Life after the EU: how Northern businesses are responding
It was a decision that shocked, but twelve months on from last June’s Brexit vote in the UK how are Northern businesses gearing up for life post-Brexit?
“Brexit also raises issues around the future availability of skills and the free movement of EU nationals currently living in the UK. We have about 200 EU national colleagues who work with us in the UK and it is important to recognise that they have made a huge contribution not just to Randox but to the UK economy as a whole – that should be a key consideration,” Mark Campbell, Randox
While the full impact of the UK’s decision to exit the European Union remains to be seen – particularly in light of the outcome of the recent UK general election – already businesses based in Northern Ireland are starting to feel the impact.
Some, such as Brazilian meat processing giant Moy Park, are steadfastly looking to the future. “Although there will be changes to the environment in which we operate following Brexit, we are confi dent that we have a robust business that can continue to thrive and grow,” the company says.
But not every business in the North is quite so upbeat.
According to the Northern Ireland Chamber of Commerce and Industry, one in three businesses in the North has “scaled back or put on hold” business growth plans following the Brexit decision.
The UK vote to leave the European Union has also sent costs spiralling for the majority of local firms, with one in every two businesses reporting an increase in costs in the fi rst quarter of 2017 due to the fall in the value of sterling.
Michael Hall, head of markets at EY Ireland, says that one of the key challenges for companies in relation to Brexit, and regardless of their size or the sector they operate in, is to get to grips with all of the uncertainty hanging over them at this time.
“There are currently more questions than answers and as a result, businesses are having to operate in a vacuum of sorts – we expect complex Brexit negotiations to continue for the next two years so it is crucially important that over this period businesses use the time to carry out scenario planning.
“There are so many potential scenarios that could emerge which businesses really need to be prepared for, but they also need to look at their short-term business objectives. For instance, many have already experienced the impact of the currency fluctuations in the short term, both good and bad. Businesses must also be prepared for every outcome in the long term – even those that might not be as positive as they had hoped for,” Hall warns.
“We would advise them to look closely at how they could be impacted by some of the key areas of negotiation, for example, the free movement of labour and trade. Businesses need to understand the what-if scenarios – in a worst-case scenario if there was a hard border with the Republic then what would they do? There could be key issues around customs such as administration and duty,” he adds.
For Carol Lynch, partner in BDO customs and international trade services, it’s all about preparing.“The worst thing to say is ‘we don’t know what’s going to happen so why bother preparing?’” she says, adding, “Anyone preparing now has the time.”
Using this time wisely is, of course, key. Lynch believes companies should take the opportunity to consider their supply chain, and determine what the potential impact of rates and border control might be.
“A lot of companies don’t necessarily know the full supply chain,” she says, adding that companies may be exposed to duties and tariffs in their supply chain that they are currently unaware of.
“You could be buying from a German manufacturer/distributor and you don’t know if they are purchasing from the UK,” she says.
‘Keep calm and carry on’
Wrights Group, Ballymena
It was something one board member particularly sought, and actively supported, but the UK’s decision to leave the EU and bring Northern Ireland with it, is nonetheless causing some “bumps in the road” for one Ballymena-based business.
The Wrights Group, founded in 1946 by Dr William Wright and his father, is one of the North’s biggest exporters, selling buses designed and manufactured in Northern Ireland, from London to Las Vegas, to Hong Kong and Dublin.
Dr Wright, who celebrates his 90th birthday this year and is still an active board member of the group, was a key supporter of the Brexit campaign in Northern Ireland.
But how has the Wrights Group fared since the vote last June?
According to Mark Nodder, chairman and chief executive, there has been the occasional bump in the road for the bus builders over the last eleven months.
“It would be fair to say that the Brexit decision initially caused a degree of uncertainty in the marketplace, with our customers pausing to consider their investment plans in light of the UK’s changing relationship with Europe.
“Our customers are private and state-owned public transport operators, some of whom have parent companies in Europe, so inevitably there are a lot of forces at work when considering whether to purchase a new fl eet of buses,” Nodder says.
But he believes Brexit is just one event that the group has to factor into its strategic planning process.
“Our principal markets are in the UK, Ireland and Asia. Continental Europe has always been challenging for us, given the preponderance of competitors and the frequent preference for local manufacturers,” Nodder says.
Like many businesses in the North, the Ballymena group has also been impacted by the weakness of sterling following the UK referendum. According to Nodder, “The shortterm effect of the exchange rates has been to increase the cost of materials, but we are countering that through working with our supply chain and broadening our international sourcing capability in the medium term. We hope that exchange rates stabilise at a level which assists our competitive position in export markets.”
