Enterprise Ireland’s approach to preparing Irish companies to respond to the challenges and uncertainty has been to adopt a ‘no regret planning’ stance.
So, irrespective of the outcome of Brexit, Enterprise Ireland will have a stronger, more competitive, more resilient client base in a post-Brexit future.
While Ireland’s trade and innovation agency has been supporting clients to have a more international market diversified approach, reducing our overall reliance on the British market, and growing exports to the eurozone, North America and AsiaPac, the fact remains that Britain is and will continue to be our number one market.
More than £1 billion is traded between both countries each week and, as Enterprise Ireland knows from its client base, one of the key Brexit response measures that Irish businesses are taking is to strengthen their business in Britain. Other measures include improving operational competitiveness, developing strategic partnerships, improving financial management, diversifying export markets, and investing in R&D.
As companies work through this period of uncertainty and prepare for the challenges, Deirdre McPartlin, Enterprise Ireland’s country manager for Britain, who is based in London said feedback from Irish clients shows recognition for a British market that can be attractive in the long-term.
“The British economy has remained resilient despite the ongoing Brexit negotiations,” she said. “We do expect changes in the coming year with consumer and business confidence taking a hit if there is a no deal Brexit, but if there is a transition period, some of the uncertainty and road blocks to decisions being made should be removed.
“Irish companies already established in the UK are not going to walk away, indeed they are still focused on growing their market share, but there is a sense it could be more complex to trade here. Companies that already trade internationally can absorb the challenges posed by a hard Brexit, but for companies that have only traded in the EU, there is a steeper learning curve.”
Enterprise Ireland’s advice to Irish exporters is to prepare for a hard Brexit. The agency said companies exporting from Ireland should focus on enhancing their innovation, market diversification and competitiveness and Enterprise Ireland has a broad range of supports to help companies achieve this.
McPartlin said Britain was a leader and benchmark for other countries in sectors like financial services, retail, construction, and offshore wind. Sectors like aerospace also continue to thrive.
Disruption on foot of technology advances, the drive to increase productivity and tackle growing challenges in demographics, labour and talent constraints offer opportunities for companies in life sciences, automotive, services industries, and advanced manufacturing. Changes as a direct result of Brexit can be both an opportunity and a threat – for example, companies selling into agriculture may need to realign their offer to how supports will be structured in future.
As reflected in Enterprise Ireland client activity, Britain remains the most attractive market for Irish exporters to start and scale based on its size, proximity, common language, business and legal systems as well as a large population with spending power and the broad range of industries.
“In general, Irish companies exporting to the UK have not yet experienced a huge amount of change,” said McPartlin. “But the perspective of clients varies from sector to sector. For all of those in construction, projects are decided a long time in advance so in general 2019 will meet company expectations but 2020 may be slower. Irish companies are not pessimistic, but there is uncertainty and they are trying to manage this in the short term.”
“On the manufacturing side, it’s a tale of different markets. For companies selling into aerospace where there are long term contracts, sales have remained buoyant with Irish companies on average growing at a rate of 25 per cent per annum. On the other hand, companies selling to the automotive space had been doing well, driven by high exports from the UK because of sterling rates, but issues around diesel are having an impact. Our strategy is to assist clients to align their efforts to where there is strong growth potential.”
McPartlin added that a lot of the conversations between the team in Britain and clients are not just Brexit related, but more to do with market changes and how to align to the evolving needs of British customers and disruptors.
“We are seeing new exporters continue to take an interest too. For new companies, there are many factors about the UK that keep it as one of the most attractive markets to start off in due to consumer tastes, its proximity to Ireland, and the size of the prize – whether that is targeting the NHS, the financial services industry, local authorities and so on,” he said.
For those that have not yet penetrated the British market, clients are telling us they are absolutely committed to growing their market share. Many see this as providing the means to further diversify their product range or new geographic markets.”
McPartlin said uncertainty may linger beyond the end of March, but British businesses cannot stall their own growth or transformation plans indefinitely, so some pent-up demand is starting to build up. Most Irish companies are doing what they can to prepare for Brexit.
For smaller companies, the challenge is greater. The communication and supports provided by Enterprise Ireland are enabling companies to be as informed as possible to make the “Brexit-ready” decisions that are right for them. The message to British customers who are facing equal uncertainty is that we share common business challenges which we will work through as partners together.
“In many ways, Irish companies are more aware of Brexit implications than companies in any other country,” she said. “Irish companies have started to increase their business development and support footprint in the UK to demonstrate to customers they have a presence on the ground, that they remain close and are committed long-term partners,” he said.
“Overall, clients are telling us that as exporters, no other country understands the UK more than us. It’s a critical market and we have a real interest in demonstrating our continued commitment. We cannot allow a white space or gap to form or move back ourselves, because other competitors will only move in. So, Irish companies are thinking broadly. The UK remains an attractive market place with growth potential for exporters, while also operating in other markets at the same time,” he added.