Hands up if you have a Brexit plan, and can you share it with the class please?
Sometimes, a force comes that is just a little too big to get our heads around, a little too all-encompassing to simply wave away with a shrug.
Ireland is an export country; we look outwards. Relentlessly positive in our mindset (and unrelentingly pessimistic in our words) we have a tendency to assume it’ll all work out, that ‘it’ll be grand’.
Sometimes though, a force comes that is just a little too big to get our heads around, a little too all-encompassing to simply wave away with a shrug. The solution used to be when these forces came along was to hit the bar and wait for it to pass by; nowadays it requires a bucket of coffee and countless brainstorming sessions in case it rolls over us.
Brexit is such a force.
Every Irish exporter is aware of the dangers, and possibilities, of Brexit, and have probably elucidated these views at the end of a board meeting or over the dinner table. They have read the business papers, mentally taking note of those aspects of Brexit that will affect them, and have kept a keen eye on the exchange rates as they’ve fluctuated since June 2016.
Most Irish exporters, however, haven’t written anything down. There is no plan, just a feeling that we may have to be more flexible down the road. Maybe there’s vague notions that the Chinese market is opening up so ‘we must look into it’ or perhaps there’s a feeling Brexit won’t really happen.
Maybe not in the ‘Hard Brexit’ that was the prevailing political wind until recently, but the UK is leaving the European Union and the relationship won’t be the same for the foreseeable future. It is now incumbent for Irish businesses, and exporters in particular, to develop their international business plans to mitigate against the risks coming down the road.
80% of Irish exports are either sold directly in the UK or transit through the region (1). Does your organisation have alternative market strategies in place? Does your export wing have plans for any transit barriers that may (suddenly) come into place?
Let’s take the tactical question first – are you prepared for a new set of administrative practices associated with transiting your goods through Britain if it’s not part of the Customs Union?
In practical terms, this may mean you have to prepare staff or procure new staff hires to make this trade efficient. Imagine if tomorrow all your exports needed to transit through Norway instead of Britain, what would be the challenges you would face? What would be the costs associated?
Many Irish businesses are waiting for answers from the government rather than proactively seeking out alternatives themselves. Almost two-thirds of Irish export companies have said they are unprepared for Brexit, and have not put any counter measures in place over the last six months, according to a survey of 600 Irish businesses by Enterprise Ireland (2).
This is a dangerous strategy. We’ve seen the lack of clarity from all sides of the negotiation table, partly as a negotiation tactic in itself, and it is likely that the rules will come as one big release when negotiations are finalised.
In other words, at the last minute.
Foreign Affairs Minister Simon Coveney has stated that companies using Britain as a transit location to other markets could be badly affected by Brexit, but has been unable to accurately track what goods, and it what volume, actually passes through Britain from Ireland. So, when it comes to negotiations on what goods are subject to custom tariffs, they may end up negotiating blind.
This makes it even more vital for Irish businesses to make their own plans. Of course, as the famous Navy Seal quote goes ‘No plan survives contact with the enemy’ but without a plan, we are doomed to fail.
Now let’s return to the first question: If Brexit makes the UK less profitable to trade with, or at the worst-case scenario, becomes uneconomical to trade with, does your business have a plan to penetrate new markets to cover the gap?
Let’s be clear here, no perfect plan exists. There are too many variables within each sector, too many knowns, and even more unknown unknowns, to accurately sit down today and predict what you’ll need down the road.
And, ironically, when it comes to planning for this, it may be best to ignore the force that is Brexit for now. Instead, now is the time to formulate those international development plans you’ve been knocking around for years now, and begin putting in place a plan of action.
Irish exporters need to begin to evaluate where a new potential customer base, assess what is required to enter that market, create a blueprint for success, and then get down to work. This strategy of international business development will:
1) Begin to grow your business organically
2) Mitigate any potential impact of political shifts in how Brexit will be legally framed
3) Get ahead of your competitors who are planning to do the exact same thing
The organisations who turn Brexit to their advantage will not be the ones who happen to be picked up by the tide and get lucky (although that will inevitably happen too) but the organisations that take a multi-pronged approach to the problem, tackling it from all sides.
They will not be able to share their plans with the rest of the class because, well, everyone is in a different class. This is a huge problem that will be tackled through a million solutions, tens of thousands of face-to-face negotiations across the world, through public and private sector policies and actions, and through lots and lots of planning.
Do you have yours yet?
Hugh Torpey is the Content Manager at the IMI. Hugh has written the above blog based on the curation of research and insights from associates on the IMI Diploma in International Business Development. The Diploma is designed to give participants a future blueprint for their organisation on completion, and is specifically for professionals from Irish export-focused SMEs, Irish multinationals and affiliates of foreign multinationals based in Ireland, either in the manufacturing or internationally traded services sectors.