Brexit binds Ireland closer to Germany in pushing ambitious joint agenda
Whether for inward investment, exports or tourism, Germany is a top five country for Ireland with potential for much more
German president Frank-Walter Steinmeier (left) and his wife Elke Buedenbender (right) with President Michael D. Higgins and his wife Sabina before a gala dinner in Berlin. Photograph: Hayoung Jeon/EPA
German chancellor Angela Merkel welcomes President Michael D Higgins in Berlin. Photograph: Markus Schreiber/AP
Kerrygold: popular in Germany
As President Michael D Higgins ends his three-day visit to Germany on Friday) in Frankfurt, continental Europe’s banking capital, Irish and German officials are confident that something has changed for the better in bilateral relations.
Like never before, Berlin and Dublin are pushing an ambitious agenda of political and diplomatic co-operation – in the EU, the UN and beyond.
Lurking over all that, however, is the UK’s long farewell from the EU. It hung in the air of Berlin’s Bellevue Palace on Wednesday, at a state dinner and a joint press conference between President Higgins and his German counterpart, Frank Walter Steinmeier.
“I do not wish this evening to focus on the decision of the United Kingdom to leave the European Union, ” said Mr Higgins on Wednesday, before admitting the decision had “profound consequences for Ireland [and] should not be either avoided or evaded”.
Three years after the Brexit vote, as two Tory politicians vie for the keys of 10 Downing Street and promise voters imminent Brexit and fantastical post-EU trade deals, Ireland is acting rather than talking. Last year it identified and began an intense courtship of Germany, the EU’s largest and most influential member, as its indispensible partner.
A year on, as the two countries celebrate nine decades of diplomatic relations, ministeral traffic is at an all-time high. On Monday, influential Bavarian allies of chancellor Angela Merkel touch down in Ireland for a high-level visit.
Together with this week’s state visit, it marks a high-point of increased diplomatic and political engagement with Germany. But a third pillar of last year’s “wider and deeper” strategy on Germany is closer economic co-operation.
Whether for inward investment, exports or tourism, Germany is a top five country for Ireland with potential for much more. For Irish business people already engaged in Europe’s largest market, this week’s visit has been heartening and a timely paradigm shift on Irish trading with Germany: from talk to practice.
After a career working in Digital and Esat, Gerry McQuaid admits he was used to thinking in national terms.
“My entire focus was the Irish market, Irish SMEs, the Irish enterprise customer,” said McQuaid, Cubic Telecom’s commercial executive vice-president. “I didn’t really care about what happened overseas bar the fact we had to support people who travelled.”
Flash forward to 2019 and Cubic Telecom is, figuratively speaking, selling coals to Newcastle. But instead of Newcastle think Germany and instead of coal, Cubic’s patented SIM card technology that allows customers connect anywhere in the world without roaming charges.
An Enterprise Ireland client company, Cubic didn’t intend to target the motor industry or Germany, said McQuaid, but connected cars have made the company the go-to provider for Germany’s Volkswagen group and its Audi and Porsche brands.
“Audi were open with us and said ‘you have done things we couldn’t do ourselves, we didn’t have the expertise or skills’,” said Mr McQuaid. The Germans gave Cubic two weeks to prove their concept and the companies signed their first contract in July 2015.
Two million cars are now driving around continental Europe with Cubic’s technology, a figure that is growing by up to 50,000 monthly. Next they are going live in the United States and in 18 countries in the Asian Pacific region with 15-year provider contracts.
For Cubic, engagement with Germany is what put them in the premier league.
“We upped our game enormously,” said McQuaid, changing processes to meet Audi’s demands and investing heavily with shareholder support. “The beauty of it is that, after proving ourselves with Audi, business has grown quickly, revenue has grown quickly and we are able to measure our cost base effectively.”
Engagement with Audi and others in Germany has not just made the company more robust, it has made McQuaid and his colleagues more sensitive to stereotypes about Germans from “people who don’t go to Germany and don’t know Germany”.
“Germans in business are very sincere, very straight but they have expectations,” he said. Understand from the outset, he advises, that this is a country where promising something means delivering on the promise.
Do your homework, he adds, and understand who you are dealing with. A common Irish blind spot, he says, is ignoring the country’s federalised nature and the wide variations in mentalities and attitudes, even within branches of one company.
“If you are selling in Bavaria, you don’t just need a German, you need a Bavarian,” he said.
Since the 2016 Brexit vote, Ireland’s state agencies have worked furiously to regroup and redirect their efforts away from the UK towards mainland Europe. Agency heads convened this week in Berlin, all pulling in the same direction with the same message. As Enterprise Ireland chief executive Julie Sinnamon told a seminar of client companies and high-level guests: Germany is no longer important for Irish business, it’s critical.
“As we approach October 31st with no resolution, a no-deal Brexit becomes increasingly likely,” she warned, prioritising the search for reliable new markets and partners.