Wrights Group also shares the concerns of many local firms about how Brexit could potentially impact on the free movement of people to work in Europe. “We trust that our ability to locate skilled workers from European countries is not impaired by negotiations to leave the EU. Around ten per cent of our workforce is drawn from other EU member states, and many of those workers have been with us for ten years or longer. We would like to see assurances about their status, given the contribution they have made to the company and the difficulty we would face in obtaining the same skills within Northern Ireland,” Nodder says.
Overall, he is adamant the Brexit process will not re-route the group from its future goals.
“The broad strategic objective of the Wrights Group is to develop environmentally-friendly vehicles for customers worldwide. The Brexit process will not impact our long-term vision to become a significant player in the global market for public transport. There will inevitably be some adjustments to the existing business model, the supply chain and possibly where we recruit the skills we need, but overall, it will be ‘keep calm and carry on’,” Nodder says.
‘Nobody knows who can stay’
José and Lucia Andre, L’Artisan Foods
For two Craigavonbased entrepreneurs, whose business is bringing a sweet taste of daily Portuguese life to Northern Ireland, Brexit is a constant source of neverending indigestion.
José Andre and his wife Lucia came to the North from Brazil via Dublin more than 13 years ago. At the time, the Brazilian economy was struggling and José and his wife, who ran their own businesses including a deli and restaurant, decided they could create a better life for themselves and their young daughter, Camilla, in Europe. They chose to relocate to Dublin and got jobs with a large agency that needed Portuguese speakers to help them recruit people in Portugal to move to Northern Ireland and work for its largest private sector business, the Brazilian-owned food company Moy Park.
It is estimated that the group, which is owned by the meat processing group JBS and has 13 processing and manufacturing plants across Europe, is one of the largest employers of EU migrants in the North.
Initially employed to recruit workers from Portugal, José and Lucia were then asked to relocate from Dublin to Northern Ireland to act as temporary liaisons and interpreters for Moy Park’s new Portuguese employees as they settled in and around the Craigavon area.
Four years ago, after a variety of other jobs, they decided to take a risk and set up a new business, this time around in what had become their adopted hometown of Craigavon.
Today their award-winning L’Artisan Foods, which is located in Bluestone Business Park, specialises in producing handmade pastry products including their signature Pastéis de Nata – traditional Portuguese custard tarts – and a growing range of savoury-baked delicacies including Northern Ireland favourites such as sausage rolls.
L’Artisan’s customers are chiefly upmarket deli’s and café groups in the North but it has recently secured a number of new customers in the South and José and Lucia are now keen to grow their business across the border and look at other new export opportunities in Europe.
But the timing of Brexit could not be worse for José, who was born in Portugal and holds a Portuguese passport, Lucia and three of their employees, two of whom are Polish, and the other Lithuanian. Like many in the North, they are deeply worried about what will happen to EU nationals working in Northern Ireland. For José and Lucia, it also casts a shadow over their future export ambition, particularly in relation to their crossborder ambitions.
“We want to stay here in Northern Ireland, we love it, we love our business – everything we have is here and for us, we don’t see borders. For us a customer is a customer whether they are in Donegal or in Downpatrick. Brexit is a worry for us – nobody knows what is going to happen – nobody knows who can stay or who could be forced to leave,” Lucia says.
For now, the couple is still considering expanding their operation in Craigavon, trying to decide if they should just adopt a wait-and-see approach before investing further in the North.
‘We can be a world-class exporter’
Mark Campbell, Randox
One of the North’s most successful exporters, Antrim headquartered biotech firm Randox, believes its “globally orientated” focus could be an essential element in helping to protect it from what for some Northern Ireland businesses could be the deadly side effects of the Brexit process.
“We are always looking for new opportunities in global markets and we firmly believe that we can be a world class exporter from these islands. We export approximately 95 per cent of our products and probably around just 15 per cent of
our products are sold within the EU,” says Mark Campbell, senior manager with Randox.
“We also have four key manufacturing and research and development sites located in Co Antrim, Dungloe in Co Donegal, Bangalore in India and in West Virginia in the US which means that strategically we are well balanced and that gives us a lot of flexibility,” Campbell says.
Despite this, however, he says that Randox has not been totally immune to the early impact of Brexit. Currency fluctuations may have helped Randox’s sterling exports, but they have also pushed up the price of raw materials sourced outside the UK.
So, while the serious negotiations over Brexit get underway between the EU and UK, what Randox is most concerned about at this stage is how the “unknowns” will impact on the company’s future operations.
“We operate in a deeply regulated environment and we would like to see close harmonisation in any future agreements between the UK and the EU in order to avoid any additional costs to businesses. But for us, Brexit also raises issues around the future availability of skills and the free movement of EU nationals currently living in the UK. We have about 200 EU national colleagues who work with us in the UK and it is important to recognise that they have made a huge contribution not just to Randox but to the UK economy as a whole – that should be a key consideration,” Campbell says.