Brexit Proof Q&A: ‘The British government have made a complete dog’s dinner of the situation’
John Keohane, CEO, Verde LED
John Keohane says he expects more Irish companies to be exploring new markets
What was your reaction when you heard the UK had voted to leave the EU?
Genuine disbelief. I never thought that it could happen but 2016 was a crazy time when even Trump got elected.
How is your business likely to be affected?
Verde LED business is as a leading Irish manufacturer of commercial energy-saving LED lighting solutions and provides a full service for our customers. Brexit uncertainty has curtailed our expansion in the UK market due to the confusion and lack of confidence that exists currently. Only when the final outcome is realised will we be in a position to plan for expansion in the UK with confidence again.
How much do you rely on raw materials or markets north of the Border? How much on Britain?
We have very little exposure to UK suppliers thankfully. We do purchase a small percentage of components from the UK but have plans in place to source these in mainland Europe as an alternative.
When did you begin preparing for Brexit and what contingency plans have you put in place so far?
Over six months ago, we started to put Brexit plans into ation. We have alternative shipping routes planned for our European customers avoiding the UK land bridge should Brexit proceed.
In addition, we wanted to create a strategy to grow the business further in Ireland to compensate for any Brexit loss. We have recently launched the availability of interest-free financing for our products. We have dedicated a €5 million fund that we can offer to customers to make the switch to green solutions a more accessible option for businesses.
Are you examining new markets/suppliers – and if so how practical is that?
Luckily we started exporting to several EU markets in 2012 so our customer base is well spread out geographically. It is quite diverse across the commercial and industrial spectrum. These include companies in pharmaceuticals, manufacturing, shopping centres, education, data centres, office buildings, etc in a number of countries.
The one thing they would all have in common is that energy spends are typically €100,000 per annum as this is where we can start saving the client tens of thousands of euro a year. Typical paybacks are between two and three years and the return on investment thereafter is between 33 and 50 per cent per annum.
Does Brexit present any opportunities for your business?
We have witnessed several of our UK competitors go out of business in the last year due to the negative impact Brexit is having on the UK economy. That gives scope for us to increase our own market share once the economy picks up again and once clarity is achieved.
When do you expect to be Brexit ready?
We are as ready as can be but I think, like most organisations, we will only understand the full impact when it actually happens.
What’s your best and worst case scenario?
Best-case scenario is that we are in a good position to take advantage of the opportunities of pent-up demand post-Brexit. Worst case scenario: the UK goes into a deep recession and UK business declines sharply.
Are you stockpiling goods/raw materials?
No, as our current supply chain doesn’t rely heavily on the UK
How might the Irish or British governments and the EU help ease the pain of Brexit for your company or sector?
Postponing customs tariffs for several years to allow time for companies to adjust to the changes that will be coming.
How do you think the Irish / British governments have handled the Brexit negotiations?
The British government have made a complete dog’s dinner of the situation and seems to have handled it extremely poorly at the expense of the UK economy and public.
I think the Irish Government have done as good a job as possible given the sensitive situation of trying to maintain positive relations whilst also protecting our interests.
In five years’ time how will business have changed as a result of Brexit?
I believe most Irish companies will plan to have less reliance on the UK market given the extra barriers that will most likely be in place for trade.
I expect more Irish companies to be exploring new markets as well as growing the home base further. We currently employ 18 team members across our four offices in Ireland, Britain, France and China, and are looking to hire more over the next few months. In five years time we would expet to be much larger.