‘I’m not going to spend a fortune on something I don’t know will happen’
Brexit Proof Q&A: Seamus Fahy, Voltaire Diamonds and Merrion Vaults
Merrion Vaults owner, Seamus Fahy, posing inside the vaults.
Having launched Voltaire Diamonds in Dublin in 2009 during the recession and Merrion Vaults, with 3,000 safety deposit boxes in 2013, he says his combined businesses are recession proof and he is expanding across the UK. But volatility exists and he has to be clever to manage it.
What was your reaction when you heard the UK had voted to leave the EU?
Like many other people, my immediate reaction was “wow”, but at the same time, when sterling weakened as a direct result of Brexit, it went in my favour and I bought diamonds at a reduced rate.
That said, with a shock to the market like this one, there was volatility and uncertainty, which affects luxury goods market so people were holding back on big diamond spends.
How is your business likely to be affected?
Our businesses is affected in that people start investing in gold, and storing it, which is good news for us. In times of uncertainty people flock to safety. Gold is considered a safe haven asset and people increase their holdings of bullion. Our subsidiary of Merrion Vaults, Merrion Gold started to go really well as a result.
Also when there is a recession, unemployment and therefore crime rates increase. This makes more people cautious about storing their valuables at home, and the need for safe deposit boxes increases. We’ve now grown our business to 5,000 boxes in Dublin and expanded to the UK.
With Voltaire I am more cautious as a result of Brexit with the amount of stock I carry. I could buy lots of diamonds today, but then the exchange rate goes against me tomorrow, and I’d be in trouble.
How much do you rely on raw materials or markets north of the Border, and how much on Britain?
Around 20 per cent of our market for Merrion Vaults comes from Northern Ireland as people store and buy gold bullion down South with us. Demand is so big that we are opening a subsidiary in Belfast in early 2020 with room for around 5,000 boxes.
When did you begin preparing for Brexit and what contingency plans have you put in place so far?
I prefer to let common sense prevail. When Brexit happens, we’ll deal with it then. Necessity is the mother of all invention. We could spend a fortune like many people did to be Y2K compatible in 2000, then nothing happened.
If sterling weakens, it’s good for me, but whenever there is volatility, people don’t like to make rash decisions. My gut feeling is that it won’t happen for some reason. I’m not breaking a sweat about it.
Are you examining new markets/suppliers and, if so, how practical is that?
Yes, I’m exploring Antwerp, home of the big diamond dealers. It’s in the euro zone, and I do have lots of contacts there. The only thing is that it does take an hour from Brussels and there’s the hour time difference, so its not as easily accessible as London. But it’s still close enough. I can buy diamonds for Voltaire in euro.
Does Brexit present any opportunities for your business?
Yes, very much so. We are opening a new Merrion Vault in Belfast to accommodate demand in Northern Ireland. In the UK, we have vaults for 5,000 boxes in Newcastle, Nottingham, Liverpool, Glasgow, and we are opening further vaults in Edinburgh in three months time.
When do you expect to be Brexit-ready?
I think we are Brexit ready. We don’t have to stockpile lots of materials, so we have our ducks lined up in that we have suppliers in Antwerp ready to do business with us. Our stock is couriered, so if there is a hard Brexit, we could have a situation where DHL arrive at the door and have to pay VAT on arrival.
At the same time, we don’t sell food or perishables, so it’s not like we have massive backlog of stuff waiting in lorries at the Border.
What’s your best/worst case scenario?
With Voltaire we deal mostly in engagement rings so there is always a demand, unless women don’t want diamond engagement rings anymore. But if there is a recession, the average spend certainly goes down as people spend more on real estate.
Life will continue and we will just have to adjust to change. I won’t be the only jeweller in Ireland who has to adjust or certainly the only businessperson. I’ll react when I have to react. As an SME, I’m not going to spend a fortune on something I don’t know will happen.
The UK is Ireland’s largest trading partner, I don’t believe all the doomsday merchants. I’ll have to wait and see.
Are you stockpiling goods / raw materials?
No, as that could be affected by the fluctuating currency market. Our stock comes by courier per plane. It’s not like food which will go off, or pallets of cheese, by the lorry which could be stuck at the Border, so we should be okay.
How might the Irish or British governments, or the EU help ease the pain of Brexit?
Boris Johnson is a Brexiteer, and very forthright in his views, but now that he’s prime minister, he may soften his stance as people very often do. Once elected, leaders don’t always fulfil their election promise.
How do you think the Irish/British (or both) government has handled the Brexit negotiations?
I think the Irish government has done a good job to date, but they also have the EU behind them, so they’re sticking to the party line.
Looking ahead five years, how do you think your business or industry will have changed as a result of Brexit?
Well it all depends on how it unfolds.
Would you like to see a second referendum on Brexit?
I’m all for democracy and I think people should stick to it. They made their bed, so they have to deal with it. If there is another referendum, there could be civil unrest. Gold is at a seven-year high. People are cautions. In the financial crisis of 2008, the value of gold went up.