One of the key unifying themes around many of the businesses listed in the Top 100 is the fact that they recognise the benefits of exporting and trading internationally.
xternal and export sales are part of their growth strategy and they recognise the significant benefits which this brings, not just in higher sales and profits but also increased productivity, improved competitiveness and the reduced vulnerability that comes with not relying on the local market alone.
Undoubtedly it is challenging for businesses here to compete globally. Quality and innovation is outstanding but there are challenges in business development - making the sale, gaining customer confidence and getting the product to market. Businesses that invest in establishing an international sales team, developing digital marketing strategies and using the international support available by Invest NI, DIT and accredited Chambers of Commerce are the most successful. Northern Ireland businesses currently sell around £22bn of goods and services outside Northern Ireland annually - a great achievement given the size of our business base.
Exports to countries outside the UK make up around half of our sales. Our key trading partners include the Republic of Ireland, Germany and France in the EU and USA, Canada and Australia across the globe. The Top 100 firms are amongst the most successful in this area and are an excellent example to other firms of what can be achieved. Fortunately many of these businesses are also focussed on the development of the wider economy and are willing to share their experiences and support the international programmes that NI Chamber and others have developed to inspire and support other businesses to do the same.
Being on the periphery of the periphery has always been a challenge for Northern Ireland when doing business internationally and 2020 brings even more challenges. Despite having made gains in growing our international reputation, businesses are now experiencing new challenges as a result of Brexit and COVID-19. The uncertainty around Brexit and Northern Ireland’s unique position as a result, has already been creating concern before the additional and major setback of the Covid-19 pandemic.
In the first quarter of this year goods exported from Northern Ireland fell by 2.7%, largely driven by falling sales to EU countries including Ireland, Germany and France. This appears to confirm member views that EU customers were becoming more focused on using suppliers in ‘remaining EU’ countries. Our latest Quarterly Economic Survey with BDO showed that in the second quarter of 2020 export sales and orders in Northern Ireland had unsurprisingly collapsed to record lows, although we do hope to see some recovery in trade after the surreal initial impact of the effective lock down of the economy dissipates. The fact that businesses are still not clear in understanding what the final outcome of any agreement with the EU will be is also showing, with only two in five of our members say that they are making plans for Brexit. This isn’t surprising when they aren’t sure what they are preparing for. There is also the spectre of a ‘no deal’ scenario hovering in the background, with implications around the introduction of World Trade Organsiation rules.
More worryingly, businesses are also in the strange position of not being clear on how our trading relationship with Great Britain, our largest trading partner, will work. NI Chamber members have expressed concerns about what the Withdrawal Agreement might mean in how they go about doing business with Great Britain. While the Ireland/NI Protocol has provided some clarity, more needs to done to help businesses understand how their trading relationship with Great Britain will change after December 31 when the transition period ends. Understanding the impact of the NI Protocol on the internal market arrangements and future trade deals are both important.
The Trader Support Service (TSS), announced by the UK government during Michael Gove’s visit to Northern Ireland in August, has been cautiously welcomed, as a free service for any company who would like to bring in goods from Great Britain or the rest of the world. It is worth highlighting that whilst the service is technically free, it will still cost them significantly in time – filling in paperwork and providing instructions to intermediaries for example and in terms of just in time delivery. There is also more to be done including resolving SPS issues, VAT and legislating to protect Northern Ireland’s position in the UK’s internal market.
Outside of the internal market, NI Chamber is positive that there will be significant opportunities for Northern Ireland based businesses through any new trade deals that are struck. We look forward to seeing the outcome of UK negotiations with countries including Australia, New Zealand, Canada, Japan and the United States. Developing new relationships with these trade partners will be key. We will need to be agile to develop and nurture those new trading relationships. At the same time we will need to ensure that we protect and grow the strong trading relationships that we have already built. This has the potential to be an exciting time in opening up new opportunities and Northern Ireland’s business community needs to be ready to maximise those opportunities. Businesses want to come out of this period of huge uncertainty with a stronger trade policy that works for all businesses here and continues to support the outward looking focus for our economy.
We do however urgently need to see progress. We have limited time left to find a solution to the way we trade with the EU and negotiate how we trade across the world. We need clarity over a myriad of issues including customs, regulations, tariffs, legislation, standards and the practical out workings of how we trade.
In the meantime, NI Chamber is here to help. Our Learn Grow Excel programme provides a free platform for firms to scale-up, start exporting, explore new markets and enhance cross-border sales. Our International Division continues to provide advice to businesses on Brexit and we continue to provide customs training in advance of January 1. We are also here to support the government in making sure that all aspects of any new arrangements work for Northern Ireland.
With so many uncertainties remaining, businesses urgently need answers to all of their questions. Government must urgently provide this and with practical considerations, not politics, at the heart of future policy.