Galway businesses are being urged to prepare for a hard Brexit and to plan for it now.
It is part of the advice that will be given to businesses at a Brexit Information Meeting, hosted by Galway’s Local Enterprise Office, taking place in the city on Wednesday 14 June.
IntertradeIreland CEO Thomas Hunter McGowan, who will be speaking at the event, said that, at present, “we don’t know if it will be a hard or soft Brexit”. “But what we are doing is preparing for a hard one as this is best approach simply because the worst case scenario is the best place to start. We are not predicting the worst will happen but if businesses prepare for the worst and then that doesn’t happen, it is the best approach.”
For the past 12 years, IntertradeIreland has conducted an All Ireland business monitor in each quarter with over 750 companies. “In the last three monitors, we have asked businesses questions about Brexit,” says Mr Hunter McGowan. What has emerged is that 98 per cent of companies have no post-Brexit plan in place.
“We are trying to get around why people are not planning and what we found is two things. The first is the big focus is on the now. Markets are extremely competitive across all sectors and businesses are fighting the day to day challenges of business including rising costs, recruitment and resources. The second is that there is a degree of uncertainty around it and this makes it difficult to have any building process in place.”
Mr Hunter McGowan, who will speak on the topic ‘Get Your Business Brexit Ready’ at next week’s event, states simply that businesses need to prepare for a new relationship that is coming with the UK. The core message and the reason behind next week’s Brexit talk is to get businesses to start to plan for the coming changes.
He explains that there are 177,000 lorries, 205,000 vans and 1.8 million cars going back and forth over the border every month. Added to this there are 30,000 people who commute across the border for work every day. On top of this, six billion in goods and services are traded north and south.
One of the main factors businesses will have to consider is Word Trade Organisation (WTO) tariffs on goods. Mr Hunter McGowan adds that Intertrade Ireland have teamed up with the ESRI and CSO and conducted a detailed study into all the goods that are traded across the border, right down to product level. The study looked at products going from South to North and vice versa. The study also looked at price sensitivity of demand of products if prices go up. This study will be published on IntertradeIreland’s website tomorrow, Thursday 8 June.
With Brexit expected to be introduced in 2019, Mr Hunter McGowan stresses that as well as considering tariffs, there are also non-tariff barriers that businesses need to consider.
Non-tariff barriers include certificates of origin of products, shipping documentation and customs documentation. “There is a whole range of paperwork that businesses will have to consider. Business will have to ask themselves, how many times do we cross the border and what you will have to pay each time you cross? Someone has to prepare these documents also.”
He adds that many businesses will be accustomed to tariffs from dealing with non EU countries in the past, prior to Brexit. “There are some businesses that have never had to deal with tariffs so this will be very new to them,” he adds.
Companies in Galway that trade either north to south or to the UK will have to look at this. Some of the top 100 products traded across the border have some of the highest tariffs including meat, dairy, fish and cheese.
“There are a lot of big items moving around and negotiations on the highest tariffs on products is ongoing to try to get them down as low as possible or eliminated if possible. The more simplified this whole process is the better for businesses.”
Mr Hunter McGowan states that businesses need to ask themselves if you don’t have free movement of goods, services and people, how does that impact on your business?
“The big thing and what we will stress in this meeting is businesses need to plan. Also businesses can look at how they make their product and if there is anything that can be altered that can reduce the tariffs that have to be paid. A lot will depend too on negotiations.”
He explains that there are Lean techniques that businesses can apply and “these can cut their costs substantially.”
“We are not telling companies to go away to other markets. For some, this is not an option. It is important for businesses to build the relationships now while there is no border. If you are trading across the border, get a good relationship going. Very often, a company will keep its contract with a business because they know you.”
Galway Local Enterprise Office’s Brexit information meeting takes place on Wednesday 14 June from 6pm-8pm in the Portershed. Speakers include Thomas Hunter McGowan, who will present ‘IntertradeIreland – Get Your Business Brexit Ready’, and John Havel, Business Consultant and Brexit Mentor who will discuss ‘Brexit: The Six Key Pillars Of Self-Assessment And Their Impact On Business Action Plans’. For more information or to book your free place, call 091-509090 or email Caroline McDonagh at email@example.com
Intertrade Ireland have a dedicated Brexit phoneline for businesses who would like to get advice on their product or service- call 048-30834100, email firstname.lastname@example.org or see intertradeireland.com