Thursday 23 November 2017

Irish firms are finally facing up to Brexit - EI chief Sinnamon

Julie Sinnamon
Julie Sinnamon
Colm Kelpie

Colm Kelpie

Exporting companies are waking up to the fact that Brexit is now a reality and that they need to put in place a strategy to mitigate the fallout, the head of Enterprise Ireland (EI) has told the Irish Independent.

Since Prime Minister Theresa May triggered Article 50 in March, companies are accepting the need to plan and are no longer in denial about the UK's impending EU departure, Julie Sinnamon said.

The agency is offering a grant to exporting companies of up to €5,000 to encourage them to develop a Brexit strategy.

"When Theresa May pressed the button on Article 50, I think there is a new reality in terms of Irish companies going from, 'with a bit of luck this won't happen', to realising 'it's going to happen and we have to plan for it'," Ms Sinnamon said.

Exporters have been the early casualties of the Brexit vote, due to sterling's immediate, and dramatic, devaluation in the wake of the referendum last June.

Although the pound has recovered some ground since it crossed the 90 pence to the euro mark late last year - dealing a considerable blow to the mushroom sector in particular - it is still hovering around the mid-80s. That compares with 77p a year ago - and analysts believe the UK currency could weaken further again.

The grant support is being made available by EI to its 5,000 client companies, and is designed to help firms cover consultancy, travel and other out-of-pocket expenses associated with drawing up a Brexit action plan.

EI will match 50pc of the costs incurred by a company in drawing up a strategy, up to a maximum of €5,000.

"Six weeks ago, when we were talking to companies, they were still in denial, in terms of hoping that they wouldn't have to address the issue," Ms Sinnamon said.

"Today that is gone and companies are now moving forward. Companies are embracing the fact that Brexit is going to happen and that they have to plan for it.

"There is so much discussion as to what that worst-case scenario is, and the bottom line is, none of us really know where the negotiations will line up. But companies have to secure their future and therefore they have to put in place a plan that means they'll survive irrespective of where Brexit ends up."

Exporters in the food, drink and traditional sectors, including engineering, manufacturing and construction, are regarded by EI as the industries with the highest level of exposure to the UK market.

Currency remains the number one short-term concern, Ms Sinnamon said, but added companies need to put in place a medium-term plan.

"Companies need to look at their exposure and have a hedged position. In some cases, companies source their raw materials from the UK and different countries, and in other cases they need to look at their currency exposure and hedge appropriately, particularly for some of the lower margins sectors. You can't keep your fingers crossed and hope that currency will go in the right direction."

The purpose of the grant is to encourage exporting companies to investigate the feasibility of diversifying into new markets, to improve their competitiveness, or enhance the financial capability.

A number of companies have applied already, but figures are only provided once applications are approved. Companies are being encouraged to first go through EI's online Brexit Scorecard, which prompts them to self-assess their potential exposure to Brexit under six business pillars.

It then generates a 12-page report giving what is described as a traffic-light system benchmark against best practice, suggested next steps based on the score and lists a range of events and resources from EI and others.

EI said around 400 SMEs have engaged with the tool so far.

Irish Independent

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