland to use it).  Many Irish airports have received substantial investments in recent years; some are suffering operational problems due to falling passenger numbers (e.g. Shannon’s fell by 12% last year); Dublin seems in little need of relief given the new terminal; and given the number of existing airports there is a level of competition.  Is another airport simply going to cannibalize the business of existing facilities (as has happened with hotels)?

One argument runs that this will be a private development and therefore if it’s not commercially viable then it will fail with no loss to the tax payer.  However, there are very few infrastructural initiatives of this size that does not draw on significant state funding and supports in some way, and its operation will require public servicing.    I’m open to persuasion on the need for a midland’s airport, but the evidence is, I think, going to need to be pretty compelling.  The next step is environmental impact assessments.  If it does go ahead I can already imagine Ryanair seeking to get it renamed as Dublin(Offaly) as per Frankfurt(Hahn) and dozens of other locations.

Rob Kitchin