Firms must prepare for a hard Brexit by diversifying
There's a long way to go before the UK implements its decision to quit the EU, but business can respond to the challenges of a disruptive era, writes Julie Sinnamon
The first guiding principle of British Prime Minister Theresa May's speech last Tuesday was to bring greater certainty to the UK's position on Brexit.
Given the level of volatility faced by Irish exporters to the UK since the vote last June, the more certainty they have, the better they can plan for the future.
There is a long way to go before implementation of Brexit in whatever form it may take. In the meantime, we are likely to see further volatility - particularly on currency markets. My advice, therefore, to Irish exporters is to prepare for a hard Brexit.
At Enterprise Ireland we recently set out our new 2017-2020 strategy - 'Building Scale, Expand Reach, Deliver Global Ambition' - in which we set out ambitious plans to grow exports by €5bn per annum to €26bn by 2020.
We also plan to reduce reliance on the UK to 33 per cent of total client exports by 2020. The UK is the number one export market for Enterprise Ireland clients, worth over €7.5bn in 2015. So our plan is twofold: we must help clients consolidate exports in the UK and help them diversify into new markets.
The challenges facing Irish exporters during this period cannot be underestimated. But I am confident that having experienced significant change over the years, we can respond to the challenges and opportunities that arise from what is likely to be a period of structural change.
As I have seen first-hand, there are thousands of Irish companies succeeding across the world by being innovative, scaling up and diversifying into new export markets.
Companies such as Voxpro, are an example. I was delighted to visit their new offices recently to announce Enterprise Ireland's results for 2016, which showed client company employment exceeded 200,000 for the first time with over 19,000 new jobs created.
The fact that almost two-thirds of the jobs were regionally based was particularly welcome.
Companies such as Core HR in Cork and Vistamed in Co Leitrim, are examples of thriving Irish enterprises who employ significant numbers and are embedded in local economies. And the importance of our clients' spend domestically - more than €24bn in 2015 - cannot be underestimated.
So as we look ahead in the context of Brexit, my advice to Irish enterprise is to take inspiration from these firms by focusing on:
Investing in innovation to develop new products and services is a key strategy in differentiating a business. Enterprise Ireland offers a range of innovation and R&D supports and we aim to increase client investment in R&D by 50 per cent to €1.25bn annually by 2020.
Focusing on improving operational efficiencies is particularly important for companies exporting to the UK. Enterprise Ireland is expanding its competitiveness and Lean programmes as well as introducing new capital and skills funding.
Leadership and management Development
Putting in place development support for senior managers particularly in relation to prudent financial and currency management is recommended to drive profitability through currency swings. We are introducing new programmes to support executives in this regard.
Having a diversified market plan should be a key element of any growth strategy, particularly as a response to the Brexit vote. Our overseas network of 32 international offices can support companies in identifying and securing business opportunities.
Despite the uncertainty, Enterprise Ireland's new strategy is ambitious. By 2020, we aim to create 60,000 new jobs; increase annual exports by €5bn to €26bn; and increase annual domestic spend by €4bn to €27bn. These are challenging but achievable aims that can deliver a significant shift in the scale of Irish enterprise.
I believe this strategy will help create a stronger indigenous business sector, with an expanded global footprint, making an even stronger contribution to jobs and economic growth nationwide. Enterprise Ireland will continue to partner with Irish companies to help them achieve this, whatever form of Brexit is implemented.
Julie Sinnamon is CEO of Enterprise Ireland
Sunday Indo Business