Get behind the Brexit steering wheel

For David Brett, general manager at Oakpark Foods, a Tipperary-based food business employing 100 people, Brexit has already had an impact.

"The effects of Brexit on our business to date have resulted in reduced margins due to the weakening of Sterling," Brett told The Sunday Business Post.

"The major risks that we have identified within our business as key concerns are trade tariffs and potential customs or border controls.

"Both risks will inevitably add to the cost of our product going to the UK, either through additional resources required to manage the distribution process or a tariff on our product.”

Oakpark is a meat processor, selling sliced bacon and gammon joints to retailers in Ireland and Britain. Situated in Cahir, the company has a turnover of €30 million.

Oakpark's customers in Britain include Lidl, Aldi and Morrisons. "We are primarily a private label packer of rashers and about 40 per cent of all production is exported to the UK market," said Brett.

Import charges

"We began exporting to the UK market in 2008 with Lidl and since then have grown to become a key supplier of private label bacon products to the British retail industry."

According to Brett, more than 80 per cent of the sliced bacon products on Britain's supermarket shelves are imported, so any additional import charges levies on producers selling into the country will ultimately impact British consumers.

"The outcome of this will lead to the British consumer paying more each week for a packet of rashers. This will still be the case post-April 2019 and into the foreseeable future," he said.

"As a company, we know we must continually invest in innovation, lean manufacturing, and technology to ensure that we are ultra-efficient in our production process in order to maintain and grow our market share in the UK post-Brexit."

National Vehicle Distribution

National Vehicle Distribution (NVD) transports vehicles in Ireland, Northern Ireland and Britain. John Boland, NVD’s operations director , estimates that between 20 and 30 per cent of NVD's income is in sterling.

"The UK is an important market for NVD," said Boland. "If Irish-registered trucks are curtailed from accessing this market, then the detrimental impact on our business would be significant."

Potential restrictions on the free movement of people are another key concern for Boland. NVD employs 360 people at its New Ross headquarters in Co. Wexford and operating centres in Dublin, Cork and Southampton in Britain.

"Our driver population is made up of 25 per cent Irish and UK residents and 75 per cent EU residents," he said.

"If, following Brexit, a visa is required for any European resident to work in the UK, it would put an enormous administrative and operational cost on our business, because of our employee make-up.”

Border controls

In addition to concerns relating to NVD's workforce, Boland sees potential problems arising from the reintroduction of border controls into Northern Ireland.

"Any physical delays on the border will lead to increased costs for us as an operator and either a drop in margin for ourselves or the cost being passed on to the customer," said Boland.

"Even if in the case of a soft Brexit, there is no physical border, there will be additional administrative requirements that will add cost."

For now, NVD is taking some steps to mitigate potential Brexit-related risks to the business, albeit with little clarity at this stage as to how the process will unfold.

The company has assessed different business functions on 11 separate fronts. These include currency, financing and funding, regulatory environment, market, operating structures and supply chain.

To ensure continued access to markets in Britain and Northern Ireland, NVD has established companies, operating centres and haulage licences in both territories.

"We reduced our reliance on ad hoc sub-contract work in the UK by winning the contract to move 23 per cent of all Renault/Dacia and Nissan product in the UK in August of this year," said Boland.

New markets

"We are also forging new relationships in Europe where we now have trucks sub-contracted into Spain, France and Holland."

NVD is also taking steps to ensure that it will have staff available to work in Britain in the future.

"We have recruited staff now directly into the UK and Northern Ireland companies," said Boland.

"We are helping our European-based drivers to achieve Irish naturalisation by loaning them the required funds of about €1,000 to apply up front.

"This is on the assumption that the common travel area remains and that Irish citizens will be able to work freely in the UK."

Roadshow events

Both John Boland and David Brett are taking part in the Bank of Ireland Prepare for Brexit Roadshow.

"Britain is obviously an important market for many of our customers, either directly or indirectly," said Pierce Butler, Head of Sectors, Bank of Ireland Business Banking.

"In our Prepare for Brexit Roadshow, the bank and our guest speakers detail the tools and supports available and are encouraging businesses to start planning now for the potential impact of Brexit on their business.

"Like Oakpark Foods and NVD, businesses should consider, not only the impact on their own business, but also look to see how their suppliers and customers will be impacted and engage with them now as part of their preparation.

"While we don’t have clarity around the eventual outcome and won’t for some time, we do know what the potential outcomes are. Businesses should use the time now to start planning and not wait until the outcome is known, as they may be at a disadvantage with their competitors who used this period to plan effectively."

Sectors team

The sectors team in Bank of Ireland Business Banking have been in discussions with many customers in recent months and have supported them in their planning for Brexit.

"This has included, amongst other things, looking at opportunities in new markets, reviewing their supply chain and route to market, improving efficiencies to counter potential tariff and non-tariff costs or strategies for displacing UK companies currently supplying into Ireland or the EU," said Butler.

The sectors team comprises specialists, recruited directly from industry, who bring real life in-depth practical experience and expertise.

"While many financial institutions have sectors teams, Bank of Ireland has taken a customer-centric initiative in that our sectors team is made up of people who have spent their career working in their respective sector," said Butler.

"This means that they have a level of expertise and insight that is unique in the market and is a key differentiator for Bank of Ireland adding significant value for our customers.

"It also demonstrates the bank’s commitment to the various business sectors and the importance the bank places on understanding our customer’s business."

The team currently covers a diverse range of sectors including retail convenience, health and life sciences, hospitality, manufacturing, motor, technology and agriculture.

"The team work closely with our relationship managers in supporting business customers across the country," said Butler.

Bank of Ireland Prepare for Brexit Roadshow

35 Bank of Ireland Prepare for Brexit Roadshows will take place across the country before the end of the year, aimed at helping Irish businesses to prepare now for continued growth in the aftermath of Britain's exit from the EU.

Bank of Ireland is partnering with a number of industry bodies and advisory firms for the Prepare for Brexit Roadshow, including Enterprise Ireland, Bord Bia, IBEC and the British Irish Chamber of Commerce.

Accounting and advisory firms KPMG, Deloitte, EY, PWC, Grant Thornton, BDO and Mazars are also participating.

In conjunction with the roadshow, Bank of Ireland has launched a new Brexit Portal (www.corporate.bankofireland.com/brexit), providing guidance and expertise for domestic and international businesses.

Prepare for Brexit Roadshow events will take place this week at Ferrycarrig Hotel in Co. Wexford, Tower Hotel in Waterford, Clontarf Castle in Dublin, Meadowlands Hotel in Tralee, Co. Kerry, Drumhall Hotel in Killarney, Co. Kerry, Sligo Park Hotel and Midlands Park Hotel in Portlaoise, Co. Laois.

For more information, log on to:www.corporate.bankofireland.com/brexit/