Innovation is vital for a global business like mine to survive a hard Brexit
Published 27/10/2016 | 02:30
It is now just over four months from the morning of June 24, when we woke to the news that the UK had voted to leave the European Union. In the intervening period, we as a country have been scrambling to understand the impact that this vote will have on Ireland.
However, on a different level, the impact that this vote has on the Border regions of Ireland is much more significant.
Combilift manufacture space-saving warehouse forklift trucks in Co Monaghan, which has borders with Armagh, Tyrone and Fermanagh.
The Combilift global head office is a mere 10km from the Border. Combilift currently exports 25pc of its product to the UK (Northern Ireland and Britain), therefore, the obvious question is how is Brexit, and the now more likely, hard Brexit going to affect Combilift?
There are obviously significant challenges arising from Brexit for Combilift, including - but not limited to - customs controls, potential import tariffs, free movement of staff (46 currently travel from Northern Ireland each day), potential reduced demand from the UK market and currency devaluation.
However at Combilift we feel that if we hold firm to our core values of producing unique, innovative and added value products, as a company we can overcome the challenges Brexit presents.
The focus of the Border business network should be to continue to develop new innovative products that provide the end user with significant added value - in Combilift we are investing 7pc of our revenue into R&D.
As a result, in the long term, the business should be able to demand premium prices, which will help cope with fluctuations in currency and the added burden and cost of the border controls that are potentially going to come into force in the event of a hard Brexit.
Investing in R&D makes Irish companies like ourselves more successful at exporting to markets outside the UK also.
Alongside this, an increased emphasis on developing products that generate worldwide demand, and a focus on exporting further afield than our nearest neighbours, is critical to building sustainable businesses in the Border region.
Ireland as a country, with its business support agencies, such as Local Enterprise Offices, Enterprise Ireland and IDA, need to encourage and support more companies to invest in R&D to support the obvious challenges that Brexit is bringing to our country, and in particular, to the Border regions.
This is the long-term means to coming through the current period of uncertainty.
Brexit will have a high impact on All-Ireland bodies such as Intertrade Ireland which rely on EU funding.
Applications for Interreg funds - an EU-supported structural funds programme - for cross-border economic and social development projects are already experiencing delays pending Article 50 negotiations, as many of these projects will span a two or three-year programme.
This will also have high implications for Border county communities.
None of us knows where the sterling versus euro currency will be in the coming year.
However, my suggestion is - if an Irish company exporting into the UK is not generating a financial loss with a £0.90 to one euro conversion rate - I would recommend hedging currency at this rate for 2017 during this period of uncertainty.
To assist with counteracting Combilift's currency exposure, we are increasing our focus on sourcing more raw material suppliers in sterling.
Martin McVicar is the managing director of Co Monaghan-based Combilift