Monday 23 April 2018

'I'm old enough to remember the customs checkpoints' - Commercial threat of Brexit looms large for Border counties

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Martin McVicar, managing director of Combilift, at the company’s plant in Monaghan. Photo: Steve Humphreys
Martin McVicar, managing director of Combilift, at the company’s plant in Monaghan. Photo: Steve Humphreys

Celine Naughton

Hard or soft, Brexit raises no fears for Combilift managing director Martin McVicar.

One of the Border region's biggest employers, over the past two decades his forklift truck and material-handling equipment manufacturing company has lifted and shifted its way to outstanding business success, culminating last year in the export of more than 5,000 units to 75 countries for an annual turnover of €230m.

From April, the firm will be celebrating its 20th anniversary by moving into a new 11-acre site in Gallinagh, Co Monaghan. Built at a cost of €46m, this state-of-the-art facility will be the largest single manufacturing plant under one roof in Ireland with a workforce of 500 employees.

So it's hardly surprising that the mood is buoyant and, notwithstanding all the worries about the post-Brexit climate, Mr McVicar is one captain of industry who is unfazed by the prospect of economic storm clouds ahead.

"The UK market represents 25pc of our business and we had significant growth there last year," he says. "So long as it doesn't go into major recession, there will continue to be a demand for our products because, unlike global giants that manufacture in bulk, we customise our trucks to save warehouse space. As long as we can continue to develop innovative products that we can charge a premium for, that can help to counteract currency fluctuation and import tariffs.

"My only concern about Brexit is the supply chain of raw material. We imported a lot from Northern Ireland and mainland UK, but in recent months, there's been much talk about a hard Brexit, and to protect ourselves in that case, we've been growing our supply base in euro-based European countries."

Workers put the finishing touches to forklifts. Photo: Steve Humphreys
Workers put the finishing touches to forklifts. Photo: Steve Humphreys

Mr McVicar reasons that Irish and UK companies will continue to trade post-Brexit largely due to our proximity, close ties and lack of a language barrier.

"The commitment from European, UK and Irish governments that there will be no hard physical Border between our countries is heartening," he says. "I'm old enough to remember the customs and military checkpoints you had to pass to get across. We have 52 employees living in the North, and it would have been terrible for them to have to cross a border to get to work."

There is no crystal ball to show how Brexit will play out from March 29 next year, but foundations are being put in place to protect Irish businesses, particularly those in the Border counties.

Brexit-proofing forms a major part of Project Ireland 2040, the new €115bn planning and investment plan for the country.

Ann Rudden, managing director of Aine’s Handmade Chocolates. Photo: Photocall
Ann Rudden, managing director of Aine’s Handmade Chocolates. Photo: Photocall

Among the initiatives included in the plan is spending on cross-Border transport links and grants for businesses to prepare for the effects of Brexit.

In the neighbouring county of Cavan, Ann Rudden manufactures Áine Hand Made Chocolate from her premises in Stradone Village. With just 14 employees and a turnover of €1.3m, she exports to France, Dubai, Russia and Northern Ireland, and has a small presence in the UK.

"Most of our raw materials come from the UK, but I'm looking at sourcing them elsewhere," she says. "A bigger concern is that some of our exports are shipped through the UK. As a small business, we're working on tight margins as it is. If tariffs are imposed, it could mean the difference between profit and loss.

"In the run up to Easter this year, we've never been busier, but trying to prepare for Brexit is a nightmare, not least because nobody actually knows what will happen."

According to Eoin Doyle, director of services with Cavan County Council, plans to improve transport connections to and from Dublin and elsewhere are a priority for the region.

"The current infrastructural deficit is an inhibitor to existing business, so the Virginia bypass extension of the M3 and the east/west link road between Dundalk and Sligo are hugely important for businesses to diversify post-Brexit," he says.

"Broadband is also a fundamental factor in developing enterprise, so it's good to see that being rolled out nationwide."

Sectors at particular risk in the area include the agri-food industry and tourism.

"Fishing and hotels here are heavily dependent on the Northern Irish and British markets, so they could suffer," says Mr Doyle.

"However, the Good Friday Agreement synergies and business connections developed during the peace process are strong, and business people in the Border region have shown themselves to be highly innovative, resilient and entrepreneurial.

"They will need to look at whether their existing supply chains could leave them vulnerable to tariffs if a hard Brexit comes in. They'll need to diversify into new markets, increase efficiency and reduce costs.

"They may also need help in sourcing new suppliers, and local enterprise offices (LEOs) can help. LEOs offer targeted interventions to help companies work in a leaner, more cost-effective way, explore alternative markets, and deal with language barriers if a business needs to open new export markets, for instance. We can help them find solutions, and show how other companies dealt with issues they may be facing."

But what those issues are remain unclear. Until Brexit becomes a reality, the uncertainty of the divorce settlement leaves Irish businesses effectively planning in a vacuum. As Fergal O'Brien, director of policy and chief economist with Ibec, puts it: "The reality for most businesses is that they don't know what the rules of engagement will be. It's unfair to expect them to plan for A, B and C when they don't yet know what they're planning for.

"There are certainly things they can do now that would be good to do anyway, like reviewing supply chains, market diversification, innovation and new product development. But before making big decisions, such as whether they'll move production, for instance, they will be looking for more certainty. They will navigate the rules of the game when they know what they are. They just can't make those calls yet."

Mr O'Brien says a post-Brexit transition phase of at least two years will be required for business to adjust once the politics of the deal are done. Meanwhile, the National Development Plan promises an infrastructure that will make trading easier, especially in the Border region.

"In anticipation that there will be some disruption, we need to ease the movement of goods and people to make it easier to do business, particularly in the Dublin-Belfast economic corridor," he says.

Construction of the A5 motorway this year will connect Dublin with Derry and Letterkenny, and there are plans for a high-speed rail link between Dublin and Belfast.

"Such measures will improve competitiveness by reducing transport costs, increasing efficiency and accessibility, and supporting innovation," says Mr O'Brien. "Work is being done to connect business. There is a stronger all-Ireland focus, and great co-operation and collaboration between the authorities North and south."

Mr O'Brien adds that these supports will help Irish business swim against the tide of Brexit pressures, while Project Ireland gives tangible hope for a brighter future.

"We're planning for a population growth of a million over the next two decades, and now we'll have the resources and money to invest in creating the conditions for doing business and improving the quality of life for that expanding population," he says.

For more information on Project Ireland 2040 visit the official website 

Irish Independent

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