Richard Curran: 'The five lessons businesses should learn from the Brexit debacle'
Just a week ago it would have been reasonable to assume that by now we would all be a little wiser about what is going to happen with Brexit. A new EU deal was in the offing
A push from Britain's Theresa May to get backing from MPs would surely follow. A vote on whether to accept or reject her slightly revised version of the deal, should have shed some new light on where Brexit was going.
But this is Brexit. And as we now know, Brexit means Brexit. A week later, and after all of those events taking place, we are still none the wiser about what will happen. Brexit has become a game of musical chairs. It is just that the music never stops and everyone keeps going round in circles.
So, there won't be any predictions from me today about what is going to happen, just some hard lessons for Irish business. No matter what way Brexit does finally finish up, here are five lessons that Irish businesses can learn from the process so far.
1 Irish companies are too dependent on the UK market
There is every chance that Ireland's future trading relationship with the UK will never be the same again. When it comes to indigenous exporting firms, despite over 40 years in the EU and over 25 years of a single market, we remain far too dependent on the British market.
Taking a logical or easy route to exporting expansion is one thing, but not enough firms have looked long and hard at the EU or wider alternatives. The proposed (and rather half-baked) tariff regime published by the British government during the week covering a no deal Brexit, sent shockwaves through the farming and food processing community. The scale of their vulnerability has been laid bare. This over-exposure to the UK, while reduced in recent years, is a real weakness.
2 We need better infrastructure for direct trade with the EU
The dependence on the land bridge through the UK has highlighted major economic and strategic weaknesses in the supply chains and potential of Irish business. The Government must also look at greater infrastructure options from direct sea routes to the continent, to energy options such as an electricity connector.
3 Forearmed isn't always forewarned
When Brexiteer minister Michael Gove said during the referendum campaign that the country had had "enough of experts", it marked a new low in the political discourse that was unfolding. But the expression about being forewarned is based on the idea that knowledge of possible dangers gives you a tactical advantage. There is little tactical advantage to be had from trying to prepare through such uncertainty as this Brexit process.
There are Irish exporters who have made expensive decisions based on assumptions about Brexit that simply may not come to pass. Equally, others have buried their heads in the sand and may even get lucky.
4 There is no status quo in business
Nothing good or bad lasts forever. How many times have we all heard since June 2016 that things were going so well if Brexit had not come along? No matter what hodgepodge outcome emerges in the months or years ahead, we will not see a return to the pre-referendum status quo. Even a second vote to Remain will not throw up the same set of circumstances in the UK as existed before and our trading relationship will change with it. The Brexit genie cannot be put back in the bottle and even if it could, British politics and to some extent the EU will have to respond to the challenges the Brexit debacle has brought about. More change is coming.
5 There is always an opportunity
As so many business people focus on the negative twists and uncertainties of the Brexit process, there is always an opportunity somewhere. Over 5,000 quality jobs are coming to Ireland directly through employment transfers out of Britain as a result of Brexit - and it hasn't even happened yet. There will be opportunities for the right Irish companies to acquire businesses or invest on the back of Brexit. There are also new startup, real estate and other service opportunities that will come directly from Brexit. And I don't mean smuggling.
For 'Larry's millions' read 'Larry's billions' as filings reveal assets
One business which will have done everything it can to minimise the Brexit fallout is Larry Goodman's ABP Food Group.
With beef, pet food, lamb and other exports to the UK, it is exactly the kind of business that could be hit by a no-deal Brexit. But it seems that Larry's millions, should better be described as Larry's billions. Company accounts filed in Luxembourg revealed two financing entities for the wider group had assets totalling around €2bn.
Notwithstanding that the wider group picture may include some borrowings and other inter-group loans, it places a new complexion on the likely net worth of the Louth beef baron. ABP has grown exponentially since Goodman bought it back from his bankers in the mid-1990s for IR£50m. It now has a pet food division which includes C&D Foods, along with six beef sites in the South, 50pc of Slaney Meats, organic beef brand Good Herdsmen, 12 beef sites in the UK including four in the North. It also has two beef facilities in Poland and two lamb-processing facilities in England and the North.
It also has Wessex Foods which makes frozen food products in England. It also converts used cooking oil and food waste into bio-diesel through a subsidiary called Olleco. This business alone employs nearly 1,000 people. Its scale has given it more options to cope with any tariffs that might arise through a hard Brexit. Goodman's wealth may have been underestimated up to now.
Six Nations should kick private equity investment to touch
As you read this the Six Nations rugby championship is over for another year. The way the competition consistently comes down to the final day to decide a winner is what makes it great.
That could all change if the company behind the competition accepted an offer from private equity firm CVC Capital Partners to take a 30pc share in the business. A massive €500m price tag has been mooted which would surely result in a huge injection of funds into the sport in this part of the world.
There will be a price to pay though if this deal were to go ahead. CVC has made some very lucrative investments not least by buying into Formula One back in 2006.
It faced a lot of criticism about how the motor racing business changed while under its control. CVC has a track record in motorcycle racing's MotoGP and last year made a £200m investment in England's club rugby competition, the Gallagher Premiership.
But private equity needs an out and it needs a return. It has tended to sell out of businesses having helped make them more valuable but that isn't always the best outcome for punters, customers and those involved in the sport.
The English rugby premiership model will see it run the commercial division of the business but not the competition itself. It is hard to see how even a model like that could work best for a competition between national rugby teams.
Sunday Indo Business