EI says Irish companies employ more than 15,000 people in Germany in everything from agritech and lifesciences to digital technology and automative.
Its Irish client base has increased exports to Germany by 6 per cent in 2018 to exceed €1.1 billion, making it Ireland’s most important trading partner.
“In a post-Brexit era, this will further grow in significance as we encourage more Irish companies to establish and scale in the German market,” said Eddie Goodwin, EI’s Germany manager. “To support this agenda, we are opening a second Enterprise Ireland office in Munich to support the growth of the industrial, lifesciences and automotive industries.”
“It’s quite simple: deliver a quality product and good service,” he said. “The German market is appreciative of those qualities and we have grown our business as a result of that.”
EI Electronics employs 720 people in the Shannon region and another 100 in sales and marketing across Europe. And, after 23 years, it has risen to become Ireland’s biggest non-food exporter to Germany and is now the country’s leading supplier of fire and gas detection products.
With 35 people across its Düsseldorf headquarters and Hanover distribution warehouse, the German market contributes nearly a quarter of the comapny’s €200 million annual turnover.
As a privately-owned company, operating at the top of its game in a niche category, EI very much mirrors the Mittelstand (SME) backbone of the German economy.
Another EI echo of the German Mittelstand, says Mick Guinee, is his company’s belief in research and innovation as its business life-blood. By next year, it hopes to hit sales of €100 million in Germany with new technology allowing its detectors to be accessed remotely.
“We didn’t take a punt, we had to be patient over 12 years and we believed Germany would happen if we persevered,” he said.
It took the sheer force of Brexit, he says, for Irish companies to shatter their vicious circle when it came to the German market – fear of the unknown through no contact, and no contact through fear of the unknown.
To enter the German market, he says, careful market research is key. Taking a staggered approach is another option, rather than trying to take on a market of 82 million people, enter one of the 16 federal states, he advises. There will be no lack of customers, with the biggest states boasting populations four times Ireland’s.
Cracking the market is the hard part, he says, and customer loyalty is the reward. “What you’ll find is that, if it is working for them, German firms are very faithful to their supply chain,” he said.
For all the success, though, it’s not all plain sailing in the bilateral relationship. Closer business ties between Germany and Ireland will eventually come up against an old chestnut of local business wisdom, summarised best by 1970s West German chancellor Willy Brandt: “If I am selling to you, I’ll speak your language; if you’re selling to me “dann müssen Sie Deutsch reden [you have to speak German]”.
IDA chief executive Martin Shanahan, also in Berlin this week, said having Irish people speaking German – and other foreign languages – is no longer an add-on luxury but an economic necessity.
Some 100 German companies operate in Ireland, employing more than 14,000 people but, after talks in Berlin with key IDA clients like Allianz and software giant SAP, Mr Shanahan said a common concern is the need to move beyond monolingual graduates.
“German speakers are in high demand,” he said. “The demand for languages is huge and German is one of the languages at the top of the list, not just for German companies but also US companies and others in the European and EMEA market.”
So far, however, it seems that language policy remains the Achilles heel of Ireland’s new strategy with Germany.
Bord Bia’s German push apppears to know no limits with sales up 28 per cent since 2014.
Irish beef has made the push from gourmet to mainstream, sitting on leading supermarket shelves alongside a growing product palette from long-time staple Kerrygold.
Kerrygold’s departing German managing director Gisbert Kügler was lauded in Berlin this week for trebling turnover to €650 million since 2004. From a one-product company, Kerrygold is now a brand in Germany that includes spreads, cheese and yoghurt.
Beyond Berlin, German-based Irish business people have been watching closely the state visit and say they stand ready to offer their assistance and insights.
Joanne Galvin, working in the automotive sector, suggests greater work needs to be done to build Ireland’s business profile in Germany, beyond food and drink exports, and the profile of the local Irish Business Network (IBN).
“There is a strong Irish network throughout Germany but the IBN needs to clarify its role and goals as its currently very fuzzy and lacking vision,” she said.
For David Dempsey, a property developer and data consultant in Munich since 1992, Ireland continues to trade on a historically positive image of our country among Germans.
The Continent’s largest St Patrick’s Day parade each year in Munich is a key factor in this and remains a unique engagement opportunity for Irish political visitors in the prosperous Bavarian capital.
Like many Irish businesspeople outside Berlin, Dempsey is welcoming of a stronger regional presence in Munich and in Frankfurt. But work remains, the 49 year-old says, to move the image of Ireland beyond Brexit.
“Ireland is seen as a European tax haven for multinational IT companies; it is not seen as an innovative IT supplier,” he said.
And not just Ireland needs to adjust; so too does Europe. Lurking behind the willingness of Irish business people to help push Team Ireland in Germany, Dempsey senses a growing weariness among long-term emigrants about the personal return.
“As a European citizen I feel disenfranchised,” he said. “I want to be able to vote for a regional and national government somewhere in Europe. Preferably where I live.”
Maybe when Europe moves beyond Brexit.