Making the most of the cross-Border opportunity

Small and medium-sized firms on the island of Ireland have an excellent opportunity to gain valuable exporting experience as a result of the thriving cross-Border market being within easy reach. In 2012, the most recent year for which statistics are available, total cross-Border trade in manufactured goods came to €2.834 billion. This represented a 10.5 per cent increase on the 2011 total.

Given the scale of the market it is little wonder that InterTradeIreland is encouraging companies keen to grow their businesses to consider cross-Border opportunities. "The cross-Border market is particularly vital for small firms", according to InterTradeIreland strategy director Aidan Gough. "Nearly two-thirds of the exports of small firms in Northern Ireland go across the Border while almost a sixth of the exports of small firms in the Republic of Ireland go to Northern Ireland."

The cross-Border market is also critical for the first-time exporter in both jurisdictions. “Cross-Border sales represent the first export market for almost three-quarters of businesses across the island, with 90 per cent of Northern Ireland firms taking their first export steps in the Irish market and almost two thirds of Irish exporters taking the same steps in the opposite direction”, says Gough.

“Our research also shows that the experience gained in cross-Border trade acts as an export stepping stone for a majority of firms. It has had a significant influence on the development of additional export markets in 71 per cent of businesses. Over one-third of businesses with existing cross-Border or off-island sales have expanded into additional markets in the past three years, and 42 per cent of all firms surveyed are actively looking to develop new or further export markets.”

These are some of the findings of InterTradeIreland’s latest quarterly Business Monitor survey of more than 750 business managers across the island. It involves telephone interviews conducted with a sample of firms of all sizes across a range of sectors to track all-island economic indicators such as sales, employment, business outlook and other specific topical research areas on a quarter-by-quarter basis.

Gap in sales growth Results from the latest quarter – January to March 2014 – also highlighted an increasing gap between exporters and non-exporters in terms of sales growth, with 52 per cent of those selling cross-Border or further afield reporting increased sales, in contrast to the 31 per cent reported by firms who don't export.

“Through our Business Monitor we consistently see exporters outperforming those that operate in their domestic market alone but as growth gains momentum that gap is beginning to grow”, Gough notes. “Firms exporting off-island or cross-Border are also twice as likely to have recruited in the last six months. This reinforces InterTradeIreland’s drive to encourage and help more businesses, particularly small local businesses, to get on that export ladder. The cross-Border market presents a great opportunity to take these first steps and we can work with local SMEs through a variety of programmes to help make this possible.”

According to InterTradeIreland operations manager Paddy Savage, these programmes cover a wide spectrum of support, beginning with Trade Accelerator Vouchers. "These offer up to €1,200 worth of vouchers to put towards advice in areas such as taxation, employment law, currency, sales, marketing or regulation. The vouchers can help businesses access expertise from service providers in Northern Ireland and the Republic of Ireland."

The Elevate and Acumen programmes are specifically aimed at assisting companies identify new opportunities for cross-Border sales. The Elevate Programme is designed for micro-enterprises employing fewer than 10 people and provides financial assistance of up to €6,000 to help identify cross-Border markets.

“We did a survey of 1,000 microbusinesses about three or four years ago, asking them to identify the particular issues and challenges they were facing”, says Savage. “We then put together a panel of more than 100 sales exports to help them win new sales in their target markets. The programme is now in its fourth phase, and we have approved 90 companies each year for assistance under it.”

Acumen offers up to €18,750 support for SMEs to source the right people to help them increase their export sales North or South, improve their knowledge of the market and identify new business opportunities. “Under the Acumen programme we provide financial support to SMEs for up to 50 per cent of the cost of putting a salesperson on the road”, Savage points out. “The support can be used for a full or part-time sales person or as matching funding to hire a graduate.”

Magnetti Foods, a specialist manufacturer of fresh pasta products based in Clarinbridge, Co Galway, has availed of assistance under the Acumen programme. Managing director Marco Magnetti believes it has helped the company build its business in Northern Ireland.

Founded in 2004, Magnetti Foods evolved out of the family-run Italian restaurant. “My parents had a restaurant for many years, and it is very much the family passion”, says Magnetti. “When they retired my brothers and I took it on and came up with the idea of making fresh pasta for the Irish market.”

The company manufactures and supplies fresh pasta, filled pasta, and ready meal products to the retail and food service sectors in the South and mainly the food service sector in the North. Magnetti points out that the retail markets in the two parts of the island are quite different.

'Treasure Island' "Northern Ireland consumers are very price-sensitive", he notes. "They have had a lot more intensive competition between the multiples for a long time. Tesco used to call the Republic of Ireland market 'Treasure Island' because of the prices they could charge here. It's very different in Northern Ireland. That's been changing since the downturn but it is still difficult for a Republic of Ireland firm to compete in the retail market in Northern Ireland."

The firm took part in the Elevate programme, resulting in new business in the North. “The programme linked us up with a consultant who is a specialist in the food sector and knew a lot about the Northern Ireland market. This was a great help to us and up to 10 per cent of our business is now in the Northern Ireland food service and delicatessen markets. “

And the cross-Border opportunity is more than just about increased sales, according to Aidan Gough. “Not only can companies tap into a new market but they also learn about things like dealing in different currencies and doing business with overseas firms . . . That helps them take the next step to exporting off the island. That’s why we are encouraging firms of all sizes to look at the opportunities presented by cross-Border trade.”